Lombard Capital PLC
("Lombard" or the "Company")
Final results for the period ended 30 June 2021
Chairman’s Statement
Dear Shareholders
The period under review has been extremely difficult for the company and the directors’ well-being.
Your company has faced significant challenges during the year and whilst the company still faces headwinds, I am pleased to say these challenges are beginning to abate. The main challenges surrounded the refurbishment to completion of Gaskell House and its financing. The date for completion failed to materialise which tipped the company into default interest rates attributable to the Gaskell House loan.
The financial loss for the period was £1,797,151 (30 June 2020 : £767,327) resulting from significant interest default payments and the loss on the sale of Gaskell House. The loss included operating expenses of £580,892, property impairment of £766,230 and finance costs of £520,425. I am pleased to say that Gaskell House has been sold, in December 2021, for £2,075,000 plus VAT of £415,000.
The company has, however made some significant progress with Bond holders agreeing to extend the redemption date to 31 January 2027. Such action relieves the immediate pressure on the company’s liquidity position whilst it realigns itself without Gaskell House.
Lombard is now a company with no property assets but one which currently has cash of approximately £1.6m for working capital and to further its existing strategy, or if the directors decide, to pursue a new strategy. Its asset base also includes amounts due in relation to loans made totalling a further £1.6m and its liabilities include outstanding 2027 Bonds of £3.7m, general creditors and general operating costs. The directors are now reviewing the options available to them for an appropriate use of the company
I would like to thank our professionals and in particular the Company Secretary for his valuable support throughout this difficult year.
I also express my thanks to our Share and Bond holders for their continued support
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 2021 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 31 December 2021. The audit report included the following modification: -
“Qualified Opinion
We have audited the financial statements of Lombard Capital Plc (the ‘Group’) for the year ended 30 June 2021 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 2021 and of the Group’s loss for the year 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 £1,552,500 as at 30 June 2021. For all of these balances indicated, we were unable to obtain sufficient appropriate audit evidence to confirm their recoverability of these amounts whether any impairments were required. Consequently, we were unable to determine whether these amounts are fairly stated.
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 £1,534,911, had net liabilities of £1,571,855 and had net cash outflows from operating activities of £223,764 for the period ended 30 June 2021.
We also draw attention to note 2 in the financial statements, which explains that the group has sold Gaskell House in December 2021 from which the proceeds will ensure the group meet liabilities as they fall due within the next 12 months from the date these accounts are signed. Furthermore, the Bonds have all been extended. They were all due for repayment in January 2022 but are now all due for repayment in January 2027. The directors have also confirmed that they will continue to support the Group and have acknowledged that their future drawdowns will be restricted to £105,000 for at least 12 months from the signing of these financial statements. These events or conditions along with other matters as set forth in note 2, indicate that a material uncertainty exists that may cast significant doubt on the Group’s ability to continue as a going concern. Our opinion is not modified in respect of this matter.
In auditing the financial statements, we have concluded that the directors’ use of the going concern basis of accounting in the preparation of the financial statements is appropriate. Our evaluation of the directors’ assessment of the entity’s ability to continue to adopt the going concern basis of accounting included a review of future estimates of costs and latest bank balances to ensure the Group can cover its overheads. We also performed the following procedures:
· We have 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 obtained and reviewed the Directors’ assessment, including challenging the liquidity position.
· We checked the robustness of the Directors’ business planning process.
· We checked the adequacy of key assumptions.
· We assessed the sensitivities of the underlying assumptions.
· We reviewed documentation showing the sale of a property post year end;
· We reviewed documentation of bond holder extensions post year end;
· 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 £105,000 for at least 12 months from the signing of these financial statements.
Our responsibilities and the responsibilities of the directors with regard to going concern are described in the relevant sections of this report.”
The Annual Report of Lombard Capital Plc for year ended 30 June 2021 is available upon request from the Company’s registered office at 19 Goldington Road, Bedford, England, MK40 3JY.
Consolidated Income Statement
| for the year ended 30 June 2021 | |||
| 30 Jun | 30 Jun | ||
| 2021 | 2020 | ||
| £ | £ | ||
| Continuing operations: | |||
| Turnover | 17,611 | 63,056 | |
Operating expenses | (580,892) | (626,743) | |
| Impairment | (766,230) | - | |
| Operating loss | (1,329,511) | (563,687) | |
| Finance income | 52,785 | - | |
|
Finance Charges Loss before taxation | (520,425) (1,797,151) |
(203,640) (767,327) | |
| Taxation expense | - | - | |
| Results attributable to non controlling interest | (478,592) | - | |
| Loss for the year, attributable to owners of the Group | (1,318,559) | (767,327) | |
| Loss per share attributable to owners of the Group during the year | Pence | Pence | |
| Basic and diluted | |||
| Total and continuing operations | (10.4) | (12.7) | |
Consolidated Statement of Financial Position
as at 30 June 2021
|
30 Jun 2021 | 30 Jun 2020 | ||
| £ | £ | ||
| Non-current assets | |||
| Fixed assets | 2,070,464 | 953,710 | |
| Financial assets at fair value through other comprehensive income | 42,751 | 42,751 | |
|
Total non-current assets Current assets | 2,113,215 | 996,461 | |
| Other receivables | 1,882,427 | 1,765,213 | |
| Cash and cash equivalents | 115,933 | 3,630 | |
| Total current assets | 1,998,360 | 1,768,843 | |
| Total assets | 4,111,575 | 2,765,304 | |
| Equity | |||
| Share capital | 204,707 | 204,707 | |
| Share premium | 2,237,456 | 2,237,456 | |
| Share option reserve | 80,300 | 80,300 | |
| Investment revaluation reserve | 30,435 | 30,435 | |
| Retained earnings | (3,971,161) | (2,652,602) | |
| Non controlling interest | (153,592) | - | |
| Equity attributable to owners of the Group and total equity | (1,571,855) | (99,704) | |
| Current liabilities | |||
| Trade and other payables | 2,141,665 | 1,032,059 | |
| Loans and other borrowings | 3,541,765 | - | |
| Total current liabilities | 5,683,430 | 1,032,059 | |
| Non-current liabilities | |||
| Loans and other borrowings | - | 1,832,949 | |
| Total equity and liabilities | 4,111,575 | 2,765,304 |
Consolidated Statement of Cashflows
for the period ended 30 June 2021
| 30 Jun 2021 £ |
30 Jun 2020 £ | ||
| Operating activities | |||
| Loss before tax | (1,797,151) | (767,327) | |
| Impairment loss | 766,230 | - | |
|
Finance expenses related to bonds (Increase)/decrease in other receivables | 185,235 (117,214) |
128,640 (1,023,217) | |
| Increase/(decrease) in other payables | 1,109,606 | 795,681 | |
| Net cash flow from operating activities | 146,706 | (866,223) | |
| Investing activities | |||
| Purchase of fixed assets | (1,882,984) | (953,710) | |
| Issue of shares in subsidiary | 325,000 | - | |
| Net cash flow from investing activities | (1,557,984) | - | |
| Financing activities | |||
| Proceeds from issue of shares | - | 320,000 | |
| Cash received from the Issuance of bonds | 1,523,581 | 1,491,504 | |
| Net cash flow from financing activities | 1,523,581 | 1,811,504 | |
| Net increase / (decrease) in cash and cash equivalents | 112,303 | (8,429) | |
| Cash and cash equivalents at start of year | 3,630 | 12,059 | |
| Cash and cash equivalents at the end of the year | 115,933 | 3,630 | |
| Cash and cash equivalents comprise: | |||
| Cash and cash in bank | 115,933 | 3,630 | |
| Cash and cash equivalents at end of year | 115,933 | 3,630 | |
Notes to the Financial Statements
for the period ended 30 June 2021
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 year and the comparatives are for a period of 15 months.
Going concern
During the year, the Group made a loss of £1,797,151 and at the year-end had net liabilities of £1,571,855. The cash balance at the year-end was £115,933. 2020 saw the world impacted by COVID-19, the group has 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 £105,000 for at least 12 months from the signing of these financial statements.
The Chairman’s statement has explained the recent sale of Gaskell House and extension of the Bonds in issue, therefore, the directors have formed the opinion that there are adequate arrangements 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
There were a number of standards and interpretations which were in issue at 30 June 2021 but not effective for periods commencing 1 July 2020 and have not been adopted for these Financial Statements. The Directors have assessed the full impact of these accounting changes on the Group. To the extent that they may be applicable, the Directors have concluded that none of these pronouncements will cause material adjustments to the Group’s Financial Statements. They may result in consequential changes to the accounting policies and other note disclosures. The new standards will not be early adopted by the Group and will be incorporated in the preparation of the Financial Statements from the effective dates noted below. The new standards include:
- IFRS 17 Insurance Contracts2
- IFRS 9 Interest Rates1
- IAS39/IFRS7 Benchmark Reform1
- IFRS16 (Amendment) 1 Leases’ – Covid [1]19 related rent concessions
- IAS 1 Presentation of Financial Statements2
The directors anticipate that the adoption of these standards and interpretations in future periods will have no material effect on the financial statements of the company or group.
1 Effective for annual periods beginning on or after 1 January 2021
2 Effective for annual periods beginning on or after 1 January 2023
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 year. 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 no impairment for the carrying value of the investment held within the financial statements. 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 year 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 year 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 year. 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 year 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 one operating segment, that of investments.
Fixed Assets
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
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.
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.
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.
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.
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 year.
| 30 Jun 2021 £ |
30 Jun 2020 £ | |
| Earnings | ||
| Loss for the purposes of basic and fully diluted loss per share | (1,534,911) | (767,327) |
| Number of shares | ||
|
Weighted average number of shares for calculating basic and fully diluted earnings per share | 14,809,707 | 6,041,726 |
| 30 Jun 2021 |
30 Jun 2020 | |
| Pence | Pence | |
| Earnings per share | ||
| Basic and fully diluted loss per share | (10.4) | (12.7) |
