Final Results

RNS Number : 0697S

Infrastrata PLC

15 November 2011

 



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 26^th 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 26^th 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
	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.
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 - -
	Cash from/(used in) discontinued operations								34,170		(1,114,017)
	Cash (used in) continuing and discontinued operations								(982,526)		(1,409,715)
	Cash flows arising from discontinued activities								2011		2010
									£		£
	Cash from/(used in) discontinued operations								34,170		(1,114,017)
	Investing activities								(415,846)		(2,819,450)
	Financing activities								-		-
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.
6.	Approval
	The preliminary announcement was approved by the Board on 14 November 2011.

 

END

 

 

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