Interim Results

RNS Number : 9752C

Longships PLC

08 September 2008

 



LONGSHIPS PLC

INTERIM REPORT AND UNAUDITED CONDENSED FINANCIAL STATEMENTS FOR THE PERIOD ENDED 30th JUNE 2008

CHAIRMAN'S STATEMENT

Dear Shareholder, 

The Company successfully floated on the AIM market of the London Stock Exchange on 21st April 2008. During the period under review it reported a net loss of £7,151 and at 30 June 2008 had liquid cash balances of £3,341,204.    The loss of £7,151 is after the non-cash share based payment charge of £21,558. Accordingly the Company has been operating on a cash flow positive basis since the flotation.  Since the Company's IPO, it has been sourcing and reviewing various investment opportunities and although none have so far met our criteria, we will continue to search for a suitable opportunity. I look forward to updating shareholders as to progress in due course. 

Craig Niven

8th September 2008

INDEPENDENT REVIEW REPORT TO THE DIRECTORS OF LONGSHIPS PLC

We have been engaged by the company to review the condensed financial statements in the interim financial report for the period ended 30th June 2008 which comprises the income statement, the balance sheet, the cash flow statement, the statement of changes in equity and related notes. We have read the other information contained in the interim financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.

This report is made solely to the company in accordance with the terms of our engagement. Our review has been undertaken so that we might state to the company those matters we are required to state to it in this 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 company for our review work, for this report, or for the conclusions we have reached.

Directors' responsibilities

The interim financial report is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the interim financial report in accordance with the AIM Rules of the London Stock Exchange.

As disclosed in note 2, the financial statements of the company are prepared in accordance with International Financial Reporting Standards as adopted by the European Union. The condensed financial statements included in this interim financial report have been prepared in accordance with International Accounting Standard 34, 'Interim Financial Reporting,' as adopted by the European Union.

Our responsibility

Our responsibility is to express to the company a conclusion on the condensed financial statements in the interim financial report based on our review.

Scope of review

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, 'Review of Interim Financial Information Performed by the Independent Auditor of the Entity' issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the condensed  financial statements in the interim financial report for the period ended 30th June 2008 is not prepared, in all material respects, in accordance with the AIM Rules of the London Stock Exchange and International Accounting Standard 34 as adopted by the European Union.

F.W. SMITH, RICHES & CO.

Chartered Accountants

London,

8th September 2008

CONDENSED INCOME STATEMENT 

FOR THE PERIOD ENDED 30th JUNE 2008    

			Period
			to 30/06/08
			Unaudited
			£
NET TRADING INCOME			-
			---------------
Share based payment charge			(21,588)
Other operating expenses			(25,369)
			------------------
Total operating expenses			(46,957)
			-------------------
OPERATING LOSS			(46,957)
Finance income			39,806
			------------------
LOSS ON ORDINARY ACTIVITIES BEFORE TAXATION			(7,151)
Taxation			-
			------------------
LOSS FOR THE PERIOD			(7,151)
			============
Loss per share (pence) - basic and fully diluted			(0.07)p
			=======

CONDENSED BALANCE SHEET AS AT 30th JUNE 2008

		As at
		30/06/08
		Unaudited
		£
CURRENT ASSETS
Trade and other receivables		7,438
Cash and cash equivalents		3,341,204
		------------------
		3,348,642
CURRENT LIABILITIES
Trade and other payables		(16,433)
		-----------------
NET CURRENT ASSETS		3,332,209
		----------------
NET ASSETS		3,332,209
		===========
CAPITAL AND RESERVES ATTRIBUTABLE
TO THE COMPANY'S EQUITY HOLDERS
Share capital		230,800
Share premium account		3,086,972
Share based payment reserve		21,588
Retained earnings		(7,151)
		----------------
TOTAL EQUITY		3,332,209
		==========

CONDENSED CASH FLOW STATEMENT 

FOR THE PERIOD TO 30th JUNE 2008

		Period
		to 30/06/08
		Unaudited
		£
Net cash outflow from operating activities	3	(16,374)
		--------------------------
Cash flows from investing activities
Interest received		39,806
		------------------------
Cash flows from financing activities
Net proceeds from issue of share capital		3,317,772
		-------------------------
Net increase in cash and cash equivalents		3,341,204
Cash and cash equivalents at beginning of period		-
		--------------------------
Cash and cash equivalents at end of period		3,341,204
		================

CONDENSED STATEMENT OF CHANGES IN NET EQUITY 

FOR THE PERIOD TO 30th JUNE 2008

	Share capital	Share premium	Share based payment reserve	Retained earnings	Total
	£	£	£	£	£
At 20th December 2007	-	-	-	-	-
Shares issued for cash	230,800	3,173,200	-	-	3,404,000
Loss for period ended 30th June 2008	-	-	-	(7,151)	(7,151)
Share issue costs	-	(86,228)	-	-	(86,228)
Share-based payments	-	-	21,588	-	21,588
	________	_________	_________	__________	_________
At 30th June 2008	230,800	3,086,972	21,588	(7,151)	3,332,209
	=======	========	========	=========	========

NOTES TO THE CONDENSED FINANCIAL STATEMENTS

FOR THE PERIOD ENDED 30th JUNE 2008

1.      GENERAL

    The interim financial statements for the period from 20th December 2007 to 30th June 2008 are unaudited and were approved by the Directors of the Company on  8th September 2008. The condensed financial information set out above does not constitute statutory accounts within the meaning of Section 240 of the Companies Act 1985. 

    The financial information has been prepared in accordance with IAS 34 'Interim Financial Reporting'.  The Company's operations are not subject to seasonality or cyclicality.

2.      ACCOUNTING POLICIES

Accounting convention

    As there are no prior financial statements the principal accounting policies are summarised below. They have all been applied consistently throughout the period covered by these financial statements.

Basis of preparation

    The finance information has been prepared in accordance with International Financial Reporting Standards ('IFRS'). The financial statements have been prepared in accordance with IFRS as adopted by the European Union.

Trading income

Trading income is recognised to the extent that it is probable that economic benefit will flow to the Company and the trading income can be reliably measured.

Cash and cash equivalents

Cash and cash equivalents are defined as cash in hand, demand deposits and short-term, highly liquid investments which are readily convertible to known amounts of cash, subject to insignificant risk of changes in value, and have a maturity of less than 3 months from the date of acquisition.

For the purposes of the cash flow statement, cash and cash equivalents consist of cash in hand and bank deposits.

Taxation

The tax currently payable is based on the taxable profit for the period. Taxable profit differs from net profit as reported in the income statement because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Company's liability for current tax is calculated using tax rates that have been enacted or substantially enacted by the balance sheet date.

Deferred taxation

Deferred income tax is provided for using the liability method on temporary timing differ­ences at the balance sheet date between tax basis of assets and liabilities and their carrying amounts for financial reporting purposes. Deferred tax liabilities are recognised in full for all temporary differences. Deferred tax assets are recognised for all deductible temporary differ­ences carried forward of unused tax credits and unused tax losses to the extent that it is prob­able that taxable profit will be available against which the deductible temporary differences, and carry-forward of unused tax credits and unused losses can be utilised.

The carrying amount of deferred income tax assets is assessed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilised. Unrecognised deferred income tax assets are reassessed at each balance sheet date and are recognised to the extent that is probable that future taxable profits will allow the deferred tax asset to be recovered.

Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realised or the liability settled, based on tax rates that have been enacted or substantively enacted at the balance sheet date.

Share-based payments

Certain Directors of the Company receive remuneration in the form of share-based payment transactions (equity-settled transactions).

The cost of equity-settled transactions is determined with reference to the fair value at the date on which they were granted. The fair value is determined by using the Black-Scholes option pricing model. 

The cost of equity-settled transactions is recognised, together with a corresponding increase in equity, over the period in which the service conditions are fulfilled, ending on the date on which the relevant employees become fully entitled to the award ('the vesting date'). The cumulative expense recognised for equity-settled transactions at each re­porting date until the vesting date reflects the extent to which the vesting period has expired and the group's best estimate of the number of equity instruments that will ultimately vest. The income statement charge or credit for a period represents the movement in cumulative expense recognised as at the beginning and end of that period.

    The dilutive effect of the outstanding options is reflected as additional dilution in the compu­tation of earnings per share.

    Financial instruments

    Financial assets and financial liabilities are recognised on the Company's balance sheet when the Company becomes a contractual party to the instrument.

    Trade receivables

    Trade receivables are recognised initially at their fair value which equates to their nominal value as reduced by appropriate provision for irrecoverable amounts and subsequently at amortised cost.

    Trade payables

    Trade payables are recognised initially at their fair value and subsequently at amortised cost.

Accounting judgements and key sources of estimation uncertainty

    The preparation of financial statements in accordance with IFRS requires management to make estimates and assumptions in certain circumstances that affect reported amounts. The most sensitive estimate affecting the financial statements is the area of share based payments. Actual outcomes may therefore differ from these estimates and assumptions. The estimates and assumptions that have the most significant impact on the carrying value of assets and liabilities of the Company within the next financial year are discussed below.

    Share based payments

    In determining the fair value of equity settled share based payments and the related charge to the income statement, the Company makes assumptions about future events and market conditions. In particular, judgement must be made as to the likely number of shares that will vest and the fair value of each award granted. The fair value is determined using a valuation model which is dependent on further estimates including the Company's future dividend policy, employee turnover, the timing of the exercise of options and the future volatility in the price of the Company's shares. Such assumptions are based on publicly available information and reflect market expectations. Different assumptions from those used (which are disclosed in note 6) could materially affect the reported value of share based payments. The Company has recognised a corresponding increase in equity in accordance with IFRS 2 by crediting 'Share based payment reserve' (a component of equity) for the issue of shares in connection with the share options.

Standards and interpretations issued but not yet effective

    The Company has not early adopted the following new and amended IAS, IFRS and IFRIC Interpretations issued. The relevant new and amended IAS, IFRS and IFRIC Interpretations will be adopted when they become effective.

• IFRS 8                  Operating Segments

• IAS 23                  Borrowing Costs

• IFRIC 11/IFRS 2   Group and Treasury Share Transactions

• IFRIC 12               Service Concession Arrangements

• IFRIC 13               Customer Loyalty Programs

• IFRIC 14/IAS 19   The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction

IFRS 8 Operating Segments

    IFRS 8 was issued in November 2006 and becomes effective for financial years beginning on or after 1st January 2009. IFRS 8 replaces IAS 14 Segment Reporting and adopts a management-based approach to segment reporting. The information reported would be that which management uses internally for evaluating the performance of operating segments and allocating resources to those segments. This information may be different from that reported in the statement of assets and liabilities and statements of operations and entities will need to provide explanations and reconciliations of the differences. 

IAS 23 Borrowing Costs

    A revised IAS 23 was issued in March 2007, and becomes effective for financial years beginning on or after 1st January 2009. The standard has been revised to require capitalisation of borrowing costs when such costs relate to a qualifying asset. A qualifying asset is an asset that necessarily takes a substantial period of time to get ready for its intended use or sale. IAS 23 is not relevant to the Company.

IFRIC 12 Service Concession Arrangements

    IFRIC 12 was issued in November 2006, and becomes effective for financial years beginning on or after 1st January 2008. This interpretation gives guidance on the accounting by operators for public-to-private service concession arrangements. IFRIC 12 is not relevant to the Company.

IFRIC 13 Customer Loyalty Programs

    IFRIC 13 was issued in June 2007 and becomes effective for annual periods beginning on or after 1st July 2008. This interpretation requires customer loyalty award credits to be accounted for as a separate component of the sales transaction in which they are granted and therefore part of the fair value of the consideration received is allocated to the award credits and deferred over the period that the award credits are fulfilled. The Company expects that this interpretation will have no impact on the Company's financial statements as no such schemes currently exist.

IFRIC 14/IAS 19 - The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction

    IFRIC 14 was issued in July 2007 and becomes effective for annual periods beginning on or after 1st January 2008. This interpretation provides guidance on how to assess the limit on the amount of surplus in a defined benefit scheme that can be recognised as an asset under IAS 19 Employee Benefits. The Company expects that this interpretation will have no impact on the financial position or results of the Company as no such schemes currently exist.

3.      CASH FLOWS FROM OPERATING ACTIVITIES

	Period
	to 30/06/08
	Unaudited
	£
Loss before taxation	(7,151)
Adjustments for:
Interest income	(39,806)
Equity-settled share options	21,588
	--------------------
	(25,369)
Increase in receivables	(7,438)
Increase in payables	16,433
	--------------------
Net cash from operating activities	(16,374)
	=============

4.      LOSS PER SHARE

 

		Six months
		to 30/06/08
		Unaudited
Weighted average number of ordinary shares in issue		10,654,229
		---------------------------------------------------
Loss after taxation		£(7,151)
		---------------------------------------------------
		(0.07)p
		===================================================

 

      Due to there being a loss during the period the share options are anti-dilutive and therefore no diluted loss per share has been presented.

                                                                                                        

5.      NET ASSET VALUE PER SHARE

 

      The “basic” net asset value per share figures are calculated on the basis of the net assets attributable to equity shareholders divided by the number of ordinary shares in issue at the relevant dates.

 

      As the exercise price of the share options is above the “basic” net asset value per share the share options are anti-dilutive and therefore a “fully diluted” net assets per share has not been calculated.

 

6.      SHARE CAPITAL

 

        Share options

       The Company granted and issued share options over ordinary shares in the Company as follows:

                                                                                 Number   Final Exercisable
       Date granted        Parties      Exercise price    of shares                       date

 

21/04/08                 C Cannon-Brookes      20p       500,000                  21/04/15

21/04/08                 C Niven                      20p       500,000                  21/04/15

                                                                             ^{_____________}

         Options outstanding at 20/12/07                                        Nil

       Options outstanding at 30/06/08                          1,000,000

                                                                                                    ^============

The fair value of equity settle share options granted is estimated as at the date of grant using a Black-Scholes option pricing model, taking into account the terms and conditions upon which the options were granted. The following table lists the inputs into the model used for the period ended 30th June 2008.

	2008
Dividend yield on underlying shares	0%
Risk free rate	4%
Expected volatility	22.36%
Average time to expiry	1 year
Weighted average share price of options	20 p
	==========================

 

 

 

      The expected life of the options is based on an estimate and is not necessarily indicative of exercise patterns that may occur. The expected volatility reflects the assumption that the historical volatility is indicative of future trends, which may also not be the actual outcome. 

 

        Authorised share capital:

	2008
	£
100,000,000 Ordinary shares of £0.01 each	1,000,000
	==========================

 

        Allotted, called up and fully paid:

	2008
	£
23,080,002 Ordinary shares of £0.01 each	230,800
	==========================

 

    

On 20 December 2007, 2 subscriber shares were issued.

 

On 28 February 2008, 8,080,000 shares were issued at 5 pence per share.

 

On 21 April 2008, 15,000,000 shares were issued on flotation at 20 pence per share.

 

7.   Copies of the interim report are available to the public free of charge from the Company at Level 2, 18 Pall Mall, London, SW1Y 5LU during normal office hours, Saturdays and Sundays excepted, for 14 days from today and are available on the website at www.longshipsplc.com.

 

 

Enquiries:

 

Longships Plc                                                                           Tel: [phone]

Charles Cannon-Brookes, Investment Director

 

Grant Thornton UK LLP                                                           Tel: [phone]

Colin Aaronson

 

 

 

END

 

 

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