Annual Report
and Financial Statements 2016
Contents
2 Chairman’s Statement
5 Oil and Gas Interests
6 Strategic Report
9 Directors’ Report
12 Corporate Governance Statement
15 Remuneration Report
18 Independent Auditor’s Report
20 Consolidated Income Statement
21 Consolidated Statement of Financial Position
22 Company Statement of Financial Position
23 Consolidated Statement of Cash Flows
24 Company Statement of Cash Flows
25 Consolidated Statement of Changes in Equity
26 Company Statement of Changes of Equity
27 Notes to the Financial Statements
42 Advisers
LANSDOW NE OIL & GAS PLC
ANNUAL REPO RT & FINANCIAL STAT EME NTS 201 6
LANSDOW NE OIL & GAS PLC ANNUAL REPO RT & FINANCIAL STAT EME NTS 201 5
1
Chairman’s Statement
This year proved to be very challenging for the Company. Oil prices continued to decline, reaching a low-
point below $30/bbl in the first quarter. Furthermore, on 13 April 2016, a judgement was handed down by the
Court of Appeal overturning an earlier ruling against Transocean in a dispute with Providence Resources
("Providence") about certain spread costs.
The case related to amounts claimed by Transocean against Providence regarding the use of the semi-
submersible drilling unit, the Arctic III, in 2011/12 on the Barryroe oilfield, offshore Ireland. The total claim,
which was made by Transocean in 2012, amounted to approximately US$19 million. Providence, in defence
of its position, counterclaimed against Transocean. The Hon. Mr Justice Popplewell, in his judgement of 19
December 2014 in the Commercial Court in London, found that Transocean was in breach of contract for
failing to maintain various parts of its sub-sea equipment and that Transocean was not, therefore, entitled to
the full amount claimed. The ruling also supported Providence's position that Providence was entitled to set
off certain spread costs against Transocean's claim.
Transocean sought and was granted the right to appeal one aspect of Mr Justice Popplewell's judgement. This
specifically related to Providence's right of set off and the appeal turned on the Court's interpretation of the
wording of the consequential loss clause in the rig contract. The appeal was heard in March 2016.
The financial implications of the Court of Appeal's judgement resulted in the payment of approximately US$7
million (excluding interest and costs) to Transocean by the Barryroe partners. In line with its working interest
in the field, Lansdowne was liable for 20% of this amount (c. US $1.4 million) and any amounts to be paid in
the future.
Given the financial implications of this, Lansdowne shares were suspended pending clarification of the
Company's financial position. The Company moved to address the situation and a General Meeting held on 9
June 2016 gave shareholder approval to allot new shares and for a necessary share capital re-organisation. A
placing was then completed to raise £2.1 million to settle the outstanding amounts due and to provide working
capital and Lansdowne's shares returned to trading on 22 June 2016.
Coincident with the placing, a portion (£930,000) of the LC Capital Master Fund loan was converted into
equity at a placing price of 1p per share, the remaining loan was extended to the end of June 2017 and the interest
rate was reduced from 10% per annum to 5% per annum.
In addition, the Company entered into an option, exercisable on one or more occasions at any time for 12
months from June 2016, to require Brandon Hill Capital to use its reasonable endeavours to procure
subscribers for new ordinary shares in the capital of the Company to raise up to an aggregate additional
£500,000 (the "Additional Placing"). Exercise of the option was conditional, inter alia, upon the Company
being required to reimburse Providence Resources in respect of further costs and/or awards associated with
the Transocean dispute.
A hearing of Transocean's application in respect of Part 36 of the English Civil Procedure Rules was heard by
Mr Justice Popplewell in the Commercial Court in London on 14 October 2016 and Judgement was handed
down on 20 October 2016.
The Judgement stated that, as a result of the decision of the Court of Appeal in April 2016, Transocean was
entitled to its costs of the first instance proceedings from 30 August 2014 on the Standard Basis (i.e.
approximately 70%) but that the other Part 36 cost consequences in relation to obtaining costs on the
indemnity basis, interest on costs and the principal sum and the surcharge of £75,000 did not apply. Based on
the Judgement, Providence paid Transocean a sum amounting to some 40% of Transocean's claim for costs.
Under the Joint Operating Agreement, Lansdowne reimbursed Providence for its 20% share of these costs.
2
LANSDOWNE OIL & GAS PLC
ANNUAL REPORT & FINANCIAL STATEMENTS 2016
Chairman’s Statement
In December 2016, the Company triggered its outstanding option agreement with Brandon Hill Capital and
placed 30,000,000 new ordinary shares ("Additional Placing Shares") at a Placing Price of 1p per share to
raise £300,000 before costs to settle its share of costs and to provide general working capital.
On 9 November 2016, the Company announced that the Supreme Court ordered that permission to appeal be
refused as the appeal did not raise a point of law of general public importance.
The dispute with Transocean arose as a result of the failure of equipment on the rig whilst drilling the Barryroe
appraisal well, leading to extensive delay and cost over-run. The long-running litigation has been a painful
and distracting experience for the Company and it is a great relief to finally put this behind us.
Standard Exploration Licence 4/07 was relinquished with effect from 31 December 2016.
Lansdowne retained a 20% interest in the licence after farming out to PSE Kinsale Energy Limited ("Kinsale
Energy"), who acquired an 80% interest and operatorship and who drilled the 49/11-3 well on the Midleton
Prospect in 2015. The well found gas in the Greensand, the main reservoir target, but the volume was
considered too small to be commercial.
Kinsale Energy conducted a comprehensive post-well evaluation of the other prospective structures on the
acreage, but concluded that, based on the current data available, none of these were attractive enough in terms
of risk and reward to offer drillable targets.
Midleton was considered the prime prospect on SEL 4/07 and, following the disappointing results of the
49/11-3 well, it made sense to relinquish the acreage. This further portfolio rationalisation reduced
Lansdowne's running costs and allowed the Company to focus all its resources upon the Barryroe Field where
substantial 2C resources have been established.
In addition to portfolio rationalisation, the Company has taken other actions to further reduce running costs,
with Richard Slape, Commercial Director, leaving after the successful completion of the re-financing and
Johnny Greenall, Chairman, retiring at the AGM on 20 July 2016.
I would like to thank both of them for all their efforts and wish them the very best for the future.
Financial Results
The Group recorded an after tax loss of £1.2 million for the year ended 31 December 2016 compared to a loss
of £15.1 million for the year ended 31 December 2015.
Group operating expenses for the year were £0.7 million, compared to £1.0 million in 2015.
Net finance expense for the year was £571,000 (2015: £129,000).
Cash balances of £0.17 million (2015: £0.32 million) were held at the end of the financial year.
Total equity attributable to the ordinary shareholders of the Group has increased to £12.5 million as at 31
December 2016 from £10.4 million as at 31 December 2015.
LANSDOWNE OIL & GAS PLC
ANNUAL REPORT & FINANCIAL STATEMENTS 2016
3
Chairman’s Statement
Outlook
The Court of Appeal ruling posed a real problem at what was already a difficult time for your Company.
However, the Company was successful in its re-financing efforts and I would like to thank all that took part,
but in particular the support of Brandon Hill Capital, Beaufort Securities and LC Capital, was essential to
providing a successful outcome. I would also like to thank LC Capital for further extending the LC Capital
Master Fund Loan to 1st July 2018.
Now that the immediate problems associated with the litigation payment have been resolved, it is time to look
forward to creating value from our 20% interest in Barryroe. This is by any standards a significant resource
with attractive costs of development and production and our entire focus is to move this project forward
against a background of greatly reduced drilling and operating costs and a stabilising oil price environment.
With the recovery of the oil price, farm-in activity within the industry has started to recover and the Barryroe
Farm Out process is continuing.
Again, I would like to thank all our shareholders for your continued support.
Tim Torrington
Chairman
4
LANSDOWNE OIL & GAS PLC
ANNUAL REPORT & FINANCIAL STATEMENTS 2016
Oil and Gas Interests
The Group has interests in the following Licences, both of which are in Irish waters:
Licence
01/11 Barryroe Exploration Licence
2/07 Helvick Exploration Licence
Interest
20 per cent
10 per cent
Operator
Exola
Providence Resources Plc
Notes
Irish licensing regime
Licensing option
Gives the holder an exclusive right to apply for an Exploration Licence
a. for a defined period
b. in return for undertaking an agreed work programme.
Exploration Licence
A "Standard" licence covers an agreed work programme in water less than 200 metres deep. The work
programme usually includes an exploration well. The licence period is six years.
Lease Undertaking
Gives the holder an exclusive right to apply for a Petroleum Lease
a. for a defined period
b. in return for undertaking an agreed work programme.
LANSDOWNE OIL & GAS PLC
ANNUAL REPORT & FINANCIAL STATEMENTS 2016
5
Strategic Report
For the year ended 31 December 2016
This Strategic Report has been prepared to inform shareholders and help them to assess how the Directors
have performed their duty to promote the success of Lansdowne Oil & Gas plc ("the Company") and its
subsidiaries (together "the Group").
Principal activities
The Group is an upstream oil and gas group, focused on exploration and appraisal opportunities for oil and
gas reserves offshore Ireland. The Group has targeted the Irish offshore shelf areas for exploration, as these
provide shallow water prospects (generally less than 100 metres), and relatively low drilling costs. These
factors, combined with favourable fiscal terms, have the potential to deliver high value oil and gas reserves.
Review of business
Details of the Group's activities during the year and its position at the end of the year are given in the
Chairman's Statement.
The Group and Company Statements of Financial Position as at 31 December 2016 and 31 December 2015
are shown on pages 21 and 22, respectively. Group net assets at 31 December 2016 were £12.5 million
(2015: £10.4 million). At 31 December 2016, the Group held £0.17 million (2015: £0.32 million) as cash or
short-term deposits.
The Group had intangible assets totaling £14.4 million (2015: £14.3 million) at the reporting date. These
assets relate to the Group's exploration licences in the Celtic Sea and their associated work programmes.
During the year, the Group had two full-time Executive Directors, one of whom resigned in June 2016, with
administration and technical support provided by LHM Casey McGrath under a service agreement. These
costs, together with the costs associated with the Company's listed status and general overheads, account for
the administrative expenses of £0.7 million (2015: £1.0 million).
A loss after tax of £1.2 million (2015: £15.1 million) was recorded in the year and the basic and diluted loss
per share for the year was 0.4p (2015: 10.2p).
Key performance indicators
The Group is not yet producing oil and gas and so has no income. Consequently, the Group is not expected to
report profits until it disposes of or is able to profitably develop or otherwise turn to account its exploration
project.
The Board monitors the activities and performance of the Group on a regular basis and uses both financial
and non-financial indicators to assess the Group's performance.
Principal risks and uncertainties
The Directors are responsible for the effectiveness of the Group's risk management activities and internal
control processes. As a participant in the upstream oil & gas industry, the Group is exposed to a wide range
of risks in the conduct of its operations. These risks include:
Financial risks:
(cid:120) Ability to raise finance to maintain licence participation
(cid:120) Cost inflation
(cid:120) Oil and gas price movements
(cid:120) Adverse taxation legislative changes
(cid:120) Third party counterparty credit risk
(cid:120) Adverse foreign exchange movements
6
LANSDOWNE OIL & GAS PLC
ANNUAL REPORT & FINANCIAL STATEMENTS 2016
Strategic Report
For the year ended 31 December 2016
Operational risks:
(cid:120) Loss of key employees
(cid:120) Delay and cost overrun on projects, including weather related delay
(cid:120) HSE incidents
(cid:120) Poor reservoir performance
(cid:120) Exploration and appraisal well failures
(cid:120) Failure of third party services
Strategic and external risks:
(cid:120) Future deterioration of capital markets, inhibiting efficient equity and/or debt raising for developments
(cid:120) Commercial misalignment with co-venturers
(cid:120) Material fall in oil or gas prices
Market risks:
The Group is exposed to a variety of risks, including the effects of changes in interest rates and foreign
currency exchange rates. These are discussed in note 10. In the normal course of business, the Group also
faces certain other non-financial or non-quantifiable risks. To the extent that the Group's oil and gas assets
can be successfully developed, the Group's assets, revenues and cash flows may become dominated by
Dollar or Euro-based oil and gas operations. Accordingly, the Sterling/Dollar and Sterling/Euro exchange
rates are important to the Sterling prices of the Shares traded on the AIM market of the London Stock
Exchange.
The tables below sets forth, for the periods and dates indicated, the exchange rate for the Dollar against
Sterling and for the Euro against Sterling.
Dollar/Sterling Exchange Rates (Dollar per Pound Sterling)
2011
2012
2013
2014
2015
2016
At end of year
1.55
1.61
1.65
1.56
1.48
1.23
Average Rate*
1.61
1.59
1.56
1.65
1.53
1.35
Euro/Sterling Exchange Rates (Euro per Pound Sterling)
2011
2012
2013
2014
2015
2016
At end of year
1.20
1.23
1.20
1.28
1.36
1.17
Average Rate*
1.15
1.23
1.18
1.24
1.38
1.22
High
1.67
1.62
1.65
1.72
1.59
1.49
High
1.20
1.28
1.23
1.29
1.44
1.37
Low
1.55
1.52
1.49
1.55
1.47
1.21
Low
1.10
1.18
1.14
1.19
1.34
1.11
* The average rates are calculated based on the last business day of each full month during the relevant year.
LANSDOWNE OIL & GAS PLC
ANNUAL REPORT & FINANCIAL STATEMENTS 2016
7
Strategic Report
For the year ended 31 December 2016
Details of how the Group manages interest rate and foreign currency exchange risks are set out in note 10.
There is no assurance that the Group's exploration and development activities will be successful. The Group's
activities may also be curtailed, delayed or cancelled not only as a result of adverse weather conditions but
also as a result of shortage or delays in the delivery of drilling rigs and other equipment which, at times, are
in short supply. The Group seeks to manage these risks through portfolio management, balancing risk across
a range of prospects and leads, which carry varying technical and commercial risks, and carefully managing
the financial exposure to each asset in the portfolio through the arrangements set out with counterparties.
The Group competes with other Exploration & Petroleum companies, some of whom have much greater
financial resources than the Group, for the identification and acquisition of oil and gas licences and
properties and also for the recruitment and retention of skilled personnel.
The market price of hydrocarbon products is volatile and is not within the control of the Group. If significant
declines occur in the price of oil or gas, or detrimental changes occur to the Irish fiscal regime, the economic
commerciality of the Group's projects can be significantly reduced or rendered uneconomic. The successful
progression of the Group's oil and gas assets depends not only on technical success, but also on the ability of
the Group to obtain appropriate financing through equity financing, debt financing, farm downs or other
means. The availability of such funding will continue to be influenced by macro-economic events, including
oil and gas price fluctuations and the overall state of the economy, both of which remain outside the control
of the Group. There is no assurance that the Group will be successful in obtaining required financing going
forward. If the Group is unable to obtain additional financing needed to fulfil its planned work programmes,
some interests may be relinquished and/or the scope of the operations reduced.
The risks set out are not exhaustive and additional risks and uncertainties may arise or become material in the
future. Any of the risks, as well as other risks and uncertainties discussed in this document, could have a
material adverse effect on our business.
Stephen Boldy
Chief Executive Officer
23 June 2017
8
LANSDOWNE OIL & GAS PLC
ANNUAL REPORT & FINANCIAL STATEMENTS 2016
Directors’ Report
For the year ended 31 December 2016
The Directors present their directors' report and audited financial statements for the year ended 31 December
2016.
Directors
In accordance with the Company's Articles of Association, Directors retire and, being eligible, offer themselves
for re-election. Stephen Boldy has a service contract with an unexpired notice period of one year. Richard Slape
had a service contract with an unexpired notice period of six months and he resigned from his position on 17 June
2016. Details of the remuneration of the Directors and the interests of the Directors in the share capital and share
options of the Company are disclosed in the Remuneration Report included on pages 15 to 17.
Details of executive director and company secretary
Dr Stephen Boldy (Chief Executive Officer), aged 61, joined Ramco Energy plc in March 2003, becoming CEO
of Lansdowne in April 2006. From 1980 to 1984, Dr Boldy worked as a petroleum geologist for the Petroleum
Affairs Division of the Department of Energy in Dublin and then spent almost 19 years with Amerada Hess
Corporation, where his appointments included UK Exploration Manager and International Exploration Manager.
Dr Boldy has extensive experience of working Irish offshore basins and the basins west of Britain and earned his
PhD in geology from Trinity College Dublin.
Con Casey, aged 56, was appointed Company Secretary in January 2013. Mr. Casey has an honours degree in
Business Management from Trinity College and is a Fellow of the Association of Chartered Certified
Accountants. He has over 30 years’ experience in advising companies in the natural resources sector as well as
acting as adviser to a number of publicly quoted companies and semi-state organisations. He specialises in the
area of corporate finance and is a founding partner of LHM Casey McGrath.
Details of non executive directors
Viscount Torrington (Non-Executive Chairman)†*, aged 73, graduated from Oxford University as a geologist
in 1964. He served in technical and managerial roles with Anglo American plc and Lonrho plc. In 1975, he
became Managing Director of the Attock Oil Company, later Anvil Petroleum plc. The latter was merged with
Berkeley Exploration in 1986, and acquired by Ranger Oil the same year. In 1987, he became a Director of
Flextech plc and chief executive of Exploration & Production Services (Holdings) Limited, better known as
Expro, a major UK oilfield services contractor. From 1995 to 2000, he served as Managing Director of Heritage
Oil & Gas Limited, later listed in Toronto as Heritage Oil Corporation. He has also served as a non-executive
Director of other listed companies. Tim was appointed Chairman effective date 20 July 2016.
Steven Lampe (Non-Executive Director)†, aged 58, an investment manager based in New York, USA, is
managing member of Lampe, Conway & Co LLC, a limited liability company organised in the state of Delaware.
John Aldersey-Williams (Non-Executive Director)*, aged 54, has worked in energy since 1984. He started his
career as an oil company geologist before completing an MBA. He then spent some years in investment banking,
with an energy focus, before returning to the oil industry in financial and commercial roles. From 1999 to 2001,
he served as finance director to Texaco's North Sea Upstream Business Unit. From 2001 until 2008, he was a
consultant active across the energy sector, before being appointed a Director and subsequently CEO of SeaEnergy
PLC in 2012. He has been a director of Lansdowne Oil & Gas plc since 2012.
Jeffrey Auld* (Non-Executive Director), aged 50, has more than 20 years of financial and commercial experience
in upstream oil and gas development and production, and is currently a director of Sabalo Energy Limited and
President and CEO of Serinus Energy Inc. His career has involved periods working for exploration and
production companies – Premier Oil, PetroKazakhstan and Equator Exploration; as well as periods spent in
financial institutions – Goldman Sachs, Canaccord Adams and Macquarie. He was appointed as a Non-Executive
Director of Lansdowne Oil & Gas plc in September 2013.
* A member of the Audit Committee
† A member of the Remuneration Committee
LANSDOWNE OIL & GAS PLC
ANNUAL REPORT & FINANCIAL STATEMENTS 2016
9
Directors’ Report
For the year ended 31 December 2016
Substantial shareholders
The Directors have been notified of the following interests in 3 per cent or more of the Company's issued share
capital at 31 December 2016 and 31 May 2017:
31 December 2016
31 May 2017
No. of Shares
% of Capital No. of Shares
% of Capital
Lampe Conway & Co LLC/LC Capital Master
Fund Limited
Brandon Hill Capital
Hargreaves Stockbrokers
SeaEnergy Hibernia Limited (a subsidiary of
SeaEnergy plc)
Beaufort Securities
Jarvis Investment Management
Artemis Investment Management
Directors (page 14)
138,160,668
58,000,000
-
30,194,193
27,795,299
27,621,288
23,100,000
16,831,797
27.08%
11.37%
-
138,160,668
53,000,000
28,320,605
5.92%
5.45%
5.41%
4.53%
3.58%
-
18,056,174
71,859,982
20,750,000
16,831,797
27.08%
10.39%
5.55%
-
3.54%
14.09%
4.07%
3.30%
The Directors are not aware of any other holding of 3% or more of the share capital of the Company.
Dividends
The directors do not recommend the payment of a dividend (2015: £Nil).
Directors' statement as to disclosure of information to auditors
The directors who were members of the board at the time of approving the directors' report are listed on page 9.
Having made enquiries of fellow directors and of the Group's auditors, each of these directors confirms that:
(cid:120) to the best of each Director's knowledge and belief, there is no information (that is, information needed by the
Group's auditors in connection with preparing their report) of which the Group's auditors are unaware; and
(cid:120) each Director has taken all the steps a Director might reasonably be expected to have taken to be aware of
relevant audit information and to establish that the Group's auditors are aware of that information.
Post Balance Sheet Events
The LC Capital Master Fund loan has been further extended to 1st July 2018.
Future developments
The Group's future outlook is described in the Chairman's Statement on page 2 to 4.
The Group's prospects are in the exploration and appraisal stage and does not contain any proven reserves.
A number of companies have expressed an interest in farming into the Group's licences.
The Group aims to finance the work programme obligations related to the licences which it holds by either
reducing its equity interest through new participants farming in, by the issue of new share capital, or by a
combination of both.
The Directors have prepared the financial statements on the going concern basis which assumes that the Group
and Company will continue in operational existence for at least twelve months from the date of these financial
statements as discussed further in the Statement of Accounting Policies section (d) on page 27.
10
LANSDOWNE OIL & GAS PLC
ANNUAL REPORT & FINANCIAL STATEMENTS 2016
Directors’ Report
For the year ended 31 December 2016
Financial instruments
Risk exposures and financial risk management policies and objectives are discussed in note 10 to the financial
statements.
Auditors
In accordance with Section 489 of the Companies Act 2006, a resolution for the re-appointment of KPMG as
auditor of the Group is to be proposed at the forthcoming Annual General Meeting.
By order of the Board
Con Casey FCCA
Company Secretary
23 June 2017
LANSDOWNE OIL & GAS PLC
ANNUAL REPORT & FINANCIAL STATEMENTS 2016
11
Corporate Governance Statement
For the year ended 31 December 2016
Lansdowne Oil & Gas plc, as an AIM-listed company, is not required to comply with the UK Corporate
Governance Code ("the Code") published by the Financial Reporting Council. However, the Board recognises
the importance of sound corporate governance and has ensured that the Group has adopted policies and
procedures which reflect such of the principles of good governance and the Code as are appropriate to the
Group's size.
Directors
At 31 December 2016, the Board comprised of a Non-Executive Chairman, one Executive Director and three
further Non-Executive Directors. Biographies of the Directors are presented on page 9. Viscount Tim
Torrington is the senior Non-Executive Director and Chairman.
Board Meeting attendance record
S A R Boldy
T Torrington
S G Lampe
J Aldersey-Williams
J Auld
2016 2016
Eligible Attended
25 25
25 23
25 23
25 23
25 24
The Board is responsible for setting overall Group strategy, policy, monitoring Group performance and
authorising significant transactions.
The Board meets not less than four times a year and has adopted a schedule of matters reserved for its decision.
All Directors have full and timely access to information and may take independent professional advice at the
Group's expense.
The Board has two standing committees with terms of reference as follows:
Audit Committee
The Audit Committee comprises John H Aldersey-Williams (Chairman), Jeffrey Auld and Lord Torrington. It
determines the terms of engagement of the Group's Auditors and, in consultation with the Auditors, the scope
of the audit. The Audit Committee receives and reviews reports from management and the Group's Auditors
relating to the interim and annual financial statements and the accounting and internal control systems in the
Group. The Audit Committee has unrestricted access to, and oversees, the relationship with the Group's
Auditors, KPMG. The Audit Committee meets at least twice a year and meets with the Group's Auditors at
least once a year. Other Directors may attend by invitation.
The independent auditors are engaged to express an opinion on the financial statements. They review and test
the systems of internal financial control and data contained in the financial statements to the extent necessary
to express their audit opinion. They discuss with management the reporting of operational results and the
financial position of the Group and present their findings to the Audit Committee.
The Audit Committee reviews the independence and objectivity of the independent auditors. The Committee
reviews the nature and amount of non-audit work undertaken by KPMG each year to satisfy itself that there is
no effect on their independence. Details of this year's fees are given in note 12 to the accounts. The Committee
is satisfied that KPMG is independent.
The Group does not have an internal audit function but the need for such a function is reviewed at least
annually. It is the current view of the Board that an internal audit function is not required given the size and
nature of the operations of the Group.
12
LANSDOWNE OIL & GAS PLC
ANNUAL REPORT & FINANCIAL STATEMENTS 2016
Corporate Governance Statement
For the year ended 31 December 2016
Remuneration Committee
The Remuneration Committee comprises of Steven Lampe and Lord Torrington (Chairman). It reviews the
scale and structure of the Executive Directors' remuneration and the terms of their service or employment
contracts, including share option schemes and other bonus arrangements. The remuneration and terms and
conditions of the Non-Executive Directors are set by the entire Board. No Director or manager of the Group
may participate in any meeting at which discussion or any decision regarding his own remuneration takes
place. The Remuneration Committee also administers any share option schemes or other employee incentive
schemes adopted by the Company from time to time.
The Remuneration Report is presented on pages 15 to 17 and contains a statement of remuneration policy and
details of the remuneration of each Director.
Risk management and internal control
The Board has established an ongoing process for identifying, evaluating and managing the significant risks
faced by the Group. Management from each business area and major project identify their risks, the likelihood
of those risks occurring, the impact if they do occur and the actions being taken to manage and mitigate those
risks to an acceptable level. This process is reviewed by the Board annually and accords with the Turnbull
guidance on internal control. It has been in place throughout the year under review and up to the date of this
report.
The Board of Directors has overall responsibility for maintaining a sound system of internal financial control
to safeguard shareholders' investment and the Group's assets. Such a system can provide reasonable but not
absolute assurance that assets are safeguarded, transactions are authorised and correctly recorded, and that
material errors and irregularities are either prevented or would be detected within a timely period. The system,
which has been in place throughout the year and up to the date of this report, comprises the following main
elements, all of which are reviewed by the Board:
(cid:120) An organisation structure with clearly defined lines of responsibility and delegation of authority.
(cid:120) Appointment of employees of the necessary calibre to fulfil their allotted responsibilities.
(cid:120) Established procedures for budgeting and capital expenditure.
(cid:120) Monthly reporting of actual performance compared to budget, reviewed by the Board quarterly.
(cid:120) Rolling monthly forecasts for the financial year.
(cid:120) The Group reports to shareholders on a half-yearly basis to ensure timely reporting of financial results.
Investor relations
Communications with investors are given high priority. The Group keeps its institutional shareholders up to
date with its business and objectives, and obtains their views on the Group, by means of periodic presentations.
Additionally, the Group is ready to respond appropriately to particular issues or questions that may be raised
by investors. All shareholders are sent the Annual Report and financial statements, the Interim Report and can
also elect to receive all press releases, many choosing to receive this information by e-mail.
The Group has a website, www.lansdowneoilandgas.com, which is regularly updated and contains a wide
range of information about the Group including the previous Annual Reports and press releases. The Board
views the AGM as an opportunity to communicate with private investors and encourages them to attend. The
Board aims to ensure that the Chairmen of the Audit and Remuneration Committees are available to answer
questions. Shareholders are invited to ask questions and are given the opportunity to meet the Directors
informally following the meeting. The Company complies with best practice in ensuring that the Notice of the
AGM is dispatched to shareholders at least 21 days ahead of the meeting.
LANSDOWNE OIL & GAS PLC
ANNUAL REPORT & FINANCIAL STATEMENTS 2016
13
Corporate Governance Statement
For the year ended 31 December 2016
Directors' responsibilities
The directors are responsible for preparing the Annual Report and the Group and Company financial
statements in accordance with applicable law and regulations.
Company law requires the directors to prepare group and parent company financial statements for each
financial year. Under that law, they are required to prepare the group financial statements in accordance with
IFRSs as adopted by the EU and applicable law and have elected to prepare the parent company financial
statements on the same basis.
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 parent company and of their profit or loss for
that period. In preparing each of the group and parent company financial statements, the directors are required
to:
(cid:120)
(cid:120) make judgements and estimates that are reasonable and prudent;
(cid:120)
(cid:120)
state whether they have been prepared in accordance with IFRSs as adopted by the EU; and
prepare the financial statements on the going concern basis unless it is inappropriate to presume that the
group and the parent company will continue in business.
select suitable accounting policies and then apply them consistently;
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain
the parent company's transactions and disclose with reasonable accuracy at any time the financial position of
the parent company and enable them to ensure that its financial statements comply with the Companies Act
2006. They have general responsibility for taking such steps as are reasonably open to them to safeguard the
assets of the group and to prevent and detect fraud and other irregularities.
The directors are responsible for the maintenance and integrity of the corporate and financial information
included on the company's website. Legislation in the UK governing the preparation and dissemination of
financial statements may differ from legislation in other jurisdictions.
Going concern
The financial statements have been prepared on the going concern basis which assumes that the Company and
its subsidiaries will continue in operational existence for the foreseeable future.
The Directors consider that it is appropriate to adopt a going concern assumption in preparing these financial
statements for the reasons outlined in accounting policy (d) to the financial statements.
By order of the Board
Con Casey FCCA
Company Secretary
23 June 2017
14
LANSDOWNE OIL & GAS PLC
ANNUAL REPORT & FINANCIAL STATEMENTS 2016
Remuneration Report
For the year ended 31 December 2016
Introduction
The following report details how the Company's remuneration committee determines Directors' remuneration
packages through the application of the Company's remuneration policy.
Remuneration Committee
The members of the Remuneration Committee (the Committee) are Steven Lampe and Lord Torrington
(Chairman), both of whom are Non-Executive Directors of the Company.
The Committee, which meets at least twice each year, is responsible to the Board for determining the terms and
conditions of employment of the Executive Directors and their remuneration packages (including pension rights
and any compensation payments) and oversees the operation of the Company's Employee Share Option Scheme.
The Committee has access to external independent professional advice, at the Company's expense, as the
Committee sees fit. None of the Committee members has any personal financial interest in the matters to be
decided by the Committee or any conflicts arising from cross-directorships or day-to-day involvement in the
running of the Group.
Remuneration Policy
The Group operates in the international oil and gas industry and aims to attract, reward, motivate and retain top
executives in a manner appropriate to that industry and with the objective of long term accumulation of value for
shareholders. The remuneration packages currently being offered are intended to be competitive and comprise a
mix of performance related and non-performance related remuneration designed to incentivise Directors. The
packages are in line with industry norms.
Directors' Service Contracts
S A R Boldy has and R Slape had service contracts with the Company with a rolling notice period of one year
and six months respectively. The other Directors do not have service contracts with the Company.
The remuneration of Non-Executive Directors is determined by the Board after consideration of appropriate
external comparisons and the responsibilities and time involvement of individual Directors. No Director is
involved in deciding his own remuneration.
Directors' Remuneration Package
Executive Directors' remuneration packages, which are reviewed annually, consist of annual salary, performance
related bonuses, health and other benefits, pension contributions and share options.
S A R Boldy is entitled to annual bonus equal to 2 per cent of the audited consolidated after tax profits of the
Company and its subsidiaries subject to a cap equal to his annual salary during the relevant financial year. He is
also entitled to bonus payments on the entering into of binding agreements with third parties in respect of any
farm-out arrangements relating to the Group's assets, with a requirement to utilise any such bonus payments to
subscribe for Ordinary Shares of the Company.
Pensions
Directors' pensions are based on salary only, with bonuses and other discretionary benefits excluded.
Retirement benefits accrue to two Executive Directors under the Group's defined contribution scheme where the
Company contributes at a rate of between 7 and 15 per cent of salary, dependent on contractual obligations.
LANSDOWNE OIL & GAS PLC
ANNUAL REPORT & FINANCIAL STATEMENTS 2016
15
Remuneration Report
For the year ended 31 December 2016
Directors' Detailed Emoluments
Salary
and fees
£’000
Performance
Related Bonus
£’000
Benefits
£’000
Pension
Contributions
£’000
Executive Directors
SAR Boldy
R Slape (resigned 17 June 2016)
Non-Executive Directors
J Greenall (resigned 20 July 2016)
T Torrington
SG Lampe (1)
J H Aldersey-Williams
JD Auld
2016
2015
158
101
22
28
8
8
23
348
450
-
-
-
-
-
-
-
-
47
-
-
-
-
-
-
-
-
9
-
-
-
-
-
-
-
-
39
2016
Total
£’000
158
101
22
28
8
8
23
348
-
2015
Total
£’000
243
187
40
30
15
-
30
-
545
(1) All fees are paid to Lampe Conway & Co LLC. S Lampe is Managing member of Lampe Conway & Co
LLC.
In addition to the above cash emoluments, the expense in the year for share options previously awarded to S A R
Boldy was £Nil (2015: £15,720), J Greenall £Nil (2015: £1,310), T Torrington £Nil (2015: £1,310), and SG
Lampe £Nil (2015: £1,310).
Interests in Shares
The beneficial interests of the Directors who held office at 31 December 2016 in the ordinary shares of the
Company are as follows:
SAR Boldy
T Torrington
S G Lampe
J H Aldersey-Williams
J D Auld
At
31 Dec
2015
At At
31 Dec 31 May
2016 2017
700,660
2,105,880
196,078
240,000
-
6,400,660 6,400,660
4,916,500 4,916,500
2,446,078 2,446,078
240,000 240,000
2,828,619 2,828,619
3,242,618
16,831,797 16,831,797
S G Lampe has an interest in 138,160,668 shares in the Company held by LC Capital Master Fund Limited.
S G Lampe is managing member of Lampe Conway & Co. LLC, the investment manager of LC Capital Master
Fund Limited.
16
LANSDOWNE OIL & GAS PLC
ANNUAL REPORT & FINANCIAL STATEMENTS 2016
Remuneration Report
For the year ended 31 December 2016
Interests in Share Options
SAR Boldy
SAR Boldy
T Torrington
T Torrington
S G Lampe
Exercise
Price
At
31 Dec
2015
2016
Granted
2016
Lapsed
36.5p
600,000
25p 1,000,000
36.5p
50,000
25p
100,000
36.5p
50,000
-
-
-
-
-
-
-
-
-
-
At
31 Dec
2016
600,000
1,000,000
50,000
100,000
50,000
Normal
Exercise
Dates
1st June 2015
to 31 May 2022
20 May 2014
to 19 May 2021
1st June 2015
to 31 May 2022
20 May 2014
to 19 May 2021
1st June 2015
to 31 May 2022
Details of the performance criteria, conditional upon which the options are exercisable, are set out in note 14 to
the financial statements. During 2016, the share price ranged between a high of 2.30p and a low of 1.06p.
On behalf of the Board
Lord Torrington
Chairman, Remuneration Committee
23 June 2017
LANSDOWNE OIL & GAS PLC
ANNUAL REPORT & FINANCIAL STATEMENTS 2016
17
Independent Auditor’s Report
For the year ended 31 December 2016
We have audited the financial statements of Lansdowne Oil & Gas plc for the year ended 31 December 2016.
The financial reporting framework that has been applied in their preparation is applicable law and International
Financial Reporting Standards (IFRSs) as adopted by the EU and, as regards the parent company financial
statements, as applied in accordance with the provisions of the Companies Act 2006. Our audit was conducted in
accordance with International Standards on Auditing (ISAs) (UK & Ireland).
Opinions and conclusions arising from our audit
1. Our opinion on the financial statements is unmodified
In our opinion:
(cid:120) the financial statements give a true and fair view of the state of the group's and the company's affairs as at 31
December 2016 and of the group's loss for the year then ended;
(cid:120) the group financial statements have been properly prepared in accordance with IFRSs as adopted by the EU;
(cid:120) the company financial statements have been properly prepared in accordance with IFRSs as adopted by the
EU and as applied in accordance with the provisions of the Companies Act 2006; and
(cid:120) the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.
2. Our opinion on the financial statements is accompanied by an emphasis of matter - going concern
In forming our opinion on the financial statements, which is not modified, we have considered the adequacy of
the disclosure made on page 27 of the financial statements concerning the group and company's ability to
continue as a going concern. The group incurred a net loss of £1.2 million during the year ended 31 December
2016 and, at that date, had net current liabilities of £12.5 million. These conditions, along with the other matters
explained on page 27 to the financial statements, indicate the existence of a material uncertainty which may cast
significant doubt about the group and the company's ability to continue as a going concern. The financial
statements do not include the adjustments that would result if the group or the company was unable to continue
as a going concern.
3. Our conclusions on other matters on which we are required to report by the Companies Act 2006 are
set out below
In our opinion, the information given in the Strategic Report and the Directors' Report for the financial year for
which the financial statements are prepared is consistent with the financial statements.
4. We have nothing to report in respect of matters on which we are required to report by exception
We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to
report to you if, in our opinion:
(cid:120)
adequate accounting records have not been kept by the parent company, or returns adequate for our audit
have not been received from branches not visited by us; or
(cid:120)
the parent company financial statements are not in agreement with the accounting records and returns; or
(cid:120)
certain disclosures of directors' remuneration specified by law are not made; or
(cid:120) we have not received all the information and explanations we require for our audit.
Basis of our report, responsibilities and restrictions on use
As explained more fully in the Directors' Responsibilities Statement set out on page 14, the directors are
responsible for the preparation of the financial statements and for being satisfied that they give a true and fair
view. Our responsibility is to audit, and express an opinion on, the financial statements in accordance with
applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply
with the Financial Reporting Council's Ethical Standards for Auditors.
An audit undertaken in accordance with ISAs (UK & Ireland) involves obtaining evidence about the amounts
and disclosures in the financial statements sufficient to give reasonable assurance that the financial statements
are free from material misstatement, whether caused by fraud or error. This includes an assessment of: whether
the accounting policies are appropriate to the Company's circumstances and have been consistently applied and
adequately disclosed; the reasonableness of significant accounting estimates made by the directors; and the
overall presentation of the financial statements.
18
LANSDOWNE OIL & GAS PLC
ANNUAL REPORT & FINANCIAL STATEMENTS 2016
Independent Auditor’s Report
For the year ended 31 December 2016
In addition, we read all the financial and non-financial information in the Annual Report to identify material
inconsistencies with the audited financial statements and to identify any information that is apparently materially
incorrect based on, or materially inconsistent with, the knowledge acquired by us in the course of performing the
audit. If we become aware of any apparent material misstatements or inconsistencies, we consider the
implications for our report.
Whilst an audit conducted in accordance with ISAs (UK and Ireland) is designed to provide reasonable
assurances of identifying material misstatements or omissions, it is not guaranteed to do so. Rather the auditor
plans the audit to determine the extent of testing needed to reduce to an appropriately low level the probability
that the aggregate of uncorrected and undetected misstatements does not exceed materiality for the financial
statements as a whole. This testing requires us conduct significant audit work on a broad range of assets,
liabilities, income and expense as well as devoting significant time of the most experienced members of the audit
team, in particular the engagement partner responsible for the audit, to subjective areas of the accounting and
reporting.
This report is made solely to the company'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 company'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 company and the
company's members as a body, for our audit work, for this report, or for the opinions we have formed.
David Meagher (Senior Statutory Auditor)
for and on behalf of KPMG, Statutory Auditor
Chartered Accountants, 1 Stokes Place,
St. Stephen's Green, Dublin 2
23 June 2017
LANSDOWNE OIL & GAS PLC
ANNUAL REPORT & FINANCIAL STATEMENTS 2016
19
Consolidated Income Statement
For the year ended 31 December 2016
Administrative expenses
Impairment of intangible assets
Operating loss
Finance costs
Loss for the year before tax
Income tax credit
Loss for the year
Loss per share (pence):
Basic loss per ordinary share
Diluted loss per ordinary share
Notes
15
16
3
3
2016
£’000
(665)
-
_________
(665)
(571)
_________
(1,236)
-
_________
(1,236)
_________
(0.4p)
_________
(0.4p)
_________
2015
£’000
(1,048)
(14,949)
_________
(15,997)
(129)
_________
(16,126)
1,052
_________
(15,074)
_________
(10.2p)
_________
(10.2p)
_________
The results for the period all arise on continuing operations. The group has no other comprehensive income or
expense in the current or prior year.
The accompanying notes on pages 27 - 41 form an integral part of these financial statements.
These financial statements were approved by the Board of Directors on 23 June 2017.
John Aldersey-Williams
Director
Stephen Boldy
Director
20
LANSDOWNE OIL & GAS PLC
ANNUAL REPORT & FINANCIAL STATEMENTS 2016
Consolidated Statement of Financial Position
As at 31 December 2016
Assets
Notes
2016
£’000
2015
£’000
Non-Current Assets
Intangible assets
Current Assets
Trade and other receivables
Cash and cash equivalents
Total Assets
Equity and Liabilities
Shareholders' Equity
Share capital
Share premium
Currency translation reserve
Share-based payment reserve
Accumulated deficit
Total Equity
Non-Current Liabilities
Provision for liabilities
4
6
11
11
9
Current Liabilities
Shareholder loan 8
7
Trade and other payables
Total Liabilities
Total Equity and Liabilities
14,399
_________
38
165
_________
203
_________
14,602
_________
11,571
25,126
59
923
(25,186)
_________
12,493
_________
261
1,587
261
14,335
_________
92
320
_________
412
_________
14,747
_________
8,087
25,247
59
923
(23,950)
_________
10,366
_________
240
1,968
2,173
_________
_________
2,109
4,381
_________
_________
14,602
_________
14,747
_________
The accompanying notes on pages 27 - 41 form an integral part of these financial statements.
These financial statements were approved by the Board of Directors on 23 June 2017.
John Aldersey-Williams
Director
Stephen Boldy
Director
LANSDOWNE OIL & GAS PLC
ANNUAL REPORT & FINANCIAL STATEMENTS 2016
21
Company Statement of Financial Position
As at 31 December 2016
Assets
Current Assets
Trade and other receivables
Cash and cash equivalents
Total Assets
Equity and Liabilities
Shareholders' Equity
Share capital
Share premium
Share-based payment reserve
Accumulated deficit
Total Equity
Notes
6
11
11
Current Liabilities
Shareholder loan 8
7
Trade and other payables
Total Liabilities
Total Equity and Liabilities
2016
£’000
2015
£’000
38
164
_________
202
_________
11,571
25,126
923
(39,260)
_________
(1,640)
_________
1,587
255
_________
1,842
_________
202
_________
92
319
_________
411
_________
8,087
25,247
923
(36,359)
_________
(2,102)
_________
1,968
545
_________
2,513
_________
411
_________
The accompanying notes on pages 27 - 41 form an integral part of these financial statements.
These financial statements were approved by the Board of Directors on 23 June 2017.
John Aldersey-Williams
Director
Stephen Boldy
Director
22
LANSDOWNE OIL & GAS PLC
ANNUAL REPORT & FINANCIAL STATEMENTS 2016
Consolidated Statement of Cash Flows
For the year ended 31 December 2016
Notes
Cash flows from operating activities
Loss for the year
Adjustments for:
Impairment of assets 4
Interest payable and similar charges
Equity settled share-based payment expense 14
Tax credit 16
Decrease in trade and other receivables
(Decrease)/increase in trade and other payables
Net cash used in operating activities
Cash flows from investing activities
Acquisition of intangible exploration assets
Net cash used in investing activities
Cash flows from financing activities
Proceeds from the issue of share capital
Proceeds from new loan
Repayment of loan
Net cash from financing activities
Net (decrease)/increase in cash and cash equivalents
Cash and cash equivalents at 1 January
Cash and cash equivalents at 31 December
4
11
2016
£’000
(1,236)
-
571
-
-
54
(1,913)
_________
(2,524)
_________
(64)
_________
(64)
_________
3,363
-
(930)
_________
2,433
_________
(155)
320
_________
165
_________
2015
£’000
(15,074)
14,949
127
29
(1,052)
105
196
_________
(720)
_________
(2,133)
_________
(2,133)
_________
1,034
1,863
-
_________
2,897
_________
44
276
_________
320
_________
The accompanying notes on pages 27 - 41 form an integral part of these financial statements.
LANSDOWNE OIL & GAS PLC
ANNUAL REPORT & FINANCIAL STATEMENTS 2016
23
Company Statement of Cash Flows
For the year ended 31 December 2016
Notes
Cash flows from operating activities
Loss for the year
Adjustments for:
Impairment of assets 5
Interest payable and similar charges
Equity settled share-based payment expense 14
Decrease in trade and other receivables
(Decrease) in trade and other payables
Net cash used in operating activities
Cash flows from financing activities
Proceeds from the issue of share capital 11
Proceeds from new loan
Repayment of loan
Net cash from financing activities
Net (decrease)/increase in cash and cash equivalents
Cash and cash equivalents at 1 January
Cash and cash equivalents at 31 December
2016
£’000
(2,901)
-
548
-
54
(289)
_________
(2,588)
_________
3,363
-
(930)
_________
2,433
_________
(155)
319
_________
164
_________
2015
£’000
(7,074)
5,432
105
29
80
(1,425)
_________
(2,853)
_________
1,034
1,863
-
_________
2,897
_________
44
275
_________
319
_________
The accompanying notes on pages 27 - 41 form an integral part of these financial statements.
24
LANSDOWNE OIL & GAS PLC
ANNUAL REPORT & FINANCIAL STATEMENTS 2016
Consolidated Statement of Changes in Equity
For the year ended 31 December 2016
Share Based Currency
Share Payment Translation Accumulated Total
Share
Capital Premium Reserve Reserve Deficit Equity
£’000
£’000
£’000
£’000
£’000
£’000
Balance at 1st January 2015
Loss for the financial year
Total comprehensive loss for the year
Share based payments charge (note 14)
Issue of new shares - gross consideration (note 11)
Cost of share issues
Balance at 31st December 2015
Balance at 1st January 2016
Loss for the financial year
Total comprehensive loss for the year
Issue of new shares - gross consideration (note 11)
Cost of share issues
Balance at 31st December 2016
59
-
7,027
-
25,273
-
(8,876)
(15,074)
894
24,377
(15,074)
-
_________ _________ _________ _________ _________ _________
(15,074)
-
29
29
1,060
-
(26)
-
_________ _________ _________ _________ _________ _________
10,366
_________ _________ _________ _________ _________ _________
(15,074)
-
-
-
-
-
1,060
-
-
-
-
(26)
(23,950)
25,247
-
-
-
-
8,087
923
59
59
-
8,087
-
25,247
-
(23,950)
(1,236)
10,366
923
(1,236)
-
_________ _________ _________ _________ _________ _________
(1,236)
-
3,484
-
(121)
-
_________ _________ _________ _________ _________ _________
12,493
_________ _________ _________ _________ _________ _________
(1,236)
-
-
-
3,484
-
(25,186)
11,571
25,126
(121)
-
-
-
923
59
-
The accompanying notes on pages 27 - 41 form an integral part of these financial statements.
LANSDOWNE OIL & GAS PLC
ANNUAL REPORT & FINANCIAL STATEMENTS 2016
25
Company Statement of Changes in Equity
For the year ended 31 December 2016
Share Based
Share Share Payment Accumulated Total
Capital Premium Reserve Deficit Equity
£’000
£’000
£’000
£’000
£’000
Balance at 1st January 2015
Loss for the financial year
Share based payments charge (note 14)
Issue of new shares - gross consideration (note 11)
Cost of share issues
Balance at 31st December 2015
Balance at 1st January 2016
Loss for the financial year
Issue of new shares - gross consideration (note 11)
Cost of share issues
Balance at 31st December 2016
7,027
-
-
1,060
-
25,273
-
-
-
(26)
3,909
(7,074)
29
1,060
(26)
_________ _________ _________ _________ _________
(2,102)
_________ _________ _________ _________ _________
(29,285)
(7,074)
-
-
-
894
-
29
-
-
(36,359)
25,247
8,087
923
8,087
-
3,484
-
25,247
-
-
(121)
(2,102)
(2,901)
3,484
(121)
_________ _________ _________ _________ _________
(1,640)
_________ _________ _________ _________ _________
(36,359)
(2,901)
-
-
923
-
-
-
(39,260)
11,571
25,126
923
The accompanying notes on pages 27 - 41 form an integral part of these financial statements
26
LANSDOWNE OIL & GAS PLC
ANNUAL REPORT & FINANCIAL STATEMENTS 2016
Notes to the Financial Statements
For the year ended 31 December 2016
1. Presentation of financial statements and accounting policies
(a) Reporting Entity
Lansdowne Oil & Gas plc (the "Company") and its subsidiaries (together, the "Group") explore for and develop
oil and gas reserves in the Irish Celtic Sea.
The Company is a public limited company, incorporated and domiciled in the UK. The address of its registered
office is c/o Pinsent Masons LLP, 30 Crown Place, London EC2A 4ES.
The Company's shares are quoted on the AIM Market of the London Stock Exchange.
(b) Basis of accounting
The financial statements have been prepared in accordance with International Financial Reporting Standards
("IFRS") and International Financial Reporting Interpretations Committee ("IFRIC") interpretations endorsed by
the European Union ("EU"), and effective for the current reporting year and, in the case of the Company, as
applied in accordance with the provisions of the Companies Act 2006 applicable to companies reporting under
IFRS. A summary of the more important accounting policies, which have been applied consistently, are set out
below.
(c) Functional and presentation currency
The consolidated financial statements are presented in Sterling, the Company's functional currency, and all
values are rounded to the nearest thousand (£'000) except where otherwise indicated.
(d) Going concern - basis of accounting
The Directors have prepared the financial statements on the going concern basis which assumes that the Group
and Company will continue in operational existence for at least twelve months from the date of the approval of
these financial statements as described below.
The Directors have carried out a detailed assessment of the Group's current and prospective exploration activity,
its relationship with the holder of its loan note, and the cash flow projections for the period to 30 June 2018. The
following represent the key assumptions underpinning the cash flow projections:
Barryroe farm out
Discussions are continuing with a view to concluding a farm-out deal(s) on attractive commercial terms.
Other options
Should a farm out deal not be concluded in relation to Barryroe, the Directors believe that the Group has a
number of available funding options; while the Group's primary aim is to conclude the ongoing farm out
campaign with a view to attracting industry partners to drill wells, the Company also has the option of issuing
new equity.
The Directors have considered the various matters set out above and have concluded that these assumptions are
affected by material uncertainties that may cast significant doubt on the ability of the Group and Company to
continue as going concerns and that they may therefore be unable to realise assets and discharge liabilities in the
normal course of business. Nevertheless, the Directors are of the view that the Group and Company will have
sufficient cash resources available to meet their liabilities for at least 12 months from the date of approval of these
financial statements.
It is on this basis that the directors consider it appropriate to prepare the financial statements on a going concern
basis. These financial statements do not include any adjustment that would result from the going concern basis
of preparation being inappropriate.
LANSDOWNE OIL & GAS PLC
ANNUAL REPORT & FINANCIAL STATEMENTS 2016
27
Notes to the Financial Statements
For the year ended 31 December 2016
(e) Basis of measurement
The Group prepares its financial statements on the historical cost basis. Where the carrying value of assets and
liabilities are calculated on a different basis, this is disclosed in the relevant accounting policy.
(f) Judgements and key sources of estimation uncertainty
The Group has used judgements, estimates and assumptions in arriving at certain figures in the preparation of its
financial statements. The resulting accounting estimates may not equate with the actual results which will only
be known in time.
Those areas believed to be key areas of estimation are;
(cid:120)
(cid:120)
(cid:120) Deferred tax (note 9)
Impairment testing (policies ( i ) and ( j ) below)
Share based payments (note 14)
Those areas believed to be key areas of judgements are;
(cid:120) Going concern (policy (d) above)
(cid:120) Oil and Gas Intangible exploration/ appraisal assets (policy (i) below)
Further details of the assumptions used can be found in this statement of accounting policies and in the notes to
these financial statements.
(g) Basis of consolidation
The consolidated financial statements include the results of Lansdowne Oil & Gas plc and its subsidiary
undertakings, made up to 31 December each year. No separate income statement is presented for the parent
company, as permitted by Section 408 of the Companies Act 2006.
The subsidiaries are those companies controlled, directly or indirectly, by Lansdowne Oil & Gas plc. The Group
controls an entity when it is exposed to, or has rights to, variable returns from its involvement with the entity
and has the ability to affect those returns through its power over the entity. This control is normally evidenced
when Lansdowne Oil & Gas plc owns, either directly or indirectly, more than 50 per cent. of the voting rights or
potential voting rights of a company's share capital. Companies acquired during the year are consolidated from
the date on which control is transferred to the Group, and subsidiaries to be divested are included up to the date
on which control passes from the Group. Inter-company balances, transactions and resulting unrealised income
are eliminated in full.
(h) Joint arrangements
The Group participates in a number of joint arrangements where control of the arrangement is shared with one
or more other parties. A joint arrangement is classified as a joint operation or as a joint venture, depending on
the rights and obligations of the parties to the arrangement.
The classification can have a material impact on the consolidated financial statements. The Group's share of
assets, liabilities, revenue, expenses and cash flows of joint operations are included in the consolidated financial
statements on a line-by-line basis, whereas the Group's investment and share of results of joint ventures are
shown within single line items in the consolidated statement of financial position and consolidated income
statement respectively.
28
LANSDOWNE OIL & GAS PLC
ANNUAL REPORT & FINANCIAL STATEMENTS 2016
Notes to the Financial Statements
For the year ended 31 December 2016
(i) Oil and gas intangible exploration/appraisal assets and property, plant & equipment -
development/ producing assets
All expenditure relating to oil and gas activities is capitalised in accordance with the "successful efforts" method
of accounting, as described in the Oil and Gas SORP. The Group's policy for oil and gas assets is also compliant
with IFRS 6 "Exploration for and Evaluation of Mineral Resources". Under this standard, the Group's
exploration and appraisal activities are capitalised as intangible assets and its development and production
activities are capitalised within "Property, plant and equipment".
All costs incurred prior to the acquisition of licences are expensed immediately to the income statement.
Licence acquisition costs, geological and geophysical costs and the direct costs of exploration and appraisal are
initially capitalised as intangible assets, pending determination of the existence of commercial reserves in the
licence area. Such costs are classified as intangible assets based on the nature of the underlying asset, which
does not yet have any proven physical substance. Exploration and appraisal costs are held, un-depleted, until
such a time as the exploration phase on the licence area is complete or commercial reserves have been
discovered. If commercial reserves are determined to exist and the technical feasibility of extraction
demonstrated, then the related capitalised exploration/appraisal costs are first subjected to an impairment test
(see below) and the resulting carrying value is transferred to the development and producing assets category
within property, plant and equipment. If no commercial reserves exist, then that particular exploration/appraisal
effort was "unsuccessful" and the costs are written off to the income statement in the period in which the
evaluation is made. The success or failure of each exploration/appraisal effort is judged on a field by field basis.
All costs incurred after the technical feasibility and commercial viability of producing hydrocarbons has been
demonstrated are capitalised within development/producing assets on a field by field basis. Development
expenditure comprises all costs incurred in bringing a field to commercial production, including financing costs.
Subsequent expenditure is capitalised only where it either enhances the economic benefits of the
development/producing asset or replaces part of the existing development/producing asset.
Net proceeds from any disposal of an exploration asset are initially credited against the previously capitalised
costs. Any surplus proceeds are credited to the income statement. Net proceeds from any disposal of exploration
assets are credited against the previously capitalised cost. A gain or loss on disposal of an exploration asset is
recognised in the income statement to the extent that the net proceeds exceed or are less than the appropriate
portion of the net capitalised costs of the asset.
Upon commencement of production, capitalised costs will be amortised on a unit of production basis which is
calculated to write off the expected cost of each asset over its life in line with the depletion of proved and
probable reserves.
Assets that are subject to amortisation are reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for
the amount by which the asset's carrying amount exceeds its recoverable amount. The recoverable amount is the
higher of an asset's net realisable value less costs to sell and value in use. For the purposes of assessing
impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows. These
cash-generating units ("CGUs") are aligned to the business unit and sub-business unit structure the Group uses
to manage its business. Cash flows are discounted in determining the value in use.
LANSDOWNE OIL & GAS PLC
ANNUAL REPORT & FINANCIAL STATEMENTS 2016
29
Notes to the Financial Statements
For the year ended 31 December 2016
(j) Investments
Shares in Group undertakings are held at cost less impairment provisions. Impairments occur where the
recoverable value of the investment is less than its carrying value. The recoverable value of the investment is the
higher of its fair value less costs to sell and value in use. Value in use is based on the discounted future net cash
flows of the investee.
(k) Operating leases
Rental payable under operating leases are charged to the income statement on a straight-line basis over the term
of the lease.
(l) Cash and cash equivalents
Cash and cash equivalents includes cash in hand, deposits held at call with banks and other short term highly
liquid investments with original maturities of three months or less.
(m) Decommissioning costs and provisions
Provision is made for the cost of decommissioning oil and gas wells and other oilfield facilities. The cost of
decommissioning is determined through discounting the amounts expected to be payable to their present value
at the date the provision is recorded and this calculation is re-assessed at each reporting date. This amount is
included within development and production assets by licence area and the liability is included in provisions.
The cost will be depleted over the life of the licence area on a unit of production basis and charged to the
Income Statement. The unwinding of the discount is reflected as a finance cost in the income statement over the
expected remaining life of the well.
(n) Equity
Equity instruments issued by the Company are recorded at the proceeds received, net of direct issue costs,
allocated between share capital and share premium.
(o) Taxation
Current tax assets and liabilities are measured at the amount expected to be recovered from or paid to the
taxation authorities, based on tax rates and laws that are enacted or substantively enacted by the reporting date.
Deferred tax is recognised on all temporary differences arising between the tax bases of assets and liabilities and
their carrying amounts in the financial statements, with the following exceptions:
(cid:120)
In respect of taxable temporary differences associated with investments in subsidiaries, associates and joint
ventures, where the timing of the reversal of the temporary differences can be controlled and it is probable
that the temporary differences will not reverse in the foreseeable future; and
(cid:120) Deferred tax assets are recognised only to the extent that it is probable that taxable profit will be available
against which the deductible temporary differences, carried forward tax credits or tax losses can be utilised.
Deferred tax assets and liabilities are measured on an undiscounted basis at the tax rates that are expected to
apply when the related asset is realised or liability is settled, based on tax rates or laws enacted or substantively
enacted at the reporting date.
The carrying amount of deferred tax assets is reviewed at each reporting date. Deferred tax assets and liabilities
are offset only if certain criteria are met.
Income tax is charged or credited to other comprehensive income if it relates to items that are charged or
credited to other comprehensive income. Similarly income tax is charged or credited directly to equity if it
relates to items that are credited or charged directly to equity. Otherwise income tax is recognised in the income
statement.
30
LANSDOWNE OIL & GAS PLC
ANNUAL REPORT & FINANCIAL STATEMENTS 2016
Notes to the Financial Statements
For the year ended 31 December 2016
(p) Defined contribution pension schemes
The Group contributes to a defined contribution pension scheme on behalf of certain employees. The pension
cost represents contributions payable by the Group to the scheme.
(q) Share based payments
The Group has in place an equity-settled share option scheme, details of which is given in the Directors'
Remuneration Report and note 14 of these financial statements.
The cost of awards under the share option scheme is recognised over the three or five year period to which the
performance criteria relate. The amount recognised is based on the fair value of the share options, as measured
at the date of the award. The corresponding credit is taken to a share based payments reserve. The proceeds on
exercise of share options are credited to share capital and share premium.
The share options are valued using a Total Shareholder Return ("TSR") simulation model, which adjusts the fair
value for the market-based performance criteria in the schemes. The TSR simulation model is based on the
Monte Carlo model and is tailored to meet the requirements of the scheme's performance criteria. The inputs to
the model include the share price at date of grant, exercise price, expected volatility, expected dividends, risk
free rate of interest and patterns of early exercise of the plan participants.
No expense is recognised for awards that do not ultimately vest, except for equity settled transactions where
vesting is conditional upon a market or non-vesting condition, which are treated as vesting irrespective of
whether or not the market or non-vesting condition is satisfied, provided that all other performance and/or
service conditions are satisfied.
Where an equity settled award is cancelled, it is treated as if it vested on the date of cancellation, and any
expense not yet recognised for the award is recognised immediately. This includes any award where non-vesting
conditions within the control of either the entity or the employee are not met. All cancellations of equity settled
transactions are treated equally.
(r) Finance income and expenses
Interest income and interest payable is recognised in the income statement as it accrues, using the effective
interest method.
(s) Foreign currency
The Group's consolidated financial statements are presented in Sterling, which is also the parent company's
functional currency. The assessment of functional currency has been based on the currency of the economic
environment in which the Group operates and in which its costs arise. These financial statements have been
presented in Sterling.
Monetary assets and liabilities denominated in foreign currencies are translated into the functional currency at
the rate of exchange ruling at the reporting date. Transactions in foreign currencies are recorded at the rate
ruling at the date of the transaction. All exchange gains and losses are taken to the income statement.
(t) Financial instruments
Non-derivative financial instruments comprise trade and other receivables, cash and cash equivalents, loans and
borrowings, and trade and other payables. Interest- bearing borrowings are recognised initially at fair value less
attributable transaction costs. Subsequent to initial recognition, interest-bearing borrowings are stated at
amortised cost using the effective interest method.
LANSDOWNE OIL & GAS PLC
ANNUAL REPORT & FINANCIAL STATEMENTS 2016
31
Notes to the Financial Statements
For the year ended 31 December 2016
(u) Segmental Reporting
The Chief Executive monitors the operating results of its operating segment for the purposes of making
decisions and performance assessment. Segment performance is evaluated based on operating profit or loss and
is reviewed consistently with operating profit or loss in the consolidated financial statements.
(v) Change in accounting policies
New and amended standards and interpretations
The following new standards and amendments were adopted by the Group for the first time in the current
financial reporting period with no resulting impact to the consolidated financial statement:
Standard
Defined Benefit Plans: Employee Contributions (Amendments to IAS 19)
Annual Improvements to IFRSs 2010 - 2012 Cycle
Amendments to IFRS 11: Accounting for acquisitions of interests in Joint Operations
Àmendments to IAS 16 and IAS 38: Clarification of acceptable methods of depreciation and
amortisation
Amendments to IAS 16 Property, Plant and Equipment and IAS 41 Bearer Plants
Amendments to IAS 27 Equity method in Separate Financial Statements
Amendments to IAS 1: Disclosure Initiative
Annual Improvements to IFRSs 2012-2014 Cycle
Amendments to IFRS 10, IFRS 12 and IAS 28: Investment Entities: Applying the consolidation
exception (December 2014)
New Standards and interpretations effective that have not been early adopted
A number of new standards, amendments to standards and interpretations that are not yet effective and have not
been applied in preparing these financial statements. These new standards, amendments to standards and
interpretations are either not expected to have a material impact on the Group's financial statements or are still
under assessment by the Group.
The principal new standards, amendments to standards and interpretations are as follows:
Standard
IFRS 15: Revenue from contracts with customers
IFRS 9 Financial Instruments (2009, and subsequent amendments in 2010 and 2013)
Amendments to IAS 7: Disclosure Initiative
Amendments to IAS 12: Recognition of deferred tax assets for unrealised losses
Clarifications to IFRS 15: Revenue from Contracts with Customers
Amendments to IFRS 2: Classification and measurement of share-based payment transactions
Amendments to IFRS 4: Applying IFRS 9 Financial Instruments with IFRS 4 Insurance Contracts
Annual Improvements to IFRS 2014 -2016 Cycle
IFRIC Interpretation 22: Foreign Currency Transactions and Advance Consideration
Amendments to IAS 40: Transfers of Investment Property
IFRS 16: Leases
IFRS 14: Regulatory Deferral Accounts
Amendments to IFRS 10 and IAS 28: Sale or contribution of assets between an investor and its associate
or joint venture.
32
LANSDOWNE OIL & GAS PLC
ANNUAL REPORT & FINANCIAL STATEMENTS 2016
Notes to the Financial Statements
For the year ended 31 December 2016
2. Segmental Reporting
The Group has one reportable operating and geographic segment, which is the exploration for oil and gas
reserves in Ireland. All operations are classified as continuing and currently no revenue is generated from the
operating segment.
3. Loss per ordinary share
The loss for the year was wholly from continuing operations.
2016
£’000
2015
£’000
Loss for the year attributable to equity holders
Weighted average number of ordinary shares in issue - basic and diluted
Loss per share arising from continuing operations attributable to the equity
holders of the Company - basic and diluted (in pence)
(1,236)
334,116,800
(15,074)
157,698,252
(0.4)
(10.2)
For diluted earnings per share, the weighted average number of ordinary shares in issue is adjusted to assume
conversion of all dilutive potential ordinary shares. The Group has one class of potential ordinary shares being
share options. As a loss was recorded for both 2016 and 2015, potentially issuable shares would have been anti-
dilutive. The number of potentially issuable shares at 31 December 2016 is 513,704,394 (2015: 165,007,665).
4.
Intangible assets
Group
Cost
At 1 January 2015
Additions
Impairment
As at 31 December 2015
At 1 January 2016
Additions
Impairment
As at 31 December 2016
Exploration/
appraisal assets
£’000
27,151
2,133
(14,949)
14,335
14,335
64
-
14,399
Oil and gas project expenditures, all of which relate to Ireland, including geological, geophysical and seismic
costs, are accumulated as intangible assets prior to the determination of commercial reserves.
LANSDOWNE OIL & GAS PLC
ANNUAL REPORT & FINANCIAL STATEMENTS 2016
33
Notes to the Financial Statements
For the year ended 31 December 2016
5.
Investments in subsidiaries
Cost
At 1 January 2015
Impairment
At 31 December 2015 and 31 December 2016
Company
£’000
5,432
(5,432)
-
The interests in Group undertakings of the Company are listed below:
Name of
undertaking
Lansdowne Celtic
Sea Limited
Milesian Oil & Gas
Limited
Country of
registration
England
Class of share
Proportion held
Ordinary
100 per cent
Ireland
Ordinary
100 per cent
Nature of
business
Oil and gas
exploration
Oil and gas
exploration
Significant joint operation Interest
Principal activity
Effective
Barryroe
Helvick
Hydrocarbon exploration
Hydrocarbon exploration
2016%
20
10
2015%
20
10
6. Trade and other receivables
Amounts falling due within one year:
Value added tax and other taxes
Prepayments
7. Trade and other payables
Amounts falling due within one year:
Trade payables
Taxes and social security
Accruals
Group
2016
£’000
19
19
38
Group
2016
£’000
115
117
29
261
Group
2015
£’000
Company
2016
£’000
Company
2015
£’000
22
70
92
19
19
38
22
70
92
Group
2015
£’000
223
161
1,789
2,173
Company
2016
£’000
Company
2015
£’000
109
117
29
255
222
161
162
545
34
LANSDOWNE OIL & GAS PLC
ANNUAL REPORT & FINANCIAL STATEMENTS 2016
Notes to the Financial Statements
For the year ended 31 December 2016
8. Shareholder loan - Group and Company
This note provides information about the contractual terms of the Group's interest bearing loans and borrowings,
which are measured at amortised cost.
Amounts falling due within one year:
Senior secured loan notes
2016
£’000
1,587
2015
£’000
1,968
The Group's senior secured loan note was issued in 2015 to LC Capital Master Fund Ltd, a related party as
outlined in note 19.
The loan note carried a coupon of 10% per annum and was repayable on 9 September 2016. The terms of the
loan note also contain a redemption premium, which is calculated as 20% of the principal amount outstanding as
at 8 March 2016.
During the year, the Group renegotiated the terms of the loan note. It became repayable on 30 June 2017 and the
coupon rate has been reduced from 10% per annum to 5% per annum. Subsequent to the year end, the repayment
date was extended to 1 July 2018.
During the year, LC Capital Master Fund also agreed to convert £930,000 of the amount outstanding into 93
million new ordinary shares at 1p per share.
9.
Provision for liabilities
Beginning of period
Unwinding of discount
Provision used during the period
As at 31 December
Deferred
tax (i)
2016
£’000
-
-
-
-
Asset
retirement
obligation (ii)
2016
£’000
238
23
-
261
Deferred
tax (i)
2015
£’000
1,052
-
(1,052)
-
Asset
retirement
obligation (ii)
2015
£’000
217
23
-
240
Total
2015
£’000
1,269
23
(1,052)
240
Total
2016
£’000
238
23
-
261
(i) An unprovided deferred tax asset, in respect of unused losses, amounts to £1.7 million (2015: £1.5 million).
(ii) The provision relates to the cost of abandonment of the Barryroe well, discounted over a seven year period.
10. Financial risk management
The Group's operations expose it to a variety of financial risks: market risk (including the effects of changes in
foreign currency exchange rates, interest rates and commodity prices), credit risk and liquidity risk. The Board
approves the use of financial products to manage the Group's exposure to fluctuations in foreign currency
exchange rates and interest rates.
(a) Market risk
Foreign exchange risk
Although the Group reports in Sterling, certain transactions are conducted in Euro. Given the low level of
business conducted in Euro during the year, foreign exchange rate fluctuations had an immaterial effect on post
tax losses.
LANSDOWNE OIL & GAS PLC
ANNUAL REPORT & FINANCIAL STATEMENTS 2016
35
Notes to the Financial Statements
For the year ended 31 December 2016
Interest rate risk
The Group's interest rate risk arises from cash deposits and interest bearing liabilities.
Given the low level of average cash balances held by the Group during the year, a 10 per cent increase or
decrease in average interest rates would have had an immaterial effect on post tax losses.
(b) Credit risk
Credit risk arises from cash and cash equivalents and deposits with banks. The Group's policy is to deposit cash
with banks with an 'A' rating or better where possible. 100 per cent of cash held on deposit at 31 December 2016
was held with such banks.
There is no credit risk associated with other receivables.
There are no financial assets which are past due but not impaired at the end of the reporting period.
The maximum credit risk exposure relating to financial assets is represented by carrying values as at the
reporting date.
(c) Liquidity risk
The Board regularly reviews rolling cash flow forecasts for the Group.
Work programme obligations related to the Group's licences will be financed by either reducing its equity
interest through new participants farming in, by the raising of new capital, through shareholder loans, or a
combination of both.
Based on current forecasts, the Group has sufficient funding in place to meet its future obligations. This is
reliant upon the assumptions outlined in the Statement of Accounting Policies.
There is no difference between the carrying value and the contractually undiscounted cash flows for financial
liabilities. At 31 December 2016, all trade and other payables and shareholder loans were due within one year.
Fair value of non-derivative financial assets and financial liabilities
The Group's financial instruments comprise cash, other receivables and trade payables and shareholder loans
due within one year and therefore, management believes that the carrying values of those financial instruments
approximate fair value.
Capital management
The Group defines capital as the total equity of the Group.
The Group's objective when managing capital is to safeguard its ability to continue as a going concern in order
to provide returns for the shareholders and to maintain an optimal capital structure to reduce the cost of capital.
The Group regularly reviews its capital structure on the basis of its expected capital requirements in order to
achieve the defined strategic objectives and manages its capital accordingly.
3636
LANSDOWNE OIL & GAS PLC
ANNUAL REPORT & FINANCIAL STATEMENTS 2016
Notes to the Financial Statements
For the year ended 31 December 2016
11. Share capital - Group and Company
Authorised
510,164,394 (2015: 161,741,795) ordinary shares at £0.01 pence each
510,164,394
161,741,795
2016
2015
Issued, called up and fully paid:
At 1st January 2015
Issued in year
Share issue costs
At 31st December 2015
Issued in year
Share issue costs
At 31st December 2016
Number of
Ordinary
Shares
140,540,159
21,201,636
-
161,741,795
348,422,599
-
510,164,394
Share
Capital
£’000
Share
Premium
£’000
7,027
1,060
-
8,087
3,484
-
11,571
25,273
-
(26)
25,247
-
(121)
25,126
Total
£’000
32,300
1,060
(26)
33,334
3,484
(121)
36,697
On 20 June 2016, the Company placed 318,422,599 new ordinary shares with new and existing investors at a
placing price of 1 pence per placing share, raising approximately £3.2 million before costs.
On 18 December 2016, the Company placed 30,000,000 new ordinary shares with existing investors at a placing
price of 1 pence per placing share, raising £300,000.
12. Statutory information
The loss for the year stated after (crediting)/charging:
Foreign exchange gains, net
Operating lease rentals - premises
Audit Services:
Fees payable to Group's auditor for the audit of the Company and
consolidated financial statements
Fees payable to the Group's auditor for the audit of Company’s
subsidiaries pursuant to legislation
2016
£’000
(2)
46
26
6
2015
£’000
(3)
70
26
6
LANSDOWNE OIL & GAS PLC
ANNUAL REPORT & FINANCIAL STATEMENTS 2016
37
37
Notes to the Financial Statements
For the year ended 31 December 2016
13. Employee costs
Number of employees
The average monthly number of employees
(including Executive Directors) during the year was:
Oil and gas exploration
Wages and salaries
Social security costs
Pension costs (note 17)
Share based payment
2016
Number
2015
Number
2
2
2016
£’000
259
42
-
-
301
2015
£’000
382
48
39
29
498
Remuneration of the Directors is disclosed in note 19 and, within the Remuneration Report on page 16.
14. Share-based payments
Share options
The Company has granted options to current and former Directors under an Employee Share Option Scheme.
Details of the grants are shown in the Remuneration Report on pages 17. As at 31 December 2016, the
following options were outstanding:
Option
exercise price
Number
Exercisable
at 31 Dec ‘16
Exercisable
at 31 Dec ‘15
25p
36.5p
15p
1,950,000
1,950,000
1,950,000
1,090,000
1,090,000
1,090,000
500,000
-
-
Normal
exercise dates
19/05/2014 to
18/05/2021
01/06/2015 to
31/05/2022
01/04/2017 to
24/06/2025
Target
variable
Share Price
Share Price
Share Price
Target
(1)
(2)
(3)
(1) The Average share price must reach or exceed a share price which is 30 per cent greater than the exercise
price. The target share price is therefore 32.5 pence per share.
(2) The Average share price must reach or exceed a share price which is 30 per cent greater than the exercise
price. The target share price is therefore 47.5 pence per share.
(3) The Average share price must reach or exceed a share price which is 30 per cent greater than the exercise
price. The target share price is therefore 22.5 pence per share.
The share options may only be exercised within the normal exercise dates as shown above.
The number of further options available for grant under the scheme rules is 11,014,016.
3838
LANSDOWNE OIL & GAS PLC
ANNUAL REPORT & FINANCIAL STATEMENTS 2016
Notes to the Financial Statements
For the year ended 31 December 2016
The fair value of services received in return for share options is based on the fair value of the share options
granted, measured using a TSR simulation model for prior years and a Black Scholes model with the following
inputs:
Fair value of share options issued in prior years and related assumptions
Grant date
Fair value at grant date
25/06/15
4.0p
31/05/12
19.0p
18/05/11
9.0p
Share price at grant date
Exercise price
Expected volatility
Expected option life
Risk-free interest rate (based on government bonds)
Expected dividend yield
6.9p
15.0p
80.0%
1.8 years
1.9%
0%
36.4p
36.5p
80.8%
3.0 years
0.73%
0%
19.5p
25.0p
75.9%
3.0 years
2.37%
0%
The cost of awards under the share option scheme is recognised over the vesting period of the awards which is
three years.
The additional vesting hurdle of reaching or exceeding a target share price of 22.5p has not been factored into
the valuation model given that it would only further reduce the fair value at grant date, and the fact that these
options were forfeit.
Expense for share options granted in 2015
Expense for share options granted in 2012
Total expense as employee costs in the year
15. Finance costs
Loan interest
Unwinding of discount (note 9)
Retranslation of foreign currency cash balances
Total expense
16. Income Tax
Current tax charge
Deferred tax credit
Total income tax credit
.
2016
£’000
-
-
-
2016
£’000
547
23
1
571
2016
£’000
-
-
-
2015
£’000
5
24
29
2015
£’000
105
23
1
129
2015
£’000
-
1,052
1,052
LANSDOWNE OIL & GAS PLC
ANNUAL REPORT & FINANCIAL STATEMENTS 2016
39
Notes to the Financial Statements
For the year ended 31 December 2016
The tax assessed for the year is different from the standard rate of corporation tax in the UK as follows;
Loss before income tax
Loss before income tax multiplied by standard rate of tax 19.25%
(2015: 20.25%)
Effects of:
Expenses not deductible for tax purposes
Losses not recognised
Losses carried forward
Deferred tax provision released
Total tax credit
17. Pension commitments
2016
£’000
2015
£’000
(1,236)
(16,126)
(238)
(3,265)
20
-
218
-
-
10
3,027
228
1,052
1,052
The Group contributes to a defined contribution pension scheme. The assets of this scheme are held separately
from those of the Group in independently administered funds. The pension cost charge represents
contributions payable by the Group to the funds and amounted to £nil (2015: £39,000) for the year. There were
no contributions payable to the funds at the year end.
Staff are eligible to join the Group's defined contribution scheme after three months' service with the Group.
The Group contributes between 7 and 15 per cent of each participating employee's salary to the scheme. The
employees may also contribute to the scheme.
18. Capital commitments
The Group has no unprovided contractual commitments for capital expenditure.
19. Related party transactions
(a) Transactions with LHM Casey McGrath
Con Casey is a partner in the accountancy practice, LHM Casey McGrath and he is the company secretary of the
Company. The Company entered into a services agreement with LHM Casey McGrath pursuant to which the
practice provides the Group with certain management, accounting, IT support, insurance and administrative
services required by the Group in connection with its business in consideration of a fee totaling £60,000 (2015:
£72,000). This agreement can be terminated by LHM Casey McGrath or by the Company on giving 90 days'
notice. The Directors consider the service agreement to be at fair value on an arm's length basis. As at 31
December 2016, the Group owed LHM Casey McGrath £578 (2015: £4,758) under the agreement.
(b) Amounts due by subsidiaries
At 31 December 2016, amounts owed to the Company by its subsidiaries totalled £23.2 million (2015: £21.5
million). These amounts have been provided in full in the Company's financial statements as there is no
immediate prospect of repayment. Amounts due to the Company are unsecured, non-interest bearing and have
no fixed repayment terms.
40
LANSDOWNE OIL & GAS PLC
ANNUAL REPORT & FINANCIAL STATEMENTS 2016
Notes to the Financial Statements
For the year ended 31 December 2016
(c) Compensation of key management personnel
The Board has determined that the Board of Directors comprise the Group's key management personnel. Their
compensation was as follows:
Short-term benefits
Post-employment benefits
Share-based payment expense
2016
£’000
348
-
-
348
2015
£’000
506
39
29
574
d) Transactions with LC Capital Master Fund Ltd
The Company has a loan agreement with LC Capital Master Fund Limited. S. Lampe is a managing member of
LC Capital Advisors LLC, the general partner of LC. Details of the loan agreement are given in note 8.
e) Directors' shareholdings
Details of directors' shareholdings are given on page 16. Each of the directors participated in the share placing
during the year.
20. Post Balance Sheet events
The LC Capital Master Fund loan has been further extended to 1st July 2018.
The Directors are not aware of any other event or circumstance arising which has not been dealt with in this
report which may have a significant impact on the operations of the Group.
.
LANSDOWNE OIL & GAS PLC
ANNUAL REPORT & FINANCIAL STATEMENTS 2016
41
Advisers
Auditors
KPMG
1 Stokes Place
St. Stephen’s Green
Dublin 2
Registrars
Computershare Investor Services
(Ireland) Ltd.
Heron House
Corrig Road
Sandyford Industrial Estate
Dublin 18
Bankers
Bank of Ireland
175 Rathmines Road Lower
Dublin 6
Bank of Ireland Global Markets
Colville House
Talbot Street
Dublin 1
Website
www.lansdowneoilandgas.com
Secretary
Con Casey FCCA
Registered Office
c/o Pinsent Masons LLP
30 Crown Place
London EC2A 4ES
Registered in England and Wales
Number 05662495
Nominated Adviser and Broker
Cantor Fitzgerald Europe
One Churchill Place
Canary Wharf
London E14 5RB
Joint Broker
Beaufort Securities Limited
63 St. Mary Axe,
London EC3A 8AA
Solicitors
Burness Paull LLP
50 Lothian Road
Festival Square
Edinburgh EH3 9WJ
Pinsent Masons LLP
30 Crown Place
London EC2A 4ES
Mason Hayes Curran
South Bank House
Barrow Street
Dublin 4
48
42
LANSDOWNE OIL & GAS PLC
ANNUAL REPORT & FINANCIAL STATEMENTS 2016
www.lansdowneoilandgas.com