INFA.L Regulatory News (INFA)

26 Oct 2009 07:00



PRESS RELEASE

Final results for the year ended 31 July 2009

Portland Gas plc (AIM: PTG) ("the Company" or "Portland Gas") the independent gas storage Company is pleased to announce final results for the year ended 31 July 2009.

Operational highlights

Portland Project funding process launched 

Pre-start planning conditions discharged for the Portland Project

Initial site works on the Portland Project wellpad area commenced

Good progress made with the Islandmagee Project

The Company has continued to pursue and evaluate international gas storage opportunities

Financial highlights

Loss for period of £1,281,002 (2008; £1,569,621) 

Loss per share of 1.82p (2008; 2.33p)

Cash and cash equivalents as at 31 July 2009 of £3,066,502 (2008; £9,276,964)

Capitalised expenditure on gas storage projects during the year of £5,729,823 (2008; £7,360,442)

Chief Executive's Report 

The Portland Gas group has during this time of economic uncertainty focused on the Portland Project funding, however it has also been able to progress its other gas storage projects. It is now well recognised that a significant programme of gas storage development is required in the United Kingdom and Ireland to secure energy supplies for the future. The two projects initiated by the Group in the United Kingdom could between them provide approximately 42 million cubic metres of gas on a cold winter day (this is approximately 10% of the total United Kingdom and Ireland peak daily demand). 

Portland Project

The first funding process for the Portland Project was halted owing to the 'credit crunch' in November 2008. There followed a period of consultation with interested parties on a bi-lateral basis until July 2009 when a new process was formally launched. During this intermediate period, BNP Paribas was appointed as project finance advisors and Field Fisher Waterhouse LLP as new legal advisors to the project company.

Following the discharge of the pre-start planning conditions, on 31 July 2009 site work commenced at Upper Osprey on Portland. 

The first task is to undertake initial works on the wellpad area from which drilling down to the salt sequence deep below Portland can take place, the first stage in creating 14 caverns providing storage for 1,000 million cubic metres of gas. These preliminary works are being performed by Hydrock, a leading national provider of consultancy and specialist contracting services for construction, infrastructure and the environment. Engineering design work is being undertaken by CB&I who have global experience in the engineering, procurement and construction of major energy infrastructure projects. The Company has reached agreement with Hydrock to undertake works to a value of £300,000. These works are being funded by a redeemable debenture created on the 7 July 2009 and granted to Hydrock. Under the terms of the debenture the Company may redeem the instrument until 31st January 2010 beyond which it is converted into 369,595 ordinary shares.

The gas storage facilities will be constructed in a number of stages, starting initially with drilling and construction of the facilities required to construct the caverns, followed by construction of the gas facilities and pipelines. The project will take approximately seven years to complete. 

After the year-end, a Co-operation Group was established following a successful first phase of the funding process. The Group consists of five companies who have each expressed an interest in possibly acquiring a working interest in the Portland Project, together with Infrastrata UK Limited (formerly Portland Gas A Limited). The Group will work together to conduct a feasibility study in respect of the Project. The Project's legal advisor, Field Fisher Waterhouse LLP, will draw up a Shareholders' Agreement and a separate Capacity Agreement. In parallel, the Project's project finance advisor, BNP Paribas, will work on the development of the financing structure. 

On the 14 July 2009 the Company agreed to place 919,474 new ordinary shares of 10p each at 81.17p per share with Portland Port Limited to settle an existing liability relating to the East Weares estate lease. These shares were issued after year end.

Islandmagee Project

The Project, a joint venture with a subsidiary of Northern Ireland Energy Holdings Limited, is designed to store 500 million cubic metres of natural gas. During 2009, technical experts developed a design for the storage caverns and surface facilities and further progress was made on the Environmental Impact Assessment. 

In June 2009 a successful two-day public exhibition to present information and gather feedback on the project was held. Further consultations with stakeholders are planned for the end of October 2009 and a target date of year end 2009 has been set for submission of the planning application.

Storage asset portfolio development

The Group made progress with its plans for new gas storage projects in Germany and Spain. In Germany, a review of the geology and infrastructure has resulted in activity being focused on a salt dome in northern Germany. In Spain, a local subsidiary Portland Gas ESP S.L. was formed to develop the Group's Spanish gas storage plans.

Outlook

The 2009/10 financial year will again be an active time for the business. The Group looks forward to the introduction of investors in the Portland Project and to continuing the development and construction of the Upper Osprey site. Islandmagee Storage Limited (the project company for the Northern Ireland Project re-named during the year from Portland Gas NI Limited) plans to complete the Environmental Impact Assessment and submit the Project planning application before the end of the 2009 calendar year. In addition the Group will continue in its stated objective of developing an international gas storage business. 

  Portland Gas plc

Consolidated income statement 

For the year ended 31 July 2009

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Portland Gas plc

Consolidated balance sheet

As at 31 July 2009

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Portland Gas plc 

Consolidated statement of changes in equity

For the year ended 31 July 2009

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Portland Gas plc 

Consolidated cash flow statement 

For the year ended 31 July 2009

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Significant non-cash transaction

The above excludes the settlement of a liability of £746,337, where the supplier agreed to accept 919,474 new 10p ordinary shares in settlement; the shares were issued after year end.

Portland Gas plc 

Notes to the financial statements  

For the year ended 31 July 2009

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For further information please contact:

Notes to Editors:

Background on Portland Gas 

Portland Gas' business is focused on the development of two gas storage projects in the United Kingdom at Portland, Dorset and at Islandmagee, County Antrim, Northern Ireland. The two projects could between them provide over 10% of the total UK and Ireland peak daily demand in the latter part of the next decade. The Company is also developing new projects in mainland Europe initially focusing on Germany and Spain. The Company is one of only a few in Europe focused specifically on gas storage development, a sector with significant growth potential in Europe over the coming decades. In order that the "Portland Gas" name can remain with the Portland Project where it is very well established in Dorset, the Directors intend to seek approval at the next Annual General Meeting of the Company, scheduled for December 2009, to change the name of Portland Gas plc to "Infrastrata plc". The project company, Portland Gas Holdings Limited, would then be renamed to "Portland Gas Limited".

Further information is available on the Company's website www.portland-gas.com.