15 Nov 2011 07:00
For Immediate Release | 15 November 2011 |
InfraStrata plc
("InfraStrata", the "Company" or the "Group")
Final results for the year ended 31 July 2011
InfraStrata plc (AIM:INFA), the independent gas storage and petroleum exploration company, is pleased to announce final results for the year ended 31 July 2011.
Financial highlights
·; Profit for period of £4,310,311 (2010; loss of £1,248,461)
·; Profit per share of 5.67p (2010; loss of 1.71p)
·; Accounting profit of £2,964,014 recognised on the loss of control of Portland Gas Limited
·; Accounting profit of £2,879,400 recognised on the loss of control of Brigantes Energy Limited and of Corfe Energy Limited
·; The Company placed 4,095,000 new ordinary shares on 7 February 2011 to raise £900,900 before expenses
·; The Company's interest in petroleum licence PL1/10 is funded through the seismic programme by partners
Operational highlights
·; Portland Project
o On 1 October 2010, eCORP Oil & Gas Limited acquired 50% of the Portland Project in return for funding the next phase of the project development
o Implementation of the planning permission at Upper Osprey
·; Islandmagee Project
o Planning application submitted in March 2010
o Planning application determination expected during first half of 2012
o Entered into exclusive negotiations with a major energy company regarding an option to acquire a significant equity interest in Islandmagee Storage Limited
o Consideration of £200,000 paid for the exclusivity, which was used to complete part of the land purchase for the project
·; Exploration activities
o The Company commenced oil and gas exploration opportunities within its two focus areas in Dorset and County Antrim
o Award of petroleum exploration licence PL1/10 in Northern Ireland during March 2011
o Acquisition of approximately 275 line kilometres of 2D seismic data on petroleum licence PL1/10 completed in early November 2011
o An application submitted to DECC in the 26th Offshore Licensing Round
Commenting on outlook, Andrew Hindle, Chief Executive said:
"In 2011 and into 2012 InfraStrata intends to further develop its exploration programmes in County Antrim and Dorset, and progress both the Portland and Islandmagee projects. The coming year will see more activity in Northern Ireland as the Islandmagee gas storage project is progressed following the determination of the Planning Application which is anticipated during the current financial year. The data from the seismic acquisition on licence PL1/10 will be processed and interpreted and lead to a decision on drilling an exploration well."
For further information please contact:
InfraStrata plc
Andrew Hindle, Chief Executive Officer Craig Gouws, Chief Financial Officer
| 020 8332 1200 |
Financial PR - Buchanan
Richard Darby James Strong Gabriella Clinkard
| 020 7466 5000 |
Nominated Advisor and Broker - Seymour Pierce
Jonathan Wright, Sarah Jacobs - Corporate Finance Richard Redmayne - Corporate Broking
| 020 7107 8000 |
Notes to Editors:
Background on InfraStrata plc
InfraStrata is an independent gas storage and petroleum exploration company. The Company is focused on two areas in the UK, in Dorset, England and Antrim, Northern Ireland.
Further information is available on the Company's website www.infrastrata.co.uk.
Chief Executive's Report
Over the past six years the Company has been developing two strategically important gas storage projects in the UK, at Portland in Dorset and Islandmagee in Antrim. Progress has continued to be made with both these projects during the year.
The Company was awarded its first petroleum exploration licence during the year. Its exploration activities are focused on the Permo-Triassic sedimentary basins of the western part of the United Kingdom close to existing gas storage project areas, Antrim in Northern Ireland and Dorset in southern England.
Portland gas storage project
Planning permission for this project was granted in May 2008 by Dorset County Council and implemented in June 2011 following completion of permanent works within the wellpad area at Upper Osprey on the Isle of Portland. InfraStrata has a 50% interest in the project together with partner eCORP International, LLC ("eCORP"). eCORP acquired its 50% interest in the project in October 2010 for agreeing to fund the on-going expenditure of Portland Gas Limited (up to the next £22.9m), subject to options to exit the project by relinquishing its equity interest. At 31 July 2011, eCORP had invested £1.2m into Portland Gas Limited.
The Pipeline Construction Authorisation from the Department of Energy and Climate Change was most recently renewed in July 2011. Applications were submitted in July 2011 to Dorset County Council for a renewal of planning permissions for permanent facilities associated with the pipeline and temporary construction sites. In addition to securing the planning and pipeline construction consents for the project, work continued through the financial year on securing land rights for the gas pipeline, a process which is now reaching completion.
Islandmagee gas storage project
A planning application for the project was submitted to the Northern Ireland Planning Service in March 2010. The focus of the work during the financial year was supporting the planning application and managing a process to introduce a partner to fund the project through the next stage including the drilling of a well.
After year end, in September 2011, the Company announced that it had entered into exclusive negotiations with a major energy company regarding an option to acquire a significant equity interest in Islandmagee Storage Limited, the Islandmagee project company. Under the terms of an Exclusivity Agreement the potential partner paid a consideration of £200,000, which was used to complete part of the land purchase for the Islandmagee gas storage project.
Petroleum exploration activities
During the financial year the main conventional exploration activities were focused on the central part of the Larne - Lough Neagh Basin following the award of petroleum exploration licence PL1/10 in March 2011. The licence covers an area of 663 square kilometres. The initial licence term is five years with a decision on drilling a well required within three years. InfraStrata is the operator of the licence and holds a 30% direct interest, with an additional net 20% interest via a 50% shareholding in partner company Brigantes Energy Limited (formerly IS E&P Limited) which has a 40% interest. The other partners in the licence are Nautical Petroleum plc (20%) and Terrain Energy Limited (10%). The acquisition of approximately 275 line kilometres of 2D seismic data commenced in mid-September 2011 and was completed in early November 2011.
The Company is awaiting the result of an application submitted to the Department of Energy and Climate Change in the 26th Offshore Licensing Round for an area in the English Channel near the Portland gas storage project.
InfraStrata plc
Consolidated statement of comprehensive income
for the year ended 31 July 2011
___________________________________________________________
Notes |
2011 |
2010 | |||
£ | £ | ||||
Continuing operations | |||||
Revenue | 240,290 | - | |||
Cost of sales | - | - | |||
Gross profit | 240,290 | - | |||
Administrative expenses | (1,180,485) | (397,358) | |||
Operating loss | (940,195) | (397,358) | |||
Finance income Share of loss of Joint Venture |
| 11,139 (452,089) | 23,645 - | ||
Loss before taxation | (1,381,145) | (373,713) | |||
Taxation | - | - | |||
Loss for the year from continuing operations |
(1,381,145) |
(373,713) | |||
Profit/(loss) for the year from discontinued operations |
5 |
5,691,456 |
(874,748) | ||
Profit/(loss) for the year attributable to the equity holders of the parent |
4,310,311 |
(1,248,461) | |||
Other comprehensive income | - | - | |||
Total comprehensive profit/(loss) for the year attributable to the equity holders of the parent |
4,310,311 |
(1,248,461) | |||
Basic and diluted earnings per share | 2 | ||||
Continuing operations | (1.82)p | (0.51)p | |||
Discontinued operations | 7.49p | (1.20)p | |||
Continuing and discontinued operations |
5.67p |
(1.71)p |
InfraStrata plc
Consolidated statement of financial position
as at 31 July 2011
_________________________________________________________
Notes | 2011 | 2010 | |||
£ | £ | ||||
Non-current assets | |||||
Plant and equipment | 15,161 | 7,280 | |||
Investments in joint venture | 22,473,516 | - | |||
Investments in associates | 2,880,000 | - | |||
Total non-current assets | 25,368,677 | 7,280 | |||
Current assets | |||||
Trade and other receivables | 140,526 | 110,732 | |||
Available for sale financial assets | 12,500 | 12,500 | |||
Cash and cash equivalents | 714,969 | 1,260,982 | |||
867,995 | 1,384,214 | ||||
Assets classified as held for sale | 4 | 2,744,731 | 26,511,034 | ||
Total current assets | 3,612,726 | 27,895,248 | |||
Current liabilities | |||||
Trade and other payables | (104,158) | (278,606) | |||
Liabilities directly associated with assets classified as held for sale |
4 |
(29,928) |
(4,061,668) | ||
Total current liabilities | (134,086) | (4,340,274) | |||
Net current assets and net assets held for sale | 3,478,640 | 23,554,974 | |||
Net assets | 28,847,317 | 23,562,254 | |||
Shareholders' funds | |||||
Share capital | 7,826,433 | 7,380,420 | |||
Share premium | 11,848,946 | 11,381,095 | |||
Merger reserve | 8,988,112 | 8,988,112 | |||
Share based payment reserve | 322,431 | 302,435 | |||
Retained earnings | (138,605) | (4,489,808) | |||
28,847,317 | 23,562,254 | ||||
InfraStrata plc
Consolidated statement of changes in equity
for the year ended 31 July 2011
__________________________________________________________
Share capital |
Share premium | Merger reserve |
Shares to be issued | Share based payment reserve | Retained earnings | Total equity | |
£ | £ | £ | £ | £ | £ | £ | |
Balance at 31 July 2009 | 7,038,473 |
8,576,705 | 8,988,112 |
746,337 | 177,189 | (3,241,347) | 22,285,469 |
Loss for the year | - | - | - | - | - | (1,248,461) | (1,248,461) |
Total comprehensive loss for the year | - |
- | - |
- |
- | (1,248,461) | (1,248,461) |
Shares issued | 341,947 | 2,804,390 | - |
(746,337) |
- |
- |
2,400,000 |
Share based payments |
- |
- |
- |
- |
125,246 |
- |
125,246 |
Balance at 31 July 2010 | 7,380,420 |
11,381,095 | 8,988,112 |
- | 302,435 | (4,489,808) | 23,562,254 |
Profit for the year | - | - | - | - | - | 4,310,311 | 4,310,311 |
Total comprehensive profit for the year | - |
- | - |
- |
- | 4,310,311 | 4,310,311 |
Shares issued | 446,013 |
467,851 | - |
- |
- |
- |
913,864 |
Share based payments | - |
- | - |
- | 60,888 | - | 60,888 |
Share options lapsed | - | - | - | - | (40,892) | 40,892 | - |
Balance at 31 July 2011 |
7,826,433
|
11,848,946 |
8,988,112
|
-
| 322,431
| (138,605)
| 28,847,317
|
InfraStrata plc
Consolidated statement of cash flows
for the year ended 31 July 2011
__________________________________________________________
Notes | 2011 | 2010 | |||
£ | £ | ||||
Net cash (used in) operating activities |
3 | (982,526) | (1,409,715) | ||
Investing activities | |||||
Interest received | 11,139 | 23,645 | |||
Purchase of intangible assets | (324,520) | (569,274) | |||
Purchase of plant and equipment | (108,706) | (2,250,176) | |||
Cash outflow on disposal of subsidiary |
(6,264) |
- | |||
Net cash (used in) investing activities | (428,351) | (2,795,805) | |||
Financing activities | |||||
Proceeds on issue of ordinary shares | 864,864 | 2,400,000 | |||
Net cash generated from financing activities | 864,864 | 2,400,000 | |||
Net (decrease) in cash and cash equivalents | (546,013) | (1,805,520) | |||
Cash and cash equivalents at beginning of year | 1,260,982 | 3,066,502 | |||
Cash and cash equivalents at end of year | 714,969 | 1,260,982 | |||
Cash and cash equivalents consist of: | |||||
Cash at bank | £714,969 | £1,260,982 | |||
Significant non-cash transactions
Significant non-cash transactions for the ended 31 July 2011 comprise the loss of control of three companies which were previously subsidiaries.
Cash flows arising from discontinued activities
Cash flows arising from discontinued operations are analysed in note 3.
InfraStrata plc
Notes to the financial statements
for the year ended 31 July 2011
1. | Basis of preparation |
| |||
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The financial information set out in this announcement does not comprise the Company's statutory accounts for the years ended 31 July 2011 or 31 July 2010. The financial information has been extracted from the statutory accounts of the Company for the years ended 31 July 2011 and 31 July 2010.
In the current financial year, the Group has adopted International Financial Reporting Standard 2 "Share-Based Payments" (revised 2009), International Accounting Standard 32 "Financial Instruments: Presentation" (revised 2009) and IFRIC 19 "Extinguishing financial liabilities with equity instruments". The adoption of these standards and interpretation did not have any impact on the financial position or performance of the Group.
The Directors prepared the statutory accounts on the going concern basis which assumes that the Group will continue in operational existence without significant curtailment in its activities for the foreseeable future. The Group requires additional funding in order to progress the development of the Islandmagee gas storage project in which it holds a 65% interest and to pay future general and administrative costs. The immediate future development costs of the Portland gas storage project will be funded by partners.
The Directors believe that the disposal of an interest in Islandmagee Storage Limited is the best way of maximising shareholder value by allowing an entity other than InfraStrata plc to develop this project. It is expected that such a disposal will provide working capital for the Group and will transfer responsibility for funding the immediate future development of the Islandmagee gas storage project to the new partner.
The Group does not currently have cash resources on hand to meet all of the committed and discretionary expenditure identified for the 12 month period following approval of the financial statements and there can be no certainty that the planned disposal of an interest in Islandmagee Storage Limited will proceed within the timeframe currently expected. Nevertheless after making inquiries and considering all the relevant factors in relation to the proposed disposal, the Directors are of the opinion that they will be able to complete any necessary funding or, if necessary, defer or reduce administrative costs and have therefore prepared cash flow forecasts for the Group on these bases. These projections, which include the deferral of expenditure, indicate that the Group will have adequate cash resources to meet its obligations as they fall due for a period of not less than one year from the date of approval of these financial statements irrespective of whether or not the disposal proceeds are received within the expected timeframe. For this reason, they continue to adopt the going concern basis of accounting in preparing the annual financial statements.
The auditor, Nexia Smith & Williamson, has reported on the statutory accounts for the years ended 31 July 2011 and 2010; the reports were unqualified and did not contain a statement under either section 498(2) or 498(3) of the Companies Act 2006. In respect of the year ended 31 July 2011, the auditor's report did not include references to any matters to which the auditor drew attention by way of emphasis. For the year ended 31 July 2010 the auditor drew attention to the uncertainties regarding the Group's ability to continue as a going concern by way of an emphasis of matter paragraph.
The statutory accounts for the year ended 31 July 2010 have been delivered to the Register of Companies; those for the year ended 31 July 2011 were approved by the Board on 14 November 2011 and will be delivered to the Registrar of Companies following the Company's Annual General Meeting.
Administrative expenditure
Administrative expenditure has been allocated between continuing and discontinuing activities. This allocation has resulted in an apparent large variance between the current and the prior year expenditure as disclosed in the consolidated statement of comprehensive income despite the actual administrative expenditure being materially consistent year on year.
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2. | Earnings per share | 2011
| 2010
| ||
Profit/(loss) | |||||
The profit/(loss) for the purposes of basic and diluted loss per share being the net loss attributable to equity shareholders: | |||||
Continuing operations | (1,381,145) | (373,713) | |||
Discontinued operations | 5,691,456 | (874,748) | |||
Continuing and discontinued operations | 4,310,311 | (1,248,461) | |||
Number of shares | |||||
Weighted average number of ordinary shares for the purposes of basic earnings per share |
75,978,414 |
73,023,939 | |||
Basic and diluted earnings per share | |||||
Continuing operations | (1.82)p | (0.51)p | |||
Discontinued operations | 7.49p | (1.20)p | |||
Continuing and discontinued operations | 5.67p | (1.71)p | |||
Diluted earnings per share calculations are not presented as there is no material difference between the weighted average number of ordinary shares for the purposes of basic earnings per share and the weighted average number of ordinary shares for the purposes of diluted earnings per share; the basic and diluted earnings per share are the same. | |||||
3. | Cash (used in) operations | 2011 | 2010 |
| |||||||||
£ | £ |
| |||||||||||
Operating loss for the year from continuing operations |
(940,195) |
(397,358) |
| ||||||||||
Depreciation | 9,499 | 21,070 |
| ||||||||||
(Increase)/Decrease in trade and other receivables |
(29,794) |
38,624 |
| ||||||||||
(Decrease) in trade and other payables | (174,449) | (83,280) |
| ||||||||||
Share option expense Shares issued in lieu of bonus Loss on sale of subsidiary | 60,888 49,000 8,355 | 125,246 - - |
| ||||||||||
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Cash from/(used in) discontinued operations | 34,170 | (1,114,017) |
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Cash (used in) continuing and discontinued operations | (982,526) | (1,409,715) |
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Cash flows arising from discontinued activities |
2011 |
2010 |
| ||||||||||
£ | £ |
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Cash from/(used in) discontinued operations | 34,170 | (1,114,017) |
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Investing activities | (415,846) | (2,819,450) |
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Financing activities | - | - |
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4. | Assets held for sale and discontinued operations | ||||||||||||
The Company has announced that, together with Moyle Energy Investments Limited that it has entered into exclusive negotiations with a major energy company regarding the acquisition of an equity interest in Islandmagee Storage Limited owned by InfraStrata (65%) and Moyle (35%). It is likely that the equity interest will arise through the issue of shares by Islandmagee Storage Limited rather than the sale of equity by the group. It is expected that the majority of the proceeds from the issue of equity will be retained in Islandmagee Storage Limited to fund project development.
The operations of Portland Gas ESP S.L. have been discontinued and the Company will be wound up as soon as possible.
Whilst the assets held for sale are classified as current assets, due to the nature of the arrangements described above, the group does not expect to receive cash inflows equivalent to, or in excess of, the book value of the assets so classified. | |||||||||||||
2011 £ | 2010 £ | ||||||||||||
Assets classified as held for sale | |||||||||||||
Property, plant and equipment | - | 23,664,983 | |||||||||||
Intangible assets - gas storage development costs |
2,700,345 |
2,414,342 | |||||||||||
Trade and other receivables | 1,066 | 334,553 | |||||||||||
Cash and cash equivalents | 43,320
| 97,156 | |||||||||||
2,744,731
| 26,511,034
| ||||||||||||
Liabilities classified as held for sale | ||||||
Current liabilities | ||||||
Trade creditors | 1,192 | 73,400 | ||||
Other taxation and social security | - | 4,182 | ||||
Accruals | 28,736 | 114,857 | ||||
Other contractual agreements | - | 700,000 | ||||
29,928 |
892,439 | |||||
Non-current liabilities | ||||||
Obligations under lease agreements | - | 2,168,286 | ||||
Other contractual agreements | - | 1,000,943 | ||||
29,928 | 4,061,668 | |||||
5. | Discontinued operations | 2011 £ | 2010 £ | ||||||||
Revenue | - | - | |||||||||
Net operating costs
Profit arising on loss of control of subsidiaries Portland Gas Limited Corfe Energy Limited Brigantes Energy Limited | (151,958)
2,964,014 1,439,700 1,439,700 | (874,748)
- - - | |||||||||
Profit/(loss) before tax | 5,691,456 | (874,748) | |||||||||
Tax charge |
- |
- | |||||||||
Profit/(loss) after tax | 5,691,456 | (874,748) | |||||||||
In accordance with the applicable international financial reporting standard, the investments in the joint venture and the associates are initially recognised as the group's share of the fair values of the relevant entities at the date which control was lost. This gives rise to an accounting profit as detailed above.
The carrying values of the joint venture and the associates are the initial fair values, adjusted for subsequent profits and losses attributable to the group.
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6. | Approval |
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The preliminary announcement was approved by the Board on 14 November 2011. |
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