InfraStrata plc
2011 Annual Report &
Financial Statement
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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’ reponsibilities
Independent auditor’s 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 the Annual General Meeting
Proxy form
InfraStrata plc
CHAIRMAN’S STATEMENT
The past financial year has been another challenging year for your
company but against a general backdrop of economic uncertainty we
have made discernible progress towards defining the road ahead.
In the year to 31 July 2011, there has been no significant improvement
in the gas storage market although I am pleased to report that, whilst
a number of gas storage projects remained on hold within the UK,
we have managed to achieve progress in the year on the introduction
of partners in both the Portland and Islandmagee projects. Market
difficulties have been widely publicised and indeed they were foreseen
and articulated at the successful gas storage seminar hosted by
InfraStrata in September 2010. The seminar was attended by over 120
professionals drawn from City institutions, gas storage developers,
Ofgem, DECC and the media. Against these difficulties we have made
some progress but the rate of progress has been slower than we would
have wished albeit for reasons outside of our control. It has been a
year in which we have moved forward and re-positioned ourselves to
benefit not only from developments in the gas storage market but also
from traditional oil and gas exploration.
In addition to the completion of planning implementation work on the
wellpad area at Upper Osprey within the Portland gas storage project -
fully funded by our partner, eCORP International LLC - we have been
pursuing our plan to secure planning permission for the project at
Islandmagee in Northern Ireland. The process in Northern Ireland has
taken longer than initially envisaged but is now approaching the final
stages and we are hopeful of positive news. In the meantime we have
secured the interest of a major energy company as potential partner in
this project and have entered into an exclusivity agreement with them
under which we have until 31 January 2012 to finalise terms.
Whilst we remain focused upon the development of gas storage
capacity within the UK we have also expanded our interest into oil
and gas exploration based on areas sited in and around the existing
areas in which we have a commitment to storage. To fund our
exploration programmes yet preserve cash, we sought participation
from investors at the project level rather than through direct dilution.
This was successfully achieved by obtaining funding at subsidiary
company level to raise £3m before costs split equally between two
previously wholly owned subsidiaries. Through InfraStrata’s continued
significant interest in these subsidiaries we hope to benefit from an
active exploration programme planned over the next financial year.
Your Board has considered the matter of remuneration for the executive
team and our decision has been again to freeze salaries for the coming
year but keep under review the matter of reward through the share
incentive scheme. This decision continues to be based 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 thank our shareholders for their continued
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
InfraStrata plc
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Over the past six years the Company has been
developing two strategically important gas
storage projects in the UK, at Portland in
Dorset and Islandmagee in Antrim. Progress
has continued to be made with both these
projects during the year.
The Company was awarded its first petroleum
exploration
licence during the year. Its
exploration activities are focused on the
Permo-Triassic sedimentary basins of the
western part of the United Kingdom close
to existing gas storage project areas, Antrim
in Northern Ireland and Dorset in Southern
England.
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Antrim, Northern Ireland
InfraStrata has a 65% interest in the Islandmagee gas storage project, together
with its partner Moyle Energy Investments Limited (35%), a wholly owned
subsidiary of Mutual Energy Limited, the operator of existing gas and electricity
infrastructure in Northern Ireland. A planning application for the project was
submitted in March 2010 to the Northern Ireland Planning Service.
The proposed 500 million cubic metres (“mcm”) gas storage facility will be
the largest on the island of Ireland and make a significant contribution to the
security of gas supplies. The facility is being designed to inject gas at 12mcm and
withdraw gas at 22mcm per day.
In September 2011 the Company, together with its partner, entered into exclusive
negotiations with a major energy company (potential partner) regarding the
appraisal and the option to acquire an equity interest in Islandmagee Storage
Limited, the Islandmagee project company. Under the terms of an Exclusivity
Agreement the potential partner paid a consideration of £200,000, which was
used to complete part of the land purchase for the Islandmagee gas storage
project. The potential partner has been granted until 31 January 2012 to finalise
terms with InfraStrata and Moyle, whereby it could acquire a significant equity
interest in the project, in return for funding the activities to develop the project
to the point where a decision can be made to commit to construction.
The planning process in Northern Ireland has been more drawn-out than
anticipated at the time of submission in 2010, with a determination of the
planning application now expected in 2012. Subject to planning permission
being granted for the project during the first half of 2012, it is hoped that
drilling of the first well from the site will take place during 2012.
A petroleum exploration licence PL1/10 in the central part of the Larne -
Lough Neagh Basin was awarded in March 2011. The licence covers an area of
663 square kilometres. The initial licence term is five years with a decision on
drilling a well required within three years. InfraStrata is operator of the licence
and holds a 30% direct interest, with an additional net 20% interest via a 50%
shareholding in partner company IS E&P Limited (now renamed Brigantes
Energy Limited) which has a 40% interest. The other partners in the licence are
Nautical Petroleum plc (20%) and Terrain Energy Limited (10%).
The sedimentary section is over 4,000 metres thick in the most deeply buried
parts of the basin within Licence PL1/10. The exploration is conventional with
the primary reservoir target the Triassic Sherwood Sandstone, the reservoir in
the giant Morecambe Bay gasfield in the East Irish Sea Basin. The regional seal
is the Mercia Mudstone Formation. Secondary targets are sandstone reservoirs
within the Permian and Carboniferous sequences. Although no deep wells have
been drilled in the central part of the Larne-Lough Neagh Basin, potential
Carboniferous oil and gas source rocks have been identified in wells drilled on
the margins of the basin for coal exploration.
A seismic programme comprising 275 line kilometres of 2D data was acquired
between mid-September and early November 2011.
It is hoped that the results of the seismic data, expected during Q1 2012, will
lead to the drilling of an exploratory well. Ideally, drilling can be coordinated
with the planned well for the Islandmagee gas storage project to optimise
expenditure.
4
InfraStrata plc
Dorset, England
InfraStrata has a 50% interest in the Portland gas storage project, together with
partner eCORP International, LLC (“eCORP”). Planning permission for the
project was granted in May 2008 by Dorset County Council, and implemented in
June 2011 following completion of some permanent works within the wellpad area
at Upper Osprey on the Isle of Portland.
eCORP and InfraStrata are currently undertaking a full review of the options for
the development of the project, a process expected to be completed in Q1 2012.
These options include the potential to introduce new finance for a phased project
development at the Portland site. It is hoped this will lead to an accelerated level of
activity during 2012.
In April 2010, the Company submitted an application to the Department of Energy
and Climate Change (“DECC”) in the 26th Licensing Round for a petroleum
exploration licence covering 3 offshore Blocks adjacent to the Dorset coast and
close to the Portland gas storage project and the giant Wytch Farm oilfield.
Subject to award of the licence and approval of licence interest assignments by
DECC, InfraStrata will be the operator with a 28% direct interest, together with
an additional net 6% interest via a 50% shareholding in partner company IS NV
Limited (now renamed Corfe Energy Limited) which would have a 12% interest.
The other partners in the licence would be eCORP Oil & Gas UK Limited (50%)
and Nautical Petroleum plc (10%).
InfraStrata plc
5
CORPORATE AND SOCIAL RESPONSIBILITY
Portland Gas Limited continues to support local communities in its area of operation. 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. Over the year the Trust received various
applications for funding. The Trust has continued to support suitable local applications and those that fitted with the Trust’s objectives
were successful.
A successful application to Awards for All enabled the Trust to develop some new projects. Working with the Council Dog Warden, a new
leaflet was produced with information on responsible dog ownership when walking on Portland. The Trust also produced a car sticker for
dog owners to display promoting picking up after your pet. These have been very well received and the Trust will be hosting a dog owners
and family fun day to educate people and promote awareness. The grant also funded four new marquees which the Trust will use for any
events held by the Trust.
Work on the Old Engine Shed site continues and scrub and brambles are still being cleared. More stone walling courses
are being organised. A successful course run by the Dorset Dry Stone Walling Association meant that a whole new
section of wall was repaired during the summer of 2011.
The Trust supported Royal Manor Arts College students who were reporting on the Jurassic Coast and
the impact of coastal erosion. It also funded the polo shirts for the students which were embroidered
with the Trust logo.
Support for the Island Ranger post continues and the Trust has funded the new wildlife packs and
walk cards for the island. The Trust has again sponsored the Budmouth College Geology Award.
A donation was made to the Piddlehinton Church fete.
The Trust has continued to meet with the local authorities to discuss options for activities
and events around the engine shed for the 2012 games. It is the intention of the Trust
to have activities and events for the local community during this time. The Trust
intends to organize some activities to celebrate the Queen’s Diamond jubilee.
The Trust will continue to work with the Young Offenders Institute on
Portland and the Ranger service to carry out environmental improvements
along the East Weares area.
Subject to obtaining planning permission and full project funding,
Islandmagee Storage Limited 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. Consultation with local residents and interest groups
indicated that there is a need to upgrade the community centre.
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 and initiatives which could be
funded through the proposed Trust. In June
2010 they appointed local businesswoman
Judith Tweed as Community Liaison
Consultant, in order to collate a
wide range of ideas for potential
funding.
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InfraStrata plc
DIRECTORS, SECRETARY, ADVISORS AND
SHAREHOLDER INFORMATION
Directors
Resigned 1 February 2011:
Resigned 3 December 2010:
Appointed 1 February 2011:
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)
Jonathan Richard Davie (Non-executive Director)
Maurice Edward Hazzard (Non-executive Director)
William Colvin (Non-executive Director)
Company secretary
Walter Rookehurst Roberts
Registrars
Registered office
Principal office
Auditor
Tax advisors
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
Nominated advisor
and broker
Solicitors
Field Fisher Waterhouse LLP
35 Vine Street
London, EC3N 2AA
Bankers
Bank of Scotland plc
33 Old Broad Street
London, EC2N 1HZ
Investor and
public relations
Buchanan Communications Limited
107 Cheapside
London, EC2V 6DN
InfraStrata plc
7
REPORT OF THE DIRECTORS
FOR THE YEAR ENDED 31 JULY 2011
The directors have pleasure in presenting their report and audited
financial statements for the year ended 31 July 2011.
Islandmagee gas storage project
Principal activity and review of business
The principal activities of the Group throughout the year were the
development of sub-surface gas storage facilities and petroleum
exploration.
General
InfraStrata plc is incorporated and domiciled in England and Wales.
Business review
During the year the Group continued to develop its gas storage and
petroleum exploration business.
Fundraising
In Q1 2011 the Company completed a round of funding comprising
two elements. Firstly, in February 2011, a placing of 4,095,000 new
ordinary shares at 22p per share raised £900,900 before expenses.
The shares were placed by Seymour Pierce Limited with an existing
institutional investor. The net proceeds of the placing receivable by the
Company are being applied to support both the development of the
Islandmagee Storage Project until the introduction of a new partner,
and the committed expenditure programme of InfraStrata through
its 2011/12 financial year. Secondly, in March 2011, InfraStrata
completed a funding exercise for its petroleum exploration programme
for 2011 and 2012.
The second round of funding was undertaken at subsidiary company
and project level. A private placing of shares raised £3 million before
costs, split equally between two previously wholly owned subsidiaries
of InfraStrata; Brigantes Energy Limited and Corfe Energy Limited.
Following the placing of new shares, which was managed by Seymour
Pierce Limited, the new investors hold 50% of the issued share capital
of each of the Companies, with the balance retained by InfraStrata.
InfraStrata assigned 40% of its rights for petroleum exploration licence
PL1/10 in Northern Ireland to Brigantes Energy Limited and 12% of
any future exploration rights close to the gas storage project at Portland,
Dorset to Corfe Energy Limited. The funds raised are being used to
fund the the next £3m of their respective exploration costs, the first
project of which being the £2m exploration programme in Northern
Ireland. At the same time as the private placing, InfraStrata farmed out
to Nautical Petroleum plc 20% of its exploration rights under licence
PL1/10 and a further 10% to Terrain Energy Limited. Under these
agreements InfraStrata’s costs through the initial exploration phase of
the project are carried.
The Company also farmed out 10% of any future exploration rights
close to the gas storage project at Portland to Nautical Petroleum plc.
A planning application for the project was submitted to the
Northern Ireland Planning Service in March 2010. The focus of
the work during the financial year was supporting the planning
application and managing a process to introduce a partner to fund
the project through the next stage including the drilling of a well.
After year end, in September 2011, the Company announced
that it had entered into exclusive negotiations, for a consideration
of £200,000, with a major energy company regarding an option
to acquire a significant equity interest in Islandmagee Storage
Limited, the Islandmagee project company.
Portland gas storage project
Planning permission for this project was granted in May 2008 by
Dorset County Council and implemented in June 2011 following
completion of permanent works within the wellpad area at Upper
Osprey on the Isle of Portland. InfraStrata has a 50% interest in
the project together with partner eCORP International, LLC
(“eCORP”). eCORP acquired its 50% interest in the project in
October 2010 for agreeing to fund the on-going expenditure of
Portland Gas Limited (up to the next £22.9m), subject to options
to exit the project by relinquishing its equity interest. At 31 July
2011, eCORP had invested £1.2m into Portland Gas Limited.
The Pipeline Construction Authorisation from the Department
of Energy and Climate Change was most recently renewed in July
2011. Applications were submitted in July 2011 to Dorset County
Council for a renewal of planning permissions for permanent
facilities associated with the pipeline and temporary construction
sites. In addition to securing the planning and pipeline construction
consents for the project, work continued through the financial year
on securing land rights for the gas pipeline, a process which is now
reaching completion.
Petroleum exploration activities
During the financial year the main conventional exploration
activities were focused on the central part of the Larne - Lough
Neagh Basin following the award of petroleum exploration licence
PL1/10 in March 2011. The licence covers an area of 663 square
kilometres. The initial licence term is five years with a decision
on drilling a well required within three years. InfraStrata is the
operator of the licence and holds a 30% direct interest, with an
additional net 20% interest via a 50% shareholding in partner
company Brigantes Energy Limited (formerly IS E&P Limited)
which has a 40% interest. The other partners in the licence are
Nautical Petroleum plc (20%) and Terrain Energy Limited (10%).
The acquisition of approximately 275 line kilometres of 2D seismic
data commenced in mid-September 2011 and was completed in
early November 2011.
The Company is awaiting the result of an application submitted
to the Department of Energy and Climate Change in the 26th
Offshore Licensing Round for an area in the English Channel near
the Portland gas storage project.
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InfraStrata plc
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.
The Board’s expectation was met by activity during the year, including
but not limited to:
• Completing the funding exercise in March 2011 for Corfe Energy
Limited and Brigantes Energy Limited, with city institutions and
industry partners for its petroleum exploration programme.
• The prudent application of available cash resources.
•
Issuance of new capital to meet working capital requirements.
• Completion of the Portland Gas Limited disposal transaction
Strategic and external risks - failure to manage and grow
the business while creating shareholder value
•
Future deterioration of capital markets, reducing ability to raise
new equity funding
• Misalignment with co-venturers
•
• Mix of storage and upstream interests
Shareholder sentiment
There is no assurance that the Group’s exploration and development
activities will be successful. The Directors seek to manage and mitigate
these risks by developing a balanced portfolio of projects, recruitment
and retention of suitably skilled personnel, through compliance with
applicable legislation and careful management of cash resources and
requirements.
The successful progression of the Group’s activities depends not only
on technical success, but also on the ability of the Group to obtain
appropriate financing through equity financing, farm downs, disposing
of interest in projects or other means. If the Group is unable to obtain
additional financing needed to fulfil its planned work programmes
some interests may be relinquished and/or the scope of operations
reduced.
Share capital
•
with eCORP.
Progressing the proposed Islandmagee Storage Limited funding
transaction.
On the 21 December 2010 the Company allotted 365,125 new
ordinary shares of 10 pence each to the Executive Directors at 13.42
pence each in lieu of cash bonuses due to the value of £49,000.
Principal risk factors
The Directors are responsible for the effectiveness of the Group’s risk
management activities and internal control processes. As a participant
in the gas storage development and upstream oil & gas industries, the
Group is exposed to a wide range of business risks in the conduct of its
operations. The Group is exposed to financial, operational, strategic
and external risks which are further described below. These risks
are not exhaustive and additional risks or uncertainties may arise or
become material in the future. Any of these risks, as well as other risks
and uncertainties in this document, could have a material effect on the
Group’s business.
Financial risks - failure to meet financial obligations
• Cost inflation and over runs
• Access to working capital
On the 7 February 2011 the Company placed 4,095,000 new ordinary
shares of 10 pence each at 22 pence per share to raise £900,900 before
expenses.
Outlook
In 2011 and into 2012 InfraStrata intends to further develop its
exploration programmes in County Antrim and Dorset and progress
both the Portland and Islandmagee projects.
The coming year will see more activity in Northern Ireland as
the Islandmagee gas storage project is progressed following the
determination of the Planning Application which is anticipated
during the current financial year. The data from the seismic acquisition
on licence PL1/10 will be processed and interpreted and lead to a
decision on drilling an exploration well.
Operational risks
- damage to shareholder value,
environment, personnel or communities caused by
operational failures
•
• Delays in planning application awards
•
•
Sustained exploration failures
Failure of third party services
Loss of key employees
InfraStrata plc
9
RESULTS AND DIVIDENDS
PAYMENT OF CREDITORS
The 2011 financial year was an active period for the group
which made a profit after tax of £4,310,311 (2010: loss
after tax of £1,248,461). The profit for the year, together
with the balance of £4,489,808 loss brought forward
leaves a retained loss of £179,497 to be carried forward.
An accounting profit of £3.0 million was recognised on
the disposal of 50% of Portland Gas Limited and £2.9
million on the disposal of 50% of Brigantes Energy
Limited and Corfe Energy Limited. Subsequent to the
transactions Portland Gas Limited is accounted for as a
joint venture while Brigantes Energy Limited and Corfe
Energy Limited are accounted for as associates. The Group
recognised revenue of £240,290 during the period which
arose from operatorship income, consulting and technical
services delivered to offset corporate and administrative
expenditure.
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 16 (2010: 20) 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 do not recommend the payment of a
dividend (2010: £nil).
The Directors, who served during the year and
subsequently, were as follows:
In accordance with international financial reporting
standards, the Islandmagee Storage project asset has
been reclassified as assets held for sale and disclosed as
such in the consolidated statement of financial position
(2010: Islandmagee Storage and Portland Gas Storage
assets) - note 20. As a corollary, the net loss attributable
to the project companies has been classified as arising
in the statement of
from discontinued operations
comprehensive income.
CHARITABLE AND POLITICAL DONATIONS
During the year the Group made various charitable
contributions in the UK totalling £200 (2010: £400). No
donations were made for political purposes (2010: £nil).
Executive Directors
A D Hindle
C S Gouws
W R Roberts
Non-executive Directors
K M Ratcliff
M A Abbott - Resigned 1 February 2011
J R Davie - Resigned 3 December 2010
M E Hazzard
W Colvin - Appointed 1 February 2011
All Directors benefit from the provisions of individual
insurance policies.
Indemnity
Directors Personal
Premiums payable to third parties are as described in note
6.
The Company operates a share option scheme and the
particulars of share options granted to Directors are
detailed in note 6 to the financial statements.
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InfraStrata plc
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Ken Ratcliff (Non-Executive Chairman)
Ken Ratcliff, JP, BSc., FCA, (61) is a Chartered Accountant with extensive finance and business experience.
He is currently College Accountant at Epsom College 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.
Andrew Hindle (Chief Executive Officer)
Andrew Hindle, BSc., MSc., PhD, FGS, CGeol, (49) 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, remained a non-executive director of Egdon until February 2011. 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) (44) 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.), (60) 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.
Maurice Hazzard (Non-Executive Director)
Maurice Hazzard, (73) 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.
William Colvin (Non-Executive Director)
William Colvin, A.C.A. (53) is a Chartered Accountant and has wide experience in the oil and gas, and
healthcare sectors in senior management and board positions of large corporations. He was Finance
Director of British-Borneo Oil & Gas plc from 1992 to 1999. From 1990 to 1992, William was Finance
Manager/Director at Oryx UK Energy. From 1984 to 1989, he worked in a variety of financial roles for
Atlantic Richfield (ARCO) Inc. He qualified as a Scottish Chartered Accountant in 1982 and holds a
Bachelor of Commerce degree from the University of Edinburgh. William is currently a non-executive
director of Energy XXI, an independent oil & natural gas exploration and production company.
DIRECTORS’ EMOLUMENTS
The Directors’ emoluments are disclosed in note 6 to the Financial Statements.
InfraStrata plc
11
DIRECTORS AND SUBSTANTIAL SHAREHOLDINGS
The Directors of the Company held the following beneficial shareholdings as at 8 November 2011.
Ordinary shares of 10p each
Number
Ken Ratcliff
Andrew Hindle
Craig Gouws
Walter Roberts
Maurice Hazzard
William Colvin
63,000
6,818,080
92,418
1,144,878
1,144
0
%
0.08
8.71
0.12
1.46
0.00
0.00
The Company has received notification of the following interests in 3% or more of the Company’s issued share capital
at 8 November 2011. The percentages presented are at the date of notification.
Ordinary shares of 10p each
Number
Calculus Nominees Limited
Maven Income and Growth VCT 5 PLC
JP Morgan Asset Management Holdings Inc.
1,858,950
2,974,013
15,516,600
%
3.60
3.80
19.83
The UK Corporate Governance Code
The Directors recognise the value of the UK Corporate Governance Code (“the
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
At the financial year end the Board was comprised of
three Executive Directors and three 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 has a suitable balance
and that the recommendations of the 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. All Directors have
access to the advice and services of the company secretary
who is responsible to the Board for ensuring that the Board
procedures are followed and that the applicable rules and
regulations are complied with. In addition, the company
secretary will ensure that the directors receive appropriate
training as necessary. The appointment and removal of the
company secretary is a matter for the Board as a whole.
InfraStrata plc
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12
CORPORATE GOVERNANCE
The table below contains details on the number of meetings held during the period and individual director attendance.
Board
Audit Committee
Remuneration Committee
Number of meetings held
during the 2011 financial
year
11§
1
2
No of meetings attended
No of meetings attended
No of meetings attended
Executive directors
Andrew Hindle
Craig Gouws
Walter Roberts
Non-executive directors
Ken Ratcliff
Mark Abbott*
Jonathan Davie**
Maurice Hazzard
William Colvin***
10
10
10
7
4
1
7
3
-
-
-
1
1
-
-
-
-
-
-
1
1
-
2
1
§ Of which 4 were minimally attended but to finalise business already approved by all directors
* Resigned 1 February 2011 ** Resigned 3 December 2010 *** Appointed 1 February 2011
Audit Committee
The role of the Audit Committee includes:
The Audit Committee met once in the year to 31 July
2011. Its members are William Colvin (Chairman), Ken
Ratcliff and for part of the year Jonathan Davie. Members
of the committee at the time of meetings attended all
meetings either in person or by telephone. In addition, the
committee met in August 2011 and senior representatives
of the external auditors attended that meeting. The
external auditor has unrestricted access to the Chairman
of the committee.
• Consideration of the appointment of the external auditor and the audit fee.
• Reviewing the nature, scope and results of the external audit.
• Monitor the integrity of the financial statements and interim report.
• Discussing with the Group’s auditors problems and reservations arising from
the interim and final results.
• Reviewing the external auditor’s management letter and management’s
response.
• Reviewing on behalf of the Board the Group’s system of internal control and
making recommendations to the Board.
The Committee also keeps under review the necessity for establishing
an internal audit function 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.
InfraStrata plc
13
CORPORATE GOVERNANCE
Remuneration Committee
The members of the Remuneration Committee are Maurice Hazzard (Chairman),
Ken Ratcliff, William Colvin and for part of the year, Mark Abbott. The committee
met twice during the year each time attended by all current members. 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. During the
year, the Remuneration Committee discussed the continuing need to maintain
motivation of the Executive during a period of intense activity and changing focus.
The conclusion of their considerations was that, while current salary burden was
regarded as being high in the overall context of the Company’s performance, it
would not be wise to do anything to jeopardise the possible outcome of current
negotiations but the focus during 2012 would be on reducing the overall burden.
The Executive has been invited to propose possible ways of achieving this.
The principal objectives of the Committee include:
• Determining and agreeing with the Board the
remuneration policy for the Chief Executive and
Executive Directors;
• Reviewing the design of share incentive plans for
approval by the Board and determining the annual
award policy to Executive Directors under existing
plans; and
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.
Nomation 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.
Relations with Shareholders
Communication with shareholders is given high priority and the
Company therefore communicates regularly with shareholders
including the release of announcements for the interim and annual
results and after significant developments. The Annual General
Meeting is normally attended by all Directors. Shareholders, including
private investors, are invited to ask questions on matters including the
Group’s operations and performance and to meet with the Directors
after the formal proceedings have ended.
The Company maintains a website (www.infraStrata.co.uk) for the
purpose of improving information flow to shareholders as well as
potential investors. The website contains all press announcements and
financial reports as well as extensive operational information about
the Group’s activities and enquiries from individual shareholders on
matters relating to their shareholdings and the business of the Group
are welcomed. The Board encourages shareholders to attend the
Annual General Meeting, at which members of the Board are available
to answer questions.
GOING CONCERN
Internal Controls
The Directors are responsible for the Group’s system of internal
controls, the setting of appropriate policies on those controls, and
regular assurance that the system is functioning effectively and that
it is effective in managing business risk. Internal control systems are
designed to meet the particular needs of the Group and to manage
rather than eliminate the risk of failure to meet business objectives.
The internal controls cover financial, operational and compliance
matters and are reviewed on an on-going basis.
The Directors consider that the frequency of Board meetings and the
information provided to the Board in relation to Group operations
assists the identification, evaluation and management of significant
risks relevant to its operations on a continuous basis.
The Group’s internal controls can only provide reasonable and not
absolute assurance against material mis-statement or loss or the
risk of failure to meet business objectives. Having thus monitored
risk management and internal control processes in place, the Board
considers that the Company’s internal control systems operated
appropriately during the year and up to the date of signing of the
Annual Report and Financial Statements.
The Group does not currently have cash resources on hand to meet all of the
committed and discretionary expenditure identified for the 12 month period
following approval of the financial statements and there can be no certainty that
the planned disposal of an interest in Islandmagee Storage Limited will proceed
within the timeframe currently expected. Nevertheless after making inquiries
and considering all the relevant factors in relation to the proposed disposal, the
Directors are of the opinion that they will be able to complete any necessary
funding or, if necessary, defer or reduce administrative costs and have therefore
prepared cash flow forecasts for the Group on these bases. These projections, which
include the deferral of expenditure, indicate that the Group will have adequate cash
resources to meet its obligations as they fall due for a period of not less than one
year from the date of approval of these financial statements irrespective of whether
or not the disposal proceeds are received within the expected timeframe. For this
reason, they continue to adopt the going concern basis of accounting in preparing
the annual financial statements.
14
InfraStrata plc
DIRECTORS’ RESPONSIBILITIES
The Directors are responsible for preparing the Report of the Directors
and the financial statements in accordance with applicable law and
regulations.
In preparing each of the Group and Company financial statements, the
Directors are required to:
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 with IFRS
as adopted by the EU and as applied in accordance with the provisions
of the Companies Act 2006.
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.
•
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
that are sufficient to show and explain the Company’s transactions and
disclose with reasonable accuracy at any time the financial position
of the 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.
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.
The Directors are responsible for the maintenance and integrity of the
corporate and financial information included on the InfraStrata plc
website.
Legislation in the United Kingdom governing the preparation and
dissemination of financial statements may differ from legislation in
other jurisdictions.
DISCLOSURE OF INFORMATION TO THE AUDITOR
AUDITOR
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 the 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.
A resolution to re-appoint the auditor, Nexia
Smith & Williamson, will be proposed at the
forthcoming Annual General Meeting.
By order of the Board
A Hindle
Director
14 November 2011
InfraStrata plc
15
INDEPENDENT AUDITOR’S REPORT TO THE
SHAREHOLDERS OF INFRASTRATA PLC
We have audited the financial statements of InfraStrata
plc for the year ended 31 July 2011 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 34. 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.
Opinion on financial statements
In our opinion:
Respective responsibilities of Directors and
auditors
As explained more fully in the Directors’ Responsibilities
Statement on page 15, 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/private.cfm
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.
•
•
•
•
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 2011 and of the Group’s profit 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.
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
Walnut Tree Close
1 Bishops Wharf
Walnut Tree Close
Guildford, GU1 4RA
14 November 2011
InfraStrata plc
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16
CONSOLIDATED STATEMENT OF COMPREHENSIVE
INCOME FOR THE YEAR ENDED 31 JULY 2011
Notes
4
9
16
10
11
12
Continuing operations
Revenue
Cost of Sales
Gross profit
Administrative expenses
Operating loss
Finance income
Share of loss of Joint Venture
Loss before taxation
Taxation
Loss for the year from continuing operations
Profit/(loss) for the year from discontinued
operations
Profit/(loss) for the year attributable to the
equity holders of the parent
Other comprehensive income
Total comprehensive profit/(loss) for the year
attributable to the equity holders of the
parent
Basic and diluted earnings per share
Continuing operations
Discontinued operations
Continuing and discontinued operations
2011
£
240,290
-
240,290
(1,180,485)
(940,195)
11,139
(452,089)
(1,381,145)
-
(1,381,145)
2010
£
-
-
-
(397,358)
(397,358)
23,645
-
(373,713)
-
(373,713)
5,691,456
(874,748)
4,310,311
(1,248,461)
-
-
4,310,311
(1,248,461)
(1.82)p
7.49p
5.67p
(0.51)p
(1.20)p
(1.71)p
InfraStrata plc
17
CONSOLIDATED STATEMENT OF
FINANCIAL POSITION AS AT 31 JULY 2011
COMPANY STATEMENT OF
FINANCIAL POSITION AS AT 31 JULY 2011
Non-current assets
Plant and equipment
Investment in joint venture
Investments in associates
Notes
2011
£
14
16
16
15,161
22,473,516
2,880,000
2010
£
7,280
-
-
Non-current assets
Plant and equipment
Investment
Notes
2011
£
2010
£
14,022
15,249,611
-
15,257,966
16
Total non-current assets
25,368,677
7,280
Current assets
Trade and other receivables
Available for sale financial assets
Cash and cash equivalents
17
18
19
140,526
12,500
714,969
110,732
12,500
1,260,982
867,995
1,384,214
Total non-current assets
15,263,633
15,257,966
Current assets
Trade and other receivables
Available for sale assets
Cash and cash equivalents
17
18
19
11,765,975
12,500
118,448
10,873,566
12,500
1,072,060
Total current assets
11,896,923
11,958,126
Assets classified as held for sale
20
2,744,731
26,511,034
Current liabilities
Trade and other payables
21
(86,261)
(260,311)
Total current assets
3,612,726
27,895,248
Net current assets
11,810,662
11,697,815
Current liabilities
Trade and other payables
Liabilities directly associated with
assets classified as held for sale
21
(104,158)
(278,606)
20
(29,928)
(4,061,668)
Total current liabilities
(134,086)
(4,340,274)
Net current assets and net assets
held for sale
Net assets
Shareholders’ funds
Share captial
Share premium
Merger reserve
Share based payment reserve
Retained earnings
3,478,640
23,554,974
28,847,317
23,562,254
24
25
26
7,826,433
11,848,946
8,988,112
322,431
(138,605)
7,380,420
11,381,095
8,988,112
302,435
(4,489,808)
28,847,317
23,562,254
Net assets
27,074,295
26,955,781
Shareholders’ funds
Share captial
Share premium
Merger reserve
Share based payment reserve
Retained earnings
24
25
26
7,826,433
11,848,946
8,466,827
322,431
(1,390,342)
7,380,420
11,381,095
8,466,827
302,435
(574,996)
27,074,295
26,955,781
Company registration number: 06409712
Approved and authorised for issue by the Board on 14 November 2011
A. Hindle, Director C. Gouws, Director
18
InfraStrata plc
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 JULY 2011
Share
capital
£
Share
premium
£
Merger
reserve
£
Shares
to be
issued
£
Share
based
payment
reserve
£
Retained
earnings
£
Total equity
£
Balance at 31 July 2009
7,038,473
8,576,705
8,988,112
746,337
177,189
(3,241,347)
22,285,469
Loss for the year
-
-
Total comprehensive loss for the year
Shares issued
Share based payments
-
341,947
-
-
2,804,390
-
-
-
-
-
-
-
(1,248,461)
(1,248,461)
-
(746,337)
-
-
-
125,246
(1,248,461)
-
-
(1,248,461)
2,400,000
125,246
Balance at 31 July 2010
7,380,420
11,381,095
8,988,112
Profit for the year
-
-
Total comprehensive profit for the year
Shares issued
Share based payments
Share options lapsed
-
446,013
-
-
-
467,851
-
-
-
-
-
-
-
Balance at 31 July 2011
7,826,433
11,848,946
8,988,112
-
-
-
-
-
-
-
302,435
(4,489,808)
23,562,254
-
4,310,311
4,310,311
-
-
60,888
(40,892)
4,310,311
-
-
40,892
4,310,311
913,864
60,888
-
322,431
(138,605)
28,847,317
COMPANY STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 JULY 2011
Share
capital
£
Share
premium
£
Merger
reserve
£
Shares to
be issued
£
Share
based
payment
reserve
£
Retained
earnings
£
Total equity
£
Balance at 31 July 2009
7,038,473
8,576,705
8,466,827
746,337
177,189
(356,743)
24,648,788
Loss for the year
-
-
Total comprehensive loss for the year
Shares issued
Share based payments
-
341,947
-
-
2,804,390
-
-
-
-
-
-
-
(218,253)
(218,253)
-
(746,337)
-
-
-
125,246
(218,253)
-
-
(218,253)
2,400,000
125,246
Balance at 31 July 2010
7,380,420
11,381,095
8,466,827
Loss for the year
-
-
Total comprehensive loss for the year
Shares issued
Share based payments
Share options lapsed
-
446,013
-
-
-
467,851
-
-
-
-
-
-
-
Balance at 31 July 2011
7,826,433
11,848,946
8,466,827
-
-
-
-
-
-
-
302,435
(574,996)
26,955,781
-
(856,238)
(856,238)
-
-
60,888
(40,892)
(856,238)
-
-
40,892
(856,238)
913,864
60,888
-
322,431
(1,390,342)
27,074,295
InfraStrata plc
19
CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31 JULY 2011
Notes
27
Net cash (used in) operating activities
Investing activities
Interest received
Purchase of intangible assets
Purchase of plant and equipment
Cash outflow on disposal of subsidiary
Net cash (used in) investing activities
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:
Cash at bank
19
2011
£
(982,526)
11,139
(324,520)
(108,706)
(6,264)
(428,351)
864,864
864,864
(546,013)
1,260,982
714,969
714,969
2010
£
(1,409,715)
23,645
(569,274)
(2,250,176)
-
(2,795,805)
2,400,000
2,400,000
(1,805,520)
3,066,502
1,260,982
1,260,982
Significant non-cash transactions
Significant non-cash transactions for the year ended 31 July 2011
comprise the loss of control of three companies which were previously
subsidiaries – see note 16.
Cash flows arising from discontinued activities
Cash flows arising from discontinued operations are analysed in note
27.
COMPANY STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31 JULY 2011
Notes
27
2011
£
2010
£
(1,803,324)
(1,428,795)
2,228
-
(17,380)
(15,152)
864,864
864,864
(953,612)
1,072,060
118,448
118,448
15,292
(8,855)
-
6,437
2,400,000
2,400,000
977,642
94,418
1,072,060
1,072,060
Net cash (used in) operating activities
Investing activities
Interest received
Subscription in share capital of subsidiary company
Purchase of plant and equipment
Net cash (used in)/in flow investing activities
Financing activities
Proceeds on issue of ordinary shares
Net cash generated from financing activities
Net (decrease)/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:
Cash at bank
19
20
InfraStrata plc
NOTES TO THE FINANCIAL STATEMENTS FOR THE
YEAR ENDED 31 JULY 2011
1. General information
basis of accounting in preparing the annual financial statements.
InfraStrata plc is a company incorporated in England & Wales under
the Companies Act 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.
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 2011, 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 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
exploration of licence PL1/10 has been funded by partners, however
InfraStrata plc will be required to fund its interest once the initial
phase of exploration is complete and the partners decide to drill an
exploration well.
The Directors believe that the disposal of an interest in Islandmagee
Storage Limited is the best way of maximising shareholder value by
allowing an entity other than InfraStrata plc to develop this project.
It is expected that such a disposal will provide working capital for
the Group and will transfer responsibility for funding the immediate
future development of the Islandmagee gas storage project to the new
partner.
The Group does not currently have cash resources on hand to meet
all of the committed and discretionary expenditure identified for the
12 month period following approval of the financial statements and
there can be no certainty that the planned disposal of an interest in
Islandmagee Storage Limited will proceed within the timeframe
currently expected. Nevertheless, after making
inquiries and
considering all the relevant factors in relation to the proposed disposal,
the Directors are of the opinion that they will be able to complete any
necessary funding or, if necessary, defer or reduce administrative costs
and have therefore prepared cash flow forecasts for the Group on these
bases. These projections, which include the deferral of expenditure,
indicate that the Group will have adequate cash resources to meet
its obligations as they fall due for a period of not less than one year
from the date of approval of these financial statements irrespective of
whether or not the disposal proceeds are received within the expected
timeframe. For this reason, they continue to adopt the going concern
Adoption of new and revised standards
In the current financial year, the Group has adopted International
Financial Reporting Standard 2 “Share-Based Payments” (revised
2009), International Accounting Standard 32 “Financial Instruments:
Presentation” (revised 2009) and IFRIC 19 “Extinguishing financial
liabilities with equity instruments”. The adoption of these standards
and interpretation did not have any impact on the financial position
or performance of the Group.
At the date of approval 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 an
impact going forward:
IFRS 9 Financial Instruments
IFRS 10 Consolidated Financial Statements
IFRS 11 Joint Arrangements
IFRS 12 Disclosure of Interests in Other Entities
IFRS 13 Fair Value Measurement
IAS 28 Investments in Associates and Joint Ventures (2011)
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.
Interests in joint venture entities
A joint venture is a contractual arrangement whereby two or more
parties undertake an economic activity that is subject to joint control
and a jointly controlled entity is a joint venture that involves a separate
entity in which each venturer has an interest. The Group recognises
its interest in jointly controlled entities using equity accounting. The
financial statements of the joint venture are prepared for the same
InfraStrata plc
21
NOTES TO THE FINANCIAL STATEMENTS
reporting year as the parent company, using consistent accounting
policies.
Plant and equipment
Oil and gas exploration joint ventures
The Group is engaged in oil and gas exploration and development
which may lead to production through unincorporated joint ventures.
The Group accounts for its share at cost of the results and net assets of
these joint ventures as jointly controlled assets based on its percentage
ownership of these joint ventures. In addition, where the Group acts
as operator to the joint venture, the gross liabilities and receivables
(including amounts due to and from non-operating partners) of
the joint venture are included in the statement of financial position.
Details of the Group’s oil & gas exploration joint ventures accounted
for as jointly controlled assets are provided in note 33.
Interests in associates
The Group has interests in associates, which are entities over which the
group has significant influence but not control and which are not joint
ventures. The Group recognises its interest in associates using equity
accounting. The financial statements of the associates are prepared
for the same reporting year as the parent company, using consistent
accounting policies.
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 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:
Office equipment
20 – 33%
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
incurred when undertaking exploration
Research expenditure,
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. Capitalisation of project rental
costs are reviewed on a regular basis and expensed when the physical
progress on the project is in the Directors’ opinion, significantly less
than expected.
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 cost of sales.
22
InfraStrata plc
NOTES TO THE FINANCIAL STATEMENTS
Oil & gas exploration and evaluation expenditure and
assets
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 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.
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 equity, in which
case the deferred tax is also dealt with in equity.
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 part of
their remuneration in the form of share based payment transactions,
whereby employees render services as consideration for equity
instruments (equity settled transactions).
The cost of equity settled transactions is recognised, together with
a corresponding increase in equity, over the period in which the
InfraStrata plc
23
NOTES TO THE FINANCIAL STATEMENTS
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 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 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.
Financial assets and financial liabilities are recognised on the balance
sheet when the Group becomes a party to the contractual provisions
of the instrument.
Revenue
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.
Revenue is recognised as the fair value of the consideration received or
receivable and represents the amounts receivable for services delivered
during the normal course of business. Revenue is recognised as the
services are delivered.
Finance income
Finance income is recognised on an accrual basis.
24
InfraStrata plc
NOTES TO THE FINANCIAL STATEMENTS
3. Segment information
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
segmental businesses activities are the development and construction of gas storage and associated facilities,
and petroleum exploration. No segmental information relating to the European activities is required to be
disclosed as they are immaterial.
Dorset
Northern Ireland
2011
Continuing activities
Revenue from services provided to joint
venture
Administrative expenses
Share of loss of joint venture
Finance income
Discontinued activities
Administrative expenses
Profit arising on loss of control of subsidiaries
Gas storage
£
Exploration
£
Gas storage
£
Exploration
£
Unallocated
£
Total
£
240,290
-
(452,089)
-
(211,799)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(1,180,485)
-
11,139
240,290
(1,180,485)
(452,089)
11,139
(1,169,346)
(1,381,145)
(31,570)
2,964,014
-
1,439,700
(120,388)
-
-
1,439,700
2,932,444
1,439,700
(120,388)
1,439,700
-
-
-
(151,958)
5,843,414
5,691,456
Analysis of:
Assets by segment
Liabilities by segment
Net assets per segment
Capital expenditure
Depreciation
* discontinued activities
2010
Continuing activities
Administrative expenses
Finance income
Discontinued activities
Administrative expenses
Analysis of:
Assets by segment
Liabilities by segment
Net assets per segment
Capital expenditure
Depreciation
* discontinued activities
2,720,645
1,439,700
(120,388)
1,439,700
(1,169,346)
4,310,311
22,473,516
-
1,440,000
-
*2,744,731
*(29,928)
1,440,000
-
883,156
(104,158)
28,981,403
(134,086)
22,473,516
1,440,000
*2,714,803
1,440,000
778,998
28,847,317
*252,977
-
-
-
*286,003
-
-
-
17,380
9,499
556,360
9,499
Dorset
Northern Ireland
Gas storage
£
Exploration
£
Gas storage
£
Exploration
£
Unallocated
£
Total
£
-
-
-
(735,259)
(735,259)
(735,259)
*24,066,195
*(4,000,554)
*20,065,641
*3,346,830
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(100,671)
(100,671)
(100,671)
*2,419,261
*(58,900)
*2,360,361
*592,791
-
-
-
-
-
-
-
-
-
-
-
-
(397,358)
23,645
(397,358)
23,645
(373,713)
(373,713)
(38,818)
(874,748)
(38,818)
(874,748)
(412,531)
(1,248,461)
1,417,072
(280,820)
27,902,528
(4,340,274)
1,136,252
23,562,254
-
21,070
3,939,621
21,070
InfraStrata plc
25
NOTES TO THE FINANCIAL STATEMENTS
4. Other expenditure
for the audit of the Company’s annual financial statements
for the audit of the Company’s subsidiaries
other services relating to taxation
all other services
Fees payable to the Group’s auditor and its associates:
•
•
•
•
Depreciation
Net foreign exchange (profit)/loss
Operating lease rentals - land and buildings
Research costs
5. Employee information
Executive Directors and staff
Staff costs for the above persons and Non-executive Directors were:
Wages and salaries
Social security costs
Defined contribution pension plan expenditure
Share based payments
6. Directors’ and key management
emoluments and compensation
Group and company
2011
2011
£
15,610
8,290
7,780
6,100
9,499
(2,024)
154,262
43,217
2011
Number
5
£
682,851
77,080
18,190
60,888
839,009
Executive Directors
Andrew Hindle
Craig Gouws
Walter Roberts
Non-executive Directors
Ken Ratcliff
Mark Abbott
Jonathan Davie
Maurice Hazzard
William Colvin
2010
Executive Directors
Andrew Hindle
Craig Gouws
Walter Roberts
Non-executive Directors
Ken Ratcliff
Mark Abbott
Jonathan Davie
Maurice Hazzard
26
Salary & Fees
£
Bonus
£
Benefits
£
Pension
£
250,000
121,067
86,320
25,000
12,000
12,000
2,170
1,552
2,971
37,500
7,500
5,000
15,000
7,500
-
-
-
-
-
-
-
-
-
-
-
6,000
6,000
1,875
-
-
750
-
529,887
49,000
6,693
14,625
Share based payment attributable to Directors
Employer’s national insurance contributions
Salary & Fees
£
Bonus
£
Benefits
£
Pension
£
250,000
122,219
120,000
37,500
15,000
15,000
15,000
574,719
-
-
-
-
-
-
-
-
2,042
1,462
2,788
-
-
-
-
-
6,000
6,000
1,875
-
-
750
6,292
14,625
Share based payment attributable to Directors
Employer’s national insurance contributions
InfraStrata plc
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
1,096,699
Total
£
277,170
140,619
107,291
39,375
7,500
5,000
15,750
7,500
600,205
36,285
67,378
703,868
Total
£
252,042
129,681
128,788
39,375
15,000
15,000
15,750
595,636
86,001
65,941
747,578
NOTES TO THE FINANCIAL STATEMENTS
The bonus of £49,000 awarded to Executive Directors during the financial year was paid by way
of the issue of shares.
The total of short-term employee benefits for Directors was £652,958 (2010: £646,952).
The Directors are considered to be the Group’s key management.
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:
Executive Directors
Andrew Hindle
Craig Gouws
Walter Roberts
Non-executive Directors
Ken Ratcliff
Mark Abbott
Maurice Hazzard
Number
Exercise Price
£
Exercisable from
Exercisable to
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
1 January 2011
1 January 2011
1 January 2011
1 January 2011
1 January 2011
31 December 2017
31 December 2017
31 December 2017
31 December 2017
31 December 2017
31 December 2017
No options were granted to Directors and no options were exercised by Directors in 2011 or 2010.
Key man insurance premiums of £1,862 (2010: £777) were paid for Executive Directors and directors’
indemnity insurance premiums of £20,140 (2010: £18,133) 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 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.
There were 98,879 options issued during 2011 (2010: 45,200). The following table illustrates
the number and weighted average exercise prices (WAEP) of, and movements in, share options
during the year.
Outstanding at 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
2011
Number
301,098
98,879
(47,570)
352,407
208,328
2011
WAEP £
2.06
0.15
2.28
1.50
2.28
2010
Number
255,898
45,200
-
301,098
-
InfraStrata plc
2010
WAEP £
2.44
0.89
-
2.06
-
27
NOTES TO THE FINANCIAL STATEMENTS
The weighted average remaining vesting period for the share options
outstanding at 31 July 2011 is 0.39 years (2010: 0.92 years). The range
of exercise prices for options outstanding at the end of the year was
£0.1517 - £2.43. The weighted average remaining option life for the
share options outstanding at 31 July 2011 is 8 years (2010: 8 years).
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 2011 and 2010.
2011
2010
Expected volatility
Risk free interest rate
Weighted average contractual life of option (years)
Expected dividend yield
Exercise price of options
Weighted average share price (£)
35%
0.5%
10
Nil
0.15
0.1517
35%
0.5%
10
Nil
0.89
0.885
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.
8. Retirement benefits
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 £17,398 (2010: £27,808) 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 2011, employer and employee contributions of £3,295 (2010: £4,557) due in respect of the
current period had not been paid over to the scheme; the payment was made on the 10 August
2011 (2010: 10 August 2010).
9. Finance income
Interest on bank deposits
10. Income tax
The major components of income tax expense for the years ended 31 July 2011 and 2010 are:
a) Consolidated income statement
Current income tax charge
Adjustments in respect of current income tax of previous years
b) A reconciliation between tax expense and the product of accounting loss for the years ended
31 July 200 and 2010 is as follows:
Accounting loss before tax from continuing operations
Loss on continuing activities multiplied by the standard rate of tax (27.33%; 2020 - 28%)
Expenses not permitted for tax purposes and pre-trading expenditure
Other timing differences
Group relief
Tax losses carried forward
At effective tax rate of 27.33% (2010: 28%)
Income tax expense reported in the income statement
A discontinued operations reconciliation between tax expense and the product of accounting
profit/(loss) for the years ended 31 July 2011 and 2010 is as follows:
Accounting profit/(loss) before tax from discontinued operations
Profit/(loss) on discontinued activities multiplied by the standard rate of tax (27.33%; 2010 – 28%)
Expenses not permitted for tax purposes and pre-trading expenditure
Non-taxable income
Group relief
2011
£
11,139
2011
£
-
-
(1,381,145)
(377,467)
29,792
2,596
-
345,079
-
2011
£
5,691,456
1,555,475
(1,782)
(1,553,693)
-
2010
£
23,645
2010
£
-
-
(373,713)
(104,640)
13,843
5,900
13
(84,884)
-
2010
£
(874,748)
(244,929)
244,942
-
(13)
At effective tax rate of 27.33% (2010: 28%)
Income tax expense reported in the income statement
-
-
28
InfraStrata plc
NOTES TO THE FINANCIAL STATEMENTS
c) Factors that may affect the future tax charge
The Group has trading losses of £1,341,015 (2010: £588,568) 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 £335,254 (2010: £158,914) 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 25% (2010: 27%), this
being the enacted rate; however, the Government has announced
that the rate of corporation tax will reduce to 23% 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 £308,433.
The Group’s potential charge to tax arising from its investments in the
joint venture and the associates is dependent on the source of future
inflows to the Group. Inflows arising from the partial or complete
disposal by way of sale are not expected to be subject to tax; inflows
from the distribution of future trading profits may be subject to tax
at a rate of 25% which would give a maximum potential liability
of £1,309,842. The group has no current expectation of receiving
distributions of profits from these investments in the foreseeable future
and has therefore provided the minimum potential deferred tax
liability.
11. Discontinued operations
Revenue
Net operating costs
Profit arising on loss of control of subsidiaries (note 16)
Portland Gas Limited
Corfe Energy Limited
Brigantes Energy Limited
Profit/(loss) before tax
Tax charge (note 10)
Profit/(loss) after tax
Details of the discontinued operations are given in note 20.
12. Earnings per share
Profit/(loss)
The profit/(loss) for the purposes of basic and diluted loss per share
bring the net loss attributable to equity shareholders:
Continuing operations
Discontinued operations
Continuing and discontinued operations
2011
£
-
(151,958)
2,964,014
1,439,700
1,439,700
5,691,456
-
2010
£
-
(874,748)
-
-
-
(874,748)
-
5,691,456
(874,748)
2011
£
2010
£
(1,381,145)
5,691,456
4,310,311
(373,713)
(874,748)
(1,248,461)
Number of shares
Weighted average number of ordinary shares for the purposes of basic
earnings per share
75,978,414
73,023,939
Basic and diluted earnings per share
Continuing operations
Discontinued operations
Continuing and discontinued operations
(1.82)p
7.49p
5.67p
(0.51)p
(1.20)p
(1.71)p
Diluted earnings per share calculations are not presented as there is no material difference between the
weighted average number of ordinary shares for the purposes of basic earnings per share basic and the
weighted average number of ordinary shares for the purposes of diluted earnings per share; the basic and
diluted earnings per share are the same.
InfraStrata plc
29
29
NOTES TO THE FINANCIAL STATEMENTS
13. Losses attributable to InfraStrata plc
The loss for the period dealt with in the financial statements of InfraStrata plc was £856,238
(2010: £218,253). As provided by s408 of the Companies Act 2006, no income statement is
presented in respect of InfraStrata plc.
14. Plant and equipment - Group
2011
2010
Cost
At 1 August 2010
Additions
At 31 July 2011
Depreciation
At 1 August 2010
Charge for the year
At 31 July 2011
Net book value
At 31 July 2011
Office equipment
£
Cost
69,648
17,380
87,028
62,368
9,499
71,867
15,161
At 1 August 2009
Additions
Transfer to assets
classified as held for
sale
At 31 July 2010
Depreciation
At 1 August 2009
Charge for the year
At 31 July 2010
Net book value
At 31 July 2010
Gas storage (under
construction)
£
Office equipment
£
20,318,153
3,346,830
69,648
-
Total
£
20,387,801
3,346,830
(23,664,983)
-
(23,664,983)
-
-
-
-
-
69,648
69,648
41,298
21,070
62,368
41,298
21,070
62,368
7,280
7,280
Plant and equipment - Company
2011
15. Intangible assets
2010
Office equipment
£
Cost
Development costs -
Gas storage
£
Cost
At 1 August 2010
Additions
At 31 July 2011
Depreciation
At 1 August 2010
Charge for the year
At 31 July 2011
Net book value
At 31 July 2011
-
17,380
17,380
-
3,358
3,358
14,022
At 1 August 2009
Additions
Transfer assets classified as held
for sale
1,821,551
592,791
(2,414,342)
At 31 July 2010
Amortisation
At 1 August 2009
Charge for the year
At 31 July 2010
Net book value
At 31 July 2010
-
-
-
-
-
30
InfraStrata plc
NOTES TO THE FINANCIAL STATEMENTS
16. Investments
Group
2011
£
2010
£
Investment in joint venture
Balance at the beginning of the year
Additions
Share of losses
Balance at the end of the year
Investment in associates
Balance at the beginning of the year
Additions
Disposals
Balance at the end of the year
-
22,925,605
(452,089)
22,473,516
-
2,880,000
-
2,880,000
Total investments at the end of the year
25,353,516
-
-
-
-
-
-
-
-
-
Joint venture
The Group has a 50% interest in Portland Gas Limited which is involved in
developing a gas storage facility on the Isle of Portland, Dorset and the related
gas pipelines between Portland and Mappowder. The joint venture is a private
company and is not listed on any public exchange.
Previously, Portland Gas Limited was a subsidiary and its assets and liabilities were
categorised as held for sale. The Group recognised the investment in the joint
venture following the issue of shares to eCORP Oil & Gas UK Limited, which
reduced the Group’s interest to 50%, this being effective on 1 September 2010
in return for funding the next £22.9 million in the project to match the project
expenditure invested by InfraStrata, subject to options to exit the project by
relinquishing its equity interest.
In accordance with the applicable international financial reporting standard, the
investment in the joint venture is the Group’s share of the fair value of Portland
Gas Limited at the date which it became a joint venture adjusted by its share of the
joint ventures losses.
The disposal is analysed as follows:
Group’s book value of assets
and liabilities at the date of
loss of control
•
•
•
Plant & equipment
Accounts payable
Long term liabilities
£
23,917,960
(679,011)
(3,277,358)
Profit on disposal
2,964,014
Group’s share of the fair value
of Portland Gas Limited
22,925,605
Share of Portland Gas Limited group capital commitments
897,500
-
•
•
•
•
Long-term assets
Current assets
Current liabilities
Long-term liabilities
2011
£
2010
£
Statement of financial position at
31 July 2011
£
25,605,758
154,135
(1,097,214)
(2,189,163)
22,473,516
For the period 1 September 2010 to 31 July 2011
Administrative expenditure
Operating lease commitments falling due
• Within one year
• Within 2 to 5 years
•
After more than 5 years
£
(452,089)
680,134
3,387,200
4,445,700
InfraStrata plc
31
NOTES TO THE FINANCIAL STATEMENTS
Associates
The Group has a 50% interest in Corfe Energy Limited and Brigantes Energy Limited which are involved
in the hydrocarbon exploration. The associates are private companies and are not listed on any public
exchanges. The following table summarises the Group’s share of the assets and liabilities of each of these
associates as recorded in each associates’ accounting records:
Corfe Energy Limited
2011
£
2010
£
Brigantes Energy Limited
2011
£
2010
£
Long-term asset
Current assets
Current liability
99,372
719,694
(106,334)
-
-
-
Long-term asset
Current assets
Current liability
108,284
720,839
(117,028)
-
-
-
The Group recognised the investment in the associates on completion of the sale of 50% of IS E&P Limited
(formerly InfraStrata Trading Limited) and IS NV Limited (formerly InfraStrata NV Limited) effective
31 March 2011 (the subsidiaries issued new equity to the buyers), in return for new investors purchasing
£1,500,000 new equity before expenses in each of the Companies. The disposals are analysed as follows:
Corfe Energy Limited
£
Brigantes Energy Limited
£
Accounts receivable
Profit on disposal
300
1,439,700
1,440,000
Accounts receivable
Profit on disposal
300
1,439,700
1,440,000
Investments
Company
2011
£
2010
£
Balance at the beginning of the year
Additions
Disposals
15,257,966
500
(8,855)
15,249,111
8,855
-
Balance at the end of the year
15,249,611
15,257,966
Subsidiaries
The Company’s subsidiary undertakings at 31 July 2011, all of which are wholly owned unless indicated
otherwise, are as follows:
InfraStrata UK Limited
Portland Gas ESP S.L.
Holding and corporate
Spanish sub surface gas storage developer
England
Spain
Principal Undertaking
Country of incorporation
InfraStrata UK Limited owns the following
subsiary:
Islandmagee Storage Limited
(65% owned)
Sub surface gas storage developer
Northern Ireland
In January 2010 InfraStrata 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.
InfraStrata UK Limited also
owns 50% (2010 – 100%) of
the issued equity share capital of
Portland Gas Limited.
32
InfraStrata plc
NOTES TO THE FINANCIAL STATEMENTS
Portland Gas Limited, which was a subsidiary at the prior year end and is now classified as a joint venture,
owns the subsidiaries listed below:
Portland Gas Storage Limited
Portland Gas Transportation Limited
Sub surface gas storage developer
Gas storage pipeline developer
England
England
Principal Undertaking
Country of incorporation
Investments in associates
Balance at beginning of year
Reclassifications
Balance at the end of the year
17. Trade and other receivables
Amounts due from Group undertakings
Trade receivables
Other receivables
Prepayments
2011
£
-
600
600
2010
£
-
-
-
Group
2011
£
-
83,754
12,900
43,872
The company owns 50% of the issued share capital of the
following companies, both of which are incorporated in
England and are involved in oil and gas exploration:
Corfe Energy Limited
Brigantes Energy Limited
Group
2010
£
-
-
71,985
38,747
Company
2011
£
11,625,452
83,754
12,897
43,872
Company
2010
£
10,809,819
-
25,000
38,747
140,526
110,732
11,765,975
10,873,566
An element of the Company and Group’s credit risk is attributable to its trade and other 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.
18. Available for sale financial assets
At 1 August
Trasferred from subsidiary
At 31 July
Group
2011
£
12,500
-
12,500
Group
2010
£
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
2011
£
Group
2010
£
Cash at bank
714,969
1,260,982
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.
InfraStrata plc
Company
2011
£
12,500
-
12,500
Company
2011
£
118,448
Company
2010
£
-
12,500
12,500
Company
2010
£
1,072,060
33
NOTES TO THE FINANCIAL STATEMENTS
20. Assets held for sale and discontinued operations
The Company has announced, together with Moyle Energy
Investments Limited, that it has entered into exclusive negotiations
with a major energy company regarding the acquisition of an equity
interest in Islandmagee Storage Limited owned by InfraStrata (65%)
and Moyle (35%). It is likely that the equity interest will arise through
the issue of shares by Islandmagee Storage Limited rather than the sale
of equity by the Group. It is expected that the majority of the proceeds
from the issue of equity will be retained in Islandmagee Storage
Limited to fund project development.
Assets classified as held for sale
Property, plant and equipment
Intangible assets - gas storage
development costs
Trade and other receivables
Cash and cash equivalents
2011
£
2010
£
-
23,664,983
2,700,345
1,066
43,320
2,414,342
334,553
97,156
2,744,731
26,511,034
The operations of Portland Gas ESP S.L. have been discontinued and
the Company will be wound up as soon as possible.
Whilst the assets held for sale are classified as current assets, due to the
nature of the arrangements described above, the group does not expect
to receive cash inflows equivalent to, or in excess of, the book value of
the assets so classified.
Liabilities classified as held for sale
Current liabilities
Trade creditors
Other taxation and social security
Accruals
Other contractual agreements
Non-current liabilities
Obligations under lease agreements
Other contractual agreements
2011
£
2010
£
1,192
-
28,736
-
73,400
4,182
114,857
700,000
29,928
892,439
-
-
2,168,286
1,000,943
29,928
4,061,668
21. Trade and other payables
Trade creditors
Other taxation and social security
Accruals
Amount due to Group undertakings
Group
2011
£
39,638
30,540
33,980
-
104,158
Group
2010
£
67,039
37,250
174,317
-
278,606
Company
2011
£
26,893
30,540
28,828
-
86,261
Company
2010
£
176,080
37,250
46,881
100
260,311
The Directors consider that the carrying amount of trade and other
payables approximates to their fair value.
22. Non-current liabilities
Obligations under lease agreements
Other contractual agreements
Transfer to liabilities directly associated with
non-current assets classified as held for sale
Group
2011
£
-
-
-
-
Group
2010
£
2,168,286
1,000,943
(3,169,229)
-
The non-current liabilities as at 31 July 2010 were liabilities of Portland
Gas Storage Limited which is now accounted for on the equity method
following the disposal of 50% of Portland Gas Limited. 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.
34
InfraStrata plc
NOTES TO THE FINANCIAL STATEMENTS
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 form 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. The group is also indirectly exposed
to risks arising from its interests in joint ventures and associates. The
group is not required to give detailed information relating to these
risks.
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 last two years, at year
end all of the funds were held in Bank of Scotland. The risk of Bank
of Scotland bank failure has decreased during the year. The carrying
amount of financial assets represents the maximum credit exposure.
The maximum exposure to credit risk at the reporting date was:
Available for sale financial assets
Trade and other receivables
Cash and cash equivalents
Group
2011
£
12,500
96,654
714,696
Group
2010
£
12,500
71,985
1,260,982
Company
2011
£
12,500
96,651
118,448
Company
2010
£
12,500
57,364
1,072,060
The reconciling item, in the prior year, between the trade and other receivables presented above
and that presented in note 17 is the VAT receivable.
Interest rate risk
Credit 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 £7,344
(2010: £13,581) and for the Company of £1,184 (2010: £10,721).
The Group is exposed to foreign currency rate risk as a result of trade
payables which are settled in Euros. 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 2011, 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 £1,178 (2010: £1,791).
The currency risk disclosures at 31 July 2011 are as follows:
Accounts payable
Euro
£10,606
The currency risk disclosures at 31 July 2010 are as follows:
Accounts payable
£15,009
The book value of financial assets and liabilities disclosed is
considered to be equal to fair value.
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
(assets held for sale and discontinued operations), 21 (trade and other
payables) and 22 (non-current liabilities). 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.
InfraStrata plc
35
NOTES TO THE FINANCIAL STATEMENTS
Within one month
More than one month and less that one year
More than one year and less than five years
More than five years
Group
2011
£
98,371
-
-
-
Group
2010
£
1,056,626
100,000
1,990,634
1,966,973
Company
2011
£
42,789
-
-
-
Company
2010
£
87,403
-
-
-
The contractual liabilities of Portland Gas Limited at 31 July 2010 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
Ordinary share capital
At 31 July 2009
- Ordinary shares of 10 pence each
Authorised
Number
Allotted, called up, and fully paid
£
Number
£
100,000,000
10,000,000
70,384,727
7,038,473
Issue 10 pence ordinary shares
-
-
3,419,474
341,947
At 31 July 2010
- Ordinary shares of 10 pence each
100,000,000
10,000,000
73,804,201
7,380,420
Issue 10 pence ordinary shares
-
-
4,460,125
446,013
At 31 July 2011
- Ordinary shares of 10 pence each
Redeemable preference shares of £1
each (classified as liabilities)
100,000,000
10,000,000
78,264,326
7,826,433
At 31 July 2011, 2010 and 2009
50,000
50,000
50,000
12,500
On the 21 December 2010 the Company allotted
365,125 new ordinary shares of 10p each to the Executive
Directors at 13.42p each in lieu of cash bonuses due to the
value of £49,000.
On the 7 February 2011 the Company completed a placing of 4,095,000 new
ordinary shares of 10p each at 22p per share with an existing institutional investor
to raise £900,900 before expenses. The expenses of the issue, which were taken to
the share premium account, were £36,063.
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. 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.
The Group is not subject to any externally
imposed capital requirements.
25. Merger reserve
Company
Group
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.
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.
36
InfraStrata plc
NOTES TO THE FINANCIAL STATEMENTS
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 £60,888 (2010: £125,426) relates to share options
granted. Options forfeited during the year resulted in a transfer of
£40,892 from the share based payment reserve into retained earnings.
For further information on the share based payment scheme see note 7.
27. Cash (used in) operations
Group
Operating loss for the year from continuing
operations
Depreciation
(Increase)/Decrease in trade and other
receivables
(Decrease) in trade and other payables
Share option expense
Shares issued in lieu of bonus
Loss on sale of subsidiary
2011
£
2010
£
(940,195)
9,499
(397,358)
21,070
(29,794)
(174,449)
60,888
49,000
8,355
38,624
(83,280)
125,246
-
-
Company
Operating loss for the year
Depreciation
(Increase)/Decrease in trade and other
receivables
(Decrease)/Increase in trade and other
payables
Share option expense
Shares issued in lieu of bonus
Loss on sale of subsidiary
2011
£
(858,467)
3,358
2010
£
(233,545)
-
(892,408)
(1,472,948)
(174,050)
60,888
49,000
8,355
152,452
125,246
-
-
Cash from/(used in) discontinued operations
34,170
(1,114,017)
Cash used in operations
(1,803,324)
(1,428,795)
Cash (used in) continuing and discontinued
operations
(982,526)
(1,409,715)
Cash from/(used in) discontinued operations
Group
Cash from/(used in) discontinued operations
34,170
(1,114,017)
Investing activities
Financing activities
(415,846)
(2,819,450)
-
-
28. Operating lease commitments
29. Tangible capital commitments
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
2011
£
Land and buildings
2010
£
30,000
22,438
-
52,438
1,223,600
6,493,505
10,585,000
18,302,105
2011
£
2010
£
Approved and contracted
-
1,795,000
The capital commitments at 31 July 2010 related
to a commitment of Portland Gas Storage Limited
in relation to a S106 deed of undertaking.
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.
At 31 July 2010 the rents due by Portland Gas Storage Limited 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.
InfraStrata plc
37
NOTES TO THE FINANCIAL STATEMENTS
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 (2010; £45,000). The balance outstanding at 31 July 2011 was £nil (2010: £nil).
The Company paid professional fees to Pinnacle Energy Limited of £35,000 (2010: £nil), a
company of which Walter Roberts is a director. The balance outstanding at 31 July 2011 was
£nil (2010: £nil).
The Group has related party relationships
with its associates and joint ventures in the
course of normal operations. The Group
recovered overhead and technical support
costs from its joint venture of £212,655
(2010 – not applicable).
The following balances were outstanding at 31 July 2011:
Joint ventures
Nominal value of convertible unsecured loan notes
Other
Associates
Other
Company
Amounts owed by related parties
£
Amounts owed to related parties
£
22,865,368
21,090
-
-
-
600
The Company has related party relationships with its
subsidiaries, associates and joint ventures in the course of
normal operations.
InfraStrata plc recovered overhead and technical support costs from InfraStrata
UK Limited of £182,863 (2010: £170,561), Portland Gas Storage Limited of
£193,450 (2010: £473,358), Islandmagee Storage Limited of £113,826 (2010:
£92,134) and Portland Gas Transportation Limited of £19,205 (2010: £230,457).
The balances outstanding at 31
July 2011, which are not secured,
are provided in the following
table.
Subsidiaries and associates
InfraStrata UK Limited
Islandmagee Storage Limited
Corfe Energy Limited
Brigantes Energy Limited
Amounts owed by related parties
£
Amounts owed to related parties
£
11,082,221
543,231
-
-
-
-
300
300
The balances outstanding at 31
July 2010, which are not secured,
are provided in the following
table.
Amounts owed by related parties
£
Amounts owed to related parties
£
Subsidiaries
InfraStrata UK Limited
Portland Gas Storage Limited
Islandmagee Storage Limited
Portland Gas Transportation Limited
Portland Gas ESP S.L.
6,751,126
2,943,867
428,577
517,063
136,823
-
-
-
-
-
31. Judgements in applying accounting policies and key sources of estimation uncertainty
Amounts included in the financial statements involve the use of
judgement and/or estimation. These estimates and judgements are
based on management’s best knowledge of the relevant facts and
circumstances, having regard to previous experience, but actual results
may differ from the amounts included in the financial statements.
Information about such judgements and estimation is contained in the
accounting policies and/or the notes to the financial statements, and
the key areas are summarised below.
Capitalisation of project costs
The assessment of whether costs incurred on project exploration and
evaluation should be capitalised or expensed involves judgement. Any
expenditure which is considered to relate to gas storage exploration
research activities or where it is not probable that future economic
benefits will flow to the Group are expensed. Management considers
the nature of the costs incurred and the stage of project development
and concludes whether it is appropriate to capitalise the costs. The
key assumptions depend on the rock mechanical properties of the
halite, the availability of a suitable site for construction of the required
facilities and the likelihood of gaining the relevant permissions.
38
InfraStrata plc
NOTES TO THE FINANCIAL STATEMENTS
Share based payments
The estimation of share based payment costs requires the selection
of an appropriate valuation model and consideration as to the inputs
necessary for the valuation model chosen. The Group has made
estimates as to the volatility of its own shares, the probable life of
options granted, and the time of exercise of those options. The model
used by the Group is the Black-Scholes model. The key assumptions
are detailed in note 7.
Review of project asset carrying values
The assessment of capitalised project costs for any indications of
impairment involves judgement. When facts or circumstances suggest
that impairment exists, a formal estimate of recoverable amount is
performed and an impairment loss recognised to the extent that the
carrying amount exceeds recoverable amount. The carrying amount
of the intangible asset with an indefinite useful life is £2,700,345.
Recoverable amount is determined to be the higher of fair value less
costs to sell and value in use. The key assumptions are the net income
expected to be generated from the facilities, the cost of construction
and the date from which the facilities become operational.
Management assigns values and dates to these inputs after taking
into account market information, engineering design costing and the
project programme. A discount rate of 8% is applied in determining
project net present values. Salt cavern gas storage projects are long
term investments and cash flows are therefore projected over periods
greater than 5 years. Engineering design provides for Project life of 40
years. It is assumed that 100% of a 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.
Going concern
The preparation of the financial statements requires an assessment of the validity of the
going concern assumption. The validity of the going concern assumption is dependent on
the availability of adequate financial resources to allow the Group to continue in operational
existence for the foreseeable future. Should the going concern basis not be appropriate,
adjustments would have to be made to the assets and liabilities in the balance sheet of the
Group. As with other development companies which have no revenue streams, the Group will
only be able to continue its development programme if it has sufficient financial resources to
do so. In order to gain such resources, the Group will need to raise additional funds, either
through the issue of shares and/or project disposals. Nevertheless after making inquiries and
considering all the relevant factors in relation to the proposed disposal, the Directors are of
the opinion that they will be able to complete any necessary funding or, if necessary, defer
or reduce administrative costs and have therefore prepared cash flow forecasts for the Group
on these bases. These projections, which include the deferral of expenditure, indicate that the
Group will have adequate cash resources to meet its obligations as they fall due for a period
of not less than one year from the date of approval of these financial statements irrespective
of whether or not the disposal proceeds are received within the expected timeframe. For this
reason, they continue to adopt the going concern basis of accounting in preparing the annual
financial statements subject to the going concern disclosure made in note 2.
32. Guarantee
Investments in joint ventures and associates
In order to establish whether an entity is a
consolidated subsidiary, a joint venture or an
associate, key areas of judgment include:
• Quantitative analysis of an entity
including review of, amongst other
factors, its capital structure, contractual
terms, which interests create or absorb
variability, related party relationships
and design of the entity.
• Rights of partners reflecting significant
business decisions, including dispositions
and acquisitions of assets.
• Board and management representation.
• Ability to make financing decisions.
• Operating and capital budget approvals
and contractual rights of other parties.
Refer to note 16 for additional information.
The Company has guaranteed the lease payments to be made by Portland Gas Storage Limited to Portland
Port Limited. The financial commitment under this guarantee at 31 July 2011 is £18,474,200.
33. Jointly controlled oil & gas exploration activities
Group and company
Country
Licence
Field name
Operator
Net interest
Northern Ireland
PL1/10
Larne-Lough Neagh Basin
InfraStrata
50%
The Company has entered into agreements with partners whereby the Company’s share of initial exploration costs are covered by the partners to
the extent of £2 million therefore the company has not incurred expenditure in developing its share of the asset.
34. 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 holding company and
is incorporated in Great Britain and registered in England. There is no ultimate controlling party of InfraStrata plc.
InfraStrata plc
39
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
Directors:
Kenneth Ratcliff (Non-executive Chairman)
Andrew Hindle (Chief Executive Officer)
Craig Gouws (Chief Financial Officer)
Walter Roberts (Legal and Commercial Director)
Maurice Hazzard (Non-executive Director)
William Colvin (Non-executive Director)
Registered Office:
Blackstable House
Longridge
Sheepscombe
Stroud
GL6 7QX
Dear Shareholder,
1
Introduction
26 November 2011
Notice of the Company’s forthcoming annual general meeting to be held on Tuesday 24 January 2012
(“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
Special Business
Annual Report and Accounts (Resolution 1)
Authority of Directors to Allot Shares (Resolution 6)
A copy of the annual report and accounts (together with the Directors’
and Auditors’ report on the annual report and accounts) for the
Company for the financial year ended 31 July 2011 (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 auditor of the Company to hold
office from the conclusion of the Annual General Meeting until the
conclusion of the next annual general meeting of the Company at
which Accounts are laid, and authorises the Directors to determine
their remuneration.
Retirement by Directors (Resolutions 3 to 5)
William Colvin, who was appointed to the Board on 1 February 2011,
retires in accordance with the Company’s Articles of Association and
offers himself for re-election. I and Walter Roberts are the Directors
retiring by rotation this year and each of us 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 page 11 of the Accounts.
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 6, pursuant to paragraph (A)
of the Resolution, the Directors will have authority to allot shares up
to a maximum of £2,608,810 which is approximately one third of the
current issued share capital as at 26 November 2011, being the latest
practicable date before the publication of this Letter. This authority
will expire immediately following the annual general meeting for 2012
or, if earlier, six months following the date to which the Company’s
next annual report and accounts are made up.
In addition, in accordance with the guidance from the Association of
British Insurers (“ABI”) on the expectations of institutional investors in
relation to the authority of directors to allot shares, upon the passing of
Resolution 6, 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 £2,608,810, which is approximately a further
third of the current issued ordinary share capital as at 26 November
2011, 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.
40
InfraStrata plc
As a result, if Resolution 6 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 7)
If the Directors wish to exercise the authority under Resolution 6
and offer unissued shares (or sell any shares 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 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 7 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 £1,565,286 which is equivalent to 20 per cent of the
issued share capital of the Company on 26 November 2011, being the
latest practicable date prior to the publication of this Letter. If given,
the authority will expire on the conclusion of the annual general
meeting for 2012 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 and the critical phase of so many of the projects in
which we are involved, which can both be expected to require up-front
investment and can take a long time to fully develop, means that your
Board considers 5% to be insufficient. Consequently I would ask that
you approve a 20% 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 8,119,520 ordinary shares (representing
10.37 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 (excluding non-business days) prior to the time appointed for
the holding of the AGM on 24 January 2012.
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
InfraStrata plc
41
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, 107 Cheapside, London, EC2V 6DN, United Kingdom on Tuesday 24 January 2012
at 11.00 hours, for the purpose of passing the following Resolutions, of which Resolutions 1 to 6 will be proposed as
Ordinary Resolutions and Resolution 7 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 2011, 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 William Colvin as Director who retires pursuant to
article 87 of the Company’s articles of association and who, being
eligible, offers himself for re-election.
4. To re-elect Walter Roberts 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 re-elect Kenneth Ratcliff as Director who retires pursuant to
article 92 of the Company’s articles of association and who, being
eligible, offers himself for re-election.
6. To consider and, if thought fit, to pass the following Resolution as
an ordinary resolution:
and so that 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 being represented by depositary receipts).
The authorities conferred on the Directors under paragraphs (A) and
(B) above shall expire at the conclusion of the next annual general
meeting of the Company after the passing of this Resolution or 31
January 2013, 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.
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:
up to an aggregate nominal amount of £2,608,810; and
comprising equity securities (within the meaning of
section 560 CA 2006) up to a further aggregate nominal
amount of £2,608,810 in connection with an offer by way
of a rights issue:
(i)
(ii)
to ordinary shareholders in proportion (as
nearly as may be practicable) to their existing
holdings; and
to holders of other equity securities as
required by the rights of those securities or as
the Directors otherwise consider necessary,
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
Capita 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
THAT
(A)
(B)
42
InfraStrata plc
Special Resolutions:
7. To consider and, if thought fit, to pass the following Resolution as a special resolution:
THAT, subject to the passing of Resolution 6 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 6, 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 6, by way of a rights issue
only):
(i)
to ordinary shareholders in proportion (as nearly as may be practicable) to their
existing holdings; and
to holders of other equity securities as required by the rights of those securities or
as the Directors otherwise consider necessary,
(ii)
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
Dated 26 November 2011
By Order of the Board
(B)
to the allotment (otherwise than under paragraph (A) of this Resolution 7) of equity securities
up to an aggregate nominal amount of £1,565,286,
and shall expire at the conclusion of the next annual general meeting of the Company after the passing of
this Resolution or 31 January 2013, 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.
Walter Roberts
Secretary
Registered Office:
Blackstable House
Longridge
Sheepscombe
Stroud
GL6 7QX
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 20 January 2012
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 20 January 2012
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.
InfraStrata plc
43
Notes:
1.
2.
3.
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 Chair-
man 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 desig-
nated account).
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 au-
thority) 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 Friday 20 January 2012.
You are entitled to appoint more than one proxy provided that each proxy is ap-
pointed 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 Unit-
ed 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 land-
line. 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 re-
corded 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
5.
person and voting at the AGM should you subsequently decide to do so.
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.
7.
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 resolu-
tion as he or she thinks fit.
In accordance with the permission in Regulation 41 of the Uncertificated Securi-
ties 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 20 January
2012 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 20 January 2012 shall be disregarded in deter-
mining the rights of any person to attend and/or vote at the AGM.
9.
10.
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.
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 appoint-
ments (see above) also apply in relation to amended instructions; any amended
proxy appointment received after the relevant cut-off time will be disregarded.
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 ap-
pointment 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 ap-
pointment 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 meet-
ing in person, your proxy appointment will automatically be terminated.
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.
11.
44
InfraStrata plc
PROXY FORM
INFRASTRATA PLC (THE “COMPANY”)
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, 107 Cheapside, London, EC2V 6DN, United Kingdom on Tuesday 24 January
2012 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 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 2011
2. To re-appoint Nexia Smith & Williamson
Audit Limited as auditor at a
remuneration to be determined by the
Directors
3. To re-elect William Colvin
4. To re-elect Walter Roberts
5. To re-elect Kenneth Ratcliff
6. 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
7. To disapply pre-emption rights on the
basis set out in the notice of AGM
Signature(s) ...................................................................................................................................................................................................................... (see note 8)
Date ..........................................................................................................................................................................................................................................................
InfraStrata plc
Business Reply
Licence Number
RSBH-UXKS-LRBC
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PXS
34 Beckenham Road
BECKENHAM
BR3 4TU
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