TIDMLBE
RNS Number : 5272F
Longboat Energy PLC
22 March 2022
Longboat Energy PLC
("Longboat Energy", the "Company" or "Longboat")
Audited Full Year Results to 31 December 2021
London, 22 March 2022 - Longboat Energy, the emerging company
established to build a significant North Sea-focused E&P
business, announces its full-year results for the period ended 31
December 2021.
Highlights
Operations Summary
-- Three bilateral transactions executed in June 2021 to farm-in
to seven, near-term material exploration wells on the Norwegian
Continental Shelf
-- Four wells drilled to date with three discoveries:
-- Egyptian Vulture: material discovery, significant upside
potential
-- Rødhette: potential commersialisation via existing
infrastructure
-- Mugnetind: sub-economic discovery
-- Ginny/Hermine: dry well (completed post period)
-- All four wells were delivered safely on time and budget
Financial Summary
-- Remains fully-funded to complete its ongoing committed drilling
programme and to pursue its business development activities
-- Cash reserves of GBP26.3 million as at 31 December 2021
and a tax rebate receivable of GBP8.1 million (31 Dec
2020: GBP7.7 million)
-- Exploration Finance Facility for GBP50 million (NOK600m)
available for 2022
-- Loss after taxation of GBP(4.7)million which includes write
down of Mugnetind well
Outlook
-- Three high-impact exploration wells over the next 6 months
-- targeting 69 mmboe (net) and total upside of 254 mmboe
(net)
-- primarily gas prospects (83%)
-- Result of the Kveikje exploration well targeting 36 mmboe
(gross) expected in coming days
-- Proposed Norwegian tax changes will lower breakeven commodity
prices and increase returns for non-sanctioned projects
allowing the Company to consider acquiring development as
well as production assets
-- Currently participating in a number of processes where we
have specific knowledge and can take advantage of the continuing
market dislocation
-- In the short term, the spike in commodity prices will make
the M&A market challenging but the move away from Russian
oil and gas will further strengthen the strategic case for
Norwegian resources
-- Longboat is well positioned to pursue the expected forthcoming
transactional opportunities, guided by a management team
with a strong track record of delivering value through M&A
Helge Hammer, Chief Executive Officer of Longboat Energy,
commented:
"Longboat remains well-positioned having made one material
discovery and another with commercialisation potential from our
first four wells. In the next six months, we will have results from
three further exploration wells, each of which could be
transformational for the business.
"Furthermore, we continue to leverage our excellent industry
relationships and are currently participating in a number of
M&A processes."
This announcement does not contain inside information
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
Simon Mensley
Ashton Clanfield
FTI Consulting (PR adviser) Tel: +44 20 3727 1000
Ben Brewerton
Ntobeko Chidavaenzi longboatenergy@fticonsulting.com
Results
For the period to 31 December 2021, the Group's loss after
taxation was GBP4,680,620.
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 Directors, having considered cash flow forecasts,
sensitivities and stress tests and undertaken careful enquiry, are
of the opinion that the Group has adequate working capital to
continue its operations and meet its liabilities and commitments
for a period of at least the next 12 months. Accordingly, the
directors have made an informed judgement to continue to adopt the
going concern basis of accounting in preparing the annual financial
statements. In forming their assessment, the Directors have
carefully considered potential risks and uncertainties associated
with the Group's business model and additionally the continuing
conflict in Ukraine and associated international sanctions on
Russia.
The forecasts indicate that sufficient liquidity is maintained
across the going concern period and have been prepared on the basis
of committed exploration expenditure and budgeted operating costs,
continuation of the Norwegian tax refund arrangements based on
proposals issued by the Norwegian Ministry of Finance and the
continued availability of the Exploration Finance Facility ("EFF")
in 2022 and 2023.
In considering the continued access to the EFF, the Directors
(and the EFF lending banks based on enquiries made by the
Directors) considered written assurances from the Norwegian
Ministry of Finance that the existing security structure of the tax
refunds will be preserved for 2022, which will enable the EFF to
continue to be available. Whilst an element of inherent uncertainty
regarding the availability of the EFF remains until the legislative
process is complete, the assurances received from the Norwegian
Ministry of Finance are such that the Directors consider the risks
of the security structure not being preserved for 2022 to be
remote. Confirmation of the continued availability of tax refunds
as security for the EFF is anticipated when details of the new
Norwegian tax regime are published. In March 2022 Longboat made its
first drawing of NOK 15 million under the EFF. The Directors
believe this addresses the material uncertainty of being able to
draw down the EFF during 2022 that existed and was highlighted in
the 2021 interim results.
Outlook
Longboat has established itself as a licence holder in Norway
with an outstanding team of professionals, committed to the
Company's ethos and strategy, and we are very grateful for their
commitment and achievements. Looking ahead, our confidence remains
high both in the remaining committed exploration wells and in
delivering further successful acquisitions.
We are currently drilling the Kveikje prospect which is in a
very prolific area of the North Sea north of Troll close to many
recent Equinor operated discoveries. If successful, Kveikje is
likely to become part of a new subsea cluster development, which
could include several of the nearby discoveries such as Røver Nord,
Swisher and Toppand. Subsequently, Cambozola will be drilled
back-to-back after Kveikje and followed by Copernicus in the
summer. Cambozola and Copernicus are large gas prospects amongst
the most exciting wells to be drilled in Norway in 2022 as has been
highlighted by Woodmac in their "Wells to Watch" list for the year.
The prospects being targeted by these three exploration wells have
been estimated by ERC Equipoise Limited to contain prospective
resources of 69 mmboe (net) and are primarily gas prospects (83%)
with total upside identified by the Company of 254 mmboe (net).
We are loath to reference the outlook for the Company to the
desperate events in Ukraine but inevitably there will be an impact.
In the short term, the spike in commodity prices will make the
M&A market challenging for both buyers and sellers, although
more so for buyers. Conversely the move away from Russian oil and
gas will make the case even stronger for Norwegian resources.
That aside, Longboat remains well-placed to transact. We have an
experienced team with excellent relationships across the industry
and we believe there are now many excellent opportunities for
Longboat to pursue. However, patience will still be required given
the commodity price levels and the competitive landscape.
Consolidated Statement of Comprehensive Income
For the year ended 31 December 2021
2021 2020
Notes GBP GBP
GROUP
Administrative expenses (4,720,133) (2,399,204)
Exploration and evaluation
expenses 9 (6,399,134) -
Operating loss 6 (11,119,267) (2,399,204)
Finance income 5 11,412 18,736
Finance costs 8 (484,527) -
Loss before taxation (11,592,382) (2,380,468)
Income tax credit 10 6,911,762 754,289
Loss for the year (4,680,620) (1,626,179)
Other comprehensive income:
Currency translation differences 580,447 524
Total items that may be reclassified
to profit or loss 580,447 524
Total other comprehensive income for
the year 580,447 524
Total comprehensive loss for the year (4,100,173) (1,625,655)
Loss per share 11 pence pence
Basic (12.97) (16.26)
Diluted (12.97) (16.26)
Statement of financial position 2021 2020
As at 31 December 2021
GROUP Notes GBP GBP
Non-current assets
Exploration and evaluation
assets 12 23,988,754 -
Property, plant and equipment 13 29,600 11,798
Right of use asset 13 560,709 -
24,579,063 11,798
Current assets
Cash and cash equivalents 26,282,067 7,021,105
Inventories 14 92,798 -
Trade and other receivables 15 1,136,081 75,807
Current tax recoverable 16 8,149,906 777,823
35,660,852 7,874,735
Total assets 60,239,915 7,886,533
Current liabilities
Trade and other payables 17 4,772,167 351,610
Lease liabilities 18 96,172 -
4,868,339 351,610
Net current assets 30,792,513 7,523,125
Non-current liabilities
Lease liabilities 18 486,630 -
Deferred tax liabilities 19 18,766,424 431
19,253,054 431
Total liabilities 24,121,393 352,041
Net assets 36,118,522 7,534,492
Equity
Called up share capital 22 5,666,665 1,000,000
Share premium account 23 35,570,411 7,808,660
Other reserves 450,000 450,000
Share option reserve 24 353,550 97,763
Currency translation reserve 25 580,996 549
Retained earnings (6,503,100) (1,822,480)
Total equity 36,118,522 7,534,492
The financial statements were approved by the board of directors
and authorised for issue on 22 March 2022 and are signed on its
behalf by:
..............................
Helge Hammer
Chief Executive
Statement of changes Share Share premium Share Currency Other Retained Total
in equity capital account option translation reserves earnings
As at 31 December reserve reserve
2021
Notes GBP GBP GBP GBP GBP GBP GBP
GROUP
Balance at 1
January 2020 1,000,000 7,808,660 - 25 450,000 (196,301) 9,062,384
Period ended
31 December
2020:
Loss for the
period - - - - (1,626,179) (1,626,179)
Other
comprehensive
income - - - 524 - - 524
Credit to
equity for
equity
settled
share-based
payments - - 97,763 - - - 97,763
Balance at 31
December 2020 1,000,000 7,808,660 97,763 549 450,000 (1,822,480) 7,534,492
Year ended 31
December 2021:
Loss for the
year - - - - - (4,680,620) (4,680,620)
Other
comprehensive
income - - - 580,447 - - 580,447
Issue of share
capital 22 4,666,665 30,333,334 - - - - 34,999,999
Credit to
equity for
equity
settled
share-based
payments - - 255,787 - - - 255,787
Costs of share
issue - (2,571,583) - - - - (2,571,583)
Balance at 31
December 2021 5,666,665 35,570,411 353,550 580,996 450,000 (6,503,100) 36,118,522
Consolidated statement of cash flows 2021 2020
for the Period to 31 December 2020
Notes GBP GBP GBP GBP
GROUP
Cash flows from operating activities
Cash absorbed by operations 29 (4,197,318) (2,164,648)
Tax paid 1,429,635 (23,533)
Net cash outflow from operating
activities (2,767,683) (2,188,181)
Investing activities
Purchase of exploration and
evaluation assets (26,513,457) -
Tax refund relating to investing
activity 17,173,053 -
Purchase of property, plant and
equipment (25,769) (12,359)
Interest received 11,412 18,736
Net cash (used in)/generated
from investing activities (9,354,761) 6,377
Financing activities
Issue of ordinary shares 32,428,416
Interest paid (484,527) -
Loan facility fees (604,085) -
Net cash generated from/(used
in) financing activities 31,339,804 -
Net increase/(decrease) in cash
and cash equivalents 19,217,360 (2,181,804)
Cash and cash equivalents at beginning
of year 7,016,199 9,197,479
Foreign exchange 48,508 524
Cash and cash equivalents
at end of year 26,282,067 7,016,199
Relating to:
Bank balances and short term
deposits 26,282,067 7,021,105
Credit cards - (4,906)
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 5(th) Floor, One
New Change, London, England, EC4M 9AF.
2. Accounting policies
2.1. Basis of preparation
The financial statements have been prepared in accordance with
International Financial Reporting Standards (IFRS) as adopted for
use in the United Kingdom and with those parts of the Companies Act
2006 applicable to companies reporting under IFRS, except as
otherwise stated.
The 2021 Annual Report was approved by the Board of Directors on
21(st) March 2022. 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. The auditors
report was unqualified and did not contain statements under s498(2)
or (3) Companies Act 2006, nor did they contain a material
uncertainty in relation to going concern.
The financial statements of Longboat Energy plc and the Company
have been prepared in accordance with International Reporting
Standards (IFRS) in conformity with the requirements of the
Companies Act 2006.
The financial statements have been prepared on the historical
cost basis.
2.2. Going concern
The Directors, having considered cash flow forecasts,
sensitivities and stress tests and undertaken careful enquiry, are
of the opinion that the Group has adequate working capital to
continue its operations and meet its liabilities and commitments
for a period of at least the next 12 months. Accordingly, the
directors have made an informed judgement to continue to adopt the
going concern basis of accounting in preparing the annual financial
statements. In forming their assessment, the Directors have
carefully considered potential risks and uncertainties associated
with the Group's business model and additionally the continuing
conflict in Ukraine and associated international sanctions on
Russia.
The forecasts indicate that sufficient liquidity is maintained
across the going concern period and have been prepared on the basis
of committed exploration expenditure and budgeted operating costs,
continuation of the Norwegian tax refund arrangements based on
proposals issued by the Norwegian Ministry of Finance and the
continued availability of draw down under the EFF in 2022 and
2023.
In considering the continued access to the EFF, the Directors
(and the EFF lending banks based on enquiries made by the
Directors) considered written assurances from the Norwegian
Ministry of Finance that the existing security structure of the tax
refunds will be preserved for 2022, which will enable the EFF to
continue to be available. Whilst an element of inherent uncertainty
regarding the availability of the EFF remains until the legislative
process is complete, the assurances received from the Norwegian
Ministry of Finance are such that the Directors consider the risks
of the security structure not being preserved for 2022 to be
remote. Confirmation of the continued availability of tax refunds
as security for the EFF is anticipated when details of the new
Norwegian tax regime are published. In March 2022 Longboat made its
first drawing of NOK 15 million under the EFF. The Directors
believe this addresses the material uncertainty associated with
being able to draw down under the EFF during 2022 that existed and
was highlighted in the 2021 interim results.
The Ministry of Finance has not yet confirmed if the pledge will
continue in 2023, however, the bulk of the Group's committed
E&A expenditure is scheduled for the current year and
sensitivity scenarios in which no draw downs are available in 2023
demonstrate that sufficient liquidity is retained for at least 12
months from the date of approval of the financial statements. The
Directors have obtained legal advice which confirms that
contractual repayment terms of amounts drawn down in 2022 would be
unaffected by an adverse revision to the security package in 2023.
The Directors have further considered combination stress case
scenarios in which exploration cost escalation is combined with
inability to access the EFF which indicates that liquidity is
retained until Q4 2023, however, the Directors are at a well
progressed stage with lending banks regarding alternate facilities
being available should they be required.
Having considered the forecasts the Directors consider that the
Group will have sufficient liquidity and no material uncertainties
are considered to exist in respect of going concern.
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.
Exploration and evaluation assets (note 6 and 12)
Judgement is required to determine whether impairment indicators
exist in respect of the Group's exploration assets recognised in
the statement of financial position. The Group has to take into
consideration whether the assets have suffered any impairment,
taking into consideration the results of the drilling to date, and
the likelihood of reserves being found. The Group relies upon
information from third parties to take these decisions, and can be
subject to change if future information becomes available. At 31
December 2021 the Group determined that impairment of GBP6.9
million was required in respect of the Mugnetind licence detailed
in note 6 and 12. Judgment was further exercised in evaluating the
extent to which an impairment indicator existed at year end in
respect of the Ginny/Hermine licence however based on the timing of
substantive drilling post year end and the continued evaluation of
the well no impairment indicator was considered to exist.
Share-based payments (note 25)
Estimation was required in determining inputs to the share-based
payment calculations including share price volatility as detailed
in note 25.
The fair value of the options were determined by an external
valuation provider using an industry accepted pricing model. For
the July and September 2020 awards, the vest date calculation
required judgment to determine the point at which the Group and
recipients had a shared mutual understanding of the terms of the
awards. 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 awards has been spread over the vesting period which commenced
at IPO. For the awards issued during 2021, the vesting period was
seen to commence on date of issue.
Cost Allocation
The issue of new shares needs to be treated in accordance with
IAS 32. According to IAS 32, the costs of issuing new shares and a
stock market listing should be accounted for as follows:
-- Incremental costs that are directly attributable to issuing new
shares should be deducted from equity, share premium, (net of
any income tax benefit) - IAS 32.37; and
-- Costs that relate to the stock market listing, or are otherwise
not incremental and directly attributable to issuing new shares,
should be recorded as an expense in the statement of comprehensive
income.
The directors exercised judgement in allocation of the costs
that relate to both share issuance and listing. These were
allocated between those functions on a rational and consistent
basis. In the absence of a more specific basis for apportionment,
an allocation of common costs based on the proportion of new shares
issued to the total number of (new and existing) shares listed is
an acceptable approach. The total costs that were deducted from
share premium were GBP2,572k. These are all directly attributable
to the issue with the remainder of the costs (GBP451k) being
expensed as they were related but not directly attributable. These
are accounted for through administrative expenses in the Statement
of Comprehensive Income.
Expected credit loss (note 16)
Determining an expected credit loss on an intercompany loan for
an exploration business is very subjective, as unlike a financial
institution there is no default credit history on a loan book to a
portfolio of customers. This is exploration and one successful well
would have the ability to provide the necessary value ultimately to
repay any intercompany loans. The next three wells are important
wells and are some of the larger wells in the portfolio.
Consequently, the directors have determined a provision equivalent
to 25% of the loan value is appropriate based on assessment of
scenarios related to well success factors.
4. Employees
GROUP
The average monthly number of persons (including directors) employed
by the group and company during the year was:
2021 2020
Number Number
Executive Directors 3 2
Non-Executive Directors 4 4
Staff 4 2
Total 11 8
Their aggregate remuneration comprised:
2021 2020
GBP GBP
Wages and salaries 1,703,062 646,485
Social security costs 245,771 82,826
Pension costs 133,047 41,782
Foreign currency gains (33,844) -
Share based payment charge 255,737 97,763
2,303,773 868,856
Foreign currency gains arise on wages and salaries due to one of
the executive directors salaries being declared in GBP and paid
in NOK.
The remuneration of the highest paid director is shown below.
Taxable Annual
Salary Benefits Bonus Pension Total
Helge Hammer 231,099 16,890 55,514 - 303,504
5 Investment income
GROUP 2021 2020
GBP GBP
Interest income
Bank deposits 11,412 18,736
Total interest income for financial assets that are not held
at fair value through profit or loss is GBP11,412 (2020:
GBP18,736).
6 Operating loss
GROUP 2021 2020
GBP GBP
Operating loss for the year is stated after
charging/(crediting):
Exchange losses 151,369 28,037
Fees payable to the company's auditor for
the
audit of the company's financial
statements 36,190 36,170
Other assurance services 126,000 16,000
Subsidiary audit fees 4,190 4,170
Depreciation of property, plant and
equipment 30,057 2,767
Costs associated with share issue 451,000 -
Share-based payments 255,787 97,763
Executive Director's remuneration 799,860 226,024
Non-Executive Director remuneration 262,938 230,541
Wages and salaries 640,264 150,719
Pensions and payroll taxes 344,924 124,608
Operating leases less than 12 month term 77,815 96,519
7 Auditor's remuneration
GROUP 2021 2020
Fees payable to the group's auditor and GBP GBP
associates:
For audit services
Audit of the financial statements of the
group 36,190 36,170
During the year the auditor provided non-audit services of
GBP110,000
in their role as Reporting Accountant in relation to the work
on the admission to AIM and GBP16,000 (2020: GBP16,000)
relating
to the interim review.
8 Finance costs
2021 2020
GROUP GBP GBP
Interest on bank overdrafts and loans 484,527 -
The Group has entered into a rolling exploration funding
facility
with 1 SR-Bank ASA and ING Bank N.V. in Norway which will
allow
the Group to receive funding for exploration activities to
take
place. The loan interest charged for the facility is a margin
of 2.50% p.a. plus NIBOR. For the undrawn loan amount, a
commitment
fee equal to 40% of the margin is charged.
9 Exploration and evaluation expenses
2021 2020
GROUP GBP GBP
Amounts written off on exploration activity (6,399,134) -
During the year, the Group acquired working interests in
seven
exploration wells on the Norwegian Continental Shelf, which
completed
on 1 September 2021.
During the year, the evaluation of the licences was
completed,
and it was determined that the Mugnetind well was dry,
therefore
the Directors have evaluated the potential future cashflows
from
that well and future licence prospectivity, and have decided
to write off the value of the well and associated licence
costs.
Further information in respect of subsequent events can be
found
in note 28.
10 Income tax expense
2021 2020
GROUP GBP GBP
Current tax
Foreign tax on losses for the current
period (25,971,588) (754,708)
Deferred tax
Origination and reversal of temporary
differences 19,059,826 419
Total tax (credit) (6,911,762) (754,289)
The charge for the year can be reconciled to the loss per the
income statement as follows:
2021 2020
GBP GBP
Loss before taxation (12,172,830) (2,380,992)
Expected tax credit based on a corporation
tax
rate of 19.00% (2020: 19.00%) (2,312,838) (452,284)
Effect of expenses not deductible in
determining
taxable profit 581,294 29,421
Effect of overseas tax rates 1,463,583 (16,696)
Deferred tax not recognised 442,003 439,559
Foreign taxes and reliefs (6,911,762) (754,289)
Reameasurement of deferred tax for changes
in
tax rates (172,264) -
Fixed asset differences (1,778) -
Taxation credit for the year (6,911,762) (754,289)
Unused tax losses in the UK on which no deferred tax asset has
been recognised as at 31 December 2021 was GBP2,871,071 (2020:
GBP1,288,521) and the potential tax benefit was GBP717,768 (2020:
GBP439,559). 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.
The current tax (rebate) of GBP 25.9 million (NOK 306.3 million)
represents what has been paid out during 2021 and will be paid out
during 2022 according to Norwegian Tax Legislation. As per 31
December 2021 GBP 18.5 million (NOK 209.1 million) has been
refunded, leaving GBP 8.2 million (NOK 97.2 million) to be paid
during 2022. The deferred tax charge represents the tax portion on
capitalised intangibles being deductible for tax purposes.
11 Earnings per share
GROUP 2021 2020
GBP GBP
Number of shares
Weighted average number of ordinary shares
for basic earnings per share 36,082,191 10,000,000
Earnings
Earnings for basic and diluted earnings per
share being net profit attributable to equity
shareholders of the group for continued operations (4,680,620) (1,626,179)
Basic and diluted earnings per share (expressed in pence)
From continuing operations (12.97) (16.26)
Basic earnings per share is calculated by dividing the earnings
attributable to ordinary shareholders by the weighted average
number of shares outstanding during the period.
Diluted earnings per share is calculated using the weighted
average number of shares adjusted to assume to conversion of
all dilutive potential ordinary shares. 2,281,667 (2020: nil)
of share options are not included because they are anti-dilutive.
12 Exploration and evaluation assets
GROUP GBP
Cost
Additions - purchased 29,716,850
Foreign currency adjustments 671,038
Exploration write off (6,399,134)
At 31 December 2021 23,988,754
Carrying amount
At 31 December 2021 23,988,754
During the year, the Group acquired interests in seven exploration
licences on the Norwegian Continental Shelf, which completed
on 31 August 2021.
During the year, the evaluation of the licences was completed,
and it was determined that the Mugnetind well was dry, therefore
the Directors have evaluated the potential future cashflows from
that well and future licence prospectivity, and have decided
to write off the value of the well and associated licence costs.
There have been no post balance sheet events to indicate any
further indicators of impairment that were in place at the year
end
13 Property, plant and equipment
Right of Fixtures Computers Total
use assets and fittings
GROUP GBP GBP GBP GBP
Cost
At 1 January 2020 - - 2,245 2,245
Additions - - 12,360 12,360
At 31 December 2020 - - 14,605 14,605
Additions 580,044 3,340 37,869 621,253
Disposals - - (15,322) (15,322)
Foreign currency adjustments - - (119) (119)
At 31 December 2021 580,044 3,340 37,033 620,417
Accumulated depreciation and impairment
At 1 January 2020 - - - -
Charge for the year - - 2,767 2,767
Foreign currency adjustments - - 40 40
At 31 December 2020 - - 2,807 2,807
Charge for the year 20,015 167 9,875 30,057
Eliminated on disposal - - (2,050) (2,050)
Foreign currency adjustments (680) - (26) (706)
At 31 December 2021 19,335 167 10,606 30,108
Carrying amount
At 31 December 2021 560,709 3,173 26,427 590,309
At 31 December 2020 - - 11,798 11,798
14 Inventories
2021 2020
GROUP GBP GBP
Materials and supplies 92,798 -
Closing inventories are equal to their net realisable value.
15 Trade and other receivables
2021 2020
GROUP GBP GBP
Trade receivables 22,662 -
Taxes recoverable 81,737 22,161
Other receivables 40,462 -
Prepayments 991,220 53,646
1,136,081 75,807
The directors consider that the carrying amount of trade and
other receivables approximates to their fair value.
16 Current tax recoverable
2021 2020
GROUP GBP GBP
Current tax receivable 8,149,906 777,823
17 Trade and other payables
2021 2020
GROUP GBP GBP
Trade payables 580,084 129,713
Accruals 2,753,202 115,309
Social security and other taxation 239,922 94,850
Other payables 1,198,959 11,738
4,772,167 351,610
18 Lease liabilities
GROUP
The Group has lease contracts for buildings used in its
operations.
The Group has agreed a new lease for its Stavanger office which
was signed in September 2021. The Group's obligations under its
leases are secured by the lessor's title to the leased assets.
Set out below are the carrying amounts of right of use assets
recognised and the movements during the period:
2021
GBP
At 1 January 2021 -
Additions 585,706
Depreciation charge for the year (20,015)
Foreign exchange (4,982)
At 31 December 2021 560,709
Set out below are the carrying value of lease
liabilities
and the movements.
2021
GBP
At 1 January 2021 -
Additions 585,706
Interest 2,758
Foreign exchange (5,662)
At 31 December 2021 582,802
GBP
Within one year 96,172
In two to five years 486,630
582,802
Maturity analysis GBP
Within one year 111,799
In two to five years 514,273
Total undiscounted liabilities 626,072
Future finance charges and
other adjustments (43,270)
Lease liabilities in the financial
statements (582,802)
Amounts recognised in profit or loss GBP
include
the following:
Depreciation expense of right of use
assets 19,335
Foreign exchange on depreciation 680
Interest expense for right of use assets 2,758
19 Deferred taxation
GROUP
The following are the deferred tax liabilities and assets
recognised
and movements thereon during the current and prior reporting
period.
ACAs
GBP
Deferred tax balance at 1 January 2020 -
Deferred tax movements in prior year
Differences in tax basis for depreciation in Norway 431
Deferred tax liability at 1 January 2021 431
Deferred tax movements in current year
Differences in tax basis for offset of tax losses in
Norway 19,059,825
Foreign exchange (293,832)
Deferred tax liability at 31 December 2021 18,766,424
Deferred tax assets and liabilities are offset in the financial
statements only where the company has a legally enforceable right
to do so.
The Group has tax losses that arose within Longboat Energy Norge
AS that are available indefinitely for offsetting against future
taxable profits of that entity. These have been recognised as
a deferred tax asset on the basis that there are future taxable
profits expected within that entity which will allow it to be
offset.
The Group has not recognised a deferred tax asset within Longboat
Energy plc, as there is not evidence to support their
recoverability
in the near future.
20 Financial risk management
The Group 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
situation of the Group. In addition, the Group is subject to
credit risks.
The Group 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 Group's risk management processes are based are designed
to ensure that the risks are identified and analysed across
the Group. They also aim for a suitable limitation and control
of the risks involved, as well as their monitoring. The Group
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 Group, credit and default risks are concentrated in the
financial institutions in which it places cash deposits.
The Group's policy is to place its cash with banks with an
appropriate credit rating in accordance with the Company's
Treasury Risk Management Policy.
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 GBP26,345,191
at the balance sheet date, of which GBP26,282,067 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 Group 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 Group's
liquid resources, the Group would seek confirmation of the
continuation of the policy and the raising of further financing
at a shareholder general meeting.
At 31 December 2021, the Group has cash on deposit of GBP26,282,067
(2020: GBP7,021,104).
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 Group is exposed to interest rate risk on cash held on
deposit at banks. Interest income for the year to 31 December
2021 was GBP11,412 (2020: GBP18,736). These accounts are maintained
for liquidity rather than investment, and the interest rate
risk is not considered material to the Group.
Currency risks
The Group operates in the UK and Norway, incurs expenses in
Sterling, United States Dollars and Norwegian Kroner ("NOK"),
and holds cash in sterling, US Dollars and NOK. The Group incurs
some expenditure in foreign currency when the investment policy
requires services to be obtained overseas. The foreign exchange
risk on these costs is not considered material to the Group.
The Group's exposure to foreign currency risk at the end of the
reporting period is summarised below. All amounts are presented
in GBP equivalent.
2021
GBP
Cash and cash equivalents 11,804,980
Trade and other receivables 1,104,580
Trade and other payables (4,693,250)
Lease liabilities (582,803)
Net exposure 7,633,507
Foreign currency gains and losses were not material in 2020 and
therefore have not been disclosed.
Sensitivity analysis
As shown in the table above, the Company is exposed to changes
in exchange rates through its balances held in non-GBP. The
table below shows the impact in GBP on pre-tax profit and
loss of a
10% increase/decrease in the exchange rates, holding all other
variables constant.
2021
GBP
Exchange rate increases by 10% 848,167
Exchange rate decreases by 10% (693,955)
21 Retirement benefit schemes
GROUP
2021 2020
Defined contribution schemes GBP GBP
Charge to profit or loss in respect of defined
contribution schemes 133,047 41,782
The Group does not operate any defined benefit schemes.
22 Share capital
GROUP
2021 2020 2021 2020
Ordinary share capital Number Number GBP GBP
Issued and fully paid
Ordinary of 10p each
of 10p
each 56,666,665 10,000,000 5,666,665 1,000,000
On 10 June 2021 46,666,666 Ordinary Shares were allotted at 75p
per Ordinary Share. This brought the total share capital to 56,666,666
ordinary shares.
23 Share premium account
2021 2020
GBP GBP
At the beginning of the year 7,808,660 7,808,660
Issue of new shares 30,333,334 -
Costs of share issue (2,571,583) -
At the end of the year 35,570,411 7,808,660
24 Share option reserve
2021 2020
GBP GBP
At the beginning of the year 97,763 -
Arising in the year 255,787 97,763
At the beginning and end of the year 353,550 97,763
During the year, Longboat Petroleum plc operated three share
incentive schemes: the Founder Incentive Plan (FIP), the Long
Term Incentive Plan (LTIP) and the Co-investment plan (CIP).
Details of the schemes are summarized below:
Founder Incentive
Plan
Under the FIP, the founders are eligible to receive 15% of the
growth in returns of the Company from its Admission to AIM in
November 2019 over a five year period. The awards are expressed
as a percentage of the total maximum potential award, being
10% of the Company's issued share capital.
Should a hurdle of doubling of the Total Shareholder Return
("TSR") over the five-year period be met, the awards will be
converted into nil cost options over ordinary shares of 10p
each in the share capital Company. The hurdle is adjusted for
any capital raises that occur during the performance period,
including the share placing of 10 June 2021, and for any additional
value to accrue to the founders, those placing shares will need
to increase by the same hurdle but as adjusted for time to reflect
the shorter period between the date of the placing and the original
measurement dates in years three to five.
For the purpose of determining the fair value of an award, the
following assumptions have been applied and a valuation calculation
run through the Monte Carlo Model:
Grant date - 3 July 2020 and 24 GBP
September
2020
Weighted average
share price at
grant date 0.78
TSR performance -
Risk free rate -0.08%
Dividend yield -
Volatility of
Company share
price 50.44%
The risk-free rate assumption has been set as the yield as at
the calculation date on zero coupon government bonds of a term
commensurate with the remaining performance period.
The historical 3 year volatility of the constituents of the
FTSE AIM Oil & Gas supersector, as of the date of grant, was
used to derive the volatility assumption.
The weighted average exercise price of outstanding options is
nil.
The weighted average remaining contractual life as at 31 December
2021 is 27 months.
Co-Investment Plan (CIP) awards
The awards granted under the CIP are nil cost options to acquire
Matching Sharesbeing ordinary shares of 10p each in the share
capital of the Company.. The awards are subject to a share price
performance condition, where the share price growth over the
vesting period must be greater than 30%. No options will vest
if this condition is not met.
For the purpose of determining the fair value of an award, the
following assumptions have been applied and a valuation calculation
run through the Monte Carlo Model:
Grant date 02-Jul-21
Performance period
(years) 3
Share price at
grant
date GBP0.70
Exercise price GBP0.10
Risk free rate 15.00%
Dividend yield 0%
Volatility of Company
share price 51.00%
Fair value per
award GBP0.38
2021 Weighted average
fair
No. value (GBP per
share)
Outstanding at
beginning
of the period - -
Granted during the
period 639,900 GBP0.38
Forfeited during the
period - -
Exercised during the
period - -
Expired during the
period - -
Outstanding at the
end
of the period 639,900 -
Exercisable at the
end
of the period - -
The weighted average exercise price of outstanding options is
GBP0.10.
The weighted average remaining contractual life as at 31 December
2021 is 30 months.
Long Term Incentive
Plan
The awards issued under the LTIP are nil-cost options subject
to a performance condition.
For the purpose of determining whether the condition has been
met, the TSR of the Company is measured over the three year
performance period, commencing at the grant date. The return
index is averaged over the 30 dealing day period prior to the
start of the performance period and over the final 30 days of
the performance period.
The awards have been valued using the Monte Carlo model, which
calculates a fair value based on a large number of randomly
generated simulations of the Company's TSR.
For the purpose of determining the fair value of an award, the
following assumptions have been applied:
Grant date 01 Sept 2 July 11 Oct 8 Nov 21
20 21 21
Weighted average share
price at grant date 0.885 0.72 0.78 0.705
TSR performance - - - -
Risk free rate -0.1% 0.15% 0.60% n/a
Dividend yield 0.0% 0.0% 0.0% 0.0%
Volatility of Company share
price 58.00% 51.00% 50.00% n/a
Weighted average
fair value GBP0.33 GBP0.33 GBP0.36 GBP0.33
The risk-free rate assumption has been set as the yield as at
the calculation date on zero- coupon
government bonds of a term commensurate with the remaining performance
period.
The historical three year volatility of the constituents of the
FTSE AIM Oil & Gas supersector , as of the date of grant, was
used to derive the volatility assumption.
Opening share awards 40,000
Awarded in the period 1,375,100
Exercised during the period -
Expired during the period (98,600)
Outstanding at the end
of the period 1,316,500
Exercisable at the end
of the period -
The weighted average exercise price of outstanding options is
GBP0.10.
The weighted average remaining contractual life as at 31 December
2021 is 27 months.
25 Currency translation reserve
GROUP
2021 2020
GBP GBP
At the beginning of the year 549 25
Currency translation differences 580,447 524
At the end of the year 580,996 549
The currency translation reserve relates to the movement in translating
operations denominated in currencies other than sterling into
the presentation currency.
26 Related party transactions
On 10 June 2021, the Company announced a conditional
placing
and subscription for New Ordinary Shares (the
"Fundraising")
raising gross proceeds of GBP35 million. The following
related
parties subscribed for shares at a price of 75 pence per
share
as set out below:
Blackrock Investment Management 7,000,258
Graham Stewart 200,000
Helge Hammer 506,667
Jonathan Cooper 200,000
Nicholas Ingrassia 160,000
Jorunn Seatre 26,667
Blackacre Trust No 1 100,000
Blackacre Trust No 2 100,000
Remuneration of key management personnel
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
4 to the accounts.
Other information
Directors' interests in the shares of the Company in the
current
and prior period, including family interests, were as
follows:
Ordinary shares
Helge Hammer 837,023
Jonathan Cooper 333,432
Graham Stewart 350,000
Jorunn Saetre 51,667
Nick Ingrassia 179,023
Julian Riddick
(PDMR) 272,648
Hilde Salthe (PDMR) 11,805
Under IAS 24 section 4, all intragroup transactions which
have
been eliminated on consolidation are exempt from being
disclosed
as the Group have prepared consolidated financial
statements.
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 Maximum percentage
Percentage entitlement
entitlement of growth Maximum percentage
of Initial in value from of issued share
Award pool IPO capital
% % %
Helge Hammer 23.50% 3.53% 1.48%
Graham Stewart 19.75% 2.96% 0.62%
Jonathan Cooper 19.13% 2.87% 0.59%
Julian Riddick 18.50% 2.78% 0.48%
The Group does not have one controlling party.
27 Subsequent Events
Post the year end, the results of the Equinor operated Ginny and
Hermine well were announced on 4th February 2022 with the well
failing to find hydrocarbons. The operator is currently assessing
if there is further prospectivity on the licence.
Post the year end Russia invaded the Ukraine. The Board has assessed
the risks to the Company associated with the Russian invasion
of Ukraine and, unless the conflict escalates into a conflict
between Russia and NATO, has concluded that there are no direct
consequences to the Company although there are indirect risks
as outlined, in the Principal Risks and Uncertainties section,
notably as regards commodity prices, FX rates and the impact on
the M&A market.
28 Cash absorbed by operations
2021 2020
GROUP GBP GBP
Loss for the year after tax before
other comprehensive
income (4,680,620) (1,626,179)
Adjustments for:
Taxation credited (6,911,763) (754,289)
Exploration write off 6,399,134 -
Release of prepaid bank fees 103,517 -
Investment income - (18,736)
Interest payable 484,527 -
Interest receivable (11,412) -
Time writing adjustments (448,071) -
Depreciation 27,982 2,807
Other - 431
Equity settled share based payment
expense 255,736 97,763
Movements in working capital:
Increase in inventories (92,798) -
Decrease in trade and other
receivables 104,906 7,192
Increase in trade and other payables 571,544 126,363
Cash absorbed by operations (4,197,318) (2,164,648)
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
RNS may use your IP address to confirm compliance with the terms
and conditions, to analyse how you engage with the information
contained in this communication, and to share such analysis on an
anonymised basis with others as part of our commercial services.
For further information about how RNS and the London Stock Exchange
use the personal data you provide us, please see our Privacy
Policy.
END
FR FIFLIVEIFFIF
(END) Dow Jones Newswires
March 22, 2022 03:00 ET (07:00 GMT)
Longboat Energy (LSE:LBE)
Historical Stock Chart
From May 2024 to Jun 2024
Longboat Energy (LSE:LBE)
Historical Stock Chart
From Jun 2023 to Jun 2024
