primarily upon the current economic
situation and financial outlook and in
no way reflects adversely upon the
performance of the team which remains
one of total dedication and diligence.
In conclusion I would like to express my
gratitude for your continued
encouragement and support during
difficult economic times and offer my
appreciation for the continuing efforts
of the executive team on your behalf.
Ken Ratcliff,
Non-Executive Chairman
Chairman’s statement
As Chairman of InfraStrata I am acutely
aware that the year to 31 July 2010 has
brought its fair share of frustration and
disappointment to our hopes and
aspirations for the Group as reflected in
a distressed share price performance.
However, I am very pleased to report
that progress is now being made to
move the business forward.
It has become a truism to say that the
appetite for investment in gas storage
within the short to medium term has
deteriorated considerably in recent
years and this has had a significantly
adverse effect upon our ability to fund
our portfolio of projects. In
consequence, we have decided during
the course of the last year, to expand
our sphere of interest based upon our
existing assets and areas of executive
expertise where we have found there to
be natural synergies. In this respect we
have sought to lessen our total
dependency upon developing gas
storage projects across an international
portfolio, to one of broadening our
range of assets within two core areas in
the UK, to include conventional and
unconventional oil and gas exploration.
In the year to 31 July 2010 our
disappointment centred upon the
ongoing difficulties within the capital
and gas storage markets. As you will
know, a Co-operation Group of potential
investors had been formed in October
2009 following which an advisor was
appointed to undertake a technical
due-diligence exercise. This process
continued in parallel with discussions
on possible shareholder and capacity
agreements co-ordinated by our legal
advisors. Regrettably, whilst our view of
the project in both technical and
financial terms remains undiminished,
the Co-operation Group, acting as a
whole, were unable to offer commercial
terms that were acceptable to us at this
time. However, during this time we were
able to make considerable progress
through our discussions with eCORP
International, LLC (“eCORP”) culminating
in a partnership agreement that not
only facilitates substantial progress in
the project but also enables our
potential participation in exploration
activity in the area. We hope that the
Portland Project will be brought back to
the market in 2012 when we anticipate
an improvement to the situation in the
markets.
In addition to our continuing efforts
directed at bringing the Portland
project to full developmental stage we
have been pursuing our plan to secure
planning permission for the project at
Islandmagee in Northern Ireland. On 23
March 2010 Islandmageee Storage
Limited, on behalf of the Group,
submitted a planning application
relating to the creation of a 500 million
cubic metres natural gas storage facility
– a capacity sufficient to store Northern
Ireland’s peak demand for in excess of
60 days. We are continuing in our
discussions with eCORP as potential
partner in this enterprise but on a non
exclusive basis as we seek interest from
other parties in not only progressing the
gas storage project but again
broadening our strategy to include
exploration.
Slim differentials between summer and
winter gas prices continue to affect
sentiment for large gas storage
developments but the requirement for
such long-lead infrastructure remains
strong. This position was echoed and
reinforced through several of the
presentations made during the highly
successful independent seminar on gas
storage hosted by InfraStrata in
September. We therefore remain
focused upon the development of the
two gas storage projects within the UK
that could between them provide over
10% of the total UK and Ireland peak
daily demand once operational in the
latter part of the decade. However,
mindful of the difficulties in obtaining
funding interest for the full development
of such projects at this stage, we have
sought, with some success, to expand
our interest into more traditional oil and
gas exploration which we hope will
bring considerable benefit by
enhancing shareholder value.
Your Board has considered the matter
of remuneration for the executive team
and our decision has been to again
freeze salaries for the coming year but
consider a reward through the share
incentive scheme for milestones
achieved. This decision is based
InfraStrata plc
3
Contents
Chairman’s statement
Chief Executive’s operating review
- Corporate and social responsibility
Directors, secretary, advisors and shareholder information
Report of the Directors
- Directors of the Company
- Corporate Governance
- Directors’ responsibilities
Independent auditors’ report
Financial statements and notes
- Consolidated statement of comprehensive income
- Consolidated statement of financial position
- Company statement of financial position
- Consolidated statement of changes in equity
- Company statement of changes in equity
- Consolidated statement of cash flows
- Company statement of cash flows
- Notes to the financial statements
Letter from the Chairman
Notice of Annual General Meeting
Proxy form
3
4
6
7
8
10
12
13
14
15
16
17
18
18
19
19
20-36
37-38
39
41
Chief Executive’s
operating review
Portland Project, Dorset
At a projected 1,000 million cubic metres
(“mcm”) of working gas, the facility would
be the largest of the publicly announced
onshore gas storage facilities in the UK.
The project is owned by Portland Gas
Limited. Its two shareholders are a
subsidiary of eCORP International, LLC, a
developer, operator and owner of natural
gas storage facilities, and a developer
and explorer of conventional and
unconventional natural gas prospects in
the US and Internationally (50% interest),
and a wholly owned subsidiary of
InfraStrata plc (50% interest).
The project has been granted planning
permission by Dorset County Council and
Pipeline Construction Authorisation by the
Department of Energy and Climate
Change. The gas storage facility is
designed to inject or withdraw gas at
20mcm per day. The total construction cost
for the project is approximately £450m.
Further information is available on the
website www.portland-gas.com.
In October 2010 the Company
announced that legal agreements had
been completed with US independent
energy company eCORP International,
LLC (“eCORP”) relating to InfraStrata’s
interests in the Portland gas storage project.
Islandmagee Project,
Northern Ireland
A subsidiary of eCORP, eCORP Oil & Gas
UK Limited, acquired rights to 50% of the
share capital of the project company,
Portland Gas Limited, in return for
matching the project expenditure
invested to date by InfraStrata (£22.9m).
The Company, through its subsidiary
InfraStrata UK Limited, will retain 50% of
the share capital in Portland Gas Limited.
These funds will be used to develop the
Portland Project further before bringing it
to market, hopefully during 2012. Under
the terms of the agreement with eCORP,
the drilling of the first cavern well during
2011 will be the initial activity. Data will
be acquired to better define the pressure
ranges over which the caverns can be
operated to maximise the responsiveness
of the caverns to short term gas demand
requirements (the ‘extrinsic value’ of the
project) and finalise elements of the
cavern design. InfraStrata will also
benefit from an income stream through a
technical services agreement.
The Company is pleased to be moving
into a new phase in the development of
the Company with the partnership.
During 2011 we look forward to
progressing plans with stakeholders to
move the Portland Project forward and
expect the major work on the ground to
start with construction of the wellpad
during Q2 2011.
The proposed 500 million cubic metres
(“mcm”) facility would be the largest on
the island of Ireland and the first for
Northern Ireland. It would make a
significant contribution to the security of
gas supplies. The facility is being
designed to inject gas at 12 mcm and
withdraw gas at 22 mcm per day. The
cost of construction has been estimated
at £250 million, including cushion gas.
The project is owned by Islandmagee
Storage Limited (“IMSL”), an independent
Northern Ireland registered company. Its
two shareholders are a subsidiary of
Mutual Energy, an operator of existing
key gas and electrical infrastructure in
Northern Ireland (35% interest), and a
subsidiary of InfraStrata plc (65% interest).
A planning application for the
Islandmagee Storage Project was
submitted in March 2010. The submission
of the planning application followed
more than two years collating
information and carrying out very
thorough investigative studies into the
development of a natural gas storage
facility within a Permian salt sequence a
mile beneath Larne Lough, including a
3D seismic survey carried out in 2007.
Since then IMSL has been consulting
extensively with stakeholders and local
resident groups and held two well
attended public exhibitions during 2009.
Further information is available on the
project website
www.islandmageestorage.com.
In June 2010 the Company announced
that it had signed a Memorandum of
Understanding (“MOU”) with eCORP
relating to a proposed investment in the
Islandmagee Project. eCORP, the
Company and its partner Mutual Energy
agreed in November 2010 to extend the
terms of the MOU until 30 April 2011, but
on a non-exclusive basis.
Under the MOU and subject to
agreement, eCORP retains an option to
acquire an interest in the project
company, Islandmagee Storage Limited
on terms specified in the MOU. Should
eCORP proceed with an investment in
IMSL, eCORP would acquire 40% of the
share capital of IMSL in return for
funding the project through to the
Financial Investment Decision point and
paying InfraStrata and Mutual Energy a
sum of up to £5m if the project proceeds
to development. In addition, eCORP
would refund all of the project
development costs incurred by IMSL to
the date of completion (these have been
funded solely by InfraStrata). InfraStrata
and Mutual Energy remain committed to
introducing a further partner into the
project and will be exploring the potential
for joint development with eCORP and
others over the coming months.
The Islandmagee Storage Project is an
important element of InfraStrata’s
portfolio and the Company remains
hopeful that this strategic asset for
Northern Ireland will be granted
planning permission in the first half of
2011 to enable drilling of the first cavern
well to commence before the end of 2011.
Front End Engineering Design will
commence following acquisition of data
from the well, leading to the point when
the decision to proceed to full
construction is expected to be taken
during 2012.
New projects
During 2010, the Company took the
decision to focus its resources on the UK
gas market, and to enhance the existing
gas storage business within its two core
areas. This includes conventional and
unconventional petroleum exploration,
where the Company can use its existing
geological and geophysical knowledge
and databases to leverage initial funding
for the projects. The Company sees an
excellent strategic fit between gas pro-
duction and storage in close proximity to
each other.
In November 2010 the Company was
offered a petroleum exploration licence
over the central part of the Larne-Lough
Neagh Basin in Northern Ireland. The
offer is in response to an application
made to the Department of Enterprise,
Trade and Investment (“DETI”) in Northern
Ireland in August 2010. The Company
expects that DETI should be in a posi-
tion to issue the licence in Q1 2011 after it
has completed the drafting of the terms
and conditions of the licence, taking
into account the outcome of its consulta-
tion with other Departments and agen-
cies. The initial licence term will be five
years with a decision on drilling a well
required within two years. InfraStrata will
be the operator of the licence with a 50%
interest. The licence covers an area of
663 square kilometres, and the existing Is-
landmagee gas storage project is located
within the boundary.
Following a licence award, seismic data
would be acquired during 2011 and it
is hoped that interpretation of this data
would lead to an exploration well being
drilled within two years. Ideally such a
well could form part of a programme
to include drilling for the Islandmagee
gas storage project, where the Com-
pany holds a 65% interest, subject to the
granting of planning permission for that
project.
In response to the decision to focus its
resources on its UK projects, the Com-
pany decided to seek a buyer for its
entire interests in the gas storage projects
in Spain and Germany, which are both at
the exploration application stage.
4
InfraStrata plc
InfraStrata plc
5
Corporate and social responsibility
Directors, secretary, advisors and
shareholder information
Portland Gas Limited continues to
and accessing grants. This led to grants
support local communities in its area of
being received by the Museum Trust for
Islandmagee
operation.
repairs to the building and IT
Islandmagee Storage Limited strongly
technology for over £11,000. Other
believes in supporting the local
larger grant programmes are also
community. Subject to obtaining
Directors
Kenneth Maurice Ratcliff (Non-executive Chairman)
Andrew David Hindle (Chief Executive Officer)
Craig Stuart Gouws (Chief Financial Officer)
Walter Rookehurst Roberts (Legal and Commercial Director)
Mark Anthony William Abbott (Non-executive Director)
Maurice Edward Hazzard (Non-executive Director)
The Portland Gas Trust
being explored.
The Portland Gas Trust is a registered
charity that supports initiatives around
education, geology and the
environment. This year the Trust has
continued to support local projects both
financially, and in kind through the
services of Community Liaison Officer,
Rachel Barton. The Governor’s Garden
The Trust has continued to work on the
Old Engine Shed and the areas around
the building. The Trust received a grant
of £4,000 from the COMMA fund which
enabled work to be done on site. This
has included rebuilding the dry stone
walls with volunteers from the
planning permission and full project
funding, the Company intends to set up
a Trust with objectives around
education, geology and the
environment. An initial investment of £1
million over three years, with a further
£50,000 per annum for a minimum of
six years thereafter is planned.
community and the YOI, clearing scrub
Consultation with local residents and
project received over £45,000 from the
and the production of information
interest groups indicated that there is a
Big Lottery fund and the Trust remains a
panels that have been set in large
need to upgrade the community centre.
partner in delivering the overall scheme
pieces of Portland Roach stone. Local
including a botanical garden, wildlife
stone company, Albion Stone, donated
garden and allotments.
two pieces of stone which have been
carved with poetry by the late Skylark
The Trust has continued to support the
Durston and placed within sections of
Island Ranger post and is a key partner
the walling. The Trust is committed to
in the Wild about Weymouth and
sustainable energies being used on the
Portland project that received Access to
Shed once the renovation works start
Nature funding to deliver a range of
and after receiving a grant of £4,125
environmental projects across the area
from CSEP, commissioned a feasibility
Islandmagee Storage Limited has
agreed to assist with this as part of its
primary investment phase which in turn
will help with the development of the
Gobbins tourism project sponsored by
Larne Borough Council.
The company is talking to local
residents and community groups in the
Larne Lough area with regard to ideas
over the next few years.
study of the types of energy saving
and initiatives which could be funded
ideas that could be used. Future plans
through the proposed Trust. In June
The Trust sponsored the Budmouth
include having activities for the local
2010 local businesswoman Judith Tweed
College Geology Award and the
community at the Old Engine site in 2012
Portland MEMO project. The Board
to celebrate the Queen’s Diamond
agreed to support the Portland Museum
Jubilee and the 2012 Olympic Games.
Trust by offering staff time in advising
was appointed as Community Liaison
Consultant, in order to collate a wide
range of ideas for potential funding.
Company secretary
Walter Rookehurst Roberts
Registered office
Principal office
Auditors
Tax advisors
Registrars
Nominated advisor and broker
Solicitors
Bankers
Blackstable House
Longridge
Sheepscombe
Stroud
Gloucestershire, GL6 7QX
80 Hill Rise
Richmond
Surrey, TW10 6UB
Nexia Smith & Williamson
1 Bishops Wharf, Walnut Tree Close
Guildford
Surrey, GU1 4RA
Smith & Williamson Limited
1 Bishops Wharf, Walnut Tree Close
Guildford
Surrey, GU1 4RA
Capita Registrars Limited
The Registry
34 Beckenham Road
Beckenham
Kent, BR3 4TH
Seymour Pierce Limited
20 Old Bailey
London, EC4M 7EN
Field Fisher Waterhouse LLP
35 Vine Street
London, EC3N 2AA
Bank of Scotland plc
155 Bishopsgate
London, EC2M 3YB
Investor and public relations
Buchanan Communications Limited
45 Moorfields
London, EC2Y 9AE
Judith Tweed, Community Liaison Consultant for the
proposed Islandmagee Trust meets with local primary
school principals to explain the background to the Trust
and discuss how local education initiatives could benefit
from potential funding.
6
InfraStrata plc
InfraStrata plc
7
Report of the Directors
for the year ended 31 July 2010
The Directors have pleasure in
presenting their report and audited
financial statements for the year ended
31 July 2010.
Principal activity and
review of business
The principal activity of the Group
throughout the year was the
development of sub-surface gas storage
facilities.
General
InfraStrata plc is incorporated in and
domiciled in England and Wales. The
Company changed its name from
Portland Gas plc to InfraStrata plc on
the 15 December 2009.
Share capital
On the 15 September 2009 the
Company issued 919,474 new ordinary
shares of 10 pence each which were
classified as shares to be issued at 31
July 2009.
On the 5 November 2009 the Company
placed 2,500,000 new ordinary shares of
10 pence each at 100 pence per share
to raise £2,500,000 before expenses.
Business review
During the year the Group continued to
develop its gas storage business.
Portland Project
At a projected 1,000 million cubic
metres of working gas stored in 14
caverns at a depth of 2,400 meters
within Triassic salt, the facility would be
the largest of the publically announced
onshore gas storage facilities in the UK.
The project has been granted planning
permission by Dorset County Council
and Pipeline Construction Authorisation
by the Department of Energy and
Climate Change. The gas storage
facility is designed to inject or withdraw
gas at 20mcm per day. The current
estimate of total construction cost for
the project is approximately £450m. The
project will use brine compensation
technology and will not require cushion
gas. Progress was made during the year
completing land leases for the 37
kilometre gas pipeline connection to
the National Transmission System.
A Co-operation Group was established
following a successful first phase of the
funding process during the prior year.
The Group consisted of five companies,
each of which had expressed an
interest in possibly acquiring a working
interest in the Portland Project, together
with InfraStrata UK Limited. The Group
worked together to conduct a feasibility
study in respect of the Project during
the year. The Project’s finance advisor,
BNP Paribas and the Company
progressed discussions with the
European Investment Bank on
development of the financing structure
and securing debt financing. The EIB
technical advisors have completed the
first phase of the project finance due
diligence. The Co-Operation Group
was terminated on 28 June 2010. On the
same day a Memorandum of
Understanding was signed with eCORP
International LLC through which eCORP
could acquire 50% of the Project by
funding the next stage of investment.
The related legal agreements were
completed on 1 October 2010.
The initial works on the wellpad area
were undertaken during the year.
Further works are expected to be
undertaken in quarter 2 of the 2011
calendar year, in preparation for the
drilling of the first cavern well later in
2011. These works will be funded by
eCORP.
The gas storage facilities will be
constructed in a number of stages,
starting initially with drilling and
construction of the facilities required to
create the caverns, followed by
construction of the gas facilities and
pipelines. The project will take
approximately eight years to construct.
Islandmagee Project
The Planning Application for the
Islandmagee Storage Project was
submitted to the Strategic Projects Unit
of the Northern Ireland Planning
Service during March 2010.
The proposed storage facility is
designed to store 500 million cubic
metres of natural gas in seven caverns
to be created at a depth of 1,500 metres
within a Permian salt sequence. The site
is located close to existing gas
infrastructure and in what the Company
believe is the thickest development of
salt in Northern Ireland at Ballylumford
on Islandmagee, County Antrim. The
project will take approximately seven
years to construct.
In January 2010 InfraStrata UK Limited,
Moyle Energy Investments Limited (a
wholly owned subsidiary of Mutual
Energy) and Islandmagee Storage
Limited entered into a preliminary
shareholders agreement whereby
Moyle Energy Investments Limited
acquired a 35% interest in Islandmagee
Storage Limited. InfraStrata UK Limited
continues to assume one hundred
percent of the risks of ownership and
therefore InfraStrata plc includes the
total assets and liabilities of
Islandmagee Storage Limited in its
consolidated results.
On 28 June 2010 a Memorandum of
Understanding was signed with eCORP
International LLC through which eCORP
could acquire 40% of the Project by
funding the next stage of investment,
refunding back-costs and paying a
bonus at the Final Investment Decision
point. Discussions are continuing on the
Islandmagee Storage Project, and
eCORP, the Company and its partner
Mutual Energy have agreed to extend
the terms of the MOU until 30 April 2011,
but on a non-exclusive basis.
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. An application for
an exploration licence over a salt dome
was made in 2010 by the German
subsidiary Sager Meer Energy Limited.
In Spain, the Group awaited the results
of an exploration application lodged by
a local subsidiary Portland Gas ESP S.L.
in 2008.
Following a strategic review, the
Company has decided to sell its entire
interests in these gas storage projects,
which are currently both at the
exploration application stage, to focus
on its core areas in the United Kingdom.
Discussions are being held with eCORP
and others with view to concluding a
sale during 2011.
REPORT OF THE DIRECTORS
Charitable and political
donations
During the year the Group made
various charitable contributions in the
UK totalling £400 (2009: £1,050). No
donations were made for political
purposes (2009: £nil).
Payment of creditors
The Group’s policy for all suppliers is to
fix terms of payment when entering into
a business transaction, ensure that the
supplier is aware of those terms and to
abide by the agreed terms of payment.
The number of days’ trade creditors
was 20 (2009: 21) for the Group.
Risk management
The financial risk management
objectives and policies of the Company
in relation to the use of financial
instruments, and the exposure of the
Company and its subsidiary
undertakings to its main risks, credit risk
and liquidity risk, are set out in note 23
to the financial statements.
Directors
The Directors, who served during the
year and subsequently, were as follows:
Executive Directors
A D Hindle
C S Gouws
W R Roberts
Non-executive Directors
K M Ratcliff
M A Abbott
J R Davie (Resigned 3 December 2010)
M E Hazzard
All Directors benefit from the provisions
of individual Directors Personal
Indemnity insurance policies. Premiums
payable to third parties are as
described in note 6.
The Company operates a share option
scheme, particulars of share options
granted to Directors are detailed in
note 6 to the financial statements.
Health, safety and
environment
There were no reportable health, safety
or environmental incidents during the
period.
Key performance indicators
Key performance indicators are used
by the Board to monitor progress
against predetermined objectives.
Key performance indicators include
identification of new economic project
opportunities, submission of project
planning applications in accordance
with project scheduling, project
development in accordance with
project development programme and
Group working capital management.
Submission of the Islandmagee project
planning application during 2010, the
further development of the Portland
project and prudent application of
available cash resources are in line
with the Board’s expectation.
Risk factors
The Group has to manage several
business risks. These risks include loss of
key employees, delays on planning
applications, funding, cost over runs
and exploration failures. The Board
conducts a review of the specific risks
the Group faces and has appropriate
systems in place in order to identify
and manage in so far as possible the
ongoing risks and uncertainties the
Group faces.
Outlook
The 2010/11 financial year will again be
an active time for the business.
The Group looks forward to progressing
the Portland Project with eCORP. The
focus will be the drilling of the first
cavern borehole.
Islandmagee Storage Limited looks
forward to the Planning Application
determination which is anticipated
during the financial year.
In addition the Group will continue in
its stated objective of developing the UK
gas storage business by working in
partnerships across all of our projects.
The Group are also making
applications for petroleum licences
where they believe synergies exist
between existing projects and the
licence areas applied for.
Results and dividends
The Group made a loss after tax of
£1,248,461 during the year (2009: loss
after tax of £1,281,002). The loss for the
year, together with the balance of
£3,241,347 brought forward leaves a
retained loss of £4,489,808 to be carried
forward.
The Directors do not recommend the
payment of a dividend (2009: £nil).
In accordance with international
financial reporting standards, the
project assets have been reclassified as
assets held for sale and disclosed as
such in the consolidated statement of
financial position. As a corollary, the net
loss attributable to the project
companies has been classified as
arising from discontinued operations in
the statement of comprehensive income.
Events since the balance
sheet date
On the 1 October 2010 eCORP Oil & Gas
UK Limited undertook to fund the first
cavern well and thereby acquired the
right to match the project expenditure
invested to date by InfraStrata (£22.9m)
in return for 50% of the share capital of
the project company, Portland Gas
Limited.
The Department of Enterprise Trade &
Investment (“DETI”) has carried out its
assessments of the financial and
technical aspects of an application
made for a petroleum licence in
Northern Ireland and offered in
November 2010 to grant InfraStrata a
50% licence interest over the area
applied for which is known as Central
Larne - Lough Neagh Basin. The licence
covers an area of 663 square
kilometres, and the existing
Islandmagee gas storage project is
located within the boundary. The
Company expects that DETI should be
in a position to issue the licence in Q1
2011 after it has completed the drafting
of the terms and conditions of the
licence, taking into account the
outcome of its consultation with other
Departments and agencies.
8
InfraStrata plc
InfraStrata plc
9
REPORT OF THE DIRECTORS
REPORT OF THE DIRECTORS
Directors of the Company
and their abridged CVs are as follows:
Ken Ratcliff (Non-Executive Chairman)
Maurice Hazzard (Non-Executive Director)
Ken Ratcliff, JP, BSc., FCA, (Non-Executive Chairman) (60) is a Chartered Accountant with extensive finance and business
experience. He is currently College Accountant at Epsom College and Accountant and co-founder of Geokinetics Processing UK
Limited, an oil and gas industry seismic contractor. He was an audit manager with Touche Ross & Co in London before moving
into accountancy and finance positions within the oil and gas industry in 1978. Ken has previously held senior management
positions with Ensign Geophysics Limited, Seismic Geocode Limited, Tenneco Corporation and Merlin Geophysical Limited. He
joined the Board in 2007 and became Chairman in October 2007. Ken has been a non-executive director of Egdon Resources
Plc since 2001.
Maurice Hazzard, (Non-Executive Director) (72) has extensive business experience in the oil and gas industry, particularly in
large offshore projects. He has held senior positions with Phillips Petroleum, Hamilton Bros. Oil & Gas Limited and Halyard
Offshore Limited. Between 1979 and 1989 Maurice was responsible for development of the Energy Division of the Tung Group of
companies, based in Hong Kong, and during this period was Executive Chairman of Houlder Marine Drilling Limited. From 1989
to 1996 he was a consultant with Maritime Audit & Technical Services Limited, consulting to the international offshore oil and
marine services industry. From 1996 to 1999 he was Chairman and CEO of PD Systems International Limited, a UK electronics
manufacturer. He is also non-executive Chairman of Orbitron Technologies Limited, a software company.
Andrew Hindle (Chief Executive Officer)
Andrew Hindle, BSc., MSc., PhD, FGS, CGeol, (Chief Executive Officer) (48) is a highly experienced geologist with 25 years worldwide
experience. He holds a degree in Geological Sciences gained in 1983 from Leeds University and, following a year with BP, gained
a MSc. degree in Petroleum Geology in 1985 from Aberdeen University. In 1998 he completed a PhD (part-time) through the Open
University. He received the J. C. “Cam” Sproule Memorial Award from the American Association of Petroleum Geologists in 1999. He
worked for Texaco from 1985 until 1996 on UK and international exploration and development projects, working overseas from 1990
to 1994. Subsequently, he worked for Anadarko Algeria Corporation from 1996 to 1997. In 1997 he became a founding director of
Egdon Resources Plc and, following the demerger of Egdon and InfraStrata, remains a non-executive director of Egdon. Andrew
has been the Chief Executive of the Group since 2005. Andrew is also a director of Geofocus Limited and Toffee Limited.
Craig Gouws (Chief Financial Officer)
Craig Gouws, BSc., CA (SA) (Chief Financial Officer) (43) is a Chartered Accountant and holds an engineering degree. He
worked within the forestry sector in South Africa before qualifying as a Chartered Accountant with Ernst & Young in 2001. His
finance experience includes working for major auditing organisations in senior financial positions in South Africa, the Middle
East and the United Kingdom. Craig joined the Group in an executive role during 2007.
Walter Roberts (Legal and Commercial Director and Company Secretary)
Walter Roberts, MA (Cantab.), (Legal and Commercial Director and Company Secretary) (59) is an oil and gas lawyer with a
strong record in commercial and legal management. Walter qualified as a solicitor with Simmons & Simmons before joining
Phillips Petroleum in 1980. He then worked for Lasmo in both the UK and in Australia where he set up its legal department.
Walter was the principal negotiator for UK joint venture commercial negotiations and gas sales for Talisman Energy (UK) Limited
(previously Bow Valley Petroleum (U.K.) Limited) until 1995. More recently he was the London partner of Cummings & Co. and he
is currently an executive director of Pinnacle Energy Limited and a non-executive director of Egdon Resources Plc. Walter joined
the Board of Egdon Resources Plc in 2001 as a non-executive director. He joined the Group in an executive role in 2007.
Mark Abbott (Non-Executive Director)
Mark Abbott, BSc., FGS, (Non-Executive Director) (49) is a geophysicist. He holds a degree in Exploration Sciences (Geology/
Geophysics/Mining Engineering) gained in 1985 from the University of Nottingham. He worked for the British Geological Survey
from 1985 to 1992 in the UK and overseas, mainly involved in onshore basin analysis in the UK. Between 1992 and 1996 he
worked in the International Division of British Gas Exploration and Production Limited evaluating exploration and appraisal
projects. From 1996 to 1997 he was employed by Anadarko Algeria Corporation as a Staff Exploration Geophysicist. In 1997 he
became a founding director of Egdon Resources Plc and, following the demerger, became the Managing Director of that
company. Mark is also a director of MA Exploration Services Limited, an exploration consulting company and Bishopswood
Pavilion Limited, an owner of sports grounds and a Trustee of the UK Onshore Geophysical Library.
Directors Emoluments
The Directors’ emoluments are disclosed in note 6 to the Financial Statements.
Directors and substantial shareholdings
The Directors of the Company held the following beneficial shareholdings as at 13 December 2010
Ordinary shares of 10p each
Number
Ken Ratcliff
Andrew Hindle
Craig Gouws
Walter Roberts
Mark Abbott
Maurice Hazzard
63,000
6,695,791
35,000
1,055,460
6,687,666
1,144
%
0.09
9.07
0.05
1.43
9.06
0.00
The Company has received notification of the following interests in 3% or more of the Company’s issued share capital at 13
December 2010. The percentages presented are at the date of notification.
Ordinary shares of 10p each
Bluehone Investors LLP
Credit Suisse Securities (Europe) Limited
Number
3,675,058
15,480,020
%
6.95
20.97
10
InfraStrata plc
InfraStrata plc
11
REPORT OF THE DIRECTORS
REPORT OF THE DIRECTORS
Corporate Governance
Directors’ responsibilities
The Directors recognise the value of the
UK Corporate Governance Code and
whilst under the AIM rules compliance
is not required the Directors believe
that the Company applies the
recommendations in so far as is
appropriate for a public company of its
size. The Company therefore does not
fully comply with the Code.
The Board
The Board comprised of three Executive
Directors and four Non-executive
Directors whose background and
experience are relevant to the
Company’s activities. As such, the
Directors are of the opinion that the
Board comprises a suitable balance
and that the recommendations of the
Combined Code have been
implemented to an appropriate level.
The Board, through the Directors,
maintain regular contact with its
advisors and public relations
consultants in order to ensure that the
Board develops an understanding of
the views of major shareholders about
the Company.
The Board held 8 full Board meetings
during the financial year. All were
attended by all Directors. In addition
there were 4 meetings to approve
administrative resolutions which were
only partly attended although all
Directors had approved the business.
Audit Committee
The Audit Committee met three times in
the year to 31 July 2010. Its members
were Jonathan Davie (Chairman), Ken
Ratcliff and Mark Abbott. Members of
the committee at the time of meetings
attended all meetings either in person
or by telephone. In addition, the
Chairman met senior representatives of
the external auditors during October
2009, April 2010 and July 2010. The
external auditor has unrestricted
access to the Chairman of the
Committee.
but considers that, given the size of the
Group and the close involvement of
senior management in day-to-day
operations, there is currently no
requirement for such a function.
Notwithstanding the absence of an
internal audit function, the Committee
keeps under review the effectiveness of
the Group’s internal controls and risk
management systems.
Going Concern
As explained in note 2 to the financial
statements, the Directors consider that
there exists a material uncertainty
which casts significant doubt upon the
ability of the Group to continue as a
going concern and therefore to realise
its assets and discharge its liabilities in
the normal course of business. There
can be no certainty that the disposal of
Remuneration Committee
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 disposals, the
Directors are of the opinion that they
will be able to complete any necessary
funding and have therefore prepared
cash flow forecasts for the Group on
this basis. These projections 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.
For this reason, they continue to adopt
the going concern basis of accounting
in preparing the annual financial
statements.
The Remuneration Committee plans to
meet at least twice in each year. The
continued adverse economic climate
meant that it only felt the need to meet
once in the year to 31 July 2010. The
members discussed at various times
during the year whether to hold a
formal meeting and decided that the
circumstances did not warrant doing
so. Its members are Maurice Hazzard
(Chairman) and Mark Abbott and both
members were in attendance at the
meeting. The Group’s policy is to
remunerate senior executives fairly in
such a manner as to facilitate the
recruitment, retention and motivation of
staff. The Remuneration Committee
agrees with the Board a framework for
the remuneration of the Chairman, the
Executive Directors and the senior
management of the Group. The
principal objective of the Committee is
to ensure that members of the
executive management of the Group
are provided with appropriate
incentives to encourage enhanced
performance and are, in a fair and
responsible manner, rewarded for their
individual contributions to the success
of the Group. The view of the
Committee is that the salaries remain
competitive, but are not over generous,
and therefore did not recommend an
adjustment during the current financial
year. Non-executive fees are
considered and agreed by the Board
as a whole and there has been no
specific review in this regard during
the period.
The Audit Committee reviews the scope
and results of the external audit and
monitors the integrity of the financial
statements of the Group. The Committee
keeps under review the necessity for
establishing an internal audit function
Nomination Committee
The Company has not established a
Nomination Committee as the Directors
are of the opinion that such a
committee is inappropriate given the
current size of the Company.
The Directors are responsible for
that are sufficient to show and explain
preparing the Report of the Directors’
the Company’s transactions and
and the financial statements in
disclose with reasonable accuracy at
accordance with applicable law and
any time the financial position of the
regulations.
UK Company law requires the directors
to prepare Group and Company
financial statements for each financial
year. Under that law the Directors have
elected (as required by the rules of the
AIM market of the London Stock
Exchange) to prepare Group financial
statements in accordance with
International Financial Reporting
Standards (“IFRS”) as adopted by the
European Union (“EU”) and have
elected to prepare the Company
financial statements in accordance
Company and to enable them to
ensure that the financial statements
comply with the Companies Act 2006.
They are also responsible for
safeguarding the assets of the
Company and hence for taking
reasonable steps for the prevention and
detection of fraud and other
irregularities.
The Directors are responsible for the
maintenance and integrity of the
corporate and financial information
included on the InfraStrata plc website.
with IFRS as adopted by the EU and as
Legislation in the United Kingdom
applied in accordance with the
governing the preparation and
provisions of the Companies Act 2006.
dissemination of financial statements
The Group financial statements are
required by law and IFRS adopted by
the EU to present fairly the financial
position and performance of the Group;
the Companies Act 2006 provides in
relation to such financial statements
that references in the relevant part of
that Act to financial statements giving
a true and fair view are references to
their achieving a fair presentation.
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 Company and of the
Group and of the profit or loss of the
group for that period.
In preparing each of the Group and
Company financial statements, the
Directors are required to:
• select suitable accounting policies
and then apply them consistently;
• make judgements and estimates that
are reasonable and prudent;
• state whether they have been
prepared in accordance with IFRSs
as adopted by the EU;
• prepare the financial statements on
the going concern basis unless it is
inappropriate to presume that the
group and the Company will
continue in business.
The Directors are responsible for
keeping adequate accounting records
may differ from legislation in other
jurisdictions.
Disclosure of information to
the auditors
In the case of each person who was a
Director at the time this report was
approved: - so far as the Director was
aware there was no relevant available
audit information of which the
Company’s auditor was unaware; and
that Director had taken all steps that
the Director ought to have taken as a
director to make himself aware of any
relevant information and to establish
that the Company’s auditor was aware
of that information.
This information is given and should be
interpreted in accordance with the
provisions of s418 of the Companies Act
2006.
Auditors
A resolution to re-appoint the auditors,
Nexia Smith & Williamson, will be
proposed at the forthcoming Annual
General Meeting.
By order of the Board
A Hindle
Director
13 December 2010
12
InfraStrata plc
InfraStrata plc
13
FINANCIAL STATEMENTS
Consolidated statement of comprehensive income
for the year ended 31 July 2010
Notes
9
10
11
Continuing operations
Revenue
Cost of sales
Gross profit/(loss)
Administrative expenses
Operating loss
Finance income
Loss before taxation
Taxation
Loss for the year from continuing operations
Loss for the year from discontinued operations
Loss for the year attributable to the equity
holders of the parent
Other comprehensive income
Total comprehensive loss for the year
2010
£
-
-
-
(397,358)
(397,358)
23,645
(373,713)
-
(373,713)
(874,748)
2009
£
-
-
-
(386,396)
(386,396)
173,439
(212,957)
-
(212,957)
(1,068,045)
(1,248,461)
(1,281,002)
-
-
attributable to the equity holders of the parent
(1,248,461)
(1,281,002)
Basic and diluted loss per share
12
Continuing operations
Discontinued operations
Continuing and discontinued operations
0.51p
1.20p
1.71p
0.30p
1.52p
1.82p
Independent auditors’ report to the
shareholders of InfraStrata plc
We have audited the financial
statements of InfraStrata plc for the
year ended 31 July 2010 which
comprise the Consolidated Statement of
Comprehensive Income, the
Consolidated and Parent Company
Statements of Financial Position, the
Consolidated and Parent Company
Statements of Cash Flow, the
Consolidated and Parent Company
Statements of Changes in Equity, and
the related notes 1 to 33. The financial
reporting framework that has been
applied in their preparation is
applicable law and International
Financial Reporting Standards (IFRSs)
as adopted by the European Union and
as regards the parent Company
financial statements, as applied in
accordance with the provisions of the
Companies Act 2006.
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.
Respective responsibilities
of Directors and auditors
As explained more fully in the
Directors’ Responsibilities Statement on
page 13, 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 the financial
statements in accordance with
applicable law and International
Standards on Auditing (UK and Ireland).
Those standards require us to comply
with the Auditing Practices Board’s
(APB’s) Ethical Standards for Auditors.
Scope of the audit of the
financial statements
A description of the scope of an audit
of financial statements is provided on
the APB’s website at www.frc.org.uk/
apb/scope/UKNP.
Opinion on financial
statements
In our opinion:
• the financial statements give a true
and fair view of the state of the
Group’s and the parent Company’s
affairs as at 31 July 2010 and of the
Group’s loss for the year then ended;
• the Group financial statements have
been properly prepared in
accordance with IFRSs as adopted by
the European Union; and
• the parent Company financial
statements have been properly
prepared in accordance with IFRSs as
adopted by the European Union and
as applied in accordance with the
provisions of the Companies Act 2006;
and
• the financial statements have been
prepared in accordance with the
requirements of the Companies Act
2006.
Emphasis of matter – Going
concern
In forming our opinion on the financial
statements, which is not qualified, we
have considered the adequacy of the
disclosure made in note 2 to the
financial statements concerning the
Group’s ability to continue as a going
concern. The Group’s ability to continue
as a going concern is dependent on
gaining additional funding, which is
expected to be derived from the part
disposal of one of its subsidiaries. These
conditions, along with the other matters
explained in note 2 to the financial
statements, indicate the existence of a
material uncertainty which may cast
significant doubt about the Group’s
ability to continue as a going concern.
The financial statements do not include
the adjustments that would result if the
Group was unable to continue as a
going concern.
Opinion on other matter
prescribed by the
Companies Act 2006
In our opinion the information given in
the Report of the Directors’ for the
financial year for which the financial
statements are prepared is consistent
with the financial statements.
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:
• 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
• the parent Company financial
statements are not in agreement with
the accounting records and returns; or
• certain disclosures of Directors’
remuneration specified by law are
not made; or
• we have not received all the
information and explanations we
require for our audit.
Andrew Bond
Senior Statutory Auditor,
for and on behalf of
Nexia Smith & Williamson
Statutory Auditor
Chartered Accountants
1 Bishops Wharf
Walnut Tree Close
Guildford, GU1 4RA
13 December 2010
14
InfraStrata plc
InfraStrata plc
15
FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
Consolidated statement of financial position as at 31 July 2010
Company statement of financial position as at 31 July 2010
Non-current assets
Investments
Current assets
Receivables
Available for sale financial assets
Cash and cash equivalents
Total current assets
Current liabilities
Trade and other payables
Net current assets
Net assets
Shareholders’ funds
Share capital
Share premium
Merger reserve
Shares to be issued
Share based payment reserve
Retained earnings
Notes
16
17
18
19
2010
£
2009
£
15,257,966
15,249,111
10,873,566
12,500
1,072,060
11,958,126
9,413,119
-
94,418
9,507,537
21
(260,311)
(107,860)
11,697,815
9,399,677
26,955,781
24,648,788
7,380,420
11,381,095
8,466,827
-
302,435
(574,996)
7,038,473
8,576,705
8,466,827
746,337
177,189
(356,743)
26,955,781
24,648,788
24
25
26
Company registration number: 06409712
Approved and authorised for issue by the Board on 13 December 2010. A Hindle, Director C Gouws, Director
Non-current assets
Plant and equipment
Intangible assets
Total non-current assets
Current assets
Receivables
Available for sale financial assets
Cash and cash equivalents
Assets classified as held for sale
Total current assets
Current liabilities
Trade and other payables
Liabilities directly associated with assets classified
as held for sale
Total current liabilities
Notes
14
15
17
18
19
20
21
20
2010
£
7,280
-
2009
£
20,346,503
1,821,551
7,280
22,168,054
110,732
12,500
1,260,982
1,384,214
26,511,034
27,895,248
149,356
12,500
3,066,502
3,228,358
-
3,228,358
(278,606)
(925,202)
(4,061,668)
(4,340,274)
-
(925,202)
Net current assets and net assets held for sale
23,554,974
2,303,156
Total assets less current liabilities
23,562,254
24,471,210
Non-current liabilities
Obligations under contractual and operating
lease agreements due after one year
Net assets
Shareholders’ funds
Share capital
Share premium
Merger reserve
Shares to be issued
Share based payment reserve
Retained earnings
22
24
25
26
-
23,562,254
(2,185,741)
22,285,469
7,380,420
11,381,095
8,988,112
-
302,435
(4,489,808)
23,562,254
7,038,473
8,576,705
8,988,112
746,337
177,189
(3,241,347)
22,285,469
Company registration number: 06409712
Approved and authorised for issue by the Board on 13 December 2010. A Hindle, Director C Gouws, Director
16
InfraStrata plc
InfraStrata plc
17
FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
Consolidated statement of changes in equity for the year ended 31 July 2010
Consolidated statement of cash flows for the year ended 31 July 2010
Share
Share
capital premium
Merger
Shares to
reserve be issued
Retained
reserve earnings
Total
equity
Share based
payment
Balance at 31 July 2008
7,038,473 8,576,705
8,988,112
£
£
£
Loss for the year
Total comprehensive loss for
the year
Commitment to issue shares
Share based payments
-
-
-
-
-
-
-
-
-
-
-
-
£
-
-
-
746,337
£
£
£
38,498
(1,960,345) 22,681,443
-
(1,281,002) (1,281,002)
-
-
(1,281,002) (1,281,002)
-
-
746,337
138,691
-
138,691
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
Total comprehensive loss
for the year
-
-
-
-
Shares issued
341,947 2,804,390
Share based payments
-
-
-
-
-
-
Balance at 31 July 2010
7,380,420 11,381,095
8,988,112
-
-
(746,337)
-
-
-
(1,248,461) (1,248,461)
-
-
125,246
(1,248,461) (1,248,461)
-
-
2,400,000
125,246
302,435
(4,489,808) 23,562,254
Net cash (used in) operating activities
27
(1,409,715)
(1,175,444)
Notes
2010
£
2009
£
Investing activities
Interest received
Purchases of intangible assets
Purchase of plant and equipment
Proceeds on disposal of plant and equipment
23,645
(569,274)
(2,250,176)
-
173,439
(530,729)
(4,678,611)
883
Net cash (used in) investing activities
(2,795,805)
(5,035,018)
Financing activities
Proceeds on issue of ordinary shares
Net cash generated from financing activities
Net (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
Cash and cash equivalents consist of:
2,400,000
2,400,000
-
-
(1,895,520)
(6,210,462)
3,066,502
1,260,982
9,276,964
3,066,502
Cash at bank
19
£1,260,982
£3,066,502
Significant non-cash transaction
The 2009 cash flow statement excludes the settlement of a liability of £746,337, where the supplier agreed to accept
919,474 new 10p ordinary shares in settlement; the 2010 cash flow statement excludes the subsequent issue of shares.
Company statement of changes in equity for the year ended 31 July 2010
Cash flows arising from discontinued activities
Cash flows arising from discontinued operations are analysed in note 27.
Share
Share
capital premium
Merger
Shares to
reserve be issued
Retained
reserve earnings
Total
equity
Company statement of cash flows for the year ended 31 July 2010
Share based
payment
£
£
£
Balance at 31 July 2008
7,038,473 8,576,705
8,466,827
Loss for the year
Total comprehensive loss for the year
Commitment to issue shares
Share based payments
-
-
-
-
-
-
-
-
-
£
-
-
£
£
£
38,498
(167,706) 23,952,797
-
(189,037)
(189,037)
(189,037)
(189,037)
746,337
-
-
138,691
-
-
746,337
138,691
Balance at 31 July 2009
7,038,473 8,576,705
8,466,827
746,337
177,189
(356,743) 24,648,788
Notes
£
27
Net cash from operating activities
Investing activities
Interest received
Subscription in share capital of subsidiary company
Net cash inflow/ (used in) investing activities
Loss for the year
Total comprehensive loss for the year
-
-
-
-
Shares issued
341,947 2,804,390
Share based payments
-
-
-
-
-
-
Balance at 31 July 2010
7,380,420 11,381,095
8,466,827
-
-
(746,337)
-
-
-
(218,253)
(218,253)
Financing activities
-
-
125,246
(218,253)
(218,253)
-
-
2,400,000
125,246
302,435
(574,996) 26,955,781
Proceeds on issue of ordinary shares
Net cash generated from financing activities
Net increase in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
Cash and cash equivalents consist of:
2010
£
(1,428,795)
15,292
(8,855)
6,437
2,400,000
2,400,000
977,642
94,418
1,072,060
2009
£
15,376
490
(2,100)
(1,610)
-
-
13,766
80,652
94,418
Cash at bank
19
£1,072,060
£94,418
Significant non-cash transactions
The 2009 cash flow statement excludes an increase in the loan to a subsidiary company of £746,337 and the associated
future issue of 919,474 new 10p ordinary shares; the 2010 cash flow statement excludes the subsequent issue of shares.
18
InfraStrata plc
InfraStrata plc
19
Notes to the financial statements
for the year ended 31 July 2010
1. General information
InfraStrata plc is a company
incorporated in England & Wales under
the Companies Acts 1985 – 2006 and is
domiciled in the United Kingdom and
is listed on the AIM market of the
London Stock Exchange.
2. Accounting policies
The financial statements are based on
the following accounting policies
which have been consistently applied,
except that IFRS 8 Operating segments
has been adopted in place of IAS 14
Segmental Reporting and the revisions
to IAS 1 Presentation of Financial
Statements have been adopted.
The adoption of these standards has
no impact on the reported result or
reported net assets of the Group, the
comparative disclosures relating to
segmental information have been
restated.
Basis of preparation
InfraStrata plc adopted International
Financial Reporting Standards (IFRS)
and IFRIC Interpretations, as adopted
by the European Union and, except as
noted below, effective in July 2010, as
the basis for preparation of its financial
statements. The financial information
has been prepared under the historical
cost convention as modified by the
revaluation of certain financial assets.
Going concern
The Directors have prepared the
financial statements 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.
It is further proposed to sell the Group’s
entire interests in Portland Gas ESP S.L.
and Sager Meer Energy GmbH.
The Directors consider that there exists
a material uncertainty which casts
significant doubt upon the ability of the
Group to continue as a going concern
and therefore to realise its assets and
discharge its liabilities in the normal
course of business. There can be no
certainty that the 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 disposals, the Directors are of
the opinion that they will be able to
complete any necessary funding and
have therefore prepared cash flow
forecasts for the Group on this basis.
These projections 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. For this
reason, they continue to adopt the
going concern basis of accounting in
preparing the annual financial
statements.
If for any reason the uncertainty
described above cannot be successfully
resolved, the going concern basis may
no longer be appropriate. The financial
statements do not include any
adjustments that would result if the
Group and Company were unable to
continue as a going concern.
Standards and
interpretations in issue not
yet adopted
At the date of authorisation of these
financial statements, the following
Standards and Interpretations which
have not yet been applied in these
financial statements were in issue but
not yet effective (and in some cases,
had not yet been adopted by the EU)
and that may have a material impact
going forward:
IFRS 9 Financial Instruments
IAS 24 (revised 2009) Related Party
Disclosures
IFRIC 19 Extinguishing Financial
Liabilities with Equity Instruments
The Directors anticipate that all of the
above standards and interpretations
will be adopted in the Group’s
financial statements in future periods.
Basis of consolidation
The financial information incorporates
the financial information of the
Company and entities controlled by the
Company. Control is achieved where
the Company has power to govern the
financial and operating policies of an
investee entity so as to obtain benefits
from its activities.
Business combinations and
goodwill
On acquisition, the assets and liabilities
and contingent liabilities of subsidiaries
are measured at their fair values at the
date of acquisition. Any excess of cost of
acquisition over the fair values of the
identifiable net assets acquired is
recognised as goodwill. Any deficiency
of the cost of acquisition below the fair
values of the identifiable net assets
acquired (i.e. discount on acquisition) is
credited to the income statement in the
period of acquisition. Goodwill arising
on consolidation is recognised as an
asset and reviewed for impairment at
least annually. Any impairment is
recognised immediately in the income
statement and is not subsequently
reversed.
Disposal groups
held-for-sale
Disposal groups are classified as assets
held for sale when their carrying
amount is to be recovered principally
through a sale transaction and a sale is
considered highly probable. They are
stated at the lower of carrying amount
and fair value less costs to sell if their
carrying amount is to be recovered
principally through a sale transaction
rather than through continuing use.
Segment reporting
Operating segments are reported in a
manner consistent with the internal
reporting provided to the chief
operating decision-maker as required
by IFRS 8 “Operating Segments”. The
chief operating decision-maker, who is
responsible for allocating resources
and assessing performance of the
operating segments, has been
identified as the Board of Directors.
The accounting policies of the
reportable segments are consistent with
the accounting policies of the Group as
a whole. Segment profit represents the
profit earned by each segment without
allocation of gains or losses on the
disposal of available-for-sale
investments, investment income, interest
payable and tax. This is the measure of
profit that is reported to the Board of
Directors for the purpose of resource
allocation and the assessment of
segment performance.
When assessing segment performance
and considering the allocation of
resources, the Board of Directors review
information about segment assets and
liabilities.
Plant and equipment
Plant and equipment is stated at cost
less accumulated depreciation and any
recognised impairment loss.
The initial cost of an asset comprises its
purchase price or construction cost and
any costs directly attributable to
bringing the asset into operation.
Depreciation is charged so as to write
off the cost of assets, over their estimated
useful lives, using the straight-line
method, once the asset has been
brought into use, on the following basis:
Capitalised tangible gas storage
inclusive of related and pipeline costs
are not depreciated as the facility is
under construction and not in use.
The carrying values of plant and
equipment are reviewed for
impairment when events or changes in
circumstances indicate that the
carrying value may not be
recoverable.
Gas storage research and
development costs
Research expenditure, incurred when
undertaking exploration activities for
gas storage opportunities, is written off
in the year in which it is incurred.
Capitalisation and
impairment of intangible
gas storage assets
Costs of development of gas storage
facilities are capitalised as intangible
assets once it is probable that future
economic benefits that are attributable
to the assets will flow to the Group and
until consent to construct has been
awarded, at which time the capitalised
costs are transferred to plant and
equipment. The nature of these costs
includes all direct costs incurred in
project development. No amortisation
or depreciation is provided until the
storage facility is brought into
commercial use.
An impairment test is performed
annually and whenever events or
circumstances arising during the
development phase indicate that the
carrying value of a development asset
may exceed its recoverable amount. The
aggregate carrying value is compared
against the expected recoverable
amount of the cash generating unit,
generally by reference to the present
value of the future net cash flows
expected to be derived from storage
revenue. The present value of future
cash flows is calculated on the basis of
future storage prices and cost levels as
forecast at the balance sheet date.
The cash generating unit applied for
impairment test purposes is generally
an individual gas storage facility.
Where the carrying value of the facility
is greater than the present value of its
future cash flows a provision is made.
Any such provisions are charged to
Office equipment
20 – 33%
cost of sales.
NOTES TO THE FINANCIAL STATEMENTS
Intangible assets – oil &
gas expenditure and
evaluation expenditure
The Group accounts for oil & gas
expenditure under the full cost
accounting method.
Costs (other than payments to acquire
rights to explore) incurred prior to
acquiring the rights to explore are
charged directly to the income
statement. All costs incurred after the
rights to explore an area have been
obtained, such as geological,
geophysical data costs and other direct
costs of exploration and appraisal are
accumulated and capitalised as
intangible exploration and evaluation
assets (“E&E”).
E&E costs are not amortised prior to the
conclusion of appraisal activities. If
technical feasibility is demonstrated
and commercial reserves are
discovered, then following development
sanction, the carrying value of the
relevant E&E asset will be reclassified
as a development and production
asset, but only after the carrying value
of the E&E asset has been assessed for
impairment, and where appropriate, its
carrying value adjusted.
If after completion of appraisal
activities in an area, it is not possible to
determine technical feasibility or
commercial viability, then the costs of
such unsuccessful exploration and
evaluation are written off to the income
statement as a component of costs of
sales in the period the relevant events
occur. The costs associated with any
wells which are abandoned are fully
amortised when the abandonment
decision is taken.
When oil or gas is sold from E&E assets,
the carrying value of the E&E asset is
reduced by the gross profit generated
from the sale.
Borrowing costs
Borrowing costs directly attributable to
the construction of an asset that
necessarily takes a substantial period
of time to get ready for its intended use
or sale are capitalised as part of the
cost of the respective assets. All other
borrowing costs are expensed in the
period they occur. Borrowing costs
consist of interest and other costs that
an entity incurs in connection with the
borrowing of funds.
20
InfraStrata plc
InfraStrata plc
21
NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
Investments
Investments in subsidiaries are stated at
cost less provision for impairments.
Taxation
Tax expense represents the sum of the
tax currently payable and any
deferred tax. The taxable result differs
from the net result as reported in the
income statement because it excludes
items of income or expense that are
taxable or deductible in other years
and it further excludes items that are
never taxable or deductible. The
Company’s liability for current tax is
calculated using tax rates that have
been enacted or substantially enacted
by the balance sheet date. Deferred
tax is the tax expected to be payable
or recoverable on differences between
the carrying amounts of assets and
liabilities in the financial statements
and the corresponding tax bases used
in the computation of taxable profit,
and is accounted for using the balance
sheet liability method. Deferred tax
liabilities are generally recognised for
all taxable temporary differences and
deferred tax assets are recognised to
the extent that it is probable that
taxable profits will be available against
which deductible temporary
differences can be utilised. Such assets
and liabilities are not recognised if the
temporary difference arises from
goodwill or from the initial recognition
(other than in a business combination)
of other assets and liabilities in a
transaction that affects neither the
taxable profit nor the accounting profit.
Deferred tax liabilities are recognised
for taxable temporary differences
arising on investments in subsidiaries,
except where the Group is able to
control the reversal of the temporary
difference and it is probable that the
temporary difference will not reverse in
the foreseeable future.
The carrying amount of deferred tax
assets is reviewed at each balance
sheet date and reduced to the extent
that it is no longer probable that
sufficient taxable profits will be
available to allow all or part of the
asset to be recovered. Deferred tax is
calculated at the tax rates that are
expected to apply in the period when
the liability is settled or the asset
realised.
Deferred tax is charged or credited to
the income statement, except when it
relates to items charged or credited
directly to other comprehensive income,
in which case the deferred tax is also
dealt with in other comprehensive
income. Deferred tax assets and
liabilities are offset when there is a
legally enforceable right to set off
current tax assets against current tax
liabilities and when they relate to
income taxes levied by the same
taxation authority and the Group
intends to settle its current assets and
liabilities on a net basis.
Foreign currency
Transactions in foreign currency are
recorded at the rates of exchange
prevailing on the dates of the
transactions. At each balance sheet
date, monetary assets and liabilities
that are denominated in foreign
currencies are retranslated at the rates
prevailing on the balance sheet date
and gains or losses are taken to
operating profit.
Leases
Leases are classified as finance leases
or hire purchase lease contracts
whenever the terms of the lease transfer
substantially all the risks and rewards of
ownership to the lessee. All other leases
are classified as operating leases.
Rental costs under operating leases are
charged on a straight-line basis over
the lease term.
Share based payment
transactions
Employees (including senior executives)
of the Group receive remuneration in
the form of share based payment
transactions, whereby employees render
services as consideration for equity
instruments (equity settled transactions).
The equity settled transactions are
measured at the fair value of the
equity instrument as at the grant date
and the expense is recognised,
together with a corresponding increase
in equity, over the period in which the
performance and or service conditions
are fulfilled, ending on the date on
which the relevant employees become
fully entitled to the award (the vesting
date). The cumulative expense
recognised for equity settled
transactions at each reporting date
until the vesting date reflects the extent
to which the vesting period has expired
and the Group’s best estimate of the
number of equity instruments that will
ultimately vest. The income statement
charge or credit for a period represents
the movement in cumulative expense
recognised as at the beginning and
end of that period. No expense is
recognised for awards that do not
ultimately vest, except for awards
where vesting is conditional upon a
market condition, which are treated as
vesting irrespective of whether or not
the market condition is satisfied,
provided that all other performance
conditions are satisfied.
Where the terms of an equity settled
award are modified, as a minimum an
expense is recognised as if the terms
had not been modified. In addition, an
expense is recognised for any
modification, which increases the total
fair value of the share based payment
arrangement, or is otherwise beneficial
to the employee as measured at the
date of modification.
Where equity settled award is
cancelled, it is treated as if it had
vested on the date of cancellation, and
any expense not yet recognised for the
award is recognised immediately.
However, if a new award is substituted
for the cancellation award, and
designated as a replacement award on
the date that is granted, the cancelled
and new awards are treated as if they
were a modification of the original
award, as described in the previous
paragraph.
Retirement benefit costs
The Company has a defined
contribution plan which requires
contributions to be made into an
independently administered fund. The
amount charged to the income
statement in respect of pension costs
reflects the contributions payable in the
year. Differences between contributions
payable during the year and
contributions actually paid are shown
as either accrued liabilities or prepaid
assets in the balance sheet.
Financial instruments
Financial assets and financial liabilities
are recognised on the balance sheet
when the Group becomes a party to
the contractual provisions of the
instrument.
Trade and other receivables are
measured at initial recognition at fair
value and are subsequently measured
at amortised cost using the effective
interest method. A provision is
established when there is objective
evidence that the Group will not be
able to collect all amounts due. The
amount of any provision is recognised
in the income statement. Cash and cash
equivalents comprise cash held by the
Group and short-term bank deposits
with an original maturity of three
months or less.
Trade and other payables are initially
measured at fair value, and are
subsequently measured at amortised
cost, using the effective interest rate
method.
Financial liabilities and equity
instruments issued by the Group are
classified in accordance with the
substance of the contractual
arrangements entered into and the
definitions of a financial liability and
an equity instrument. An equity
instrument is any contract that
evidences a residual interest in the
assets of the Group after deducting all
of its liabilities. Equity instruments issued
by the Company are recorded at the
3. Segment information
proceeds received, net of direct issue
costs. Equity issued for non monetary
consideration is recorded at the fair
value of the equity instruments issued,
except when a parent reorganises the
structure of its group by establishing a
new entity and (a) the new parent
obtains control of the original parent by
issuing equity instruments in exchange
for existing equity instruments of the
original parent; (b) the assets and
liabilities of the new group and the
original group are the same
immediately before and after the
reorganisation; and (c) the owners of
the original parent before the
reorganisation have the same absolute
and relative interests in the net assets of
the original group and the new group
immediately before and after the
reorganisation. In this latter case equity
instruments issued by the new parent
are recognised at the carrying amount
of its share of the equity items shown in
the separate financial statements of the
original parent at the date of the
reorganisation.
Interest bearing bank loans, overdrafts
and other loans are recorded at the
proceeds received, net of direct issue
costs. Finance costs are accounted for
on an accruals basis in the income
statement using the effective interest
method.
Available for sale financial assets are
those non-derivative financial assets
that are designated as available for
sale or are not classified as financial
assets at fair value through profit and
loss, held to maturity investments or
loans and receivables. After initial
recognition available for sale financial
assets are measured at fair value with
gains or losses being recognised as a
separate component of equity until the
investment is derecognised or until the
investment is determined to be
impaired at which time the cumulative
gain or loss previously reported in
equity is included in the income
statement. The fair value of investments
that are actively traded in organised
financial markets is determined by
reference to quoted market bid prices
at the close of business on the balance
sheet date. For investments where there
is no active market, fair value is
determined using appropriate valuation
techniques.
Finance income
Finance income is recognised on an
accrual basis.
The Directors have determined the Group’s operating segments by reference to the risk profile of the Group’s activities,
which are affected predominately by location of the Group’s assets. The Group’s head office is located in the United
Kingdom with operations located in Dorset, Northern Ireland and Europe. The business of each segment is the development
and construction of gas storage and associated facilities.
2010
Discontinued (see note 11 and 20)
Dorset
Northern
Ireland
Continental
Europe
Continuing
unallocated
£
£
£
£
Total
£
Loss on ordinary activities by segment
Gas storage development
735,259
100,671
38,818
373,713
1,248,461
Assets by segments
Gas storage development
24,066,195
2,419,261
25,578
1,391,494
27,902,528
Liabilities by segment
Gas storage development
4,000,554
58,900
2,214
278,606
4,340,274
Net assets by segment
Gas storage development
20,065,641
2,360,361
23,364
1,112,888
23,562,254
Capital expenditure on segmental assets
Gas storage development
3,346,830
592,791
Depreciation
-
-
-
-
-
3,939,621
21,070
21,070
22
InfraStrata plc
InfraStrata plc
23
NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
3. Segment information cont.
6. Directors’ and key management emoluments and compensation
2009
Discontinued (see note 11)
Group and company 2010
Salary & fees
Bonus
Benefits
Pension
Dorset
Northern
Ireland
Continental
Europe
Continuing
unallocated
£
£
£
£
Total
£
Loss on ordinary activities by segment
Gas storage development
850,607
113,943
103,495
212,957
1,281,002
Assets by segments
Gas storage development
20,396,867
1,872,100
1,982
3,125,463
25,396,412
Liabilities by segment
Gas storage development
2,871,101
129,654
3,718
106,470
3,110,943
Net assets by segment
Gas storage development
17,525,766
1,742,446
(1,736)
3,018,993
22,285,469
Capital expenditure on segmental assets
Gas storage development
5,171,931
557,892
Depreciation
-
-
-
-
-
5,729,823
21,880
21,880
4. Other expenditure
Fees payable to the Group’s auditor and its associates:
- for the audit of the Company’s financial statements
- for the audit of the Company’s subsidiaries
- other services relating to taxation
- all other services
Depreciation
Net foreign exchange loss
Operating lease rentals – land and buildings
Research costs
5. Employee information
Executive Directors and staff
Staff costs for the above persons were:
Wages and salaries
Social security costs
Defined contribution pension plan expenditure
Share based payments
2010
£
12,750
17,750
12,450
3,556
21,070
5,278
1,521,146
103,716
2010
Number
7
£
854,196
89,449
27,808
125,246
2009
£
11,250
17,750
11,950
3,726
21,880
10,482
1,529,152
120,268
2009
Number
8
£
895,766
102,163
29,950
138,691
1,096,699
1,166,570
Executive Directors
Andrew Hindle
Craig Gouws
Walter Roberts
Non-executive Directors
Ken Ratcliff
Mark Abbott
Jonathan Davie
Maurice Hazzard
£
250,000
122,219
120,000
37,500
15,000
15,000
15,000
574,719
£
-
-
-
-
-
-
-
-
Share based payment attributable to Directors
Employers national insurance contributions
Group and company 2009
Executive Directors
Andrew Hindle
Craig Gouws
Walter Roberts
Non-executive Directors
Ken Ratcliff
Mark Abbott
Jonathan Davie
Maurice Hazzard
£
250,000
122,048
120,000
37,500
15,000
8,750
15,000
568,298
£
-
-
-
-
-
-
-
-
Share based payment attributable to Directors
Employers national insurance contributions
Total
2010
£
252,042
129,681
128,788
39,375
15,000
15,000
15,750
86,001
65,941
747,578
Total
2010
£
251,757
129,308
128,392
39,375
15,000
8,750
15,750
£
2,042
1,462
2,788
-
-
-
-
£
-
6,000
6,000
1,875
-
-
750
6,292
14,625
595,636
£
1,757
1,260
2,392
-
-
-
-
£
-
6,000
6,000
1,875
-
-
750
5,409
14,625
588,332
107,085
65,106
760,523
Salary & fees
Bonus
Benefits
Pension
The total of short-term employee benefits for Directors was £646,952 (2009: £638,813).
The Directors are considered to be the Group’s key management.
Company
Directors’ emoluments comprised £574,719 (2009: £568,298) in respect of salary and bonuses, £6,292 (2009: £5,409)
in respect of benefits. In addition there was a Directors’ pension benefit expense of £14,625 (2009: £14,625) and
employers’ national insurance contributions of £65,941 (2009: £65,106). The charge in respect of share based
payments was £86,001 (2009: £107,085).
Aggregate emoluments above include amounts for the value of options to acquire ordinary shares in the
Company granted or held by Directors. Details of Enterprise Management Incentive and other options granted on
the 25 January 2008 are as follows:
24
InfraStrata plc
InfraStrata plc
25
NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
Directors’ and key management emoluments and compensation cont.
8. Retirement benefits
Number
Exercise price
Exercisable from
Exercisable to
Executive Directors
Andrew Hindle
Craig Gouws
Walter Roberts
Non-executive Directors
Ken Ratcliff
Mark Abbott
Maurice Hazzard
43,859
43,859
43,859
21,929
21,929
21,929
£
2.28
2.28
2.28
2.28
2.28
2.28
1 January 2011
31 December 2017
1 January 2011
31 December 2017
1 January 2011
31 December 2017
1 January 2011
31 December 2017
1 January 2011
31 December 2017
1 January 2011
31 December 2017
The Group operates a defined contribution retirement plan for all qualifying employees who wish to participate. The assets of
the scheme are held separately from those of the Group in funds under the control of trustees.
The total cost charged to expenses of £27,808 (2009: £29,950) represents contributions payable to the scheme by the Group at
rates specified in the rules of the scheme for the year. As at 31 July 2010, employer and employee contributions of £4,557 (2009:
£3,757) due in respect of the current period had not been paid over to the scheme, the payment was made on the 10 August
2010 (2009: 10 August 2009).
9. Finance income
Interest on bank deposits
10. Income tax
2010
£
23,645
2009
£
173,439
No options were granted to Directors in 2010 or 2009.
The major components of income tax expense for the years ended 31 July 2010 and 2009 are:
Key man insurance premiums of £777 (2009: £777) were paid for Executive Directors and directors’ indemnity
insurance premiums of £18,133 (2009: £18,786) were paid in respect of all Directors. Executive and Non-executive
Directors participate in the Group Stakeholder Pension Plan under which Group Life Cover is offered.
7. Share based payment plans
a) Consolidated income statement
Current income tax charge
Adjustments in respect of current income tax of previous years
2010
2009
£
-
-
£
-
-
A share based payment plan was created in the year ended 31 July 2008. All Directors and employees are entitled to a grant
of options subject to the Board of Directors’ approval. The options do not have a cash settlement alternative. The options
granted are Enterprise Management Incentive share options for qualifying employees.
b) A reconciliation between tax expense and the product of
accounting loss for the years ended 31 July 2010 and 2009 is as follows:
Accounting loss before tax from continuing operations
(373,713)
(212,957)
There were 45,200 options issued during 2010 (2009: nil). The following table illustrates the number and weighted average
exercise prices (WAEP) of, and movements in, share options during year.
Outstanding at the beginning of the year
Granted during the year
Forfeited during the year
Outstanding at the end of the year
Exercisable at the end of the year
2010
Number
255,898
45,200
-
301,098
-
2010
WAEP
£
2.44
0.89
-
2.06
-
2009
Number
318,831
-
62,933
255,898
-
2009
WAEP
£
2.43
-
2.39
2.44
-
Loss on continuing activities multiplied by the standard rate of tax
(28%; 2009 – 28%)
Expenses not permitted for tax purposes and pre-trading expenditure
Other timing differences
Group relief
Tax losses carried forward
(104,640)
13,843
5,900
13
(84,884)
(59,628)
(4,111)
6,023
152
(57,564)
A discontinued operations reconciliation between tax expense and the product of accounting loss for the years
ended 31 July 2010 and 2009 is as follows:
Accounting loss before tax from discontinued operations
(874,748)
(1,068,045)
2010
£
2009
£
The weighted average remaining vesting period for the share options outstanding at 31 July 2010 is 0.92 years (2009: 1.8 years).
The range of exercise prices for options outstanding at the end of the year was £0.885 - £3.90.
Loss on discontinued activities multiplied by the standard rate of tax
(28%; 2009 – 28%)
Expenses not permitted for tax purposes and pre-trading expenditure
The fair value of equity settled options granted is estimated as at the date of the grant using a Black- Scholes model, taking
into account the terms and conditions upon which the options were granted. The following table lists the inputs to the model
used to value the options issued in 2010 and 2008:
Group relief
Income tax expense reported in note 11
(244,929)
244,942
13
-
(299,053)
299,205
152
-
Expected volatility (%)
Risk free interest rate
Weighted average contractual life of option (years)
Expected dividend yield
Weighted average share price (£)
2010
35%
0.5%
10
nil
0.885
2008
35%
5%
9.5
nil
2.43
The expected volatility reflects the assumption that the historical volatility of a sample of oil and gas companies is indicative of
future trends for InfraStrata plc, which may not necessarily be the actual outcome. The expected life of the options is based on
Directors best estimate and may not necessarily be indicative of the patterns that may occur.
c) Factors that may affect the future tax charge
The Group has trading losses of £588,568 (2009: £327,017) which may reduce future tax charges. Future tax charges may also be
reduced by capital allowances on cumulative capital expenditure.
d) Deferred taxation
The Group has an unrecognised deferred taxation asset arising from trading losses carried forward of £158,914 (2009: £91,565) at
year end. The deferred tax asset is not recognised due to the uncertainty over its future recovery.
The deferred tax asset is calculated at a rate of 27%; however, the Government has announced that the rate of corporation tax
will reduce by 1% per annum to 24% and this is the rate expected to be in force when the tax losses may be able to be utilised.
The deferred tax asset calculated at this tax rate is £141,256.
26
InfraStrata plc
InfraStrata plc
27
NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
Plant and equipment 2009
Gas storage
(under construction)
Office equipment
11. Discontinued operations
Revenue
Net operating costs
Loss from operations
Loss before tax
Tax charge (note 10)
Loss after tax
2010
£
-
874,748
874,748
874,748
-
874,748
2009
£
-
1,068,045
1,068,045
1,068,045
-
1,068,045
Details of the discontinued operations are given in note 20.
The results for the discontinued activities of the Group for the year ended 31 July 2009 have been re-presented, as required by
IFRS 5, so that the disclosures relate to all operations that have been discontinued by 31 July 2010 for all periods presented.
12. Loss per share
Loss
The loss for the purposes of basic and diluted loss per share being
the net loss attributable to equity shareholders:
Continuing operations
Discontinued operations
Continuing and discontinued operations
Number of shares
Weighted average number of ordinary shares for the purposes
of basic earnings per share
Basic earnings per share
Continuing operations
Discontinued operations
Continuing and discontinued operations
2010
£
373,713
874,748
1,248,461
2009
£
212,957
1,068,045
1,281,002
0.51p
1.20p
1.71p
0.30p
1.52p
1.82p
In accordance with IAS 33, diluted earnings per share calculations are not presented as assumed conversion of outstanding
share options (note 7) would be anti-dilutive; as such the diluted earnings per share is equal to the basic loss per share.
13. Losses attributable to InfraStrata plc
Cost
At 1 August 2008
Additions
Disposals
At 31 July 2009
Depreciation
At 1 August 2008
Charge for the year
Disposals
At 31 July 2009
Net book value
At 31 July 2009
15. Intangible assets 2010
Cost
At 1 August 2009
Additions
At 31 July 2010
Amortisation
At 1 August 2009
Charge for the year
At 31 July 2010
Net book value
At 31 July 2010
The loss for the period dealt with in the financial statements of InfraStrata plc was £218,253 (2009: £189,037). As provided by
s408 of the Companies Act 2006, no income statement is presented in respect of InfraStrata plc.
Intangible assets 2009
14. Plant and equipment 2010
Gas storage
(under construction)
Office equipment
Cost
At 1 August 2009
Additions
£
20,318,153
3,346,830
Transfer to assets classified as held for sale
(23,664,983)
At 31 July 2010
Depreciation
At 1 August 2009
Charge for the year
At 31 July 2010
Net book value
At 31 July 2010
-
-
-
-
-
£
69,648
-
-
69,648
41,298
21,070
62,368
7,280
Total
£
20,387,801
3,346,830
(23,664,983)
69,648
41,298
21,070
62,368
7,280
Cost
At 1 August 2008
Additions
At 31 July 2009
Amortisation
At 1 August 2008
Charge for the year
At 31 July 2009
Net book value
At 31 July 2009
73,023,939
70,384,727
Transfer to assets classified as held for sale
£
15,146,222
5,171,931
-
20,318,153
-
-
-
-
£
68,730
1,801
(883)
69,648
19,785
21,880
(367)
41,298
Total
£
15,214,952
5,173,732
(883)
20,387,801
19,785
21,880
(367)
41,298
20,318,153
28,350
20,346,503
Development costs
–Gas storage
£
1,821,551
592,791
(2,414,342)
-
-
-
-
-
1,263,659
557,892
1,821,551
-
-
-
1,821,551
28
InfraStrata plc
InfraStrata plc
29
NOTES TO THE FINANCIAL STATEMENTS
16. Investments
Balance at the beginning of the year
Additions
Balance at the end of the year
Subsidiaries
Company 2010
Company 2009
£
15,249,111
8,855
15,257,966
£
15,247,011
2,100
15,249,111
The Company’s subsidiary undertakings at 31 July 2010, all of which are wholly owned unless indicated otherwise, are as follows:
Principal undertaking
Country of incorporation
InfraStrata UK Limited
Portland Gas ESP S.L.
InfraStrata Trading Limited
Holding and corporate
Spanish sub surface gas
storage developer
Dormant
Sager Meer Energy GmbH (80% owned)
German sub surface gas storage developer
InfraStrata UK Limited owns the following subsidiaries:
England
Spain
England
Germany
Portland Gas Holdings Limited
Holding
England
Islandmagee Storage Limited (65% owned)
Sub surface gas storage developer
Northern Ireland
InfraStrata Limited
Portland Gas Holdings Limited owns
the following subsidiaries:
Holding
England
Portland Gas Storage Limited
Sub surface gas storage developer
Portland Gas Transportation Limited
Gas storage pipeline developer
England
England
In January 2010 InfratStrata UK Limited, Moyle Energy Investments Limited and Islandmagee Storage Limited entered into a
preliminary shareholders agreement whereby Moyle Energy Investments Limited acquired a 35% interest in Islandmagee
Storage Limited. InfraStrata UK Limited continues to assume one hundred percent of the risks and rewards of ownership of
Islandmagee Storage Limited (including voting rights) and therefore InfraStrata plc includes the total assets and liabilities in its
consolidated results.
17. Receivables
Amounts due from Group undertakings
Other receivables
Prepayments
Group
2010
£
-
71,985
38,747
110,732
Group
2009
£
-
75,791
73,565
149,356
Company
Company
2010
£
2009
£
10,809,819
9,352,960
25,000
38,747
34,118
26,041
10,873,566
9,413,119
An element of the Company and Group’s credit risk is attributable to its receivables. Based on prior experience and an
assessment of the current economic environment, the Directors did not consider any provision for irrecoverable amounts was
required and consider that the carrying amounts of these assets approximates to their fair value. There are no set terms for the
repayment of the amounts due from Group undertakings and they are expected to be recovered following the development of
the project and or following the part disposal of the project companies.
18. Available for sale financial assets
At 1 August
Transfer from subsidiary
At 31 July
Group
2010
£
12,500
-
Group
2009
£
12,500
-
12,500
12,500
Company
Company
2010
2009
£
-
12,500
12,500
£
-
-
-
The investment in securities above represents an investment in Egdon Resources plc redeemable preference shares. The assets
are held at cost as an approximation of fair value. These are the only financial assets which the Group and Company are
required to carry at fair value.
19. Cash and cash equivalents
Group
2010
£
Group
2009
£
Cash at bank
1,260,982
3,066,502
1,072,060
NOTES TO THE FINANCIAL STATEMENTS
Company
Company
2010
£
2009
£
94,418
The Directors consider that the carrying amount of these assets approximates their fair value. The credit risk on liquid funds is
limited because the counter-parties are banks with high credit ratings.
20. Assets held for sale
and discontinued
operations
A Memorandum of Understanding
(“MOU”) was signed with US independent
energy company eCORP International,
LLC (“eCORP”) relating to InfraStrata’s
gas storage projects. The disposal group
comprises the assets described in this
note. In respect of the Portland Project
eCORP Oil & Gas UK Limited undertook
to fund the first cavern well and thereby
acquired the right to match the project
expenditure invested to date by
InfraStrata (£22.9m) in return for 50% of
the share capital of the project company,
Portland Gas Ltd. The transaction was
completed after year end.
The Company will also dispose of its
interest in the share capital of Sager
Meer Energy GmbH and Portland Gas
ESP S.L. its gas storage projects in
Germany and Spain.
Under the terms of the MOU the
Company and Mutual Energy are
continuing discussions with eCORP to
acquire 40% of the share capital of
Islandmagee Storage Limited. The terms
of the MOU have been extended to 30
April 2011, but on a non-exclusive basis.
Whilst the assets held for sale are
classified as current assets, due to the
nature of the transaction, the disposal
of the Portland Project will not generate
a cash inflow for the Group.
Assets classified as held for sale
Property, plant and equipment
Intangible assets – gas storage development costs
Trade and other receivables
Cash and cash equivalents
Liabilities classified as held for sale
Current liabilities
Trade creditors and accruals
Other taxation and social security
Accruals
Other contractual agreements
Non-current liabilities
Obligations under lease agreements
Other contractual agreements
21. Trade and other payables
Trade creditors
Other taxation and social security
Accruals
Other contractual agreements
£
23,664,983
2,414,342
334,553
97,156
26,511,034
73,400
4,182
114,857
700,000
892,439
2,168,286
1,000,943
4,061,668
Group 2010 £ Group 2009 £ Company 2010 £ Company 2009 £
67,039
37,250
174,317
-
278,606
174,355
34,904
215,943
500,000
925,202
176,080
37,250
46,881
-
260,311
56,356
34,904
16,500
-
107,860
The Directors consider that the carrying amount of trade and other payables approximates to their fair value. Other contractual
agreements relate to amounts due to the Portland Gas Trust under a Section 106 deed of undertaking which are not expected
to be paid until the Portland project is fully funded; for 2010, these amounts are disclosed within liabilities classified as held for
sale (note 20).
30
InfraStrata plc
InfraStrata plc
31
NOTES TO THE FINANCIAL STATEMENTS
22. Non-current liabilities
Group 2010 £ Group 2009 £ Company 2010 £ Company 2009 £
Obligations under lease agreements
2,168,286
990,741
Other contractual agreements
1,000,943
1,195,000
Transfer to liabilities directly associated with
non-current assets classified as held for sale
(3,169,229)
-
-
2,185,741
-
-
-
-
-
-
-
-
The obligation under a lease agreement is to be settled over a period of 13 years. Under the terms of a separate agreement
with the lessor the Group will pay £120,000 per annum of the liability arising under the lease until the Portland project is fully
funded. The balance will be settled by way of an interest bearing loan, which will be repaid when the project is fully funded.
Other contractual agreements relate to payments to be made to the Portland Gas Trust under a Section 106 planning
agreement and will be settled over a period of 20 years.
23. Financial assets and
liabilities
The Group and Company’s financial
instruments comprise cash and cash
equivalents and items such as trade
payables and other receivables which
arise directly from the Group’s
operations. The Group’s operations
expose it to a variety of financial risks
including credit risk, liquidity risk,
interest rate risk and foreign currency
exchange risk. Given the size of the
Group, the Directors have not
delegated the responsibility of
monitoring financial risk management
to a subcommittee of the board. The
objectives of the financial instrument
policies are to reduce the Group and
Company’s exposure to financial risk.
The policies set by the board of
Directors are implemented by the
Company’s finance department.
Credit risk
The credit risk on liquid funds is limited
because the Group and Company
policy is to only deal with counter
parties with high credit ratings and
more than one institution is utilised to
deposit cash holdings. The Group held
funds in the Bank of Scotland, Northern
Rock and Lloyds TSB bank accounts
during the year, at year end all of the
funds were held in Bank of Scotland
and Northern Rock accounts. The risk of
Bank of Scotland bank failure has
decreased during the year while
Northern Rock was supported by British
Government Guarantee. The carrying
amount of financial assets represents
the maximum credit exposure. The
maximum exposure to credit risk at the
reporting date was:
NOTES TO THE FINANCIAL STATEMENTS
Liquidity risk
The Group and Company policy is to
actively maintain a mixture of long-
term and short-term deposits that are
designed to ensure it has sufficient
available funds for operations. The total
carrying value of Group and Company
financial liabilities is disclosed in notes
20, 21 and 22. Further information on
contractual maturities of significant
financial liabilities is disclosed in notes
22 and 28. The Company issues share
capital when external funds are
required. The reconciling items
between the contractual maturities
presented below and that presented in
notes 20, 21 and 22 are taxes and the
effect of discounting long term
liabilities to present value. The
following table shows the contractual
maturities of the Group’s and
Company’s financial liabilities, all of
which are measured at amortised cost.
Within one month
1,056,626
Within more than one month and less than one year
100,000
262,045
614,286
More than 1 year and less than five years
1,990,634
1,007,741
More than five years
1,966,973
1,983,000
87,403
58,989
-
-
-
-
-
-
Group 2010 £ Group 2009 £ Company 2010 £ Company 2009 £
Contractual liabilities of £616,622 and £100,000 shown as falling due within one month and within one year, respectively, are not
expected to be paid until such time as the Portland project is fully funded.
24. Share capital and redeemable preference shares
Authorised
Number
Allotted, called up, and fully paid
£
Number
£
Ordinary share capital
At 31 July 2008 and 2009
- Ordinary shares of 10 pence each
100,000,000
10,000,000
70,384,727
Issue 10 pence ordinary shares
-
-
3,419,474
7,038,473
341,947
At 31 July 2010
- Ordinary shares of 10 pence each
100,000,000
10,000,000
73,804,201
7,380,420
Redeemable preference shares of £1 each (classified as liabilities)
Group 2010 £ Group 2009 £ Company 2010 £ Company 2009 £
At 31 July 2008
-
-
-
Available for sale financial assets
Other receivables
12,500
71,985
12,500
29,324
12,500
57,364
Cash and cash equivalents
1,260,982
3,066,502
1,072,060
-
19,156
94,418
The reconciling item between the Other
receivables presented above and that
presented in note 17 and 20 is the VAT
receivable.
Interest rate risk
The Company and Group is exposed to
interest rate risk as a result of positive
cash balances, denominated in sterling,
which earn interest at a variable rate.
These attract interest at rates that vary
with bank interest rates. Cash at bank
at floating rates consisted of money
market deposits which earn interest at
rates set in advance from periods of 1-3
months by reference to Sterling LIBOR.
An effective interest rate increase or
decrease by 1% on the cash and cash
equivalents balance at year end would
result in a before tax financial effect of
an increase or decrease in investment
revenues and equity for the Group of
£13,581 (2009: £30,665) and for the
Company of £10,721 (2009: £944).
Foreign currency risk
The Group is exposed to foreign to
currency rate risk as a result of trade
payables which are settled in Euros
and United States Dollars (USD). During
the year the Group and Company did
not enter into any arrangements to
hedge this risk, as the Directors did not
consider the exposure to be significant
given the short term nature of the
balances. The Group and Company
will review this policy as appropriate
in the future. As at 31 July 2010, if the
Euro had weakened or strengthened
10% against sterling with all other
variables held constant, the Group’s net
loss and equity would have decreased
or increased by £1,791 (2009: £4,853).
The currency risk disclosures at 31 July
2010 are as follows:
The currency risk disclosures at 31 July 2010 are as follows:
Accounts payable
The currency risk disclosures at 31 July 2009 are as follows:
Accounts payable
Euro
£15,009
£53,383
USD
-
-
Total
£15,009
£53,383
The book value of financial assets and liabilities disclosed is considered to be equal to fair value.
Creation and issue of £1 redeemable
preference shares
At 31 July 2010 and 2009
On the 5 November 2009 the Company
completed a placing of 2,500,000 new
ordinary shares of 10p each at 100p
per share to raise £2.5 million before
expenses.
On the 15 September 2009 the
Company issued 919,474 new 10p
ordinary shares in settlement of an
existing liability of £746,337. These
shares have been disclosed as shares
to be issued at 31 July 2009.
Objectives, policies and processes for
managing capital
The Group’s objectives when managing
capital are to safeguard the Group’s
ability to continue as a going concern in
order to achieve its operational objectives.
The Group defines capital as being
share capital plus reserves. The Board
of Directors monitors the level of capital
as compared to the Group’s forecast
cash flows and long term commitments
and when necessary issues new shares.
50,000
50,000
50,000
50,000
50,000
50,000
-
12,500
12,500
Dilution of existing shareholder value is
considered during all processes which
may result in an alteration of share
capital in issue.
Ordinary share capital in issue is
managed as capital and the
redeemable preference shares in issue
are managed as current liabilities.
Group
The merger reserve represents the
difference between the nominal value
of the shares issued on the demerger
and the combined share capital and
share premium of InfraStrata UK
Limited at the date of the demerger.
The reserve is not distributable.
The Group is not subject to any
externally imposed capital
requirements.
25. Merger reserve
Company
The merger reserve arose on the
demerger of the Portland Gas Group of
companies from Egdon Resources Plc
when the Company issued shares at a
premium to their nominal value on
acquisition of InfraStrata UK Limited.
The reserve is not distributable.
26. Share based payment
reserve
The reserve for share based payments
is used to record the value of equity
settled share based payments awarded
to employees and transfers out of this
reserve are made upon the exercise or
expiration of the share awards.
The transfer in of £125,426 (2009:
£138,691) relates to share options
granted. For further information on the
share based payment scheme see
note 7.
32
InfraStrata plc
InfraStrata plc
33
NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
27. Cash (used in) operations
29. Tangible capital commitments
Operating loss for the year from continuing operations
Group
Depreciation
Profit on disposal of plant & equipment
Decrease in trade and other receivables
(Decrease) in trade and other payables
Share option expense
Cash (used in) discontinued operations
Cash (used in) continuing and discontinued operations
2010
£
(397,358)
21,070
-
38,624
(83,280)
125,246
(1,114,017)
(1,409,715)
The statement of cash flows includes the following amounts which arise from discontinued activities:
Group
Cash (used in) discontinued operations
Investing activities
Financing activities
Company
Operating loss for the year
(Increase)/Decrease in trade and other receivables
Increase/(Decrease) in trade and other payables
Share option expense
Cash (used in)/from operations
28. Operating lease commitments
Group
(1,114,017)
(2,819,450)
-
(233,545)
(1,472,948)
152,452
125,246
(1,428,795)
2009
£
(386,396)
21,880
367
156,164
(38,105)
138,691
(1,068,045)
(1,175,444)
(1,068,045)
(5,209,340)
-
(189,527)
172,557
(106,345)
138,691
15,376
Future minimum rentals payable under non-cancellable operating leases as at 31 July are as follows:
Amounts due:
Within one year
Within 2 to 5 years
After more than 5 years
Land and buildings
2010
Land and buildings
2009
£
£
1,223,600
6,493,505
10,585,000
18,302,105
1,056,933
6,023,505
12,278,600
19,359,038
Operating lease payments represent rentals payable by the Group for office premises and land which is for the purposes of
gas storage facility development.
The office premises lease rentals are fixed for 5 years and the escalation clause is linked to market rates agreed between the
landlord and tenant. The lease provides for a break clause at the fifth anniversary of the lease, exercisable at the Company’s option.
The rents due under the gas storage development land leases are fixed to the first review date on the 20 October 2011 and the
escalation clause is linked to the Retail Price Index published by the Office for National Statistics. The lease provides for a
break clause at the fifteenth anniversary of the lease, exercisable at the Company’s option. Until such time as the Group has
secured funding for the Portland project only minimal cash payments will fall due, with the balance of the liability being
settled by way of interest bearing loans, which are payable once the associated gas storage project is fully funded.
Approved and contracted
2010
£
1,795,000
2009
£
2,038,764
The capital commitments largely relate to commitment a of Portland Gas Storage Limited in relation to a S106 deed of
undertaking and, for 2009, capital works to be performed on the Upper Osprey site.
30. Related party transactions
InfraStrata UK Limited leases the Group’s head office from Toffee Limited, a company of which Andrew Hindle is a director and
shareholder. A fair market rent paid during the period was £45,000 (2009: £45,000). The balance outstanding at 31 July 2010 was
£nil (2009: £nil).
The Company has related party relationships with its subsidiaries in the course of normal operations.
InfraStrata plc recovered overhead costs from InfraStrata UK Limited of £170,561 (2009: £179,328), Portland Gas Storage Limited
of £473,358 (2009: £497,690), Islandmagee Storage Limited of £92,134 (2009: £96,870) and Portland Gas Transportation Limited of
£230,457 (2009: £242,304).
The balances outstanding at 31 July 2010, which are not secured, are provided in the following table.
Related party
The ultimate parent
InfraStrata plc
Subsidiaries
InfraStrata UK Limited
Portland Gas Storage Limited
Islandmagee Storage Limited
Portland Gas Transportation Limited
Portland Gas Limited
InfraStrata NV Limited
InfraStrata Trading Limited
Portland Gas ESP S.L.
Amounts owed
by related parties
Amounts owed
to related parties
£
10,777,456
21,744,838
4,835,464
-
-
-
-
100
-
£
100
6,751,126
22,407,599
2,697,060
5,347,152
-
-
-
154,821
The balances outstanding at 31 July 2009, which are not secured, are provided in the following table.
Related party
The ultimate parent
InfraStrata plc
Subsidiaries
InfraStrata UK Limited
Portland Gas Storage Limited
Islandmagee Storage Limited
Portland Gas Transportation Limited
Portland Gas Limited
InfraStrata NV Limited
InfraStrata Trading Limited
Portland Gas ESP S.L.
Amounts owed
by related parties
Amounts owed
to related parties
£
9,352,960
19,486,563
4,397,874
-
-
-
-
100
-
£
100
7,104,539
19,399,430
1,978,572
4,642,596
-
12,500
-
99,759
34
InfraStrata plc
InfraStrata plc
35
NOTES TO THE FINANCIAL STATEMENTS
31. Judgements in applying accounting policies
and key sources of estimation uncertainty
Amounts included in the financial
the date from which the facilities
and/or project disposals. The
statements involve the use of
become operational. Management
Directors have reviewed the budget,
Directors:
Kenneth Ratcliff (Non-executive Chairman)
Andrew Hindle (Chief Executive Officer)
Craig Gouws (Chief Financial Officer)
judgement and/or estimation. These
assigns values and dates to these
projected cash flows, considered
Walter Roberts (Legal and Commercial Director)
Mark Abbott (Non-executive Director)
Maurice Hazzard (Non-executive Director)
estimates and judgements are based
inputs after taking into account
committed expenditure and based
on management’s best knowledge of
market information, engineering
the relevant facts and circumstances,
design costing and the project
having regard to previous
programme. A discount rate of 8% is
experience, but actual results may
applied in determining project net
differ from the amounts included in
present values. Salt cavern gas
the financial statements. Information
storage projects are long term
about such judgements and
investments and cash flows are
estimation is contained in the
therefore projected over periods
on this review are confident that the
Group will have adequate financial
resources to continue in existence for
the foreseeable future. Consequently
the Directors consider it appropriate
to prepare the financial statements
on the going concern basis subject
to the going concern disclosure
accounting policies and/or the notes
greater than 5 years. Engineering
made in note 2.
to the financial statements, and the
design provides for Project life of 40
key areas are summarised below.
years. It is assumed that 100% of a
Capitalisation of
project costs
The assessment of whether costs
incurred on project exploration and
evaluation should be capitalised or
expensed involves judgement. Any
project’s capacity will be sold from
the date that the capacity becomes
operational, therefore no cash flow
growth is used when performing
cash flow projections.
Share based payments
expenditure which is considered to
The estimation of share based
relate to gas storage exploration
payment costs requires the selection
research activities or where it is not
of an appropriate valuation model
probable that future economic
and consideration as to the inputs
benefits will flow to the Group are
necessary for the valuation model
expensed. Management considers
chosen. The Group has made
the nature of the costs incurred and
estimates as to the volatility of its
the stage of project development
own shares, the probable life of
and concludes whether it is
options granted, and the time of
appropriate to capitalise the costs.
exercise of those options. The model
The key assumptions depend on the
used by the Group is the Black-
rock mechanical properties of the
Scholes model. The key assumptions
halite, the availability of a suitable
are detailed in note 7.
site for construction of the required
facilities and the likelihood of
gaining the relevant permissions.
Review of project asset
carrying values
Going concern
The preparation of the financial
statements requires an assessment
on the validity of the going concern
assumption. The validity of the going
The assessment of capitalised project
concern assumption is dependent on
costs for any indications of
the availability of adequate
impairment involves judgement.
financial resources to allow the
When facts or circumstances suggest
Group to continue in operational
that impairment exists, a formal
existence for the foreseeable future.
estimate of recoverable amount is
Should the going concern basis not
performed and an impairment loss
be appropriate, adjustments would
recognised to the extent that the
have to be made to the assets and
carrying amount exceeds
liabilities in the balance sheet of the
recoverable amount. The carrying
Group. As with other development
amount of the intangible asset with
companies which have no revenue
an indefinite useful life is £2,414,342.
streams, the Group will only be able
Recoverable amount is determined
to continue its development
32. Events after balance
sheet date
On the 1 October 2010 eCORP Oil &
Gas UK Limited undertook to fund
the first cavern well and thereby
acquired the right to match the
project expenditure invested to date
by InfraStrata (£22.9m) in return for
50% of the share capital of the
project company, Portland Gas
Limited.
The Department of Enterprise Trade
& Investment (“DETI”) has carried out
its assessments of the financial and
technical aspects of an application
made for a petroleum licence in
Northern Ireland and offered in
November 2010 to grant InfraStrata a
50% licence interest over the area
applied for which is known as
Central Larne - Lough Neagh Basin.
The licence covers an area of 663
square kilometres, and the existing
Islandmagee gas storage project is
located within the boundary. The
Company expects that DETI should
be in a position to issue the licence
in Q1 2011 after it has completed the
drafting of the terms and conditions
of the licence, taking into account
the outcome of its consultation with
other Departments and agencies.
33. Control of the Group
The largest Group in which the
results of the Company are
consolidated is that headed by
InfraStrata plc. It is the ultimate
to be the higher of fair value less
programme if it has sufficient
holding company and is
costs to sell and value in use. The
financial resources to do so. In order
incorporated in Great Britain and
key assumptions are the net income
to gain such resources, the Group
registered in England. There is no
expected to be generated from the
will need to raise additional funds,
ultimate controlling party of
facilities, the cost of construction and
either through the issue of shares
InfraStrata plc.
Registered Office:
Blackstable House
Longridge
Sheepscombe
Stroud
GL6 7QX
Letter from the Chairman with
notice of Annual General Meeting
InfraStrata plc (The “Company”)
(Incorporated and registered in England and Wales with registered number 06409712)
13 December 2010
Dear Shareholder,
the next annual general meeting of the
In addition, in accordance with the
1. Introduction
Notice of the Company’s forthcoming
annual general meeting to be held on
Monday 31 January 2011 (“AGM” or
“Annual General Meeting”) appears on
the following pages.
As in previous years your Board is not
recommending the payment of a
dividend.
2. Resolutions to be
proposed at the AGM
Ordinary Business
Annual Report and Accounts
(Resolution 1)
A copy of the annual report and
accounts (together with the Directors’
and Auditors’ reports on the annual
report and accounts) for the Company
for the financial year ended 31 July
2010 (the “Accounts”) has been sent to
you with this document. Shareholders
will be asked to receive the Accounts at
the Annual General Meeting.
Re-appointment of Auditors
(Resolution 2)
The Company is required at each
general meeting at which accounts are
presented to appoint auditors to hold
office until the next such meeting. Nexia
Smith & Williamson Audit Limited have
indicated their willingness to continue
in office. Accordingly, Resolution 2
proposes their re-appointment as
auditors of the Company to hold office
from the conclusion of the Annual
General Meeting until the conclusion of
Company at which Accounts are laid,
guidance from the Association of British
and authorises the Directors to
Insurers (“ABI”) on the expectations of
determine their remuneration.
institutional investors in relation to the
Retirement by Directors
(Resolutions 3 & 4)
Andrew Hindle and Maurice Hazzard
are the Directors retiring by rotation this
year and each offers himself for
re-election. All members of the Board
are required to submit themselves for
re-election at least once every three
years. Brief biographical details of each
of the Directors appear on pages 10
and 11 of the Accounts.
Special Business
Authority of Directors to Allot Shares
(Resolution 5)
The authority given to the Directors to
allot further shares in the capital of the
Company requires the prior
authorisation of the shareholders in
general meeting under section 551
Companies Act 2006. Upon the passing
of Resolution 5, pursuant to paragraph
(A) of the Resolution, the Directors will
have authority to allot shares up to a
maximum of £2,460,140 which is
approximately one third of the current
issued share capital as at 9th
December 2010, being the latest
authority of directors to allot shares,
upon the passing of Resolution 5, the
Directors will have authority (pursuant
to paragraph (B) of the Resolution) to
allot an additional number of ordinary
shares up to a maximum of £2,460,140,
which is approximately a further third
of the current issued ordinary share
capital as at 9th December 2010, being
the latest practical date before the
publication of this Letter. However, the
Directors will only be able to allot those
shares for the purposes of a rights issue
in which the new shares are offered to
existing shareholders in proportion to
their existing shareholdings. This
authority will also expire immediately
following the next annual general
meeting or, if earlier, six months
following the date to which the
Company’s next annual report and
accounts are made up to.
As a result, if Resolution 5 is passed, the
Directors could allot shares representing
up to two-thirds of the current issued
share capital pursuant to a rights issue.
Disapplication of Pre-emption Rights
(Resolution 6)
practicable date before the publication
If the Directors wish to exercise the
of this Letter. This authority will expire
immediately following the next annual
authority under Resolution 5 and offer
unissued shares (or sell any shares
general meeting or, if earlier, six
months following the date to which the
Company’s next annual report and
accounts are made up.
which the Company may purchase and
elect to hold as treasury shares) for
cash, the Companies Act 2006 requires
that unless shareholders have given
specific authority for the waiver of the
36
InfraStrata plc
InfraStrata plc
37
CHAIRMAN’S LETTER
statutory pre-emption rights, the new
shares be offered first to existing
shareholders in proportion to their
existing shareholdings. In certain
circumstances, it may be in the best
interests of the Company to allot new
shares (or to grant rights over shares)
for cash without first offering them to
existing shareholders in proportions to
their holdings.
Resolution 6 would authorise the
Directors to do this by allowing the
Directors to allot shares for cash (i) by
way of a rights issue (subject to certain
exclusions), (ii) by way of an open offer
or other offer of securities (not being a
rights issue) in favour of existing
shareholders in proportions to their
shareholdings (subject to certain
exclusions) and (iii) to persons other
than existing shareholders up to an
aggregate nominal value of £738,042
which is equivalent to 10 per cent of the
issued share capital of the Company on
9th December 2010, being the latest
practicable date prior to the publication
of this Letter. If given, the authority will
expire on the conclusion of the following
annual general meeting or, if earlier, six
months following the date to which the
Company’s next annual reports and
accounts are made up.
For this purpose the ABI
recommendation for companies on the
LSE main list is 5% although it is
generally recognised that for smaller
companies and those on AIM this may
be too constrictive. The nature of our
business means that projects in which
we will have an interest will normally
require up-front investment and can
take a long time to fully develop.
Consequently I would ask that you
approve a 10% disapplication of
pre-emption rights to provide your
Board with the flexibility to pursue such
opportunities without incurring the costs
of a rights issue or the need to market
part of the investment opportunity to
third parties.
3. Recommendation
Your Directors consider the Resolutions
to be proposed at the AGM to be in the
best interests of the Company and its
shareholders as a whole. Consequently,
the Directors recommend shareholders
to vote in favour of the Resolutions as
they intend to do in respect of their own
beneficial holdings totalling 15,103,461
ordinary shares (representing 20.46 per
cent of the Company’s issued share
capital as at the date of this Letter).
A form of proxy is included for use at
the AGM. Forms of proxy should be
completed, signed and returned as
soon as possible and in any event so
as to be received by Capita Registrars
at The Registry, 34 Beckenham Road,
Beckenham, Kent BR3 4TU not less than
48 hours prior to the time appointed
for the holding of the AGM on
31 January 2011.
Completion of a proxy form will not
prevent you from attending the AGM in
person if you so wish.
Yours sincerely,
Ken Ratcliff
Non-executive Chairman
Notice of annual general meeting
Notice is hereby given that the Annual
General Meeting of InfraStrata plc (the
“Company”) will be held at the offices of
Buchanan Communications Limited, 45
Moorfields, London EC2Y 9AE, United
Kingdom on Monday 31 January 2011 at
11.00 hours, for the purpose of passing
the following Resolutions, of which
Resolutions 1 to 5 will be proposed as
Ordinary Resolutions and Resolution 6
will be proposed as a Special
Resolution:
Ordinary Resolutions:
1. To receive the report of the
Directors and the audited accounts
of the Company for the year ended
31 July 2010, together with the
report of the Auditors on those
audited accounts.
2. That Nexia Smith & Williamson
Audit Limited be and are hereby
reappointed as auditor of the
Company to hold office from the
conclusion of this meeting until the
conclusion of the next meeting at
which accounts are laid before the
meeting, at a remuneration to be
determined by the Directors.
3. To re-elect Andrew Hindle as
Director who retires pursuant to
article 92 of the Company’s articles
of association and who, being
eligible, offers himself for
re-election.
4. To re-elect Maurice Hazzard as
Director who retires pursuant to
article 92 of the Company’s articles
of association and who, being
eligible, offers himself for
re-election.
5. To consider and, if thought fit, to
pass the following Resolution as an
ordinary resolution:
That the Directors be and they are
hereby generally and
unconditionally authorised in
accordance with section 551
Companies Act 2006 (CA 2006) to
exercise all the powers of the
Company to allot shares in the
Company and to grant rights to
subscribe for, or to convert any
security into, shares in the
Company:
(A) up to an aggregate nominal
amount of £2,460,140; and
(B) comprising equity securities (within
the meaning of section 560 CA
2006) up to a further aggregate
nominal amount of £2,460,140 in
connection with an offer by way of
a rights issue:
(i) to ordinary shareholders in
proportion (as nearly as may be
practicable) to their existing
holdings; and
(ii) to holders of other equity securities
as required by the rights of those
securities or as the Directors
otherwise consider necessary,
and so that Directors may impose
any limits or restrictions and make
any arrangements which they
consider necessary or appropriate
to deal with treasury shares,
fractional entitlements, record dates,
legal, regulatory or practical
problems in, or under the laws of,
any territory or the requirements of
any regulatory body or stock
exchange or any other matter
(including any such problems
arising by virtue of equity securities
conclusion of the next annual
general meeting of the Company
after the passing of this Resolution
or 31 January 2012, whichever is the
earlier save that the Company may
before such expiry make an offer
or agreement which would or might
require shares to be allotted or
rights to subscribe for, or to convert
any security into, shares to be
granted after such expiry and the
Directors may allot shares or grant
rights to subscribe for, or to convert
any security into, shares (as the
case may be) in pursuance of such
an offer or agreement as if the
authority conferred hereby had not
expired.
Special Resolutions:
6. To consider and, if thought fit, to
pass the following Resolution as a
special resolution:
That, subject to the passing of
Resolution 5 above the Directors be
and they are hereby empowered
pursuant to section 570 CA 2006 to
allot equity securities (within the
meaning of section 560 CA 2006) for
cash pursuant to the authority
conferred by Resolution 5, as if
section 561 CA 2006 did not apply
to any such allotment, provided that
this power shall be limited:
(A) to the allotment of equity securities
in connection with an offer of
equity securities (but in the case of
the authority granted under
paragraph (B) of Resolution 5, by
way of a right issue only):
being represented by depositary
(i) to ordinary shareholders in
receipts).
The authorities conferred on the
Directors under paragraphs (A) and
proportion (as nearly as may be
practicable) to their existing
holdings; and
(B) above shall expire at the
(ii) to holders of other equity securities
38
InfraStrata plc
InfraStrata plc
39
NOTICE OF ANNUAL GENERAL MEETING
as required by the rights of those
securities or as the Directors
otherwise consider necessary,
and so that the Directors may
impose any limits or restrictions and
make any arrangements which they
consider necessary or appropriate
to deal with any treasury shares,
fractional entitlements, record dates,
legal, regulatory or practical
problems in, or under the laws of,
any territory or the requirements of
any regulatory body or stock
exchange or any other matter
(including any such problems
arising by virtue of equity securities
being represented by depositary
receipts); and
(B) to the allotment (otherwise than
under paragraph (A) of this
Resolution 6) of equity securities up
to an aggregate nominal amount of
£738,042.,
and shall expire at the conclusion
of the next annual general meeting
of the Company after the passing of
this Resolution or 31 January 2012,
whichever is the earlier, except that
the Company may before such
expiry make an offer or agreement
which would or might require
equity securities to be allotted after
such expiry and the Directors may
allot equity securities in pursuance
of such offer or agreement as if the
power conferred hereby had not
expired.
Dated 13 December 2010
By Order of the Board
Walter Roberts
Secretary
Registered Office:
Blackstable House
Longridge
Sheepscombe
Stroud
GL6 7QX
Notes:
1 A member is entitled to appoint one or more proxies to
exercise all or any of the member’s rights to attend, speak
and vote on his/her behalf at the meeting. A proxy need
not be a member of the Company. If a member appoints
more than one proxy to attend the meeting, each proxy
must be appointed to exercise the rights attached to a
different share or shares held by the member. If a
member wishes to appoint more than one proxy and so
requires additional proxy forms, the member should
contact Capital Registrars on 0871 664 0300 if calling
within the United Kingdom or +44 20 8639 3399 if calling
from outside the United Kingdom. Lines are open 8:30am
– 5:30pm Mon–Fri. Calls to the helpline from within the
United Kingdom cost 10 pence per minute (including VAT)
from a BT landline. Other service providers’ costs may
vary. Call to the helpline from outside the United Kingdom
will be charged at applicable international rates. Calls
may be recorded and monitored for security and training
purposes. A form of proxy for use by members at the
Annual General Meeting accompanies this notice.
2 To be effective, the form of proxy and the power of
attorney or other authority (if any) under which it is
signed, or a notarially certified copy of such authority,
must be received by post or (during normal business
hours only) by hand at the office of the Company’s
Registrars, being Capita Registrars at The Registry, 34
Beckenham Road, Beckenham, Kent BR3 4TU, not less than
48 hours, excluding non-business days, before the time of
the holding of the meeting or any adjournment thereof.
3 Completion and return of the proxy form does not
preclude a member from attending and voting at the
meeting in person.
4 In the case of joint shareholders, where more than one of
the joint holders purports to appoint a proxy, only the
appointment submitted by the most senior holder will be
accepted. Seniority is determined by the order in which
the names of the joint shareholders appear in the
Company’s register of members in respect of the joint
holding (the first-named being the most senior).
5 To change your proxy instructions simply submit a new
proxy appointment using the methods set out above. Note
that the cut-off time for receipt of proxy appointments (see
above) also apply in relation to amended instructions;
any amended proxy appointment received after the
relevant cut-off time will be disregarded. If you submit
more than one valid proxy appointment, the appointment
received last before the latest time for the receipt of
proxies will take precedence.
6 In order to revoke a proxy instruction you will need to
inform the Company by sending notice in writing clearly
stating your intention to revoke your proxy appointment
to Company’s Registrars, being Capita Registrars at The
Registry, 34 Beckenham Road, Beckenham, Kent BR3 4TU.
In the case of a member which is a company, the
revocation notice must be executed under its common
seal or signed on its behalf by an officer of the company
or an attorney for the company. Any power of attorney or
any other authority under which the revocation notice is
signed (or a duly certified copy of such power or
authority) must be included with the revocation notice.
The revocation notice must be received by the Company
no later than 48 hours, excluding non-business days,
before the time of the holding of the meeting or any
adjournment thereof. If you attempt to revoke your proxy
appointment but the revocation is received after the time
specified then your proxy appointment will remain valid.
If you have appointed a proxy and attend the meeting in
person, your proxy appointment will automatically be
terminated.
7 In accordance with the permission in Regulation 41(1) of
The Uncertificated Securities Regulations 2001 (SI 2001 No.
3755), only those holders of ordinary shares who are
registered on the Company’s share register at 18.00 hours
on 27 January 2011 shall be entitled to attend the above
Annual General Meeting (or, in the case of an adjourned
meeting, 18.00 hours on the day which is two days before
the adjourned meeting) and to vote in respect of the
number of shares registered in their names at that time.
Changes to entries on the share register after 18.00 hours
on 27 January 2011 shall be disregarded in determining
the rights of any person to attend and/or vote at the
Annual General Meeting.
8 If the Chairman, as a result of any proxy appointments, is
given discretion as to how the votes the subject of those
proxies are cast and the voting rights in respect of those
discretionary proxies, when added to the interests in the
Company’s securities already held by the Chairman,
result in the Chairman holding such number of voting
rights that he has a notifiable obligation under the
Disclosure and Transparency Rules, the Chairman will
make the necessary notifications to the Company and the
Financial Services Authority. As a result, any member
holding 3% or more of the voting rights in the Company
who grants the Chairman a discretionary proxy in respect
of some or all of those voting rights and so would
otherwise have a notification obligation under the
Disclosure and Transparency Rules, need not make a
separate notification to the Company and the Financial
Services Authority.
9 Copies of the service agreements and letters of
appointment between the Company and its Directors will
be available for inspection at the registered office of the
Company during usual business hours on any weekday
(Saturdays, Sundays and Bank Holidays excluded) until
the date of the meeting and also on the date and at the
place of the meeting from half an hour before the
meeting until the conclusion of the meeting.
40
InfraStrata plc
!
Proxy Form
InfraStrata plc (The “Company”)
(Incorporated and registered in England and
Wales with registered number 06409712)
Proxy Form for use by shareholders at the Annual General Meeting (“AGM”) of InfraStrata plc (the “Company”) to be held at the offices
of Buchanan Communications Limited, 45 Moorfields, London EC2Y 9AE, United Kingdom on Monday 31 January 2011 at 1100 hours.
Please read the Notice of the AGM and the accompanying notes carefully before completing this Proxy Form.
As a shareholder of the Company you have the right to attend, speak at and vote at the AGM. If you cannot, or do not want to
attend the AGM, but still want to vote, you can appoint someone to attend the AGM and vote on your behalf. That person is known
as a “proxy”. You can use this Proxy Form to appoint the Chairman of the AGM, or someone else, as your proxy. Your proxy does
not need to be a shareholder of the Company.
I/We,.................................................................................................................................................................................................................................................... (in BLOCK CAPITALS please)
being a Shareholder/Shareholders of InfraStrata plc, appoint the Chairman of the AGM or ........................................................................................................
......................................................................................................................................................................................................................................................................................................................................
(see note 1) as my/our proxy to attend and, on a poll, to vote for me/us and on my/our behalf as indicated below at the AGM and
at any adjournment thereof (see notes 2, 3, 4, 5 and 6 below).
Please tick here if this proxy appointment is one of the multiple appointments being made. *For the appointment of more than
one proxy, please see note 3.
Please clearly mark the boxes below to instruct your proxy how to vote.
ORDINARY RESOLUTIONS
For
Against
Vote withheld Discretionary
1 To receive the Report and Accounts for the year ended
31 July 2010
2 To re-appoint Nexia Smith & Williamson Audit Limited as
auditors at a remuneration to be determined by the Directors
3 To re-elect Andrew Hindle
4 To re-elect Maurice Hazzard
5 To grant the directors authority to allot shares on the basis
set out in the Notice of AGM
SPECIAL RESOLUTION
For
Against
Vote withheld Discretionary
6 To disapply pre-emption rights on the basis set out in the
notice of AGM
Signature(s) ............................................................................................................................................................................................................................................................................... (see note 8)
Date ...............................................................................................................................................................................................................................................................................................................................
Notes:
1 A proxy need not be a member of the Company but must
attend the meeting to represent you. If you wish to appoint as
a proxy a person other than the Chairman of the AGM,
please delete the words “the Chairman of the AGM” and
insert the name of the other person. All alterations made to
this Proxy Form must be initialled by the signatory. If you sign
and return this Proxy Form with no name inserted in the box,
the Chairman of the AGM will be deemed to be your proxy.
If the proxy is being appointed in relation to less than your
full voting entitlement, please enter the number of shares in
relation to which they are authorised to act as your proxy. If
left blank your proxy will be deemed to be authorised in
respect of your full voting entitlement (or if this Proxy Form
has been issued in respect of a designated account for a
shareholder, the full voting entitlement for that designated
account).
2 To be effective, this Proxy Form (together with any power of
attorney or other authority (if any) under which it is signed,
or a notarially certified copy of such authority) must be
received by post or (during normal business hours only) by
hand at the office of the Company’s Registrars, being Capita
Registrars at The Registry, 34 Beckenham Road, Beckenham,
Kent BR3 4TU, by no later than 11.00 hours on Thursday 27
January 2011.
3 You are entitled to appoint more than one proxy provided
that each proxy is appointed to exercise rights attached to a
different share or shares held by you. You may not appoint
more than one proxy to exercise rights attached to any one
share. To appoint more than one proxy, (an) additional Proxy
Form(s) may be obtained by contacting the Registrars
helpline on 0871 664 0300 if calling within the United
Kingdom or +44 20 8639 3399 if calling from outside the
United Kingdom. Lines are open 8:30am – 5:30pm Mon–Fri.
Calls to the helpline from within the United Kingdom cost 10
pence per minute (including VAT) from a BT landline. Other
service providers’ costs may vary. Call to the helpline from
outside the United Kingdom will be charged at applicable
international rates. Calls may be recorded and monitored for
security and training purposes. Or you may photocopy this
form. Please indicate next to the proxy holder’s name the
number of shares in relation to which they are authorised to
act as your proxy. Please also indicate by ticking the box
provided if the proxy instruction is one of multiple instructions
being given. All forms must be signed and should be
returned together in the same envelope.
4 Completion and return of this Proxy Form will not prevent you
from attending in person and voting at the AGM should you
subsequently decide to do so.
5 If you wish your proxy to cast all of your votes “For” or
“Against” a resolution you should insert an “X” in the
appropriate box. If you wish your proxy to cast only certain
votes “For” and certain votes “Against”, insert the relevant
number of shares in the appropriate box. In the absence of
instructions, your proxy may vote or abstain from voting as
he or she thinks fit on the specified resolution and, unless
instructed otherwise, may also vote or abstain from voting as
he or she things fit on any other business (including on a
motion to amend a resolution to propose a new resolution or
to adjourn the AGM) which may properly come before the
AGM.
6 The “Vote Withheld” option is provided to enable you to
instruct your proxy to abstain from voting on a particular
resolution. A “Vote Withheld” is not a vote in law and will not
be counted in the calculation of the proportion of the votes
“For” or “Against” a resolution. The “Discretionary” option is
provided to enable you to give discretion to your proxy to
vote or abstain from voting on a particular resolution as he
or she thinks fit.
7 In accordance with the permission in Regulation 41 of the
Uncertificated Securities Regulations 1001 (SI 2001 No. 3755),
only those holders of ordinary shares who are registered on
the Company’s share register at 18.00 hours on 27 January
2011 shall be entitled to attend the above AGM (or 18.00 hours
on the day which is two days before the day of any
adjourned meeting) and to vote in respect of the number of
shares registered in their names at that time. Changes to
entries on the share register after 18.00 hours on 27 January
2011 shall be disregarded in determining the rights of any
person to attend and/or vote at the AGM.
8 This Proxy Form must be signed by the shareholder or his/her
attorney. Where the shareholder is a corporation, the
signature must be under seal or signed by a duly authorised
representative stating their capacity (e.g. Director, secretary).
In the case of joint shareholders, any one shareholder may
sign this Proxy Form or may vote in person at the Meeting. If
more than one joint shareholder is present at the AGM either
in person or by proxy, that one of them whose name stands
first in the register of members in respect of the share shall
alone be entitled to vote (whether in person or by proxy) in
respect of it.
9 To change your proxy instructions simply submit a new proxy
appointment using the methods set out above. Note that the
cut-off time for receipt of proxy appointments (see above)
also apply in relation to amended instructions; any amended
proxy appointment received after the relevant cut-off time
will be disregarded.
10 In order to revoke a proxy instruction you will need to inform
the Company by sending notice in writing clearly stating
your intention to revoke your proxy appointment to
Company’s Registrars, being Capita Registrars at The Registry,
34 Beckenham Road, Beckenham, Kent BR3 4TU. In the case
of a member which is a company, the revocation notice must
be executed under its common seal or signed on its behalf
by an officer of the company or an attorney for the company.
Any power of attorney or any other authority under which
the revocation notice is signed (or a duly certified copy of
such power or authority) must be included with the
revocation notice. The revocation notice must be received by
the Company no later than 48 hours, excluding non-business
days, before the time of the holding of the meeting or any
adjournment thereof. If you attempt to revoke your proxy
appointment but the revocation is received after the time
specified then your proxy appointment will remain valid. If
you have appointed a proxy and attend the meeting in
person, your proxy appointment will automatically be
terminated.
11 If you submit more than one valid proxy appointment in
respect of the same share or shares, the appointment
received last before the latest time for the receipt of proxies
will take precedence. If the Company is unable to determine
which was received last, none of the proxy appointments in
respect of that share or shares shall be valid.
Business Reply
Licence Number
RSBH-UXKS-LRBC
Fold 2 here
PXS
34 Beckenham Road
BECKENHAM
BR3 4TU
Fold 3 here and tuck in
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InfraStrata plc
80 Hill Rise
Richmond
Surrey
TW10 6UB
www.infrastrata.co.uk