TIDMLBE

RNS Number : 6535Z

Longboat Energy PLC

22 September 2020

Longboat Energy PLC

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

Results for Half Year Ended 30 June 2020

London, 22 September 2020 - Longboat Energy, established by the former management team of Faroe Petroleum plc to build a significant North Sea-focused E&P business, announces its half-year results for the six months ended 30 June 2020.

Highlights

Financial Summary

-- Cash reserves of GBP8.1 million at 30 June 2020 with no debt (31 Dec 2019: GBP9.2 million) which allows the Company ample headroom to continue to pursue its business development activities.

-- Low fixed running costs of GBP125k per month, together with low variable due diligence costs triggered by the impact of COVID-19 on the A&D market, allows the Company significant capacity to pursue attractive opportunities as activity picks up.

Business Summary

-- During Q1 2020, the Company was engaged in a number of processes to acquire portfolios with positive cash flow, 2P reserves and growth, with negotiations curtailed due to Covid-related market conditions.

-- As business and market activity returns, Longboat is actively leveraging relationships, testing creative and new business development ideas and is making good progress on several fronts.

-- Recently introduced Norwegian tax changes have lowered breakeven oil prices and increased Internal Rate of Return (IRR) for non-sanctioned projects which will accelerate new project developments and drilling plans. The impact of these changes allows Longboat to now consider modest exposure to Norwegian development assets in combination with a production acquisition.

Outlook

-- The Company's core strategy remains unchanged and the market dislocation presents an exciting opportunity as the backlog of transactions begins to unwind.

-- Many of the Majors and large E&P players in the North Sea have announced significant changes in strategic direction which will involve a substantial divestment of assets.

-- 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:

"We floated the business in November 2019 having identified an opportunity to build a new, North Sea-focused E&P business through value-accretive M&A transactions. At the beginning of the year, we were engaged in a number of opportunities but our business development activities were curtailed by the onset of the coronavirus pandemic as the sector entered a period of huge uncertainty and market volatility.

"Despite the challenging times, we see encouraging signs of recovery and have remained active throughout the period as we leverage the experience and creativity of our team and our industry relationships to generate business opportunities. As a result of policy changes and strategic shifts by existing players, we believe there will be increased opportunities to secure quality assets on attractive terms in the period ahead, and we remain focused on delivering the best possible deal for our shareholders."

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 
  Sara Powell 
  Ntobeko Chidavaenzi                    longboatenergy@fticonsulting.com 
 

OPERATIONAL REPORT FOR THE 6 MONTH PERIODED 30 JUNE 2020

CEO Introductory Statement

We floated Longboat on AIM last November having identified an opportunity to replicate the success of Faroe Petroleum by building a new, North Sea-based E&P business through value-accretive M&A transactions. Commodity prices had enjoyed a period of stability, and the M&A market was active and favourable for the buy side. These factors, together with Longboat's proximity to a number of potential transactions, positioned us well to launch the Company with a view to building significant shareholder value in short order. As we now know, the first half of 2020 heralded unprecedented changes to all aspects of society and the global economy with the energy sector particularly hard hit as we witnessed an historic fall in demand.

This initial period of uncertainty resulted in a number of our active opportunities being put on hold by vendors, as there was too large a gap between buyer and seller value expectations. However, commodity prices have begun to stabilise and this will narrow the gap between buyer and seller expectations and ultimately prove attractive for us as an asset acquirer.

Despite these challenging times, we have remained extremely active, leveraging strong relationships, testing new deal structures and ideas and continuing to pursue attractive business development opportunities. We believe the lack of M&A activity during the past six months and shifting strategies of the European Majors has created a backlog of transactions which will lead to an increase in deal activity in the months ahead. We remain confident in Longboat's strategy and, as we experience increasing levels of deal dialogue, believe we are entering an exciting period in which the Company will be well positioned to capitalise on any opportunities to secure attractive assets with material upside, on favourable terms.

Directors Statement

The Directors are pleased to present to shareholders the interim report and audited financial statements of Longboat Energy plc for the six-month period ended 30 June 2020. The Company was incorporated on 28 May 2019 and successfully admitted to AIM on 28 November 2019 and is currently an investment company, pending completion of its first oil and gas asset acquisition. The Company's time and resources are being deployed fully in meeting the Company's investment objectives as set out below.

Given the improved market conditions, the Company has arranged for these interim accounts to be audited so that in the event that a transaction is entered into and a re-admission document or prospectus required, the Company will have recent audited numbers available for inclusion.

Market Update

Oil & gas: This year's volatility in the oil market fundamentals has been unprecedented with a collapse in demand and an OPEC+ price war combining to create a significant over supply in April. In the short term, there is likely to be continued oil price volatility as authorities continue to control the Covid-19 virus with local and/or national lockdowns which will continue to impact demand. However, there is broad consensus amongst oil and gas analysts for an increasing oil price derived from an expectation that the market will become undersupplied, possibly from as early as 2021. This undersupply is driven by OPEC+, which has cut production significantly due to good compliance from its members, and an expectation that a rebound from US shale production will fade through a combination of base decline rates and lower activity and investment levels.

The recovery of oil demand has continued since its initial collapse in April, down by 21.8mb/d year on year. There is an expectation for this to continue with demand predicted to reach pre-Covid levels during 2022. Oil and gas capex cuts resulting from the pandemic are estimated to be around $180bn, which is in the order of 30% year-on-year. Balancing oil supply with demand, to meet the supply shortfall, in the medium-term will require a significant shale recovery and another investment cycle in offshore projects. The recent fallout from the Covid-19 pandemic makes capital allocation to such projects more challenging as i) capital is scarce and balance sheets have been weakened, ii) companies have tightened criteria for investment, in particular projects need to be more robust at lower oil prices and iii) the energy transition has moved up the agenda, and tight finances come at a time of aggressive decarbonisation strategies and the beginning of a significant shift in capital allocation by the majors. This will ultimately result in lower ongoing capex levels and fewer projects being sanctioned. 2020 capex across the industry will be the lowest in 15 years and will remain low in 2021. The recognised oil and gas consultancy firm Wood Mackenzie estimates an increase in conventional E&P spend will need an oil price in excess of US$55bbl.

Longboat recognises the need for energy transition to lower carbon emissions in order to meet the goals of the Paris Agreement, however, hydrocarbons will continue to play a vital role in the global energy mix as we move towards net zero. As long as demand for hydrocarbons continues to be significant, it will be crucial to maximise, responsibly, economic recovery value from North Sea production, minimise greenhouse gas emissions and reduce reliance on hydrocarbon imports. The basin has lower levels of carbon intensity from production compared with many other oil producing regions and is at the forefront of research, development and application of emissions reduction technologies such as carbon capture and storage. Thunder Said Energy, the energy technology and transition consultancy, estimates the size of the oil market in 2050 to be 85Mb/d , assuming that new technologies eliminate 45Mb/d of prospective oil demand.

Acquisition and Development (A&D): In March, the market A&D dynamics were altered significantly as a consequence of the Covid-19 outbreak and the subsequent commodity price collapse. In the short term, companies have been fully focused on operational matters and reducing both capital and operational expenditure to mitigate the impact of the oil price crash, while the plans for A&D activities were put on hold in many cases. According to Wood Mackenzie, 2020 has so far recorded the lowest number of deals in any quarter or half-year. The monthly average spend on transactions has been just 5% of the run rate of the last 15 years. The few oil and gas deals that have completed in recent months were generally agreed before the price collapse before becoming subject to re-negotiation. During this time, Longboat has continued its business development activities apace although these have also been impacted by the downturn with a number of opportunities that were relatively advanced, put on hold.

Whilst the current situation has slowed down M&A activity, the market dislocation presents an exciting opportunity for Longboat in the forthcoming period as the backlog of transactions begins to be unwound. Many of the Majors and large E&P players in the North Sea have announced significant changes in strategic direction which will require a substantial divestment of assets in order to be delivered. This is expected to result in an increasing number of material opportunities for Longboat which continues to benefit from a clean capital structure and strong shareholder support.

Norwegian Fiscal Stimulus

In June, the Norwegian government approved temporary tax reforms for the offshore oil and gas industry, which significantly improve the economics of new development projects and provide stimulus for companies to make final investment decisions. The tax changes include:

-- immediate expensing, for tax purposes, of capex with a 24% uplift (previously 20.8%) against the special tax (whilst expensing against corporate tax remains 6 years);

-- these temporary changes apply to projects with development plans submitted before the end of 2022 and for all capex incurred to the year of the commencement of production; and

-- tax losses incurred during 2020 and 2021 will be paid out early, including the use of negative instalment tax payments "terminskatt".

These tax changes lower the breakeven prices for non-sanctioned development projects and it is estimated that they increase the associated economic resources offshore Norway from 5bn boe to 7bn boe (source Wittemann E&P Consulting). It is projected that whilst globally, budgets are being cut significantly, Norway will see up to $40bn of new developments, redevelopments and project upgrades brought forward.

Many new development projects are also being brought forward simultaneously for sanctioning as a result of the fiscal changes, forcing less-well financed, minority partners to consider trimming capex through active portfolio management. This has led Longboat to now also consider modest exposure to Norwegian development assets to take advantage of increased returns and accessibility to debt finance facilitated by the fiscal stimulus.

Financial Results

The period end cash position was GBP8,123,612, with no debt (31 December 2019: GBP9,204,257). The loss for the period was GBP1,111,571. The fixed running costs remain relatively low at approximately GBP125,000 per month. The largest costs since IPO, in the period ended 31 December 2019, were those associated with the IPO which totalled GBP741,340. Salaries and pension costs in the six month period were GBP350,079. Other significant costs were those associated with the analysis and review of potential transactions, such as consultant costs of GBP273,132 and legal and professional fees of GBP160,786. Outsourced accounting fees were GBP69,000. The IFRS2 non-cash charge for the period in relation to the Founders' Incentive Plan was GBP52,185.

Acquisition Strategy

The investment objectives of the Company are to create a full-cycle North Sea E&P company in order to deliver significant value to investors. The Company's Board of Directors has excellent relationships across the oil and gas industry which it believes will provide the Company with unique access to deal opportunities.

Through focus on and investment in acquired assets, the Directors believe that they will be able to achieve the investment objectives of the Company and create value:

   --    by targeting assets that are non-core to existing owners; 

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

-- through more efficient operations, 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, field investment and near-field exploration. Longboat will focus its low-risk near-field exploration plans on good infrastructure access and the existence of nearby fields and discoveries.

The Company is targeting its initial acquisition to deliver asset(s) that are able to meet its investment criteria as well as provide an appropriate basis to build on the Company's investment objectives. Typical initial acquisition targets are likely 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 leveraged to add value.

An objective in any acquisition will be a focus on investments where the Directors believe that their expertise, knowledge and experience can be deployed to facilitate material growth and unlock inherent value.

It is likely that the Company's financial resources will be invested initially in either a small number of projects or one large investment, which may be deemed to be a reverse takeover under the AIM Rules. In every case, the Directors will mitigate risk by undertaking appropriate due diligence and transaction analysis. Any transaction constituting a reverse takeover under the AIM Rules will also require shareholder approval.

Any farm-ins to exploration assets are expected to be funded mainly in the form of equity. In the event of exploration discoveries, following successful appraisal and approval of a field development plan, it is intended that an appropriate level of debt would be raised to cover in part the financing of development of such assets. Portfolio management including divestment or part-divestment of discoveries that move into development will also be considered in order to balance and manage risk. Acquisitions of producing and near-producing assets are more likely to include an element of debt to equity gearing.

As a key strategic requirement the Company will, irrespective of the equity ownership acquired, take an active role in targeting work and investments in the acquired assets, in order to unlock their inherent value. In Norway the "see to duty", a central part of industry regulations, allows and requires a non-operating partner to have significant input into the asset partnership.

The Directors consider that as acquisitions are made, and new acquisition opportunities arise, further equity funding of the Company will be required.

Investing Policy

Under the AIM Rules (8.), the Company's 'investing policy', which is substantially reflected in the Acquisition Strategy, should be regularly notified and so is included in full in Note 12 to these accounts.

Outlook

Events year-to-date have been unprecedented causing deals under negotiation to be put on hold on several occasions, due to matters beyond Longboat's control.

As we progress further into the second half of the year, we have good reason to be increasingly optimistic about the M&A market and our ability to source and close attractive opportunities. While overall Covid-19 infection levels have begun to creep up again in Europe, hospitalisation and death rates are at relatively low levels as governments and authorities have become increasingly adept at using new measures to control the spread and impact of the pandemic. Central banks have also managed successfully to avert severe economic fallout and bring markets back from their previous lows through unprecedented financial and fiscal stimulus. Commodity prices have also stabilised somewhat through a combination of returning demand levels and OPEC support, with the medium term consensus view being for prices continuing to increase, both for oil and gas.

With business development again on sellers' agendas in the North Sea, we have recently strengthened our own reach into the market through the appointment of Nick Ingrassia to head up our Business Development activities. Nick has over 19 years' experience across a wide range of corporate roles in and around the oil & gas industry. Nick started his career in banking with roles at Morgan Stanley (energy investment banking) and RBS (structured energy lending & debt advisory) before joining the oil and gas industry, working in business development roles with Valiant Petroleum plc (sold to Ithaca Energy inc in 2013), Salamander Energy plc (sold to Ophir Energy plc in 2015) and Faroe Petroleum plc (sold to DNO in 2019).

Despite the market disruption in the first part of this year, and the resultant delays and postponements, we see the M&A market activity returning and remain confident of delivering value-accretive opportunities to our shareholders and building Longboat into a successful full-cycle North Sea E&P company.

On behalf of the board

Helge Ansgar Hammer

Director

21 September 2020

PRINCIPAL RISKS AND UNCERTAINTIES FACING THE BUSINESS FOR THE 6 MONTH PERIODED 30 JUNE 2020

The principal risks facing the Company were set out in the Company's annual report and accounts to 31 December 2019 and there has been one appreciable change in those risks, of which we are all aware.

The impact of Coronavirus on the global demand for oil and gas and the subsequent impact on oil and gas prices has been very evident in H1 2020, and in response we have seen the Majors downgrade their long-term commodity price assumptions. There exists a risk that there will be significant further outbreaks of Coronavirus across the world which may detrimentally impact the Company's ability to meet its Investing Policy, specifically due to delays in sales processes, the bridging of buyer / seller pricing expectations and its ability to access equity capital and debt.

When the Company meets its investment objectives and secures an acquisition, the Company's risk profile will change and a full statement of risks will be published in the subsequent Annual Report and accounts.

On behalf of the board

Helge Ansgar Hammer

Director

21 September 2020

DIRECTORS' RESPONSIBILITIES STATEMENT FOR THE 6 MONTH PERIODED 30 JUNE 2020

The directors are responsible for preparing the interim report in accordance with applicable law and regulations.

Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union. Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Group and of the profit or loss of the Group for that period. The directors are also required to prepare the financial statements in accordance with the rules of the London Stock Exchange for companies trading securities on AIM.

In preparing these financial statements, the directors are required to:

   --    select suitable accounting policies and then apply them consistently; 
   --    make judgements and accounting estimates that are reasonable and prudent; 

-- state whether they have been prepared in accordance with IFRSs as adopted by the European Union, subject to any material departures disclosed and explained in the financial statements; and

-- prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.

The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company's transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the financial statements comply with the requirements of the Companies Act 2006. They are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

Website publication

The directors are responsible for ensuring the annual and interim reports and financial statements are made available on a website. Financial statements are published on the company's website in accordance with legislation in the United Kingdom governing the preparation and dissemination of financial statements, which may vary from legislation in other jurisdictions. The maintenance and integrity of the company's website is the responsibility of the directors. The directors' responsibility also extends to the ongoing integrity of the financial statements contained therein.

INDEPENT AUDITOR'S REPORT TO THE MEMBERS OF LONGBOAT ENERGY PLC

Opinion

We have audited the non-statutory financial statements of Longboat Energy Plc (the 'Company') and its subsidiaries (the 'Group') for the six month period ended 30 June 2020 in accordance with our engagement letter dated 18 August 2020 which comprise the Consolidated Statement of Comprehensive Income, Consolidated Statement of Financial Position, Consolidated Statement of Changes in Equity, Consolidated Statement of Cash flows and notes to the financial statements, including a summary of significant accounting policies.

The financial reporting framework that has been applied in the preparation of the financial statements is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union.

In our opinion:

-- the financial statements give a true and fair view of the state of the Group's affairs as at 30 June 2020 and of the Group's loss for the period then ended;

-- the financial statements have been properly prepared in accordance with IFRSs as adopted by the European Union;

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the Company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC's Ethical Standard as applied to listed entities, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Conclusions relating to going concern

We have nothing to report in respect of the following matters in relation to which the ISAs (UK) require us to report to you where:

-- the Directors' use of the going concern basis of accounting in the preparation of the financial statements is not appropriate; or

-- the Directors have not disclosed in the financial statements any identified material uncertainties that may cast significant doubt about the Company's ability to continue to adopt the going concern basis of accounting for a period of at least twelve months from the date when the financial statements are authorised for issue.

Key audit matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) we identified, including those which had the greatest effect on: the overall audit strategy, the allocation of resources in the audit; and directing the efforts of the engagement team. This matter was addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on this matter.

 
Key audit matter                             How our audit responded to this 
                                              matter 
Share based payments 
The Company granted awards under                   Our audit procedures included 
 its Founder Incentive Plan on                      the following: 
 3 July 2020 that was previously 
 detailed in the IPO Admission                       *    We reviewed the report prepared by management's 
 Document.                                                external expert and, in conjunction with our own 
                                                          internal valuation experts, calculated our own 
 A share based payment of charge                          valuation of the awards independently. We held 
 of GBP52,185 has been recorded                           discussions with management's experts to understand 
 in the period by management in                           and evaluate the valuation methodology and inputs 
 respect of the awards as detailed                        used by the management expert. 
 in notes 3, 4 and 18 to the financial 
 statements. 
                                                     *    We assessed the objectivity and competence of 
 Management were required to exercise                     management's expert. 
 judgment and estimation when determining 
 the inputs to the valuation and 
 the accounting treatment of the                     *    We agreed the terms of the awards to supporting 
 awards. Management engaged an                            documentation and compared them to the IPO Admission 
 external valuation expert to assist                      Document. 
 with the valuation of the awards. 
 
                                                     *    We evaluated the accounting treatment applied against 
                                                          the requirements of IFRS. In doing so we considered 
                                                          management's judgment that the IPO Admission Document 
                                                          created sufficient mutual understanding of the terms 
                                                          of the awards prior to them being legally granted in 
                                                          July 2020. In doing so we reviewed the disclosures in 
                                                          the IPO Admission Document. 
 
 
                                                     *    We recalculated the share based payment charge for 
                                                          the period and agreed the charge to the ledger. 
 
 

Our application of materiality

Our materiality level was determined as GBP130,000 (FY 2019: GBP140,000) based on 1.5% of total assets. Total assets was considered to be the most relevant financial metric to users of the financial statements given the Group's cash balance is its principal asset with no current oil and gas operations.

We apply the concept of materiality both in planning and performing our audit, and in evaluating the effect of misstatements. We consider materiality to be the magnitude by which misstatements, including omissions, could influence the economic decisions of reasonable users that are taken on the basis of the financial statements. Importantly, misstatements below these levels will not necessarily be evaluated as immaterial as we also take account of the nature of identified misstatements, and the particular circumstances of their occurrence, when evaluating their effect on the financial statements as a whole.

Materiality for the one significant component of the Group was set at GBP123,500. This was the first period for which consolidated financial statements had been prepared.

Performance materiality is the application of materiality at the individual account or balance level set at an amount to reduce to an appropriately low level the probability that the aggregate of uncorrected and undetected misstatements exceeds materiality for the financial statements as a whole. Performance materiality was determined based on 75% of materiality being GBP97,500 (FY 2019: GBP105,000).

We agreed with the audit committee that we would report to the committee all individual audit differences identified during the course of our audit in excess of GBP2,400 (FY 2019: GBP2,700). We also agreed to report differences below these thresholds that, in our view, warranted reporting on qualitative grounds.

An overview of the scope of our audit

Our audit was scoped by obtaining an understanding of the Group and its environment, as well as assessing the risks of material misstatement in the financial statements at Group level. In approaching the audit, we considered how the Group is organised and managed. We assessed there to be one significant component being the parent company. This component was subject to a full scope audit and the audit was conducted by the Group audit team.

The remaining component of the Group was considered non-significant and was subject to analytical review procedures by the Group audit team.

Other information

The Directors are responsible for the other information. The other information comprises the information included in the Interim Report and financial statements, other than the financial statements and our auditor's report thereon. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.

In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement in the financial statements or a material misstatement of the other information. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

Responsibilities of Directors

As explained more fully in the statement of Directors' responsibilities set out on page 6, the Directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the Directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the Directors are responsible for assessing the Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Directors either intend to liquidate the Company or to cease operations, or have no realistic alternative but to do so.

Auditor's responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists.

Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

A further description of our responsibilities for the audit of the financial statements is located on the website of the Financial Reporting Council at: http://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.

 
Use of our report 
This report is made solely to the Group's members, as a body, in 
 accordance with Chapter 3 of Part 16 of the Companies Act 2006. 
 Our audit work has been undertaken so that we might state to the 
 Group's members those matters we are required to state to them in 
 an auditor's report and for no other purpose. To the fullest extent 
 permitted by law, we do not accept or assume responsibility to anyone 
 other than the Group and the Group's members, as a body, for our 
 audit work, for this report, or for the opinions we have formed. 
 
Ryan Ferguson (Senior Statutory Auditor) 
for and on behalf of BDO LLP                  21 September 2020 
 
Chartered Accountants 
Statutory Auditor                             55 Baker Street 
                                              London 
                                              W1U 7EU 
 

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE 6 MONTH PERIODED 30 JUNE 2020

 
                                                       6 months 
                                                       ended 30   From incorporation   From incorporation 
                                                           June           to 30 June       to 31 December 
                                                           2020                 2019                 2019 
                                                        audited            unaudited            unaudited 
                                        Notes               GBP                  GBP                  GBP 
 
Administrative expenses                             (1,118,850)              (4,058)              (198,051) 
 
 
 
Operating loss                            7         (1,118,850)              (4,058)              (198,051) 
 
Investment revenues                       6              10,719                    -                1,750 
 
 
 
Loss before taxation                                (1,108,131)              (4,058)              (196,301) 
 
Income tax expense                        9                   -                    -                    - 
 
 
 
Loss for the period                                 (1,108,131)              (4,058)              (196,301) 
 
 
 
Items that may be reclassified to profit 
 or loss 
Currency translation differences                        (3,440)                    -                   25 
 
 
 
Total items that may be reclassified to 
 profit or loss                                         (3,440)                    -                   25 
 
 
 
Total comprehensive loss                            (1,111,571)              (4,058)              (196,276) 
 
 
 
Earnings per share                        10 
Basic and diluted                                       (11.08)            (405,773)                 (9.52) 
 
 
 
Earnings per share is expressed in pence per share. 
 
The income statement has been prepared on the basis that all operations 
 are continuing operations. 
 
 

CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2020

 
                                                                        30 June     30 June   31 December 
                                                                           2020        2019          2019 
                                                                        Audited   Unaudited     Unaudited 
                                                          Notes             GBP         GBP           GBP 
 
Non-current assets 
Property, plant and equipment                              11             8,545           -         2,245 
 
 
 
Current assets 
Trade and other receivables                                14            74,383         223        83,104 
Cash and cash equivalents                                             8,123,612           -     9,204,257 
 
 
 
                                                                      8,197,995         223     9,287,361 
 
 
 
Total assets                                                          8,206,540         223     9,289,606 
 
 
 
Current liabilities 
 
Trade and other payables                                   17           203,542       4,280       227,222 
 
 
 
Total liabilities                                                       203,542       4,280       227,222 
 
 
 
Equity 
 
Called up share capital                                    15         1,000,000           1     1,000,000 
Share premium account                                      16         7,808,660           -     7,808,660 
Other reserves                                             16           450,000           -       450,000 
Currency translation reserve                               16           (3,415)           -            25 
Share based payment reserve                                18            52,185           -             - 
Retained earnings                                                   (1,304,432)     (4,058)       (196,301) 
 
 
 
Total equity                                                          8,002,998     (4,057)     9,062,384 
 
 
 
Total equity and liabilities                                          8,206,540         223     9,289,606 
 
 
 
The financial statements were approved by the board of directors 
 and authorised for issue on 21 September 2020 and are signed on 
 its behalf by: 
 
Helge Ansgar Hammer 
Director 
 
Company Registration No. 12020297 
 
 

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE 6 MONTH PERIODED 30 JUNE 2020

 
                            Share      Share      Currency     Share     Other   Retained      Total 
                          capital    premium   translation     based  reserves   earnings 
                                     account       reserve   payment 
                                                             reserve 
                Notes         GBP        GBP           GBP       GBP       GBP        GBP        GBP 
 
Balance at 28 
May 2019                        -          -             -         -         -          -          - 
 
Period ended 
30 June 2019 
Issue of share capital          1          -             -         -         -                     1 
Loss and total 
 comprehensive 
 income for the period          -          -             -         -         -    (4,058)      (4,058) 
 
 
 
Balance at 30 June 
 2019                           1          -             -         -         -    (4,058)      (4,057) 
 
 
 
Period ended 
31 December 
2019: 
Loss and total 
 comprehensive 
 income for the period          -          -             -         -         -  (192,243)    (192,243) 
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) 
Other 
comprehensive 
income: 
Currency translation 
 differences                    -          -            25         -         -          -         25 
 
 
 
Balance at 31 December 
 2019                   1,000,000  7,808,660            25         -   450,000  (196,301)  9,062,384 
 
 
 
 

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (CONTINUED) FOR THE 6 MONTH PERIODED 30 JUNE 2020

 
                           Share      Share      Currency      Share     Other      Retained         Total 
                         capital    premium   translation      based  reserves      earnings 
                                    account       reserve    payment 
                                                             reserve 
                Notes        GBP        GBP           GBP        GBP       GBP           GBP           GBP 
 
Period ended 
30 June 2020: 
Loss and total 
 comprehensive 
 income for 
 the period                    -          -             -          -         -   (1,108,131)     (1,108,131) 
Credit to 
 equity for 
 equity 
 settled 
 share-based 
 payments        18            -          -             -     52,185         -             -        52,185 
Other comprehensive 
 losses: 
Currency 
 translation 
 differences                   -          -       (3,440)          -         -             -         (3,440) 
 
 
 
Balance at 30 June 
 2020                  1,000,000  7,808,660       (3,415)     52,185   450,000   (1,304,432)     8,002,998 
 
 
 
 

CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE 6 MONTH PERIODED 30 JUNE 2020

 
                                                                 30 June              31 December 
                                                                    2020                     2019 
                                           Notes        GBP          GBP         GBP          GBP 
 
Cash flows from operating activities 
 
Cash absorbed by operations                  23              (1,081,261)                   (60,711) 
 
 
 
Net cash outflow from operating 
 activities                                                  (1,081,261)                   (60,711) 
 
Investing activities 
Purchase of property, plant and equipment           (7,254)                  (2,245) 
Interest received                                    10,719                    1,750 
 
 
 
Net cash generated from/(used 
 in) investing activities                                          3,465                      (495) 
 
Financing activities 
Proceeds from issue of shares                             -                9,258,660 
 
 
 
Net cash (used in)/generated 
 from financing activities                                             -                9,258,660 
 
 
 
Net (decrease)/increase in cash and 
 cash equivalents                                            (1,077,796)                9,197,454 
 
Cash and cash equivalents at beginning 
 of period                                                     9,204,257                        - 
Effect of foreign exchange rates                                 (3,440)                       25 
 
 
 
Cash and cash equivalents at 
 end of period                                                 8,123,021                9,197,479 
 
 
 
Relating to: 
Bank balances and short term 
 deposits                                                      8,123,612                9,211,035 
Bank overdrafts                                                    (591)                    (6,778) 
 
 
 
No bank account was held at 30 June 2019 therefore no interim statement 
 of cash flows has been prepared. 
 
 

NOTES TO THE FINANCIAL STATEMENTS FOR THE 6 MONTH PERIODED 30 JUNE 2020

 
1       Accounting policies 
 
        Company 
        information 
        Longboat Energy PLC is a private company limited by shares incorporated 
         in England and Wales. The registered office is 5th Floor, One 
         New Change, London, EC4M 9AF. The company's principal activities 
         and nature of its operations are disclosed in the directors' 
         report. 
 
1.1     Accounting 
        convention 
        The consolidated interim financial statements have been prepared 
         in accordance with International Financial Reporting Standards 
         (IFRS) as adopted for use in the European Union, except as otherwise 
         stated. 
 
         This interim financial information does not constitute accounts 
         within the meaning of section 434 and of the Companies Act 2006. 
         Statutory accounts for the year ended 31 December 2019 were approved 
         by the Board of Directors on 5 February 2020 and delivered to 
         the Registrar of Companies. The report of the auditors on those 
         accounts was unqualified. The audited financial statements for 
         the period from incorporation to 31 December 2019 were individual 
         company accounts rather than consolidated financial statements 
         as the subsidiary was immaterial. 
 
        The financial statements are prepared in sterling, which is the 
         functional currency of the company. Monetary amounts in these 
         financial statements are rounded to the nearest GBP. 
 
        The financial statements have been prepared under the historical 
         cost convention. The principal accounting policies adopted are 
         set out below. 
 
         The Group interim financial statements consolidate the financial 
         statements of the parent company and its subsidiary undertakings 
         drawn up to 30 June 2020. The results of subsidiaries acquired 
         or sold are consolidated for periods from or to the date on which 
         control passed. 
 
         Business combinations are accounted for in accordance with International 
         Financial Reporting Standards. Acquisitions of subsidiaries and 
         businesses are accounted for using the acquisition method. The 
         consideration of each acquisition is measured as the aggregate 
         of the fair values (at the date of exchange) or cash and other 
         assets given, liabilities incurred or assigned and equity instruments 
         issued by the Group in exchange for control of the acquiree. 
 
1.2     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 interim statements. 
 
1.3     Property, plant 
        and equipment 
        Property, plant and equipment are initially measured at cost 
         and subsequently measured at cost or valuation, net of depreciation 
         and any impairment losses. 
 
        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. 
 
        Computers         33.33% 
 
        The gain or loss arising on the disposal of an asset is determined 
         as the difference between the sale proceeds and the carrying 
         value of the asset, and is recognised in the income statement. 
1       Accounting policies 
 
1.4     Cash and cash 
        equivalents 
        Cash and cash equivalents include cash in hand, deposits held 
         at call with banks, other short-term liquid investments with 
         original maturities of three months or less, and bank overdrafts. 
         Bank overdrafts are shown within borrowings in current liabilities. 
 
1.5     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 Group 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 Group 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 Group, have contractual cash 
               flows representing solely the payment of principal and interest. 
               The Group 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 Group 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. 
1       Accounting policies 
 
        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 Group does not hold other financial assets for which an expected 
         credit loss would be material to record. 
 
1.6     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 
        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 
        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. 
 
1.7     Retirement benefits 
        Payments to defined contribution retirement benefit schemes are 
         charged as an expense as they fall due. 
1       Accounting policies 
 
1.8     Share-based payments 
        For cash-settled share-based payments, a liability is recognised 
         for the goods and services acquired, measured initially at the 
         fair value of the liability. At the balance sheet date until 
         the liability is settled, and at the date of settlement, the 
         fair value of the liability is remeasured, with any changes in 
         fair value recognised in profit or loss for the 6 month period. 
 
        Equity-settled share-based payments are measured at fair value 
         at the date of grant by reference to the fair value of the equity 
         instruments granted using the Monte Carlo model. Non-market vesting 
         conditions are taken into account by adjusting the number of 
         equity instruments expected to vest at each reporting date so 
         that, ultimately, the cumulative amount recognised over the vesting 
         period is based on the number of options that eventually vest. 
         Non-vesting conditions and market vesting conditions are factored 
         into the fair value of the options granted. As long as all other 
         vesting conditions are satisfied, a charge is made irrespective 
         of whether the market vesting conditions are satisfied. The cumulative 
         expense is not adjusted for failure to achieve a market vesting 
         condition or where a non-vesting condition is not satisfied. 
         The fair value determined at the grant date is expensed on a 
         straight-line basis over the vesting period, based on the estimate 
         of shares that will eventually vest. A corresponding adjustment 
         is made to equity. 
 
        When the terms and conditions of equity-settled share-based payments 
         at the time they were granted are subsequently modified, the 
         fair value of the share-based payment under the original terms 
         and conditions and under the modified terms and conditions are 
         both determined at the date of the modification. Any excess of 
         the modified fair value over the original fair value is recognised 
         over the remaining vesting period in addition to the grant date 
         fair value of the original share-based payment. The share-based 
         payment expense is not adjusted if the modified fair value is 
         less than the original fair value. 
 
         Cancellations or settlements (including those resulting from 
         employee redundancies) are treated as an acceleration of vesting 
         and the amount that would have been recognised over the remaining 
         vesting period is recognised immediately. 
 
1.9     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 Group'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. 
 
1.10    Foreign exchange 
        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. 
1       Accounting policies 
 
1.11    Reserves 
        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 Group which are revenue 
         in nature are dealt with in this reserve. 
 
         Other reserves 
         Other reserves relate to the nominal value of share capital repurchased 
         and cancelled. 
 
2      Adoption of new and revised standards and changes in accounting 
        policies 
 
       The accounting policies adopted in the preparation of the interim 
        condensed consolidated financial statements are consistent with 
        those followed in the preparation of the Group's annual consolidated 
        financial statements for the year ended 31 December 2019, except 
        for the adoption of new standards effective as of 1 January 2020. 
        The Group has not early adopted any standard, interpretation or 
        amendment that has been issued but is not yet effective. 
 
        Several amendments and interpretations apply for the first time 
        in 2020, but do not have an impact on the interim financial statements 
        of the Group. 
 
       Amendments to IFRS 3: Definition of a Business 
        The amendment to IFRS 3 clarifies that to be considered a business, 
        an integrated set of activities and assets must include, at a 
        minimum, an input and a substantive process that together significantly 
        contribute to the ability to create output. Furthermore, it clarified 
        that a business can exist without including all of the inputs 
        and processes needed to create outputs. These amendments had no 
        impact on the consolidated financial statements of the Group, 
        but may impact future periods should the Group enter into any 
        business combinations. 
 
       Amendments to IFRS 7, IFRS 9 and IAS 39: Interest Rate Benchmark 
        Reform 
        The amendments to IFRS 9 and IAS 39 Financial Instruments: Recognition 
        and Measurement provide a number of reliefs, which apply to all 
        hedging relationships that are directly affected by interest rate 
        benchmark reform. A hedging relationship is affected if the reform 
        gives rise to uncertainties about the timing and or amount of 
        benchmark-based cash flows of the hedged item or the hedging instrument. 
        These amendments had no impact on the consolidated financial statements 
        of the Group as it does not have any interest rate hedge relationships. 
 
       Amendments to IAS 1 and IAS 8: Definition of Material 
        The amendments provide a new definition of material that states 
        "information is material if omitting, misstating or obscuring 
        it could reasonably be expected to influence decisions that the 
        primary users of general purpose financial statements make on 
        the basis of those financial statements, which provide financial 
        information about a specific reporting entity." 
 
        The amendments clarify that materiality will depend on the nature 
        or magnitude of information, either individually or in combination 
        with other information, in the context of the financial statements. 
        A misstatement of information is material if it could reasonably 
        be expected to influence decisions made by the primary users. 
        These amendments had no impact on the consolidated financial statements 
        of, nor is there expected to be any future impact to the Group. 
2      Adoption of new and revised standards and changes in accounting 
        policies 
 
       Conceptual Framework for Financial Reporting issued on 29 March 
        2018 
        The Conceptual Framework is not a standard, and none of the concepts 
        contained therein override the concepts or requirements in any 
        standard. The purpose of the Conceptual Framework is to assist 
        the IASB in developing standards, to help preparers develop consistent 
        accounting policies where there is no applicable standard in place 
        and to assist all parties to understand and interpret the standards. 
        The revised Conceptual Framework includes some new concepts, provides 
        updated definitions and recognition criteria for assets and liabilities 
        and clarifies some important concepts. 
 
        These amendments had no impact on the consolidated financial statements 
        of the Group. 
 
3       Critical accounting estimates and judgements 
 
        In the application of the Group'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. 
 
         Shared based payments (note 18) 
         Estimation was required in determining inputs to the share based 
         payment calculations including share price volatility as detailed 
         in note 18. 
 
         Judgment was required in determining the point at which the Company 
         and recipients had a shared mutual understanding of the terms 
         of the awards. 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 awards has been spread over the vesting period which commenced 
         at IPO. A charge of GBP52,185 has been recorded which includes 
         the one month period relevant to the period ended 31 December 
         2019 as the charge of GBP7,973 was immaterial to the prior period. 
4       Employees 
 
        There are no additional staff members within the Group who are 
         not staff members of the Company. 
 
        The average monthly number of persons (including directors) employed 
         by the company during the period was: 
 
                                 Six month           Six month                  From incorporation 
                              period ended        period ended 
                                   30 June             30 June                           to 31 Dec 
                                      2020                2019                                2019 
                                    Number              Number                              Number 
 
        Executive 
         Directors                       2                   -                                   2 
        Non-Executive 
         Directors                       4                   -                                   4 
        Staff                            1                   -                                   1 
 
 
 
        Total                            7                   -                                   7 
 
 
 
        Their aggregate remuneration comprised: 
                                 Six month           Six month                  From incorporation 
                              period ended        period ended 
                                   30 June             30 June                           to 31 Dec 
                                      2020                2019                                2019 
                                       GBP                 GBP                                 GBP 
 
        Wages and 
         salaries                  298,814                   -                              52,163 
        Share based 
         payment                    52,185                   -                                   - 
        Social security 
         costs                      33,610                   -                               6,504 
        Pension costs               17,655                   -                               3,447 
 
 
 
                                   402,264                   -                              62,114 
 
 
 
        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. 
5       Directors' remuneration 
                                 Six month           Six month                  From incorporation 
                              period ended        period ended 
                                   30 June             30 June                           to 31 Dec 
                                      2020                2019                                2019 
                                       GBP                 GBP                                 GBP 
 
        Remuneration for 
         qualifying 
         services                  248,095                   -                              43,780 
        Pension 
         contributions 
         to defined 
         contribution 
         schemes                    12,676                   -                               2,515 
 
 
 
                                   260,771                   -                              46,295 
 
 
 
6      Investment Income 
 
                                 Six month                               Six month            From 
                              period ended                            period ended   incorporation 
                                   30 June                                 30 June       to 31 Dec 
                                      2020                                    2019            2019 
                                       GBP                                     GBP             GBP 
       Interest income 
 Bank deposits                      10,719                                       -           1,750 
 
 
 
       Total interest income for financial assets that are not held at 
        fair value through profit or loss is GBP10,719 (2019: GBP1,750). 
 
7       Operating loss 
 
                                 Six month           Six month                  From incorporation 
                              period ended        period ended 
                                   30 June             30 June                           to 31 Dec 
                                      2020                2019                                2019 
                                       GBP                 GBP                                 GBP 
        Operating profit/(loss) for the period is stated after 
        charging/(crediting): 
        Exchange gains              74,120                   -                            (86,792) 
        Fees payable to 
         the company's 
         auditor 
         for the audit 
         of the 
         company's 
         financial 
         statements                 16,000                   -                               8,000 
        Depreciation of 
         property, plant 
         and 
         equipment                     954                   -                                   - 
        Share-based 
         payments                   52,185                   -                                   - 
 
 
 
 
 
8   Auditor's remuneration 
                                    Six month       Six month   From incorporation 
                                 period ended    period ended 
                                      30 June         30 June            to 31 Dec 
                                         2020            2019                 2019 
    Fees payable to the                   GBP             GBP                  GBP 
    company's auditor 
    and associates: 
 
    For audit services 
 Audit of the financial 
  statements of 
  the company                          16,000               -                8,000 
 
 
 
    For other services 
 Non-audit services                         -               -               15,000 
 
 
 
    During the prior period the auditor provided non-audit 
    services 
    of GBP15,000 in their role as Reporting Accountant in 
    relation 
    to the Company's Admission to AIM. There were no non-audit 
    services 
    provided in the six months to 30 June 2020. 
 
9   Income tax expense 
                                  Six month      Six month     From incorporation 
                                 period ended   period ended 
                                      30 June         30 June            to 31 Dec 
                                         2020            2019                 2019 
                                          GBP             GBP                  GBP 
    UK corporation tax on 
    profits for the 
    current period                          -               -                    - 
 
 
 
    The charge for the 6 month period can be reconciled to the loss 
     per the income statement as follows: 
 
                                    Six month       Six month   From incorporation 
                                 period ended    period ended 
                                      30 June         30 June            to 31 Dec 
                                         2020            2019                 2019 
                                          GBP             GBP                  GBP 
 
 Loss before taxation             (1,108,131)         (4,058)              (196,301) 
 
 
 
 Expected tax charge/(credit) 
  based 
  on a corporation tax rate of 
  19.00% 
  (2019: 19.00%)                    (210,545)           (771)               (37,297) 
 Effect of expenses not 
  deductible in 
  determining taxable profit            2,499               -                8,321 
 Adjust closing mainstream 
  unrecognized 
  deferred tax to average rate 
  of 19%                                    -               -                  363 
 Adjust closing ring fence 
  unrecognized 
  deferred tax to average rate 
  of 19%                                    -               -               (28,217) 
 Deferred tax not recognised          288,114             771               56,830 
 Remeasurement of deferred tax 
  for changes 
  in tax rates                      (110,016)               -                    - 
 Foreign tax and losses                29,948               -                    - 
 
 
 
 Taxation charge for the 
  period                                    -               -                    - 
 
 
 
 
 
9     Income tax expense 
 
      No deferred tax asset has been recognised because there is uncertainty 
       of the timing of suitable future profits against which they can 
       be recovered. The company has losses carried forward of GBP345,870 
       (2018: GBP57,756). 
 
10   Earnings per share                                              30 June     30 June      31 Dec 
                                                                        2020        2019        2019 
                                                                         GBP         GBP         GBP 
     Number of shares 
 Weighted average number of ordinary 
  shares for basic earnings per share                             10,000,000           1   2,062,213 
 
     Earnings 
     Continuing operations 
 Loss for the period from continued 
  operations                                                     (1,108,131)     (4,058)   (196,301) 
 
 
 
 Earnings for basic and diluted earnings 
 per share being net profit attributable 
 to equity shareholders of the company 
 for continued operations                                        (1,108,131)     (4,058)   (196,301) 
 
 
 
 Basic and diluted earnings per share                                (11.08)   (405,773)      (9.52) 
 
 
 
 Earnings per share is expressed in pence per share. 
 
 
 
11   Property, plant and equipment 
 
                                                                                   Computers 
                                                                                         GBP 
     Cost 
 Additions                                                                             2,245 
 
 
 
 At 31 December 2019                                                                   2,245 
 Additions                                                                             7,254 
 
 
 
 At 30 June 2020                                                                       9,499 
 
 
 
     Accumulated depreciation and impairment 
 Charge for the 6 month period                                                           954 
 
 
 
 At 30 June 2020                                                                         954 
 
 
 
     Carrying amount 
 At 30 June 2020                                                                       8,545 
 
 
 
 At 31 December 2019                                                                   2,245 
 
 
12   Investing Policy 
 
       The Company will look to achieve its investment objectives and 
        strategy by taking an active approach in investments made in line 
        with the following parameters: 
         *    Geographic focus: initially the Company's principal 
              focus will be acquiring assets or corporate 
              opportunities based in or principally operating in 
              Norway, the United Kingdom, or in the wider EEA 
              region. The Company may consider acquiring assets 
              globally, including in emerging markets. 
 
 
         *    Sector focus: the Company intends to focus on the oil 
              and gas sector. 
 
 
         *    Proposed targets: the proposed acquisitions to be 
              made by the Company may be licence applications, 
              direct interests in oil and gas assets, quoted or 
              unquoted companies, made by acquisition or through 
              farm-ins, either in companies, partnerships or joint 
              ventures. 
 
 
         *    Types of investment and control of investments: it is 
              anticipated that the Company will acquire and control 
              one or more working interests, assets, businesses or 
              companies on a long-term basis. The Company's equity 
              interest in a proposed acquisition may range from a 
              minority position to 100 per cent. ownership. The 
              Company intends, where possible, to be actively 
              involved in the management and development of the 
              assets that it acquires irrespective of the equity 
              ownership acquired in the assets with a view to 
              improving performance and adding value to the assets. 
              The Board may issue new ordinary shares of 10p each 
              in the share capital of the Company ('Ordinary 
              Shares') as acquisition consideration to vendors of 
              working interests, assets, or businesses as 
              appropriate, and the Board would expect such new 
              Ordinary Shares to represent a non-controlling or 
              minority shareholding in the Company at that time. 
 
 
         *    Investment size: the Company intends to use the net 
              funds received from the placing of Ordinary Shares 
              undertaken in November 2019 (the 'Placing'), 
              principally to investigate and pursue potential 
              acquisitions, perform due diligence, contribute 
              towards professional costs associated with an 
              acquisition and fund the initial working capital 
              requirements of the Company. It is envisaged that the 
              Company's first acquisition will be in the region of 
              an enterprise value of US$10-US$500 million, which 
              will be funded through further equity issuance and 
              debt to appropriate and prudent levels. 
 
 
         *    Nature of returns: it is anticipated that returns to 
              shareholders will be delivered through a combination 
              of an appreciation in the Company's share price and, 
              at an appropriate time, dividends paid out of 
              retained earnings or a one off capital return, if 
              appropriate. 
 
 
 
        Any material change to the Investing Policy will be made only 
        with the approval of shareholders. 
 
        The Directors believe that the Investing Policy can be substantially 
        implemented within 18 months of Admission to AIM, which occurred 
        on 28 November 2019. If this is not achieved, the Company, in 
        accordance with the AIM Rules for Companies, will seek the consent 
        of its shareholders for its Investing Policy or any changes thereto 
        at the 2021 annual general meeting of the Company and on an annual 
        basis thereafter, until such time that its Investing Policy has 
        been substantially implemented. If it appears unlikely that the 
        Investing Policy will be substantially implemented, the Directors 
        may consider returning the remaining proceeds from the Placing 
        to shareholders. 
 
        Given the nature of the Investing Policy, the Company does not 
        intend to make regular periodic disclosures or calculations of 
        its net asset value. 
 
 
 
13   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 and revenue 
      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 reputable clearing 
      banks. The Group's cash is deposited across one bank with credit 
      ratings 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 GBP8,197,995 at the balance 
      sheet date, of which GBP8,123,612 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 30 June 2020, the Group has cash on deposit of GBP8,123,612. 
 
     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 period to 30 June 2020 was GBP10,719. 
      The interest rate risk is not considered material to the Group 
 
     Currency Risks 
     The Group operates in the UK and Norway, incurs expenses predominantly 
      in sterling and NOK, and holds cash in sterling, USD and NOK. 
      The Group 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 Group. 
 
 
14    Trade and other 
      receivables 
 
                                           30 June                   30 June                 31 Dec 
                                              2020                      2019                   2019 
                                               GBP                       GBP                    GBP 
 
      VAT recoverable                        8,295                       222                 45,060 
      Other receivables                      4,696                         1                      - 
      Prepayments                           61,392                         -                 38,044 
 
 
 
                                            74,383                       223                 83,104 
 
 
 
15   Share Capital 
 
                                                                                                GBP 
 Balance at 28 May 2019 and 30 June 2019                                                          1 
 Additions                                                                                1,179,999 
 Share buy-back and cancellation of shares                                                  (180,000) 
     Other movements                                                                              - 
 
 
 
 Balance at 31 December 2019                                                              1,000,000 
 
 
 
 Balance at 30 June 2020                                                                  1,000,000 
 
 
 
           Share capital history over the period: 
 
             *    On incorporation on 28 May 2019, one subscriber share 
                  with a nominal value of GBP1.00 was issued 
 
 
             *    On 3 September 2019 the subscriber share of GBP1.00 
                  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 GBP500,000 (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. GBP1.00 per share). 
 
 
             *    On 25 November 2019 a capital reduction was 
                  undertaken to convert GBP270,000 of share premium to 
                  other reserves. 
 
 
             *    On 28th November 2019 9,500,000 Ordinary Shares were 
                  allotted to the new subscribers at a premium of 90p 
                  per Ordinary Share 
16   Other reserves 
                              Other reserves            Currency translation          Share Premium 
                                                                     reserve 
                                         GBP                             GBP                    GBP 
 
      Balance at 28 May 
      2019 and 
      30 June 2019                         -                               -                      - 
      Additions                            -                              25                      - 
      Issue of share 
       capital                             -                               -                270,000 
      Share buy-back and 
       cancellation of 
       share 
       premium                             -                               -                (270,000) 
      Initial Public 
       Offering                            -                               -              8,550,000 
      Costs of share issue                 -                               -                (741,340) 
      Other movements                450,000                               -                      - 
 
 
 
      Balance at 31 
       December 
       2019                          450,000                              25              7,808,660 
      Additions                            -                         (3,440)                      - 
 
 
 
      Balance at 30 June 
       2020                          450,000                         (3,415)              7,808,660 
 
 
 
17    Trade and other 
      payables 
 
                                           30 June                   30 June                 31 Dec 
                                              2020                      2019                   2019 
                                               GBP                       GBP                    GBP 
 
      Trade payables                        50,275                     4,280                 94,452 
      Accruals                             114,691                         -                 63,877 
      Social security and 
       other taxation                       36,552                         -                  6,504 
      Other payables                         2,024                         -                 62,389 
 
 
 
                                           203,542                     4,280                227,222 
 
 
 
18    Share-based payment transactions 
 
      The Company 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 following table summarises the expense recognised 
       in the Statement of Comprehensive Income since the IPO. 
 
 
 
18   Share-based payment transactions 
 
                                                                Six month      Six month    From incorporation 
                                                              period ended   period ended 
                                                                    30 June        30 June           to 31 Dec 
                                                                       2020           2019                2019 
                                                                        GBP            GBP                 GBP 
 
 Founder Incentive Plan                                              52,815              -                   - 
 
 
 
           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 performance condition is based 
            on the relative Total Shareholder Return (TSR) of doubling the 
            value of the company at each respective measurement date. 
 
            The Threshold TSR growth rates will be the following: 
             *    Measurement Date 1 - 25.99% 
 
 
             *    Measurement Date 2 - 18.92% 
 
 
             *    Measurement Date 3 - 14.87% 
 
 
 
            For Measurement Dates 2 and 3, should the Threshold TSR be met 
            at a previous Measurement Date, the Threshold TSR will be the 
            higher of: 
             *    Threshold TSR calculated using the relevant growth 
                  rate set out above from the Initial Price; or 
 
 
             *    the highest previous Measurement TSR at any prior 
                  Measurement Date, where nil-cost options have been 
                  awarded. 
 
 
 
            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: 
 
                                                                Six month      Six month    From incorporation 
                                                              period ended   period ended 
                                                                    30 June        30 June           to 31 Dec 
                                                                       2020           2019                2019 
                                                                        GBP            GBP                 GBP 
 
 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. 
 
 
 
19   Other leasing information 
 
     Lessee 
 
     Amounts recognised in profit or loss as an expense during the 
      period in respect of lease arrangements are as follows: 
 
                                                                               2020       2019 
                                                                                GBP        GBP 
 
 Expense relating to short-term leases                                       47,744          - 
 
 
 
20   Related party transactions 
 
     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 
      6 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                                                                          300,000 
 
 Jonathan Cooper                                                                       125,000 
 
 Graham Stewart                                                                        150,000 
 
 Jorunn Saetre                                                                          25,000 
 
 Julian Riddick                                                                        100,000 
 
 There were no other transactions or balances with related parties 
  in the period. 
 
 
 
21    Cash used by operations 
 
                                                                           30 June   30 June      31 Dec 
                                                                              2020      2019        2019 
                                                                               GBP       GBP         GBP 
 
      Loss for the 6 month period after tax                            (1,108,131)   (4,058)     (196,301) 
 
      Adjustments for: 
      Investment income                                                   (10,719)         -       (1,750) 
      Depreciation and impairment of property, 
       plant and equipment                                                     954         -           - 
      Equity settled share based payment 
       expense                                                              52,185         -           - 
 
      Movements in working capital: 
      Decrease/(increase) in trade and other 
       receivables                                                           8,721         -      (83,104) 
      (Decrease)/increase in trade and other 
       payables                                                           (24,271)     4,058     220,444 
 
 
 
      Cash absorbed by operations                                      (1,081,261)         -      (60,711) 
 
 
 
22   Other information 
 
 A copy of this interim report and financial statements is available 
  on the Company's website www.longboatenergy.com. 
 
 
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September 22, 2020 02:00 ET (06:00 GMT)

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