Lombard Capital PLC - Final Results PR Newswire

Lombard Capital PLC

("Lombard" or the "Company")

Final results for the period ended 30 June 2020

Chairman’s Statement

Dear Shareholders

The period under review covers the fifteen months to 30 June 2020. Your Board has continued working towards, but at a much reduced level, producing secure bond investments where the instrument will be fully secured by tangible assets. Then in April we announced a potential investment in the waste recycling sector and appointed Robert Malone to the board of Waste and Recycling Solutions Limited a wholly owned subsidiary of LCP Financial Limited.  Subsequent to the year end the group’s holding in LCP Financial Limited was reduced from 100% to 67%.

On the 8 June 2020 we completed the acquisition of Gaskell House, the freehold site of a former waste recycling operation, with the intention of developing further into the waste management recycling sector.

Unfortunately the suspension of the company’s shares severely impacted any such development as investors were concerned about investing in a company whose shares were suspended.

The board is now looking at ways to extract benefit from the investment.

During the period holders of the remaining convertible loan notes converted their bonds plus interest resulting in the issue of 5,362,627 ordinary shares. Warrant holders also took opportunity to exercise warrants covering 3,200,000 shares for a total consideration of £320,000. The funds generated assisted with the funding of Gaskell House.

On the 8 June 2020 David Grierson, who was instrumental in the corporate activity of the group, resigned from the company and Barry Fromson was appointed executive director. Throughout his short tenure Barry has demonstrated great tenacity in order to bring stability and benefit to the group.

The Board remains engaged how best to develop the company and its current main investment, Gaskell House, and I hope to report on such matters at the next financial review.  Whilst I look forward to the future, your directors have much to do in the coming months. I would like to thank our professional advisors and in particular Steve Monico who has supported the directors throughout.

I also thank you as shareholders for your continuing support in these challenging times.

N B Fitpatrick

The directors of Lombard Capital Plc accept responsibility for this announcement.

For further information please contact:

Brent Fitzpatrick

Tel:  07718 883813

AQSE Corporate Adviser:

Alfred Henry Corporate Finance Limited

Nick Michaels:  0203 772 0021

Statutory Information

The financial information set out below does not constitute the Group’s statutory accounts for the period ended 30 June 2020 but is derived from those accounts.

The financial information has been extracted from the statutory accounts of Lombard Capital Plc and is presented using the same accounting policies, which have not yet been filed with the Registrar of companies, but on which the auditors, Jeffreys Henry LLP, gave a qualified report on 12 November 2020. The audit report included the following modification: -

“Qualified Opinion

We have audited the financial statements of Lombard Capital Plc (the ‘Group’) for the period ended 30 June 2020 which comprise the consolidated statement of income and other comprehensive income, the consolidated statement of financial position, the consolidated statement of cash flows, the consolidated statement of changes in equity and notes to the consolidated 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, except for the possible effects of the matter described in the Basis for Qualified Opinion section of our report:

  • 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; and
  • the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.

Basis for qualified opinion

Within loans to related parties there are amounts advanced totalling £1,525,788 as at 30 June 2020. For all of these balances indicated, we were unable to obtain sufficient appropriate audit evidence to confirm the recoverability of these amounts or consequently whether any impairments were required. Consequently, we were unable to determine whether these amounts are fairly stated. We note that whilst we have not received sufficient evidence in relation to the recovery of these amounts as the directors believe these amounts to be recoverable but they are unable to provide the evidence to support this.

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 Group 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 qualified opinion.

Material uncertainty related to going concern

We draw your attention to the primary statements within these financial statements, which indicate that the group incurred a loss after tax of £767,327, had net liabilities of £99,704 and had net cash outflows from operating activities of £866,223 for the period ended 30 June 2020.

We also draw attention to note 2 in the financial statements, which explains that the group is dependent upon ongoing fundraising and forecast revenue streams to commercialise and develop its core businesses.  These events or conditions along with other matters as set forth in note 2, indicate that a material uncertainty exists that may cast doubt on the Group’s ability to continue as a going concern.

We have also enquired with management as to the impact of COVID-19 and the steps being taken to limit the impact of the pandemic on the business.

We have reviewed future estimates of costs and latest bank balances to ensure the Group can cover its overheads. However, the Group will need to raise additional finance in order to continue with its programmes and to meet its recurring expenditure, and that, although the Group has been successful in the past in raising additional finance, there can be no assurance that the funding required by the Group will be made available to it when needed or, if such funding were to be available, that it would be offered on reasonable terms. We also performed the following procedures:

We obtained and reviewed the Directors’ assessment, including challenging the liquidity position.

We checked the robustness of the Directors’ business planning process.

We checked the key assumptions.

We assessed the sensitivities of the underlying assumptions.

We reviewed the latest financial information to gauge the financial position; and

Considered the Group’s historic ability to raise funds

The directors have confirmed that they will continue to support the Group and acknowledge that there are accrued Director remuneration amounts where the Directors have committed to ensure their drawdowns against this and any future remuneration will not exceed £50,000 for at least 12 months from the signing of these financial statements.

Our opinion is not modified in respect of this matter.”

The Annual Report of Lombard Capital Plc for year ended 31 March 2019 is available upon request from the Company’s registered office at 19 Goldington Road, Bedford, England, MK40 3JY.

Consolidated Income Statement

for the period ended 30 June 2020
30 Jun 31 Mar
2020 2019
£ £
Notes
Continuing operations:
Turnover 63,056 -

Operating expenses

(626,743)

(292,337)
Operating loss (563,687) (292,337)
Finance Charges

Loss before taxation
(203,640)

(767,327)
(29,469)

(321,806)
Taxation expense - -
Loss for the period, attributable to owners of the Group (767,327) (321,806)
Loss per share attributable to owners of the Group during the period Pence Pence
Basic and diluted
Total and continuing operations 3 (12.7) (9.3)

Consolidated Statement of Financial Position

as at 30 June 2020

30 Jun
2020
31 Mar
2019
£ £
Non-current assets
Fixed assets 953,710 -
Financial assets at fair value through other comprehensive income 42,751 131,250
Financial Assets at amortised cost - 700,700
Total non-current assets

Current assets
996,461 831,950
Other receivables 1,765,213 41,296
Cash and cash equivalents 3,630 12,059
Total current assets 1,768,843 53,355
Total assets 2,765,304 885,305
Equity
Share capital 204,707 194,116
Share premium 2,237,456 954,574
Share option reserve 80,300 80,300
Investment revaluation reserve 30,435 118,934
Retained earnings (2,652,602) (1,885,275)
Equity attributable to owners of the Group and total equity (99,704) (537,351)
Current liabilities
Trade and other payables 1,032,059 672,656
Loans and other borrowings - 750,000
Total current liabilities 1,032,059 1,422,656
Non-current liabilities
Loans and other borrowings 1,832,949 -
Total equity and liabilities 2,765,304 885,305

Consolidated Statement of Cashflows

for the period ended 30 June 2020


 
30 Jun
2020
£
31 Mar
2019
£
Operating activities
Loss before tax (767,327) (321,806)
Finance expenses related to bonds
(Increase)/decrease in other receivables
128,640
(1,023,217)
120,000
(41,296)
Increase/(decrease) in other payables and bonds 795,681 323,707
Net cash flow from operating activities (866,223) 80,605
Investing activities
Purchase of fixed assets (953,710) -
Loan advanced - (700,700)
Net cash flow from investing activities (953,710) (700,700)
Financing activities
Proceeds from issue of shares 320,000 -
Cash received from the Issuance of bonds 1,491,504 630,000
Net cash flow from financing activities 1,811,504 630,000
Net increase / (decrease) in cash and cash equivalents (8,429) 9,905
Cash and cash equivalents at start of period 12,059 2,154
Cash and cash equivalents at the end of the period 3,630 12,059
Cash and cash equivalents comprise:
Cash and cash in bank 3,630 12,059
Cash and cash equivalents at end of period 3,630 12,059

Notes to the Financial Statements

for the period ended 30 June 2020

1. General information

Lombard Capital Plc is a public limited Company incorporated and domiciled in the United Kingdom. The registered office is 19 Goldington Road, Bedford, MK40 3JY.

2. Principal accounting policies

The principal Accounting Policies applied in the preparation of these Financial Statements are set out below. These policies have been consistently applied to all the periods presented, unless otherwise stated.

Basis of preparation

The financial statements of the Group have been prepared in accordance with International Financial Reporting Standards (IFRS), and IFRIC interpretations as adopted in the European Union and as applied in accordance with the provisions of the Companies Act 2006, and under the historical cost convention.

The preparation of financial statements in conformity with IFRSs requires the use of certain critical accounting estimates.  It also requires management to exercise its judgement in the process of applying the Group’s accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumption and estimates are significant to the Financial Statements, are disclosed later in these accounting policies.

The financial statements are presented in sterling (£).

The financial statements report on a period of 15 months and the comparatives are for a period of 12 months.

Going concern

During the period, the Group made a loss of £767,327 and at the period-end had net liabilities of £99,704. The cash balance at the period-end was £3,630.  2020 saw the world impacted by COVID-19, the group have not been adversely affected by the global pandemic.

The directors have confirmed that they will continue to support the Group and acknowledge that there are accrued Director remuneration amounts where the Directors have committed to ensure their drawdowns against this and any future remuneration will not exceed £50,000 for at least 12 months from the signing of these financial statements.

The Chairman’s statement has explained the current fundraising activities, by way of exercise of warrants and further loans, therefore, the directors have formed the opinion that with the revenue streams from bond issuances, the eradication of debt and the inflow of funds from the conversion of warrants, the Group will secure adequate funds for the working capital requirements of the Group in the foreseeable future.  Further, this will ensure that adequate arrangements will be in place to enable the settlement of their financial commitments as and when they fall due.

For this reason, the directors continue to adopt the going concern basis in preparing the financial statements. Whilst there are inherent uncertainties in relation to future events, and therefore no certainty over the outcome of the matters described, the directors consider that, based on financial projections and dependent on the success of their efforts to complete these activities, the Group will be a going concern for the next 12 months.

Changes in accounting policy

The following standards, amendments and interpretations applicable to the Group are in issue but are not yet effective and have not been early adopted in these financial statements. They may result in consequential changes to the accounting policies and other note disclosures. We do not expect the impact of such changes on the financial statements to be material. These are outlined in the table below:

IFRS 3 (amended)                    Business combinations

IFRS 10            (amended)                    Consolidated Financial Statements

IFRS 11            (amended)                    Joint Arrangements

IFRS 12            (amended)                    Disclosure of Interests in Other Entities

IAS 1 & IAS 8 (amended)                       Presentation of Items of Other Comprehensive Income

The directors anticipate that the adoption of these standards and interpretations in future periods will have no material impact on the financial statements of the Group.

Key estimates and assumptions

The preparation of financial statements requires the use of estimates and assumptions that affect the reported amount of assets and liabilities at the date of the financial statements and the reporting amount of income and expenses during the period. Although these estimates are based on management’s best knowledge of the amount, event or actions, actual results ultimately may differ from those estimates.

The only estimates and assumptions that may cause material adjustment to the carrying value of assets and liabilities relate to the valuation of unquoted investments and estimation of expected credit losses of receivables. These are valued in accordance with the techniques set out in the accounting policy for ‘Financial Assets and Liabilities’ on page 14.

Carrying value of unquoted investments

In assessing potential impairment of unquoted investments, management estimates the recoverable amount of each asset. Management has estimated an impairment for the carrying value of the investment due to management having insufficient evidence to support the original value held within the financial statements. This has resulted in an impairment of £113k for the current period. Also see note 8 for details in relation to investments.

Estimation of the expected credit losses of receivables

In assessing the expected credit losses, in respect of the receivables under IFRS 9, the Group considers the past performance of the receivable book along with future factors, that may affect the credit worthiness of the entire receivables. Due to the lack of information available no estimations of potential impairment have been made within these assumptions which could affect the carrying value of the receivables. However, it is management’s judgement that the carrying value of the receivables appears appropriate.

Revenue

The Group provides consultancy services.

Revenue from providing services is recognised in the accounting period in which services are rendered under IFRS 15. Any increases or decreases in estimated revenues or costs are reflected in profit or loss in the period in which the circumstances that give rise to the revision become known by management.

Taxation

The tax expense represents the sum of the tax currently payable and deferred tax.

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

Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit and is accounted for using the balance sheet liability method.  Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised.  Such assets and liabilities are not recognised if the temporary difference arises from the initial recognition of goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit.

Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries and associates, and interest in joint ventures, except where the group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future.

The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that the temporary difference will not reverse in the foreseeable future.

Current and deferred tax assets and liabilities are calculated at tax rates that are expected to apply to their respective period of realisation, provided they are enacted or substantively enacted at the balance sheet date.  Changes in deferred tax assets or liabilities are recognised as a component of tax expense in the profit or loss income statement, except where they relate to items that are recognised in other comprehensive income in which case the related deferred tax is also charged or credited directly to equity.

Segmental reporting

A segment is a distinguishable component of the Group’s activities from which it may earn revenues and incur expenses, whose operating results are regularly reviewed by the Group’s chief operating decision maker to make decisions about the allocation of resources and assessment of performance and about which discrete financial information is available.

As the chief operating decision maker reviews financial information for and makes decisions about the Group’s investment activities as a while, the directors have identified a single operating segment, that of developing secure bond investment.

Property, plant and equipment

Property, plant and equipment is stated at cost less accumulated depreciation. Cost represents the cost of acquisition or construction, including the direct cost of financing the acquisition or construction until the asset comes into use.

Depreciation on property, plant and equipment is provided to allocate the cost less the residual value by equal instalments over their estimated useful economic lives, once the asset is complete.

The expected useful lives and residual values of property, plant and equipment are reviewed on an annual basis and, if necessary, changes in useful life or residual value are accounted for prospectively.

No deprecation is charged until the asset is brought into use.

Financial assets and liabilities

i. Recognition and initial measurement                                                                           

The Group initially recognises loans and advances, trade and other receivables/payables, and borrowings plus or minus transactions costs when and only when the Group becomes party to the contractual provisions of the instruments.

Financial assets at amortised cost

The Group’s financial assets at amortised cost comprise trade and other receivables. These represent debt instruments with fixed or determinable payments that represent principal or interest and where the intention is to hold to collect these contractual cash flows.

They are initially recognised at fair value, included in current and non-current assets, depending on the nature of the transaction, and are subsequently measured at amortised cost using the effective interest method less any provision for impairment

Financial assets and liabilities continued

Financial assets at fair value through other comprehensive income

  1. Classification of financial assets at fair value through other comprehensive income

Financial assets at fair value through other comprehensive income (FVOCI) comprise:

Equity securities which are not held for trading, and which the group has irrevocably elected at initial recognition to recognise in this category. These are strategic investments and the group considers this classification to be more relevant.

Debt securities where the contractual cash flows are solely principal and interest and the objective of the group’s business model is achieved both by collecting contractual cash flows and selling financial assets.

  1. Equity investments at fair value through other comprehensive income

Financial liabilities at amortised cost            

Financial liabilities at amortised cost comprise trade and other payables. They are classified as current and non-current liabilities depending on the nature of the transaction, are subsequently measured at amortised cost using the effective interest method.

Financial assets

The Group derecognises a financial asset when the contractual rights to the cash flows from the financial asset expire, or when it transfers the rights to receive the contractual cash flows in a transaction in which substantially all of the risks and rewards of ownership of the financial asset are transferred or in which the Group neither transfers nor retains substantially all of the risks and rewards of ownership and it does not retain control of the financial asset.

On derecognition of a financial asset, the difference between the carrying amount of the asset (or the carrying amount allocated to the portion of the asset derecognised) and the sum of (i) the consideration received (including any new asset obtained less any new liability assumed) and (ii) any cumulative gain or loss that had been recognised in OCI is recognised in profit or loss.

Cash and cash equivalents

Cash and cash equivalents comprise cash in hand and current and deposit balances deposits at banks, together with other short-term highly liquid investments that are readily convertible into known amounts of cash and which are subject to an insignificant risk of changes in value. 

Equity

An equity instrument is any contract that evidences a residual interest in the assets of the Group after deducting all of its liabilities.  Equity instruments issued by the Group are recorded at the proceeds received net of direct issue costs.

The share premium account represents premiums received on the initial issuing of the share capital. Any transaction costs associated with the issuing of shares are deducted from share premium, net of any related income tax benefits.

The investment revaluation reserve represents the difference between the purchase costs of the available-for-sale investments less any impairment charge and the market value of those investments at the accounting date.

Retained earnings include all current and prior period results as disclosed in the statement of comprehensive income.

Financial liabilities

Financial liabilities are recognised in the Group’s balance sheet when the Group becomes a party to the contractual provisions of the instrument.  All interest related charges are recognised as an expense in finance cost in the income statement using the effective interest rate method.  The Group’s financial liabilities comprise trade and other payables.

The Group derecognises a financial liability when its contractual obligations are discharged, cancelled or expire.

Trade payables are recognised initially at their fair value and subsequently measured at amortised cost less settlement payments.

3. Earnings per share

The basic and diluted earnings per share is calculated by dividing the loss attributable to owners of the Group by the weighted average number of ordinary shares in issue during the period.

30 Jun
2020
£
31 Mar
2019
£
Earnings
Loss for the purposes of basic and fully diluted loss per share (767,327) (321,806)
Number of shares
Weighted average number of shares for calculating basic and fully diluted
earnings per share

6,041,726

3,455,865
30 Jun
2020
31 Mar
2019
Pence Pence
Earnings per share
Basic and fully diluted loss per share (12.7) (9.3)