InfraStrata plc
2012 Annual Report &
Financial Statements
Contents
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10-14
15-16
16-18
19
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28-53
54-55
56
57
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 with Notice of AGM
Notes to Proxy form
Proxy form
02
InfraStrata plc
Chairman’s statement
The past few years have been challenging and in response to a
fundamental shift in market conditions, I am pleased to report
that we have worked successfully to reposition the business and
identify routes to build significant shareholder value within
a realistic timeframe. We have made considerable progress on
our exploration projects and we have advanced the Islandmagee
gas storage project through to successful receipt of planning
approval.
Chronologically, your company was created on the back of a single
large gas storage project based at Portland in Dorset and our
difficulties in securing funding or otherwise realising value from
the project have been well documented during an unprecedented
shift in the fundamental economics and markets for seasonal
gas storage facilities. In seeking to broaden our base we have
embraced a smaller, more flexible and commercially attractive
gas storage project, at Islandmagee in Northern Ireland. In
addition to being able to meet the demands of seasonal storage,
this facility would also be able to meet short-term fluctuations
in demand on the gas network throughout the year, resulting in
a greater value to the traded markets. We have also capitalised
on our knowledge of the areas near to our storage projects and
secured exploration licences PL1/10 and P1918 close to each and
in this respect the emphasis of the Company’s development has
changed. Meanwhile we have continued to preserve the planning
permissions for the Portland project and looked for additional or
alternative projects to use both the site and those permissions.
The greater flexibility of the Islandmagee project compared to
Portland has meant that, with our partner Mutual Energy,
we were able to secure investment from BP Gas Marketing in
the Islandmagee storage project. Our association with BP Gas
Marketing and Mutual Energy in respect of the Islandmagee
project is poised to enter a new phase now that planning
permission has been granted and we expect shortly to be
assessing how best to unlock value for shareholders in the near
term.
The current poor market conditions for seasonal storage mean
that we do not consider that it is likely we can realise the Portland
gas storage project in the short term. As a result, we have been
obliged to look critically at the cost pool. As a Board, we consider
it is appropriate to take a conservative approach to the applicable
accounting treatment of the project and the carrying value of the
asset in the Company’s accounts. This has resulted in a substantial
reduction in the financial asset value of the project cost carried
on our balance sheet. There are no cash cost implications on the
re-assessment and there remain clear commercial opportunities
for the Portland site, which the Group will continue to assess
and explore. Not least of these are those historic costs associated
with the gas pipeline which has potential value for the P1918
petroleum licence or gas imports. The costs incurred in drilling
the Portland-1 well and acquiring the Portland seismic data have
been recognised as an exploration and evaluation intangible
asset in the Group’s financial statements. In the shorter term, the
use of the brownfield site and attendant planning permissions
are currently under appraisal as a potential for a salt solution
mining facility, in its own right.
The Company also made significant progress during the year
to 31 July 2012 with the petroleum exploration project in
Northern Ireland where we are at an advanced stage of reviewing
the additional seismic data acquired earlier this year. The data
looks very encouraging and the prospects of drilling our first
exploration well during 2013 appear strong.
In offshore Dorset the exploration is at an earlier stage following
the formal award of the P1918 licence in first half 2012, but the
presence of existing oil and gas discoveries within the licence area
marks it out as prospective for the Company and good progress
is anticipated in the coming year. These exciting developments
encourage me to believe that there exists potential within these
exploration projects to unlock significant shareholder value.
May I conclude by offering my thanks to our small but
highly effective team for the progress made over the past
eighteen months across both the exploration acreage and the
Islandmagee gas storage project and also to our shareholders
for their support. 2012 has been another challenging year but
one in which significant progress has been made, one in which
the emphasis of the Company has been repositioned and one in
which our progress justifies my expectation that 2013 could be a
very good year for your Company.
Ken Ratcliff
Non-executive Chairman
InfraStrata plc
03
Chief Executive’s
operating review
The Company has continued to focus on oil and gas activities
in two areas within the United Kingdom; County Antrim in
Northern Ireland; and Dorset in Southern England. InfraStrata
works alongside strong and experienced partners in projects
in both areas. During the past two years the focus has shifted
towards the exploration projects in both areas where significant
progress has been made and two wells are being planned for
2013, which together with the planned appraisal well for the
Islandmagee gas storage project – all have the potential to unlock
very significant value for shareholders.
County Antrim, Northern Ireland
Islandmagee Project
Islandmagee Storage Limited (“IMSL”) was granted planning
permission for a £400 million natural gas storage facility at
Islandmagee, Co Antrim, in October 2012. IMSL was also granted
a Gas Storage Licence from the Utility Regulator in October
2012. IMSL plans to create seven caverns, capable of storing up
to a total of 500 million cubic metres of gas in Permian salt beds
approximately 1,500 metres beneath Larne Lough.
(65% shareholder) and Moyle Energy
IMSL is an independent Northern Ireland registered company; a
joint venture between a wholly-owned subsidiary of InfraStrata
plc
Investments
Limited, part of the Mutual Energy group of companies (35%
shareholder). In January 2012 we were very pleased to announce
that IMSL had entered into agreements with BP Gas Marketing
Limited (“BPGM”) for the appraisal of the project and the option
for BPGM to acquire a 50.495% equity interest in IMSL. Under
the terms of a Joint Appraisal Agreement, BPGM has agreed to
fund the activities necessary to develop the project, including
the drilling of the first borehole, up to the point where a decision
can be made on whether to proceed with its detailed engineering
design. BPGM has also paid IMSL a total of £600,000 (a third
on signing of an option agreement in September 2011, a third
on signing the agreement in January 2012 and the remainder
on the grant of planning permission in October 2012). The
first payment was used to complete a land purchase for the
project and the remaining funds were used to settle a portion of
InfraStrata’s loan account to IMSL.
The Islandmagee project has a number of advantages which
enhance its commercial case. These include being immediately
adjacent to gas and electrical infrastructure, the salt being at
an optimum depth for gas storage and close to a water source
for solution mining of the salt to create the caverns. The project
is also designed to access the extrinsic value of the gas storage
market in the UK and Ireland by being able to respond to short-
term volatility.
The proposed gas storage facility will make a significant
contribution to the security of gas supplies for the whole
island of Ireland. Ireland is dependent on gas for around 65%
of electricity generation with 90% of the island’s gas imported
via a single pipeline from Scotland. The facility, when complete,
will store enough gas to satisfy Northern Ireland’s demand for
around 60 days. Northern Ireland has a target to generate 40%
of electricity from renewables by 2020 – this will primarily be
achieved through wind-powered generation. A shift to renewable
energy sources is likely to result in an increasing reliance on
gas-fired power stations to support the inherently intermittent
supply from wind. Rapid cycle gas storage facilities, such as this
planned project, will be important to respond to the increasingly
fluctuating demands for gas to fuel this electricity generation
requirement.
The estimated timescale for the project is approximately seven
years, with the first cavern becoming operational after five
years. The initial appraisal well drilling is planned, subject to
confirmation on the regulatory framework for the project, in
2013. Samples of the Permian salt will provide the technical
confirmation and final design parameters for the project.
Petroleum Exploration Project – PL1/10 Larne-Lough Neagh Basin
A group led by InfraStrata plc was awarded Petroleum Licence
PL1/10 in March 2011 by the Department of Enterprise, Trade
and Investment (“DETI”). The licence covers an area of 663
square kilometres over what the Company believes is a very
prospective largely unexplored sedimentary basin. The licence
term is five years with a drill-or-drop decision required by March
2014. InfraStrata plc has a direct operated interest of 30%, with
a further 40% shareholding in Brigantes Energy Limited which
holds a 40% interest in the licence – resulting in an overall net
licence interest of 46%. The other partners in the licence are
Cairn Energy (20%) and Terrain Energy (10%).
The licence is located within the Larne-Lough Neagh Basin,
a SW-NE trending Permo-Triassic Basin, overlying an older
Carboniferous sequence. The basin has historically received
little attention from explorers - the primary reason is the thick
development of Palaeocene Antrim Flood Basalts overlying the
target horizons. This has been a barrier to effective seismic
imaging but with the recent technological advances in data
processing, it is now opening up.
The group has acquired, using onshore specialist contractor Tesla
04
InfraStrata plc
Exploration International Limited, a total of 400 kilometres
of 2D seismic data over two campaigns, the first in October/
November 2011 and the second in June 2012. Following the
first survey, structures were identified below the basalt and large
leads mapped in the east of the licence area. This eastern area
became the focus for the second survey. The Company believes
the new data has the potential to open up an exciting new area
for petroleum exploration with significant potential.
There has been a limited amount of drilling in the Larne-Lough
Neagh Basin over the past 40 years; largely for coal exploration
and geothermal feasibility. However this has confirmed the
development of good sandstone reservoirs and seals within
the thick Permo-Triassic sedimentary section, similar to those
found in our analogue, the prolific East Irish Sea Basin. Oil-
prone source rocks have been identified on the margins of the
Basin within the Carboniferous section, and gas-prone coals
have also been mined to the west in the Coalisland area, and
along the North Antrim coast. The basin is also along trend from
the Midland Valley of Scotland where oil and gas prone rocks of
Carboniferous age are well known. It is anticipated that in the
more deeply buried areas of the Larne-Lough Neagh Basin the
Carboniferous will have been buried sufficiently to generate oil
and possibly also gas. As with any new exploration province
anywhere, the presence of a working petroleum basin remains
the highest risk of the play and can only be resolved by drilling.
The 2011 data, together with the new 2012 survey were both
processed by Fugro Seismic Imaging Limited, a world leader in
the processing of challenging land data, during July to October
2012. Since October 2012 the interpretation has been on-going.
A trend of large structures within the eastern half of the licence
has been high-graded.
The initial licence term commitments to DETI have now been
exceeded. The joint venture proposes to drill its first exploration
well during 2013. Work is now commencing on identifying a
suitable surface site from which to drill, and engaging with
local stakeholders. It is hoped that it will be possible to drill
the well in a coordinated programme with the first well on the
Islandmagee gas storage project, to realise technical synergies
and in particular to save costs for both projects.
Dorset, Southern England
Portland Project – Gas storage and salt solution mining
Planning permission was granted for a 1,000 million cubic
metres gas storage facility and associated infrastructure in 2008.
The Company has run two formal processes to unlock value in
the project. The first in 2007/8 had to be halted when interested
parties withdrew from the process as the financial markets
collapsed in the autumn of 2008. A second process was run in
2009/10 and resulted in US company, eCORP International LLC
(“eCORP”), taking a 50% interest in the project during 2010 in
return for funding the project through the next stage of pre-
construction activity.
Between 2010 and 2012, eCORP invested £1.9 million in
the project, which included lease payments, securing the
majority of landowner agreements for the 37 kilometre gas
pipeline connection to the National Transmission System and
undertaking works on the site to implement the main site
planning permission. However this investment was against a
backdrop of a closing of the summer-winter gas price spread,
which undermines the financial case for all but the very flexible
gas storage projects in the UK, such as the Islandmagee project,
which are able to respond to the volatility in prices rather than
longer-term seasonal trends. With the continuing poor market
conditions for seasonal gas storage facilities and a refocusing of
eCORP’s European operations, InfraStrata reached agreement
with eCORP in June 2012 whereby InfraStrata acquired 100%
of the project again and eCORP’s former funding obligations
were restructured into an obligation to provide funding for a
further US$2.88 million, in the form of monthly payments of
US$120,000 until May 2014. The deal was structured so that
eCORP would earn a 7.5% share of the future profits from the
Portland project in return for its total investment in Dorset
projects of approximately £3.7 million.
The Company believes it is unlikely that the seasonal gas storage
market will improve in the short-term, but it remains a longer-
term play as pressure for reliable winter supplies increases and
the UK’s indigenous production reduces further. Against this
backdrop, InfraStrata has conducted a review of all the potential
projects which could be sited at Portland in the short-term to
build upon the existing planning permissions. These included
the generation and export of electricity, carbon capture &
storage (“CCS”), salt production and export, gas imports and the
siting of petroleum production facilities.
An application for funding for a CCS pilot at the site to the
Department of Energy and Climate Change (“DECC”) in 2012
proved unsuccessful. The Company is now focused on the
potential for salt production at the site. The location adjacent
to a deep water port makes the export of salt to UK and
international markets potentially attractive. If such a project
could be established in the shorter-term it would enable the
Company to retain the option for gas storage in the longer-term.
The gas pipeline construction authorisation from DECC is
viewed as being of considerable potential value and will be
maintained pending its future use as a potential export line for
gas from production in the area (discussed further below), or for
gas imports.
InfraStrata plc
05
Petroleum Exploration Project – P1918, Wessex Basin
A group led by InfraStrata plc was awarded Petroleum Licence
P1918 in December 2011, effective February 2012. The licence
term is four years with a drill-or-drop decision required by
February 2014. InfraStrata has a direct operated interest of 70%,
with a further 40% shareholding in Corfe Energy Limited which
holds a 20% interest in the licence – resulting in an overall net
licence interest of 78%. The other partner in the licence is Cairn
Energy (10%). InfraStrata acquired a 50% licence interest from
eCORP (subject to a 7.5% share of future profits) in June 2012.
The P1918 licence covers three offshore Blocks 97/14, 97/15 and
98/11, with a total area of 584 square kilometres adjacent to the
Dorset coast and close to the giant Wytch Farm oilfield.
UK offshore well in 1963 on Lulworth Banks in Block 97/14. Six
of these wells encountered oil or gas shows and three flowed oil
or gas on test. The advances in technology and higher petroleum
prices mean that the licensees are hopeful of being able to develop
one of the existing discoveries profitably as a base from which
to appraise the full potential of the area. The focus has been on
the offshore extension of the Purbeck Prospect, an anticline
in the east of the licence, up dip of the onshore well Southard
Quarry-1, which encountered petroleum at several stratigraphic
levels in 1989 but was not tested. This large structure lies largely
within Licence P1918. InfraStrata will commence reprocessing of
existing data to define further the sub-surface target location for
a new appraisal well. It is proposed to drill the well directionally
from an onshore location, subject to planning permission and
project funding, in the latter part of 2013.
Within and immediately adjacent to the licence area there are a
number of active oil and gas seeps. A total of seven wells have
previously been drilled within the licence area, including the first
The gas pipeline consent for the Portland project may prove a key
investment to export gas from the area and realise this potential.
Funding review
BPGM funded the Islandmagee gas storage project to the extent
of £475,689 during the financial year under the terms of a
Joint Appraisal Agreement. BPGM will continue funding the
development of the Islandmagee gas storage project through
2013 including the drilling of an appraisal well. We anticipate
that the drilling of this well will trigger the detailed engineering
and design phase and an unlocking of value in the project for
InfraStrata through a monetising of its interest in the project.
The project proceeding to construction will also be a further cash
boost to InfraStrata with settlement of partner Mutual Energy’s
share of the loan account which is due to InfraStrata and which
currently stands at £1.2 million.
The Company has no debt and has been successful in attracting
investment into its projects. In addition, cash revenue of
£253,932 has been earned from partners for managing the
various projects, resulting in a net cash outflow (before legal
costs relating to transactions) during the financial year of
£78,000 per month. A placing of shares in February 2012 has
secured the necessary funds to meet administration and general
expenditure of the Company and support processes to unlock
the inherent value in our range of projects.
InfraStrata has been funded for its share of the PL1/10 seismic
programme through the
introduction of partners (gross
expenditure to year end of £2.2 million). A portion of the first
well in Northern Ireland is already funded under an existing
farmout agreement. We expect to see continued significant
interest from industry partners in our acreage and will assess
the options for securing the balance of the funding for the first
exploration well.
In the Dorset projects, the restructuring agreement with eCORP
has secured $120,000 per month funding until May 2014. At the
same time as reaching agreement with eCORP, agreement was
also reached with Portland Port Limited to modify the existing
leases at the Portland site. Portland Gas Storage Limited is able
to terminate, without financial penalty, the leases annually in
June of each year until 2018.
InfraStrata has funded the majority of its share of the initial
work programme in the Dorset exploration project, comprising
seismic mapping and prospect characterisation, through a
farmout of an 8% interest to Corfe Energy Limited in August
2012. InfraStrata is likely to seek to farmout a further interest
in the licence to fund the drilling and testing of an appraisal well.
The Company holds a large equity position, following the eCORP
licence acquisition, with which to manage a farmout funding
process during 2013.
InfraStrata also holds a shareholding in two independent
exploration companies, Brigantes Energy and Corfe Energy,
who are partners in its exploration projects and are self-funding.
InfraStrata Director William Colvin represents the Company’s
interest on the Board of each exploration company.
Brigantes holds a 40% interest in licence PL1/10 in Northern
Ireland, and Corfe a 20% interest in offshore Dorset licence
P1918. The companies raised a further £750,000 each during
2012 in private share placings, diluting InfraStrata’s shareholding
from 50% to 40%. At an appropriate time InfraStrata could
sell its interests in these companies to unlock the value of its
investments for shareholders.
06
InfraStrata plc
Outlook
Good progress has been made in assessing and defining the
prospectivity within the Company’s exploration acreage. The
coming year will see an increasing focus of the Company’s
activities towards its exploration portfolio. The upside potential
of the licences for the Company is expected to be very significant.
Characterisation of the primary prospects in each licence will
continue as preparations commence for drilling and testing the
plays, which are expected during the second half of 2013.
In Dorset, evaluation of existing data in licence P1918 will be
progressed further with seismic reprocessing of data over the
most prospective structure. It is anticipated that preparatory
work, including the submission of a planning application, will be
commenced to enable the joint venture to drill the first appraisal
well in the licence from an onshore location. At Portland options
to progress projects by building on existing technical work and
consents will continue to be reviewed.
The coming year will see the Islandmagee gas storage project
progressing further following the successful granting of planning
permission in October 2012. Drilling of the first well is expected
to take place in 2013 subject to confirmation of the regulatory
framework for the project. The data from the seismic acquisition
on licence PL1/10 in Northern Ireland will be processed and
interpreted and is expected to lead to an exploration well being
drilled, hopefully using the same rig as the Islandmagee well.
Unlocking the inherent value of the Company’s projects during
the coming 12 months is management’s primary objective.
The Company looks forward to working with partners and
stakeholders to progress all of our projects.
Andrew Hindle
Chief Executive Officer
InfraStrata plc
07
Corporate and
Social Responsibility
Through the work of the Portland Gas Trust, Portland Gas
Limited continues to support local communities in its area
of operation. The Trust is a registered charity that supports
initiatives around education, geology and the environment.
Throughout the year the Trust has continued to support local
projects both financially, and in kind, through Rachel Barton,
Manager of the Trust. During the year the Trust received
various applications for funding. The Trust has continued to
support suitable local applications and those that fitted with our
objectives were successful.
This year saw the completion of the dry stone walling around
the back of the Old Engine shed. Various walling courses were
held over the winter months which meant lots could be achieved.
Scrub was cleared with blackthorn and bramble being sprayed.
The Trust is very grateful to Wessex Water for supporting the
Trust with the costs of the spraying. Over 300 individuals helped
as volunteers to complete the walling.
The Trust held two very successful fundraiser archive film nights
at the Boat that Rocks which were oversubscribed and the Trust
intends to host similar events in the coming year.
The responsible dog owner campaign was a great success. The Dog
Fun day held in September was well attended with lots of people
getting up to date information relating to dog ownership. The
Trust has had awareness days out in the community promoting
the bags, car stickers and information leaflets with the Island
Ranger and the local authority Dog Warden.
Financial support was given, by the Trust, to the Project Pliosaur,
the creation of a large dinosaur by local school children as part
of the Cultural Olympiad. The Trust once again sponsored the
Budmouth Geology Award.
The Trust supported various projects in kind which included the
Portland Community Partnership. The Trust is also represented
on the Board of Expia, a Community Interest Company based at
HMP The Verne.
Looking forward, work will continue around the engine shed
site, with the intent to rebuild the walls on the second field and
clear away the remaining areas of scrub.
The Trust will continue to hold its own fundraising events and
ensure that the local community is included and aware of the
works that are undertaken.
Subject to obtaining 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 continuing discussions with local residents and
community groups in the Larne Lough area with regard to ideas
and initiatives which could be funded through the proposed
Trust. Local businesswoman, Judith Tweed, is the company
Community Liaison Consultant; Judith is collating a wide range
of ideas for potential funding.
08
InfraStrata plc
Directors, secretary, advisors
and shareholder information
Directors
Kenneth Maurice Ratcliff (Non-executive Chairman)
Andrew David Hindle (Chief Executive Officer)
Craig Stuart Gouws (Chief Financial Officer)
Walter Rookehurst Roberts (Legal and Commercial Director)
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 LLP
1 Bishops Wharf, Walnut Tree Close
Guildford
Surrey, GU1 4RA
Capita Registrars Limited
The Registry
34 Beckenham Road
Beckenham
Kent, BR3 4TH
Arden Partners plc
125 Old Broad Street
London, EC2N 1AR
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
09
Report of the Directors
for the year ended 31 July 2012
The Directors have pleasure in presenting their report and audited financial statements for the year ended 31 July 2012.
Principal activities and review of business
The principal activities of the Group throughout the year were
petroleum exploration and the development of sub-surface gas
storage facilities.
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.
Funding
In February 2012 the Company completed the placing of
12,727,273 new ordinary shares at 11p per share and raised
£1,400,000 before expenses. Following the placing, the
Company has 90,991,599 ordinary shares in issue. The shares
were placed by Seymour Pierce Limited largely with existing
and new institutional investors. The net proceeds of the placing
receivable by the Company together with the existing cash prior
to the placing and anticipated income, particularly from project
partners in return for management activities, are being applied
to the general and administrative expenditure of the Company
with the majority of the proceeds of the placing being used to
strengthen the balance sheet of the Company and assist the
Company to unlock the inherent value in its four projects as they
all proceed to key milestones through its 2012/2013 financial
year.
An agreement was entered into with BP Gas Marketing Limited
(“BPGM”) regarding the appraisal of the Islandmagee gas storage
facility development project in County Antrim, and the grant
of an option to BPGM to acquire a 50.495% equity interest in
Islandmagee Storage Limited (“IMSL”). In consideration for the
work undertaken in developing the project, Islandmagee Storage
Limited received an amount of £400,000. £200,000 was paid on
signature of a Joint Appraisal Agreement (“JAA”) and a further
£200,000 was paid following award of planning permission for
the project on the 18 October 2012. These funds were used to
repay a portion of the InfraStrata plc loan account to Islandmagee
Storage Limited. In addition, Islandmagee Storage Limited was
paid £200,000 by BPGM on the grant of exclusivity in 2011.
The Company signed a Restructuring Agreement with eCORP
Oil & Gas UK Limited (“eCORP”) during June 2012, following
a refocusing of eCORP’s European operations. The provisions
of the Restructuring Agreement include a revised funding
arrangement. eCORP’s 50% interest in Portland Gas Limited
(“PGL”) was converted into preference shares and eCORP’s
former funding obligations have been restructured into an
obligation to subscribe a further US$2.88 million for further
preference shares over a period of two years. The preference
shares will provide eCORP with a 7.5% share of the future profits
distributed by Portland Gas Limited.
Associate companies Brigantes Energy Limited (“Brigantes”)
and Corfe Energy Limited (“Corfe”) have each raised £750,000
through a placing of shares during July 2012. The InfraStrata
plc interest in each Company was reduced to 40% however
these associate companies are now adequately funded for the
foreseeable future.
Following year end the Company also farmed out a further
8% interest in English Channel licence P1918 to Corfe Energy
Limited. Under the terms of the agreement Corfe will carry the
first £96,000 of InfraStrata’s expenditure under the licence.
The farmout to Corfe is part of InfraStrata’s strategy to bring
investment into its projects and de-risk its programme on the
licence.
Islandmagee project
On 19 January 2012 an agreement was entered into with
BPGM regarding the appraisal of the Islandmagee gas storage
facility development project in County Antrim, and the grant
of an option to BPGM to acquire a 50.495% equity interest in
Islandmagee Storage Limited. Islandmagee Storage Limited is
the gas storage developer in Northern Ireland currently owned
by InfraStrata (65%) and Moyle Energy Investments Limited
(“Moyle”) (35%). Should the option be exercised, InfraStrata’s
equity interest in Islandmagee Storage Limited will become
32.178% and the remaining 17.327% will be owned by Moyle.
Under the terms of the JAA, BPGM has agreed to fund the
activities necessary to develop the project, including the drilling
of the first well, up to the point where a decision can be made
on whether to proceed with a detailed engineering design. In
addition to the planning permission, now received, the drilling of
the well is subject to Islandmagee Storage Limited confirmation
that a regulatory and operational framework will be adopted
by the Northern Ireland and Republic of Ireland authorities to
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InfraStrata plc
facilitate commercial operations of the facility on a level playing
field with storage elsewhere in the UK and Ireland.
in the same year) and the 50% interest in the P1918 licence
acquired from eCORP.
During the appraisal stage of the project, BPGM is responsible
for managing surface and sub-surface engineering matters.
Islandmagee Storage Limited is managing the regulatory, land
and stakeholder relations together with drilling and operating
the well. All costs incurred by Islandmagee Storage Limited
in undertaking these activities are and will be recovered from
BPGM.
Islandmagee Storage Limited had received £475,689 from BPGM
at 31 July 2012 in accordance with the agreement.
The Islandmagee gas storage project is, with the valued
participation of stakeholders, progressing as anticipated.
Portland 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.
Following a very challenging time and facing the unlikely
prospect of securing full funding for the gas storage project in
the near to medium term, alternative business streams have and
are being investigated and developed for the site.
During June 2012 the Company signed a Restructuring
Agreement with eCORP (a subsidiary of eCORP International,
LLC), following a refocusing of eCORP’s European operations.
The provisions of the Restructuring Agreement included the
following:
•
•
eCORP’s 50% interest in Portland Gas Limited has been
converted into preference shares and eCORP’s former
funding obligations have been restructured
into an
obligation to subscribe a further US$2,880,000 for further
preference shares over the next two years. The preference
shares will provide eCORP with a 7.5% share of the future
profits distributed by Portland Gas Limited. Following the
restructuring, InfraStrata UK Limited, a wholly owned
subsidiary of InfraStrata plc, now holds 100% of the
ordinary shares in Portland Gas Limited;
InfraStrata plc has also acquired eCORP’s 50% interest in the
26th Round petroleum exploration licence P1918, offshore
Dorset (increasing the Company’s direct interest to 78%).
In return InfraStrata plc has granted eCORP a 7.5% share
of the future net profits generated on the acquired licence
interest.
As a consequence of the Restructuring Agreement the Group
de-recognized its 50% interest in the Portland Gas Limited
joint venture and recognized an investment in a wholly owned
subsidiary being the same company. The transaction resulted in
the Group recognizing the fair value of intangible assets being
the Portland-1 well data (well data obtained from the well which
was drilled on Portland in 2006 and the seismic data acquired
An agreement was also reached with Portland Port Limited
to modify the existing leases at the Portland site. These
modifications include permission for a wider range of uses
of the land, such as the generation and export of electricity,
carbon capture & storage, salt production and export, and the
siting of petroleum production facilities. A restructuring of lease
payments was also agreed, whereby the rental payments in the
early years are reduced, but could be higher in the longer term
if there are multiple uses of the land. There is also flexibility for
Portland Gas to terminate the leases during the next five years.
The Company has been reviewing a range of business options
which build on synergies with Portland Port, together with the
engineering, environmental and consenting work undertaken to
date on the gas storage project.
The unique combination of thick Triassic salt strata present
below the Portland area, and access to Port facilities, provides
an attractive opportunity to establish the production and export
of salt as an initial business. This opportunity is under appraisal
and is the current focus of the Company with investment being
sought for the project.
There is potential to store CO2 in salt caverns. A bid was
submitted in the Carbon Capture Storage (“CCS”) Innovation
Programme of the Department of Energy and Climate Change
(“DECC”) for a research and development project at Portland but
this application was not successful.
The Pipeline Construction Authorisation from the DECC was
most recently renewed in June 2012. An eight year extension to
planning permissions related to the pipeline infrastructure was
approved by the Dorset County Council in December 2011. In
the face of the uncertainty surrounding the development of the
gas storage project, the Company believes the pipeline could be
used exporting hydrocarbons from the P1918 licence area, or for
gas importation.
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 plc is the operator of the licence and holds a 30%
direct interest, with an additional net 16% interest via a 40%
shareholding in partner company Brigantes Energy Limited
which has a 40% interest. The other partners in the licence are
Cairn Energy 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.
Tesla Exploration International Limited completed a further
infill Vibroseis seismic programme in June 2012 comprising
a total of 111 kilometres of 2D seismic data. Processing the
InfraStrata plc
11
seismic data was undertaken by Fugro Seismic Imaging Limited
between July and October 2012. The new survey has enabled
the project partners to refine their evaluation of the petroleum
prospectivity of the licence area, and plans are being made to
drill the first well during 2013.
The Dorset petroleum licence, P1918, comprising Blocks 97/14,
97/15 and 98/11 was offered to the Company in December 2011
and formally awarded to InfraStrata plc and eCORP effective
February 2012. InfraStrata plc acquired eCORP’s 50% interest
in the licence P1918 in June 2012. In return InfraStrata plc has
granted eCORP a 7.5% share of the future profits generated on
the acquired licence interest.
InfraStrata is the operator of the P1918 licence with a 70%
interest, Cairn Energy plc has a 10% interest and Corfe Energy
Limited has the remaining 20% interest. Corfe is 40% owned by
InfraStrata plc.
A total of seven wells have been previously drilled within the
P1918 licence area, including the first UK offshore well in 1963
Key performance indicators
on Lulworth Banks in Block 97/14. Six of these wells encountered
oil or gas shows and three flowed oil or gas.
Following year end the Company also farmed out a further
8% interest in the P1918 licence to Corfe Energy Limited. In
the terms of the agreement, Corfe will carry the first £96,000
of InfraStrata’s expenditure under the licence. The farmout to
Corfe is part of InfraStrata’s strategy to bring investment into its
projects and de-risk its programme on the licence.
The priority of the initial 2012/13 work programme will be to
establish the potential commerciality of the most highgraded
of the existing discoveries in the licence. The work will include
reprocessing of existing seismic data to better define the extent
and size of the prospect.
Health, safety and environment
There were no reportable health, safety or environmental
incidents during the period.
Key performance indicators, both financial and non-financial, are used by the Board to
monitor progress against predetermined objectives:
Objective
Definition
Strategy
We seek to identify new project
opportunities
Identify new project opportunities which
are expected to increase shareholder
value once development commences
Develop a balanced portfolio of projects
We endeavour to develop projects in
accordance with project schedules
Predetermined and agreed project
development schedules adhered too
including submission of planning
applications
Delivery of projects to sensible time
schedules. Submit and achieve planning
permission approvals in a cost effective
and timely manner
We aim to control general and
administrative costs keeping costs as
low as possible
Management and control of group
general and administrative costs
We aim to prudently manage Group
working capital
Management and control of working
capital ensuring liquidity as is necessary
Maintain low cost of Group general
and administration expenditure and
conserve cash to the extent possible
Management of working capital to
ensure liquidity to develop projects as
planned in development schedules
Our Group KPIs provide a measure of our progress and
performance against our strategy. 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, management of general and
administrative costs and Group working capital management.
The KPIs are reported at Board meetings. Measurement entails
analysing variance between expected and actual progress,
financial position and financial performance. Relevant
performance measures for 2012 include:
•
A number of new business opportunities including salt
production and carbon capture and storage where considered
during the financial year. The carbon capture and storage
business proposal was not pursued following the Portland
project application to DECC being unsuccessful.
• The prudent application of available cash resources. The
cash balance at the financial year end was £1,918,201,
£1,203,232 higher than that at the previous year end.
• Net general and administration expenditure was well
12
InfraStrata plc
controlled during the financial year, a decrease of £48,989
before legal transaction costs when compared to the prior
year.
Issuance of new capital to raise £1,400,000 to meet working
capital requirements during the financial year.
Completion of the Portland Gas Limited restructuring
transaction with eCORP and securing an agreement
whereby eCORP is to subscribe for $2,880,000 preference
shares in Portland Gas Limited.
Completion of the initial Islandmagee Storage Limited
funding transaction with BPGM concluded.
Completing the PL1/10 seismic acquisition to schedule and
budget.
P1918 exploration licence award effective February 2012.
Although no planning awards took place during the financial
year, the grant of the Islandmagee gas storage project
planning permission occurred on 18 October 2012.
•
•
•
•
•
•
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.
Loss of key employees.
Sustained exploration failures.
Failure of third party services.
Operational risks - damage to shareholder value, environment,
personnel or communities caused by operational failures
•
• Delays in planning application awards.
•
•
• Once hydrocarbon production projects become operational
there will be an increased environmental risk for example
hydrocarbon spillage.
Failure to be seen to be acting in a socially responsible
manner and/or failure to maintain good local community
relations.
•
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 partners.
Shareholder sentiment.
•
• Mix of storage and upstream interests.
•
Corporate governance failings.
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
On the 15 February 2011 the Company placed 12,727,273 new
ordinary shares of 10 pence each at 11 pence per share to raise
£1,400,000 before expenses. The shares were placed by Seymour
Pierce Limited with existing and new institutional investors.
Following the placing, the Company has 90,991,599 ordinary
shares in issue.
Outlook
Good progress has been made in assessing and defining the
prospectivity within the Company’s exploration acreage.
The coming year will see an increasing focus of the Company
activities towards its exploration portfolio. The upside potential
of the licences for the Company is expected to very significant.
Characterisation of the primary prospects in each licence will
continue as preparations commence for drilling and testing the
plays, which are expected during the second half of 2013.
The coming year will see the Islandmagee gas storage project
progressing further following the successful granting of planning
permission in October 2012. Drilling of the first well is expected
to take place in 2013 subject to confirmation of the regulatory
framework for the project. The data from the seismic acquisition
on licence PL1/10 in Northern Ireland will be processed and
interpreted and expected to lead to an exploration well being
drilled, hopefully using the same rig as the Islandmagee well.
In Dorset, evaluation of existing data in licence P1918 will be
progressed further with seismic reprocessing of data over the
most prospective structure. It is anticipated that preparatory
work, including the submission of a planning application, will
be commenced to enable the joint venture to drill the first
exploration well in the licence from an onshore location. At
Portland options to progress projects building on existing
technical work and consents will continue to be reviewed.
Unlocking the inherent value of the Company’s projects during
the coming 12 months is management’s primary objective.
The Company looks forward to working with partners and
stakeholders to progress all of our projects.
InfraStrata plc
13
Results and dividends
The 2012 financial year was an active period for the Group during
which an exploration programme of £2,261,262 was undertaken
of which the Company incurred a cash cost of only £34,564.
A non-cash share of loss of the joint venture of £10,306,395 and
non-cash share of loss of associates of £174,869 was accounted
for during the year. The loss on the joint venture primarily arose
from impairment charges in respect of the Portland project as
it is now unlikely that the project will secure full funding in the
near to medium term. The Company derecognised its 50% joint
venture investment in Portland Gas Limited and an investment
in a 100% held subsidiary, being the same Company, was
recognised. This gave rise to a net non-cash accounting loss of
£8,113,730.
The Group recognised cash revenue of £253,932 which arose
from operatorship income, consulting and technical services.
These revenues offset corporate and administrative expenditure.
Corporate and administrative expenditure, before gas storage
lease costs and transaction legal fees of £190,659, was
£1,068,547.
Largely as a result of non-cash transactions, the Group incurred
a loss after tax of £19,727,362 (2011: profit after tax of
£4,310,311). The loss for the year, together with the balance
of £138,605 loss brought forward leaves a retained loss of
£19,865,967 to be carried forward.
Following the impairments of the Portland project, the
InfraStrata plc investment in InfraStrata UK Limited and the
related inter-company receivable were impaired and this resulted
in a non-cash expense of £23,141,684 being recognised in the
InfraStrata plc company loss for the year.
The Directors do not recommend the payment of a dividend
(2011: £nil).
In accordance with international financial reporting standards,
the Islandmagee Storage project assets and liabilities continue
to be classified as a disposal group and they are shown as held
for sale and in the consolidated statement of financial position
- note 21. As a corollary, the net loss attributable to this project
company, representing costs that could not be capitalized, has
been classified as arising from discontinued operations in the
statement of comprehensive income.
Charitable and political donations
During the year the Group made various charitable contributions in the UK totalling £250 (2011: £200).
No donations were made for political purposes (2011: £nil).
Events after the reporting period
Islandmagee Storage Limited received planning approval on 18 October 2012 for its development of a natural
gas storage facility at Islandmagee, County Antrim.
Payment of creditors
The Group’s policy for all suppliers is to fix terms of payment when entering into a business transaction,
ensure that the supplier is aware of those terms and to abide by the agreed terms of payment. The number of
days’ trade creditors was 26 (2011: 16) 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 24 to the financial statements.
14
InfraStrata plc
Directors
The Directors, who served during the year and subsequently, were as follows:
Executive Directors: A D Hindle, C S Gouws, W R Roberts. Non-executive Directors: K M Ratcliff, M E Hazzard, W Colvin
All Directors benefit from the provisions of individual Directors’ Personal Indemnity insurance policies.
Premiums payable to third parties are as described in note 6. The Company operates a share option scheme
and the particulars of share options granted to Directors are detailed in note 6 to the financial statements.
Directors of the Company at 31 July 2012 and their abridged CVs are as follows:
Ken Ratcliff (Non-Executive Chairman)
Ken Ratcliff, JP, BSc., FCA, (62) 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
Andrew Hindle (Chief Executive Officer)
Andrew Hindle, BSc., MSc., PhD, FGS, CGeol, (50) is a highly
experienced geologist with over 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
Craig Gouws (Chief Financial Officer)
Craig Gouws, BSc., CA (SA) ACA, (45) 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
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.
international petroleum 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
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.), (61) 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, (74) 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
William Colvin (Non-Executive Director)
William Colvin, BCom. CA, (54) 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
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.
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,
the independent oil & natural gas exploration and production
company.
InfraStrata plc
15
Directors’ emoluments
The Directors’ emoluments are disclosed in note 6 to the financial statements.
Directors and substantial shareholdings
The Directors of the Company held the following beneficial shareholdings as at 20 November 2012.
Ordinary shares of 10p each
Ken Ratcliff
Andrew Hindle
Craig Gouws
Walter Roberts
Maurice Hazzard
William Colvin
Number
104,000
7,172,625
277,226
1,132,378
19,326
272,727
The Company has received notification of the following interests in 3% or more of the Company’s
issued share capital at 20 November 2012. The percentages presented are at the date of notification.
Ordinary shares of 10p each
JP Morgan Asset Management Holdings Inc
Mark Abbott
Investec Wealth and Investment Management
Maven Income and Growth VCT 5 PLC
Calculus Nominees Limited
Number
15,516,600
6,294,806
5,299,112
2,974,013
1,858,950
%
0.11
7.88
0.30
1.24
0.02
0.30
%
19.83
6.92
5.82
3.80
3.60
Corporate Governance
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.
The table overleaf contains details on the number of meetings
held during the period and individual director attendance.
16
InfraStrata plc
Number of meetings held
during the 2012 financial
year
Executive directors
Andrew Hindle
Craig Gouws
Walter Roberts
Non-executive directors
Ken Ratcliff
Maurice Hazzard
William Colvin
Board
Audit Committee
Renumeration Committee
7§
4
1
Number of meetings
attended
Number of meetings
attended
Number of meetings
attended
6
7
7
5
5
4
-
-
-
4
-
4
-
-
-
1
1
1
§ Of which 2 were minimally attended but to finalise business already approved by all directors
Audit Committee
The Audit Committee met four times in the year to 31 July
2012. Its members are William Colvin (Chairman) and Ken
Ratcliff. 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 and November 2012 and
senior representatives of the external auditors attended these
meetings. The external auditor has unrestricted access to the
Chairman of the committee.
The role of the Audit Committee includes:
•
•
Consideration of the appointment of the external auditor
and the audit fee.
Reviewing the nature, scope and results of the external
audit.
• Monitoring the integrity of the financial statements and
Renumeration Committee
The members of the Remuneration Committee are Maurice
Hazzard (Chairman), Ken Ratcliff and William Colvin. The
committee met once during the year and the meeting was
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 recommends to 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 2012/13 would be on reducing the overall burden. The
Executive was invited to propose possible ways of achieving this
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.
and recommendations put forward during the financial year
have been implemented.
The principal objectives of the Committee include:
• Determining and recommending to 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.
•
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.
InfraStrata plc
17
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.
Representatives of the Board, at least twice per year, together
with the Company brokers go on road shows during which
existing and new investors are updated on Company affairs.
Arden Partners plc was appointed as Nominated Advisor and
broker to the Company during the financial year.
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
Going concern
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 misstatement 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 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.
years. It is anticipated that these funds will enable the Company
to settle existing commitments. Petroleum exploration activities
in P1918 have largely been and are expected to be funded
through farmouts as and when considered necessary.
The Islandmagee gas storage project, in which InfraStrata plc
currently holds a 65% interest, is funded by BPGM. Under the
terms of a JAA, BPGM agreed to fund the activities necessary to
develop the project, including the drilling of the first well, up to
the point where a decision can be made on whether to proceed
with its detailed engineering design.
The exploration of licence PL1/10 has largely been funded to
date 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. InfraStrata plc is
currently funded for a third of its interest of a well and will be
seeking to farmout a further interest to complete the funding.
On 1 June 2012, eCORP agreed to subscribe for US$2.88 million
of Portland Gas Limited preference shares over the following two
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 future development of the Islandmagee
gas storage project to the new shareholder.
After making inquiries and considering all the relevant factors
in relation to the Group, the Directors have a reasonable
expectation that the Group has adequate resources to continue in
operational existence for the foreseeable future. For this reason,
they continue to adopt the going concern basis of accounting in
preparing the annual financial statements.
18
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.
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.
Under company law the Directors must not approve the financial
statements unless they are satisfied that they give a true and fair
view of the state of affairs of the Company and of the Group and
of the profit or loss of the group for that period.
In preparing each of the Group and Company financial
statements, the Directors are required to:
•
select suitable accounting policies and then apply them
consistently;
• make judgements and estimates that are reasonable and
•
•
prudent;
state whether they have been prepared in accordance with
IFRSs as adopted by the EU;
prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the Group and the
Company will continue in business.
The Directors are responsible for keeping adequate accounting
records 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.
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
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.
Auditor
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
23 November 2012
InfraStrata plc
19
Independent auditor’s report to the members of InfraStrata plc
We have audited the financial statements of InfraStrata plc for
the year ended 31 July 2012 which comprise the Consolidated
Income, the Consolidated
Statement of Comprehensive
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 38. The financial reporting
framework that has been applied in their preparation is
applicable law and International Financial Reporting Standards
(IFRSs) as adopted by the European Union and as regards the
parent Company financial statements, as applied in accordance
with the provisions of the Companies Act 2006.
This report is made solely to the company’s members, as a body,
in accordance with Chapter 3 of Part 16 of the Companies Act
2006. Our audit work has been undertaken so that we might
state to the Company’s members those matters we are required
to state to them in an auditor’s report and for no other purpose.
To the fullest extent permitted by law, we do not accept or
assume responsibility to anyone other than the Company and
the Company’s members as a body, for our audit work, for this
report, or for the opinions we have formed.
Respective responsibilities of Directors and auditors
As explained more fully in the Directors’ Responsibilities
Statement on page 19, 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 financial statements
In our opinion:
•
•
•
•
the financial statements give a true and fair view of the state
of the Group’s and the parent Company’s affairs as at 31
July 2012 and of the Group’s loss for the year then ended;
the Group financial statements have been properly prepared
in accordance with IFRSs as adopted by the European Union;
and
the parent Company financial statements have been
properly prepared in accordance with IFRSs as adopted by
the European Union and as applied in accordance with the
provisions of the Companies Act 2006; and
the financial statements have been prepared in accordance
with the requirements of the Companies Act 2006.
Opinion on other matter prescribed by the Companies Act
2006
In our opinion the information given in the Report of the
Directors’ for the financial year for which the financial statements
are prepared is consistent with the financial statements.
Matters on which we are required to report by exception
We have nothing to report in respect of the following matters
where the Companies Act 2006 requires us to report to you if,
in our opinion:
•
•
•
adequate accounting records have not been kept by the
parent Company, or returns adequate for our audit have not
been received from branches not visited by us; or
the parent Company financial statements are not in
agreement with the accounting records and returns; or
certain disclosures of Directors’ remuneration specified by
law are not made; or
• we have not received all the information and explanations
we require for our audit.
Andrew Bond
Senior Statutory Auditor
for and on behalf of
Nexia Smith & Williamson
Statutory Auditor
Chartered Accountants
Walnut Tree Close
1 Bishops Wharf
Walnut Tree Close
Guildford, GU1 4RA
23 November 2012
20
InfraStrata plc
Consolidated statement of comprehensive income for the year
ended 31 July 2012
Continuing operations
Revenue
Cost of sales
Gross profit
Administrative expenses
Operating loss
Finance income
Share of loss of Joint Venture
Impairment of interest in Joint Venture
Gain arising on assuming control of the former Joint Venture
Share of loss of Associates
Loss before taxation
Taxation
Notes
2012
£
2011
£
253,932
240,290
-
-
253,932
240,290
(1,259,206)
(1,180,485)
(1,005,274)
(940,195)
2,596
(10,306,395)
(10,626,210)
2,512,480
(174,869)
11,139
(452,089)
-
-
-
(19,597,672)
(1,381,145)
-
-
4
9
16
16
16
16
10
Loss for the year from continuing operations
(19,597,672)
(1,381,145)
(Loss)/profit for the year from discontinued operations
11
(129,690)
5,691,456
(Loss)/profit for the year attributable to the equity
holders of the parent
(19,727,362)
4,310,311
Other comprehensive income
-
-
Total comprehensive
attributable to the equity holders of the parent
(loss)/profit
for
the year
(19,727,362)
4,310,311
Basic and diluted earnings per share
Continuing operations
Discontinued operations
Continuing and discontinued operations
12
(23.30)p
(0.15)p
(23.45)p
(1.82)p
7.49p
5.67p
InfraStrata plc
21
Consolidated statement of financial position as at 31 July 2012
Non-current assets
Intangible fixed assets
Property, plant and equipment
Investment in joint venture
Investments in associates
Other receivables
Total non-current assets
Current assets
Trade and other receivables
Available for sale financial assets
Cash and cash equivalents
Assets classified as held for sale
Total current assets
Current liabilities
Trade and other payables
Liabilities directly associated with assets classified as held
for sale
Total current liabilities
Net current assets
Non-current liabilities
Deferred income tax liabilities
Net assets
Shareholders’ funds
Share capital
Share premium
Merger reserve
Share based payment reserve
Retained earnings
Attributable to owners of the parent
Non-controlling interests
Notes
14
15
16
16
17
18
19
20
21
22
21
23
25
26
27
28
2012
£
3,399,473
7,471
-
2,705,131
768,102
2011
£
-
15,161
22,473,516
2,880,000
-
6,880,177
25,368,677
1,114,145
12,500
1,918,201
140,526
12,500
714,969
3,044,846
867,995
3,206,003
2,744,731
6,250,849
3,612,726
(905,750)
(104,158)
(73,032)
(29,928)
(978,782)
(134,086)
5,272,067
3,478,640
(1,201,296)
-
10,950,948
28,847,317
9,099,160
11,920,219
8,988,112
333,735
(19,865,967)
7,826,433
11,848,946
8,988,112
322,431
(138,605)
10,475,259
475,689
28,847,317
-
Total equity
10,950,948
28,847,317
Company registration number: 06409712
Approved and authorised for issue by the Board on 23 November 2012
A Hindle
Director
C Gouws
Director
22
InfraStrata plc
Company statement of financial position as at 31 July 2012
Non-current assets
Intangible exploration assets
Property, plant and equipment
Investments
Total non-current assets
Current assets
Trade and other receivables
Available for sale assets
Cash and cash equivalents
Total current assets
Current liabilities
Trade and other payables
Net current assets
Net assets
Shareholders’ funds
Share capital
Share premium
Merger reserve
Share based payment reserve
Retained earnings
Notes
14
15
16
18
19
20
22
25
26
27
2012
£
34,564
7,153
600
2011
£
-
14,022
15,249,611
42,317
15,263,633
3,623,518
12,500
1,814,603
11,765,975
12,500
118,448
5,450,621
11,896,923
(858,636)
(86,261)
4,591,985
11,810,662
4,634,302
27,074,295
9,099,160
11,920,219
8,466,827
333,735
(25,185,639)
7,826,433
11,848,946
8,466,827
322,431
(1,390,342)
Total equity
4,634,302
27,074,295
Company registration number: 06409712
Approved and authorised for issue by the Board on 23 November 2012
A Hindle
Director
C Gouws
Director
InfraStrata plc
23
Consolidated statement of changes in equity for the year ended
31 July 2012
Share
capital
£
Share
premium
£
Merger
reserve
£
Share
based
payment
reserve
£
Retained
earnings
£
Attributable
to the owners
of the parent
£
Non-
controlling
interest
£
Total
equity
£
Balance at 31 July 2010
7,380,420
11,381,095
8,988,112
302,435
(4,489,808)
23,562,254
Profit for the year
Total comprehensive profit
for the year
-
-
-
-
Shares issued
446,013
467,851
Share based payments
Share options lapsed
-
-
-
-
-
-
-
-
-
-
-
-
60,888
(40,892)
4,310,311
4,310,311
4,310,311
4,310,311
-
-
40,892
913,864
60,888
-
-
-
-
-
-
-
23,562,254
4,310,311
4,310,311
913,864
60,888
-
Balance at 31 July 2011
7,826,433
11,848,946
8,988,112
322,431
(138,605)
28,847,317
-
28,847,317
Loss for the year
Total comprehensive loss
for the year
-
-
-
-
Shares issued
1,272,727
71,273
Share based payments
BP Gas Marketing Limited
- Islandmagee Storage
Limited option (note 28)
-
-
-
-
-
-
-
-
-
-
(19,727,362)
(19,727,362)
-
(19,727,362)
-
-
11,304
-
(19,727,362)
(19,727,362)
-
(19,727,362)
-
-
-
1,344,000
11,304
-
-
1,344,000
11,304
-
475,689
475,689
Balance at 31 July 2012
9,099,160
11,920,219
8,988,112
333,735
(19,865,967)
10,475,259
475,689
10,950,948
24
InfraStrata plc
Company statement of changes in equity for the year ended
31 July 2012
Share
capital
£
Share
premium
£
Merger
reserve
£
Share
based
payment
reserve
£
Retained
earnings
£
Total
equity
£
Balance at 31 July 2010
7,380,420
11,381,095
8,466,827
302,435
(574,996)
26,955,781
Loss for the year
Total comprehensive loss
for the year
-
-
-
-
Shares issued
446,013
467,851
Share based payments
Share options lapsed
-
-
-
-
-
-
-
-
-
-
-
-
(856,238)
(856,238)
(856,238)
(856,238)
-
913,864
60,888
(40,892)
-
40,892
60,888
-
Balance at 31 July 2011
7,826,433
11,848,946
8,466,827
322,431
(1,390,342)
27,074,295
Loss for the year
Total comprehensive loss
for the year
-
-
-
-
Shares issued
1,272,727
71,273
Share based payments
-
-
-
-
-
-
-
(23,795,297)
(23,795,297)
-
-
11,304
(23,795,297)
(23,795,297)
-
-
1,344,000
11,304
Balance at 31 July 2012
9,099,160
11,920,219
8,466,827
333,735
(25,185,639)
4,634,302
InfraStrata plc
25
Consolidated statement of cash flows for the year ended
31 July 2012
Net cash (used in) operating activities
29
(266,553)
(982,526)
Notes
2012
£
2011
£
Investing activities
Interest received
Purchase of intangible assets
Purchase of plant and equipment
Cash outflow on disposal of subsidiary
Cash inflow on acquisition of subsidiary
2,596
(34,564)
(371,510)
-
53,574
11,139
(324,520)
(108,706)
(6,264)
-
Net cash (used in) investing activities
(349,904)
(428,351)
Financing activities
Proceeds on issue of ordinary shares
Non-controlling interest
1,344,000
475,689
864,864
-
Net cash generated from financing activities
1,819,689
864,864
Net increase/(decrease) in cash and cash equivalents
1,203,232
(546,013)
Cash and cash equivalents at beginning of year
714,969
1,260,982
Cash and cash equivalents at end of year
1,918,201
714,969
Cash and cash equivalents consist of:
Cash at bank
20
£1,918,201
£714,969
Significant non-cash transactions
The significant non-cash transaction for the year ended 31 July 2012 was the
assumption of control over the previous joint venture – see note 16.
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 29.
26
InfraStrata plc
Company statement of cash flows for the year ended
31 July 2012
Notes
2012
£
2011
£
Net cash (used in) operating activities
29
385,086
(1,803,324)
Investing activities
Interest received
Purchase of intangible assets
Purchase of plant and equipment
1,633
(34,564)
-
2,228
-
(17,380)
Net cash (used in) investing activities
(32,931)
(15,152)
Financing activities
Proceeds on issue of ordinary shares
1,344,000
864,864
Net cash generated from financing activities
1,344,000
864,864
Net increase/(decrease) in cash and cash equivalents
1,696,155
(953,612)
Cash and cash equivalents at beginning of year
118,448
1,072,060
Cash and cash equivalents at end of year
1,814,603
118,448
Cash and cash equivalents consist of:
Cash at bank
20
£1,814,603
£118,448
InfraStrata plc
27
Notes to the financial statements for the year ended
31 July 2012
1. General information
InfraStrata plc is a company incorporated in England & Wales under the Companies
Acts 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) as adopted by the European Union effective
in July 2012, 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 Islandmagee gas storage project in which InfraStrata plc
currently holds a 65% interest is funded by BPGM. Under the
terms of a JAA, BPGM agreed to fund the activities necessary to
develop the project, including the drilling of the first well, up to
the point where a decision can be made on whether to proceed
with its detailed engineering design.
The exploration of licence PL1/10 has largely been funded to
date 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. InfraStrata plc is
currently funded for a third of its interest of a well and will be
seeking to farmout a further interest to complete the funding.
On 1 June 2012, eCORP agreed to subscribe for US$2.88 million
of Portland Gas Limited preference shares over the following two
years. It is anticipated that these funds will enable the Company
to settle existing commitments. Petroleum exploration activities
in P1918 have largely been and are expected to be funded
through farmouts as and when considered necessary.
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 future development of the Islandmagee
gas storage project to the new partner.
After making inquiries and considering all the relevant factors
in relation to the Group, the Directors have a reasonable
expectation that the Group has adequate resources to continue in
operational existence for the foreseeable future. For this reason,
they continue to adopt the going concern basis of accounting in
preparing the annual financial statements.
Adoption of new and revised standards
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: Recognition and measurement
(revised 2009)
IFRS 10 Consolidated Financial Statements
IFRS 11 Joint Arrangements
IFRS 12 Disclosure of Interests in Other Entities
IFRS 13 Fair Value Measurement
IAS 27 Separate Financial Statements (revised 2011)
IAS 28 Investments in Associates and Joint Ventures (revised
2011)
The Directors anticipate that all of the above standards
and interpretations will be adopted in the Group’s financial
statements in future periods. Adoption of these standards is not
expected to have a material impact on the Group.
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.
28
InfraStrata plc
Notes to the financial statements for the year ended 31 July 2012
When a business combination is achieved in stages, the Group’s
previously held equity interest in the acquiree is re-measured
to fair value at the acquisition date and the resulting gain or
loss, if any, is recognised in profit or loss in the statement of
comprehensive income.
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 reporting year as the parent
company, using consistent accounting policies.
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 36.
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.
Property plant and equipment
Property 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
Freehold land
20-33%
0%
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 property plant and equipment are reviewed
for impairment when events or changes in circumstances
indicate that the carrying value may not be recoverable.
Gas storage research and development costs
Research expenditure, incurred when undertaking exploration
activities for gas storage opportunities, is written off in the year
in which it is incurred.
Capitalisation and impairment of intangible gas storage
assets
Costs of development of gas storage facilities are capitalised as
intangible assets once it is probable that future economic benefits
that are attributable to the assets will flow to the Group and
until consent to construct has been awarded, at which time the
capitalised costs are transferred to plant and equipment provided
there being reasonable certainty of construction proceeding. 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
InfraStrata plc
29
Notes to the financial statements for the year ended 31 July 2012
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.
Oil & gas exploration and evaluation expenditure and
assets
The Group accounts for oil & gas expenditure under the full cost
accounting method.
Pre-licence costs (other than payments to acquire rights to
explore) are those costs 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. Development
assets will be depreciated on the unit production method.
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.
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.
30
InfraStrata plc
Notes to the financial statements for the year ended 31 July 2012
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 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 an 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 cancelled 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.
Trade and other receivables are measured at initial recognition
at fair value and are subsequently measured at amortised cost
using the effective interest method. A provision is established
when there is objective evidence that the Group will not be
able to collect all amounts due. The amount of any provision is
recognised in the income statement. Cash and cash equivalents
comprise cash held by the Group and short-term bank deposits
with an original maturity of three months or less.
Trade and other payables are initially measured at fair value, and
are subsequently measured at amortised cost, using the effective
interest rate method.
Financial liabilities and equity instruments issued by the Group
are classified in accordance with the substance of the contractual
arrangements entered into and the definitions of a financial
liability and an equity instrument. Equity instruments issued by
the Company are recorded at the proceeds received, net of direct
issue costs.
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.
Revenue
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.
Operating activities
The activities of investments controlled by InfraStrata plc are
treated as operating activities in the Group financial statements.
Financial instruments
Finance income
Financial assets and financial liabilities are recognised on the
balance sheet when the Group becomes a party to the contractual
provisions of the instrument.
Finance income is recognised when it is probable that the
economic benefits will flow to the group and the amount of
income can be measured reliably. Income is accrued on a time
basis, by reference to the principal outstanding and the effective
interest rate applicable.
InfraStrata plc
31
Notes to the financial statements for the year ended 31 July 2012
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 and Northern Ireland. The segmental businesses activities
are the development and construction of gas storage and associated facilities, and
petroleum exploration.
2012
Continuing activities
Revenue from services provided to
joint venture and associates
Administrative expenses
Share of loss of joint venture
Share of loss of associates
Impairment of interest in joint venture
Gain arising on assuming control of
the former joint venture
Finance income
Dorset
Gas storage Exploration
£
£
Northern Ireland
Gas storage Exploration
£
£
Unallocated
Total
£
£
150,000
(183,559)
(10,306,395)
-
(10,626,210)
-
-
-
(83,354)
-
1,218,334
-
1,294,146
-
(19,747,830)
1,210,792
-
-
-
-
-
-
-
-
97,142
-
-
(91,515)
-
6,790
(1,075,647)
-
-
-
253,932
(1,259,206)
(10,306,395)
(174,869)
(10,626,210)
-
-
-
2,596
2,512,480
2,596
5,627
(1,066,261)
(19,597,672)
Discontinued activities
Administrative expenses
Analysis of:
Assets by segment
Liabilities by segment
-
-
(129,690)
-
-
(129,690)
(19,747,830)
1,210,792
(129,690)
5,627
(1,066,261)
(19,727,362)
1,846,155
(567,201)
4,721,556
(773,930)
*3,206,003
*(73,032)
1,383,048
-
1,974,265
(765,916)
13,131,027
(2,180,079)
Net assets per segment
1,278,954
3,947,626
*3,132,971
1,383,048
1,208,349
10,950,948
Capital expenditure
Depreciation
* discontinued activities
2011
Continuing activities
Revenue from services provided to
joint venture
Administrative expenses
Share of loss of joint venture
Finance income
-
-
-
-
*371,510
-
34,564
-
-
7,690
406,074
7,690
Dorset
Gas storage Exploration
£
£
Northern Ireland
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)
32
InfraStrata plc
Notes to the financial statements for the year ended 31 July 2012
2011
Discontinued activities
Administrative expenses
Profit arising on loss of control of
subsidiaries
Dorset
Gas storage Exploration
£
£
Northern Ireland
Gas storage Exploration
£
£
(31,570)
2,964,014
-
-
(120,388)
-
-
-
Unallocated
Total
£
-
-
£
(151,958)
5,843,414
2,932,444
1,439,700
(120,388)
1,439,700
-
5,691,456
2,720,645
1,439,700
(120,388)
1,439,700
(1,169,346)
4,310,311
Analysis of:
Assets by segment
Liabilities by segment
22,473,516
-
1,439,700
-
*2,744,731
*(29,928)
1,439,700
-
883,156
(104,158)
28,981,403
(134,086)
Net assets per segment
22,473,516
1,440,000
*2,714,803
1,440,000
778,998
28,847,317
Capital expenditure
Depreciation
* discontinued activities
*252,977
-
-
-
*286,003
-
-
-
17,380
9,499
556,360
9,499
4. Other expenditure
Fees payable to the Group’s auditor and its associates:
- 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
Depreciation
Net foreign exchange (profit)
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
2012
£
16,000
21,650
9,150
6,550
7,690
(961)
180,000
55,791
2011
£
15,610
8,290
7,780
6,100
9,499
(2,024)
154,262
43,217
2012
Number
2011
Number
5
£
698,670
82,416
17,925
11,304
5
£
682,851
77,080
18,190
60,888
810,315
839,009
InfraStrata plc
33
Notes to the financial statements for the year ended 31 July 2012
6. Directors’ and key management emoluments and compensation
Group and company
2012
Executive Directors
Andrew Hindle
Craig Gouws
Walter Roberts
Non-executive Directors
Ken Ratcliff
Maurice Hazzard
William Colvin
Salary & fees
£
Bonus
£
*279,167
120,000
123,960
37,500
15,000
15,000
590,627
-
-
-
-
-
-
-
Benefits
£
2,358
1,674
3,363
-
-
-
Pension
£
-
6,000
6,000
1,875
750
-
Total
2012
£
281,525
127,674
133,323
39,375
15,750
15,000
7,395
14,625
612,647
Share based payment attributable to Directors
Employers national insurance contributions
*Andrew Hindle agreed during the financial year to reduce his cash remuneration for 12 months by the sum
of £50,000 and in return he was issued 454,545 ordinary shares in the February 2012 placing at the placing
price. The £50,000 was expensed on issuance of the ordinary shares, resulting in a proportionally greater
salary falling within the current year.
2011
Executive Directors
Andrew Hindle
Craig Gouws
Walter Roberts
Non-executive Directors
Ken Ratcliff
Mark Abbott
Jonathan Davie
Maurice Hazzard
William Colvin
Salary & fees
£
Bonus
£
250,000
121,067
86,320
25,000
12,000
12,000
37,500
7,500
5,000
15,000
7,500
-
-
-
-
-
Benefits
£
2,170
1,552
2,971
-
-
-
-
-
Pension
£
-
6,000
6,000
1,875
-
-
750
-
-
72,000
684,647
Total
2011
£
277,170
140,619
107,291
39,375
7,500
5,000
15,750
7,500
529,887
49,000
6,693
14,625
600,205
Share based payment attributable to Directors
Employers national insurance contributions
36,285
67,378
703,868
The bonus of £49,000 awarded to Executive Directors during the 2011 financial year
which was paid by way of the issue of shares.
The total of short-term employee benefits for Directors was £670,022 (2011: £652,958).
The Directors are considered to be the Group’s key management.
34
InfraStrata plc
Notes to the financial statements for the year ended 31 July 2012
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
Maurice Hazzard
Number
Exercise price
£
Exercisable from
Exercisable to
43,859
43,859
43,859
21,929
21,929
2.28
2.28
2.28
2.28
2.28
1 January 2011
1 January 2011
1 January 2011
31 December 2017
31 December 2017
31 December 2017
1 January 2011
1 January 2011
31 December 2017
31 December 2017
No options were granted to Directors and
no options were exercised by Directors in
2012 or 2011.
Key man insurance premiums of £1,927 (2011: £1,862) were paid for Executive
Directors and directors’ indemnity insurance premiums of £23,479 (2011: £20,140)
were paid in respect of all Directors. Two Executive and two 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 no options issued during 2012 (2011: 98,879). The following table illustrates the
number and weighted average exercise prices (WAEP) of, and movements in, share options during
year.
Outstanding at the beginning of the year
Granted during the year
Forfeited during the year
2012
Number
352,407
-
-
Outstanding at the end of the year
352,407
Exercisable at the end of the year
352,407
The weighted average remaining vesting period for the share
options outstanding at 31 July 2012 is 0.06 years (2011: 0.39
years). The range of exercise prices for options outstanding at
the end of the year was £0.15 - £2.28. The weighted average
remaining option life for the share options outstanding at 31
July 2012 is 7 years (2011: 8 years).
Expected volatility (%)
Risk free interest rate
Weighted average contractual life of option (years)
Expected dividend yield
Exercise price of options
Weighted average share price (£)
2011
35%
0.5%
10
Nil
0.15
0.1517
2012
WAEP
£
1.50
-
-
1.50
1.50
2011
Number
301,098
98,879
(47,570)
352,407
208,328
2011
WAEP
£
2.06
0.15
2.28
1.50
2.28
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.
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.
InfraStrata plc
35
Notes to the financial statements for the year ended 31 July 2012
8. Retirement benefits
9. Finance income
2012
£
2011
£
Interest on bank deposits
2,596
11,139
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
independent trustees.
The total cost charged to expenses of £17,925 (2011: £17,398) 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 2012, employer and employee
contributions of £3,295 (2011: £3,295) due in respect of the current period
had not been paid over to the scheme, the payment was made on the 10
August 2012 (2011: 10 August 2011).
10. Income tax
The major components of income tax expense for the years ended 31 July 2012 and
2011 are:
a) Income tax recognised in profit or loss
Current income tax charge
Adjustments in respect of current income tax of previous years
Deferred tax
b) A reconciliation between tax expense and the product of accounting loss from
continuing operations for the years ended 31 July 2012 and 2011 is as follows:
2012
£
-
-
-
2011
£
-
-
-
Accounting loss before tax from continuing operations
(19,597,672)
(1,381,145)
Loss on continuing activities multiplied by the standard rate of tax
(25.33%; 2011:27.33%)
Expenses not permitted for tax purposes and pre-trading expenditure
Other timing differences
Tax losses carried forward
Income tax expense reported in the profit or loss relating to continuing
operations
A reconciliation between tax expense and the product of accounting profit/(loss) for
discontinued operations for the years ended 31 July 2012 and 2011 is as follows:
(4,996,941)
(377,467)
4,500,328
-
496,613
-
2012
£
29,792
2,596
345,079
-
2011
£
Accounting (loss)/profit before tax from discontinued operations
(129,690)
5,691,456
(Loss)/profit on discontinued activities multiplied by the standard rate of tax
(25.33%; 2011:27.33%)
Expenses not permitted for tax purposes and pre-trading expenditure
Non-taxable income
(32,850)
1,555,475
32,850
-
(1,782)
(1,553,693)
Income tax expense reported in the profit or loss relating to discontinued
operations
-
-
c) Factors that may affect the future tax charge
The Group has trading losses of £1,573,810 (2011: £1,341,015) which may reduce
future tax charges. Future tax charges may also be reduced by capital allowances on
cumulative capital expenditure.
36
InfraStrata plc
The Government has announced a
reduction in the corporation rate to 22%
to be in force for 2013/14 but this has not
yet been substantively enacted.
Notes to the financial statements for the year ended 31 July 2012
10. Income tax (continued)
The Group’s potential charge to tax arising from its investments in 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. The Group has no current expectation of receiving
distributions of profits from these investments in the foreseeable future and therefore no deferred
tax liability arises.
11. Discontinued operations
Revenue
Net operating costs
Profit arising on loss of control of subsidiaries
Portland Gas Limited
Corfe Energy Limited
Brigantes Energy Limited
(Loss)/profit before tax
Tax charge (note 10)
2012
£
-
(129,690)
-
-
-
2011
£
-
(151,958)
2,964,014
1,439,700
1,439,700
(129,690)
5,691,456
-
-
(Loss)/profit after tax
(129,690)
5,691,456
2012
£
2011
£
(19,597,672)
(129,690)
(19,727,362)
(1,381,145)
5,691,456
4,310,311
84,122,359
75,978,414
(23.30)p
(0.15)p
(23.45)p
(1.82)p
7.49p
5.67p
Details of the discontinued operations are given in note 21.
12. Earnings per share
(Loss)/profit
The (loss)/profit for the purposes of basic and diluted loss per share
being the net loss attributable to equity shareholders:
Continuing operations
Discontinued operations
Continuing and discontinued operations
Number of shares
Weighted average number of ordinary shares for the purposes of
basic earnings per share
Basic and diluted earnings per share
Continuing operations
Discontinued operations
Continuing and discontinued operations
For 2012, the share options were not dilutive as a loss was incurred. For
2011 diluted earnings per share calculations are not presented as there was
no material difference between the weighted average number of ordinary
shares for the purposes of basic earnings per share and the weighted average
number of ordinary shares for the purposes of diluted earnings per share;
the basic and diluted earnings per share are the same for both years.
13. Losses attributable to InfraStrata plc
The loss for the period dealt with in the financial statements of InfraStrata plc
was £23,795,297 (2011: £856,238). As provided by s408 of the Companies
Act 2006, no income statement is presented in respect of InfraStrata plc.
InfraStrata plc
37
-
34,564
34,564
-
-
-
Notes to the financial statements for the year ended 31 July 2012
14. Intangible assets - Group
Intangible assets - Company
2012
Cost
Exploration & evaluation
£
2012
Cost
Exploration & evaluation
£
At 1 August 2011
Additions
Arising on acquisition (note 16)
-
34,564
3,364,909
At 1 August 2011
Additions
At 31 July 2012
3,399,473
At 31 July 2012
Amortisation
At 1 August 2011
Charge for the year
At 31 July 2012
Net book value
At 31 July 2012
Amortisation
-
-
At 1 August 2011
Charge for the year
-
At 31 July 2012
Net book value
3,399,473
At 31 July 2012
34,564
15. Plant and equipment - Group
Plant and equipment - Group
2012
Cost
At 1 August 2011
Additions
Office equipment
£
2011
Cost
87,028
-
At 1 August 2010
Additions
At 31 July 2012
87,028
At 31 July 2011
Depreciation
At 1 August 2011
Charge for the year
Depreciation
71,867
7,690
At 1 August 2010
Charge for the year
At 31 July 2012
79,557
At 31 July 2011
Net book value
At 31 July 2012
Net book value
7,471
At 31 July 2011
Office equipment
£
69,648
17,380
87,028
62,368
9,499
71,867
15,161
38
InfraStrata plc
Plant and equipment - Company
Plant and equipment - Company
Notes to the financial statements for the year ended 31 July 2012
2012
Cost
At 1 August 2011
Additions
Office equipment
£
2011
Cost
17,380
-
At 1 August 2010
Additions
At 31 July 2012
17,380
At 31 July 2011
Depreciation
At 1 August 2011
Charge for the year
Depreciation
3,358
6,869
At 1 August 2010
Charge for the year
At 31 July 2012
10,227
At 31 July 2011
Office equipment
£
-
17,380
17,380
-
3,358
3,358
Net book value
At 31 July 2012
16. Investments
Group
Investment in joint venture (note 16A)
At 1 August
Additions
Share of losses
Impairment
Disposal
At 31 July
Net book value
7,153
At 31 July 2011
14,022
2012
£
2011
£
22,473,516
-
(10,306,395)
(10,626,210)
(1,540,911)
-
22,925,605
(452,089)
-
-
-
22,473,516
Investment in associates (note 16B)
At 1 August
Additions
Disposals
Share of losses
2,880,000
-
-
(174,869)
-
2,880,000
-
-
At 31 July
2,705,131
2,880,000
Total investments at the end of the year
2,705,131
25,353,516
InfraStrata plc
39
Notes to the financial statements for the year ended 31 July 2012
A. Joint venture - Portland Gas Limited
The Group held 50% of the ordinary shares of Portland Gas Limited as at 31 July 2011. Portland Gas Limited
is involved in developing a gas storage facility on the Isle of Portland, Dorset and the related gas pipelines
between Portland and Mappowder. This joint venture is a private company, registered in England and Wales
and is not listed on any public exchange.
Under the terms of a Restructuring Agreement on 1 June 2012, the 50% interest of the ordinary shares
of Portland Gas Limited, held by eCORP, were converted into non-voting preference shares. Accordingly, as
from that date, the Group owned all the ordinary shares and held all the voting rights. In accordance with
IFRS, the change in the control is accounted for as the disposal of the interest in the joint venture and the
acquisition of a subsidiary. Therefore the investment is accounted for as a wholly owned subsidiary in the
Group financial statements at 31 July 2012. The primary reason for the Restructuring Agreement was the
refocusing of eCORP’s European operations.
The provisions of the Restructuring Agreement, include the following:
•
•
eCORP’s 50% interest in Portland Gas Limited has been converted into preference shares and
eCORP’s former funding obligations have been restructured into an obligation to subscribe a
further US$2,880,000 ($120,000 per month; eCORP receivable) for further preference shares
of Portland Gas Limited over the next two years. The preference shares will provide eCORP
with a 7.5% share of the future profits distributed by Portland Gas Limited.
InfraStrata plc has also acquired eCORP’s 50% interest in the 26th Round petroleum
exploration licence P1918, offshore Dorset (increasing the Company’s direct interest to 78%).
In return InfraStrata plc has granted eCORP a 7.5% share of the future profits generated on
the acquired licence interest.
Portland Gas Limited fully impaired its investment in the Portland Project prior to the restructuring. The
Portland gas storage project, like many other developing gas storage projects in the United Kingdom has not
achieved full funding. This is largely due to the project being only marginally economic at the current winter/
summer natural gas price differential and the project construction start date is thus uncertain. The Group’s
share of the impairment charge and other losses was £10,306,395.
The Group’s investment in the joint venture was then subject to an impairment review and as a result, an
impairment loss of £10,626,210 was recognised. The impairment reduced the group’s investment in the joint
venture to its estimated fair value. This fair value was estimated by considering the estimated value of the
underlying assets of Portland Gas Limited; the only assets considered to have a value for accounting purposes
is the Portland-1 well data and seismic data, which are described more fully below.
The Portland Gas Limited gain on bargain purchase, as described below, arises due to the net assets acquired
having a higher fair value than the fair value of the Group’s 50% interest in the ordinary share capital of
Portland Gas Limited immediately prior to the Restructuring Agreement. The gain on bargain purchase has
been credited to profit or loss in the statement of comprehensive income and will not impact the Group
income tax.
40
InfraStrata plc
Notes to the financial statements for the year ended 31 July 2012
Portland Gas Limited assets acquired at 1 June 2012:
Non-current assets
Intangible assets
- Portland-1 well data
- P1918 licence interest
Financial asset
- eCORP receivable
Current assets
eCORP receivable
Cash
Accounts receivable
Current liabilities
Accounts payable
Non-current liabilities
Inter-company balance
Deferred tax liabilities
Book value of
assets acquired
£
Fair value
adjustments
£
Fair value of
assets acquired
£
-
-
-
-
53,574
226,111
(248,026)
(127,437)
-
2,764,909
600,000
2,764,909
600,000
922,763
935,356
-
-
922,763
935,356
53,574
226,111
-
(248,026)
127,437
(1,201,296)
-
(1,201,296)
Total identifiable net assets
(95,778)
4,149,169
4,053,391
Consideration (fair value of interest
previously accounted for as a joint
venture)
Gain on bargain purchase
1,540,911
2,512,480
The fair value of the Portland-1 well data comprises the fair value of the well data obtained from the well which
was drilled on Portland in 2006 and the seismic data acquired in the same year. Reference was made to the
historic cost to estimate the fair value. The fair value of the 50% interest in the P1918 licence acquired from
eCORP was determined by reference to the farmout of an 8% interest to Corfe Energy Limited in August 2012.
The fair value of the eCORP receivable was determined by estimating the present value of future Portland Gas
Limited preference share subscription receipts expected. The deferred tax liability raised is attributable to the
assets acquired based on the difference between the respective fair values recognised and the tax based of the
underlying assets at an enhanced tax rate of 23%.
The fair value of the joint venture interest (£1,540,911) represents the Group’s 50% share of the Portland-1
well data and seismic data value.
Net cash inflow arising on acquisition:
Cash consideration
Cash acquired
Amount of revenue and net loss of Portland Gas Limited since the acquisition date:
Revenue
Net loss
Amount of revenue and net loss of the combined entity as if the acquisition date had
been as of the beginning of the reporting period (the net loss presented below includes
the impairment of the Portland Gas Limited net assets):
Revenue
Net loss
InfraStrata plc
£
-
53,574
-
183,430
73,932
21,121,970
41
Notes to the financial statements for the year ended 31 July 2012
B. Associates
The Group has 40% interests (2011: 50%) in both of Corfe Energy Limited and Brigantes Energy Limited
which are involved in the hydrocarbon exploration. The associates are private companies, incorporated in
England and Wales 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’ audited financial statements made up to 31 July 2012 and after making
adjustments to align the accounting policies of the associates with those of the Group:
Corfe Energy Limited
2012
£
2011
£
Brigantes Energy Limited
2012
£
2011
£
Long-term asset
Current assets
Current liability
Long-term liability
32,320
781,356
(10,012)
(1,210)
99,372
719,694
(106,334)
-
Long-term asset
Current assets
Current liability
Long-term liability
376,234
428,412
(7,335)
(1,210)
108,284
720,839
(117,028)
-
Group’s share of net assets of associates
802,454
712,732
Group’s share of net assets of associates
796,101
712,095
The revenue and net loss of each of these associates as recorded in each associates’
audited financial statements made up to 31 July 2012 and after making adjustments to
align the accounting policies of the associates with those of the Group:
Corfe Energy Limited
Revenue
2012
£
69,491
2011
£
14,911
Brigantes Energy Limited
Revenue
2012
£
69,491
2011
£
14,911
Total loss for the year
63,864
13,776
Total loss for the year
60,653
13,776
Group’s share of losses
Group’s share of other
comprehensive loss
83,354
-
-
-
Group’s share of losses
Group’s share of other
comprehensive loss
91,515
-
-
-
The 2011 share of associate losses are accounted for in the 2012 financial year.
42
InfraStrata plc
Notes to the financial statements for the year ended 31 July 2012
C. Company
Cost
Balance at 1 August
Additions
Disposals
2012
£
15,249,611
-
(2,000)
2011
£
15,257,966
500
(8,855)
Balance at 31 July
15,247,611
15,249,611
Impairment
Balance at 1 August
Charge for the year
-
(15,247,011)
Balance at 31 July
(15,247,011)
Net book value
-
-
-
Subsidiaries
The Company’s subsidiary undertakings at 31 July 2012, all
of which are wholly owned unless indicated otherwise, are as
follows:
Principal undertaking
InfraStrata UK Limited
Holding and corporate
Country of
incorporation
England
InfraStrata UK Limited
owns the following
subsidiary:
Islandmagee Storage
Limited (65% owned)
Sub surface gas
storage developer
Northern Ireland
Balance at 31 July
600
15,249,611
In January 2010 InfraStrata UK Limited, Moyle and Islandmagee Storage Limited entered into a preliminary
shareholders agreement whereby Moyle acquired a 35% interest in Islandmagee Storage Limited. On 19
January 2012 an agreement was entered into with BPGM regarding the appraisal of the Islandmagee gas
storage facility development project in County Antrim, and the grant of an option to BPGM to acquire a
50.495% equity interest in Islandmagee Storage Limited. Under the terms of a JAA, BPGM has agreed to fund
the activities necessary to develop the project up to the point where a decision can be made on whether to
proceed with a detailed engineering design. 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 100% (2011: 50%) of the issued equity share capital of Portland Gas Limited.
Portland Gas Limited, which was a joint venture at the prior year end and is now classified as a subsidiary,
owns the subsidiaries listed below:
Principal undertaking
Country of
incorporation
Portland Gas Storage Limited
Sub surface gas storage developer
England
Portland Gas Transportation Limited
Gas storage pipeline developer
England
The Company impaired the Infrastrata UK Limited investment and the loan receivable by £15,247,011 and
£7,894,673 respectively during the year. These impairments follow the impairment of the Portland Gas
Limited project investments as described in this note.
Investment in associates
Balance at beginning of year
Reclassifications
2012
£
600
-
Balance at the end of the year
600
2011
£
-
600
600
The company owns 40% (2011: 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
InfraStrata plc
43
Notes to the financial statements for the year ended 31 July 2012
17. Non-current receivables
Group
2012
£
Group
2011
£
Other receivables
768,102
768,102
-
-
18. Trade and other receivables
Amounts due from Group undertakings
Trade receivables
Other receivables
Prepayments
The non-current receivables are amounts due from eCORP.
The receivable is denominated in United States dollars and is
expected to be received within a period of 22 months. The fair
value of the receivable is £768,102.
Group
2012
£
-
107,829
970,449
35,867
Group
2011
£
-
83,754
12,900
43,872
Company
2012
£
3,478,924
107,629
1,205
35,760
Company
2011
£
11,625,452
83,754
12,897
43,872
1,114,145
140,526
3,623,518
11,765,975
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.
19. Available for sale financial assets
Group
2012
£
12,500
Group
2011
£
12,500
Company
2012
£
Company
2011
£
12,500
12,500
At 1 August
At 31 July
12,500
12,500
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.
20. Cash and cash equivalents
Group
2012
£
Group
2011
£
Company
2012
£
Company
2011
£
Cash at bank
1,918,201
714,969
1,814,603
118,448
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.
44
InfraStrata plc
Notes to the financial statements for the year ended 31 July 2012
21. Assets held for sale and discontinued operations (disposal group)
The Company has announced, together with Moyle, that it has
entered into an agreement with BPGM regarding the acquisition
of an equity interest in Islandmagee Storage Limited owned by
InfraStrata plc (65%) and Moyle (35%). Under the agreements,
the equity interest will arise through the issue of shares by
Islandmagee Storage Limited rather than the sale of equity by
the Group and the majority of the proceeds from the issue of
equity will be retained in Islandmagee Storage Limited to fund
project development. Islandmagee Storage Limited was classified
as held for sale in 2011 and continues to be so classified as, in
the opinion of the directors, it is highly probable that BPGM
will exercise its option and the delay in the disposal was due to
events outside the control of the company.
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. The measurement
basis is the carrying amount.
22. Trade and other payables
Assets classified as held for sale
Freehold land
Intangible assets – gas storage
development costs
Trade and other receivables
Cash and cash equivalents
Liabilities classified as held for sale
Current liabilities
Trade creditors
Accruals
2012
£
2011
£
440,100
-
2,631,755
64,772
69,376
2,700,345
1,066
43,320
3,206,003
2,744,731
69,518
3,514
1,192
28,736
73,032
29,928
Trade creditors
Preference shares (note 25)
Other taxation and social security
Accruals
Group
2012
£
818,782
12,500
18,137
56,331
Group
2011
£
27,138
12,500
30,540
33,980
Company
2012
£
794,267
12,500
17,126
34,743
Company
2011
£
14,393
12,500
30,540
28,828
905,750
104,158
858,636
86,261
The Directors consider that the carrying amount of trade and other payables approximates their fair value.
23. Non-current liabilities – Deferred tax
Deferred income tax liabilities in relation to:
Intangible assets
Financial assets
Group
2012
£
773,929
427,367
1,201,296
Group
2011
£
-
-
-
The gross movement on the
deferred tax account is as
follows:
Group
2012
£
Group
2011
£
At August
Acquisition of subsidiary (note 16)
-
1,201,296
At 31 July
1,201,296
-
-
-
Deferred tax has been calculated at a rate of 23% which is the tax
rate which is the currently enacted tax rate for tax years starting
on 1 April 2013. The Government has announced a reduction in
the corporation rate to 22% to be in force for 2013/14 but this
has not yet been substantively enacted.
InfraStrata plc
45
Notes to the financial statements for the year ended 31 July 2012
24. Financial assets and liabilities
The Group and Company’s financial instruments comprise financial assets, cash and cash equivalents and
items such as trade payables and other receivables which arise directly from the Group’s operations. The
Group’s operations expose it to a variety of financial risks including credit risk, liquidity risk, interest rate
risk and foreign currency exchange risk. Given the size of the Group, the Directors have not delegated the
responsibility of monitoring financial risk management to a subcommittee of the board. The objectives of the
financial instrument policies are to reduce the Group and Company’s exposure to financial risk. The policies
set by the board of Directors are implemented by the Company’s finance department. The Group is also
indirectly exposed to risks arising from its interests its 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, Investec, 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, Investec and Lloyds TSB accounts. In
the Directors’ view there is a low risk of one of the banks holding the Groups funds at year end failing in the
foreseeable future. As at 31 July 2012, the Group is also exposed to the credit risk in relation to the eCORP
receivable (£1,706,592), which is payable over 22 months.
The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to
credit risk at the reporting date was:
Non-current receivables
Trade and other receivables
Cash and cash equivalents
Group
2012
£
784,314
1,101,820
1,918,201
Group
2011
£
-
96,654
714,969
Company
2012
£
-
107,629
1,814,603
Company
2011
£
-
96,651
118,448
The reconciling item between non-current receivables as shown above and as presented in note 17 is the
discount to fair value. The reconciling items between the trade and other receivables presented above and that
presented in note 18 and 21 are VAT receivable, prepayments and the discount to fair value. No receivables
are past due but not impaired.
Interest rate risk
The Company and Group is exposed to interest rate risk as a result of positive cash balances, denominated in
sterling, which earn interest at a variable rate. These attract interest at rates that vary with bank interest rates.
Cash at bank at floating rates consisted of money market deposits which earn interest at rates set in advance
from periods of 1-3 months by reference to Sterling LIBOR. An effective interest rate increase or decrease
by 1% on the cash and cash equivalents balance at year end would result in a before tax financial effect of an
increase or decrease in investment revenues and equity for the Group of £19,182 (2011: £7,344) and for the
Company of £18,146 (2011: £1,184).
Foreign currency risk
The Group is exposed to foreign currency rate risk as a result of the eCORP receivable, which is denominated in
dollars and trade payables, which are settled in Euros. During the year the Group and Company did not enter
into any arrangements to hedge these risks, 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 2012, 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 £782
(2011: £1,178). As at 31 July 2012, if the USD 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 £267,593
(2011: £nil).
46
InfraStrata plc
Notes to the financial statements for the year ended 31 July 2012
The currency risk disclosures at 31 July 2012 are as follows:
Accounts payable
Non-current accounts receivable
Current accounts receivable
USD
-
£768,102
£938,491
Euro
£6,145
-
-
The currency risk disclosures at 31 July 2011 are as follows:
Accounts payable
-
£10,606
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 21 (assets held for sale and discontinued operations) and 22
(trade and other payables). The Company issues share capital when external funds are required. The reconciling
items between the contractual maturities presented below and that presented in notes 21 and 22 are taxes.
The following table shows the contractual maturities of the Group’s and Company’s financial liabilities, all of
which are measured at amortised cost.
Group
2012
£
Within one month
951,439
Group
2011
£
98,371
Company
2012
£
Company
2011
£
826,953
42,789
25. Share capital and redeemable preference shares
Authorised
Alloted, called up and fully paid
Ordinary share capital
Number
£
Number
£
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 10p each
100,000,000
10,000,000
78,264,326
7,826,433
Issue 10 pence ordinary shares
-
-
12,727,273
1,272,727
At 31 July 2012
Ordinary shares of 10p each
Redeemable preference shares of
£1 each (classified as liabilities)
100,000,000
10,000,000
90,991,599
9,099,160
At 31 July 2012, 2011 and 2010
50,000
50,000
50,000
12,500
On 15 February 2012 the Company completed a placing of
12,727,273 new ordinary shares at 11p per share and raised
£1,400,000 before expenses. The expenses of the issue, which
were taken to the share premium account, were £56,000.
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.
InfraStrata plc
47
Notes to the financial statements for the year ended 31 July 2012
Preference shares
The preference shares carry the right to an annual dividend out of distributable profits of 0.00001% per
annum on the amount for the time being paid up on each such share and do not carry any voting rights. The
Company may redeem the shares at any time by giving preference shareholders one week’s notice. Preference
shareholders may require the Company to redeem their shares at any time by giving six months’ notice. In
each case, any redemption is at par and is subject to the provisions of the Companies Act. The preference
shares are treated as short-term liabilities and included within trade payables.
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.
26. 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.
27. 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 £11,304 (2011: £60,888) relates to share
options granted in prior periods. There were no options forfeited
during the year (2011: £40,892). For further information on the
share based payment scheme see note 7.
28. Non-controlling interest
BPGM paid an amount of £475,689 to Islandmagee Storage
Limited in relation to their option to acquire an interest in that
Company during the financial year. Should BPGM exercise its
option, as described below, this amount will form part of the
consideration for the equity issued to BPGM.
consents and approvals for the project, and a regulatory and
operational framework being adopted by the Northern Ireland
and Republic of Ireland authorities to facilitate commercial
operations of the facility on a level playing field with storage
elsewhere in the UK and Ireland.
On 19 January 2012 an agreement was entered into with
BPGM regarding the appraisal of the Islandmagee gas storage
facility development project in County Antrim, and the grant
of an option to BPGM to acquire a 50.495% equity interest in
Islandmagee Storage Limited.
During the appraisal stage of the project, BPGM is responsible
for managing surface and sub-surface engineering matters.
Islandmagee Storage Limited is managing the regulatory, land
and stakeholder relations together with drilling and operating
the well.
Under the terms of a JAA, BPGM has agreed to fund the activities
necessary to develop the project up to the point where a decision
can be made on whether to proceed with a detailed engineering
design. The greatest item of the expenditure during the appraisal
period is the drilling of the first well. The drilling of the well is
subject to Islandmagee Storage Limited obtaining other key
Islandmagee Storage Limited has received £200,000 on the grant
of exclusivity to BPGM in 2011, £200,000 was paid on signature
of the agreement and a further £200,000 was paid on the
grant of planning permission for the project in October 2012.
Islandmagee Storage Limited received £75,689 during the year
for works undertaken on the project which BPGM undertook to
fund in terms of the JAA.
48
InfraStrata plc
Notes to the financial statements for the year ended 31 July 2012
29. Cash (used in) operations
Group
Operating loss for the year from continuing operations
Depreciation
Increase in trade and other receivables
Increase/(Decrease) in trade and other payables
Share option expense
Shares issued in lieu of salary or bonus
Loss on sale of subsidiary
2012
£
(1,005,274)
7,690
(35,128)
801,592
11,304
50,000
-
2011
£
(940,195)
9,499
(29,794)
(174,449)
60,888
49,000
8,355
Cash (used in)/from discontinued operations
(96,737)
34,170
Cash (used in) continuing and discontinued operations
(266,553)
(982,526)
Cash flows arising from discontinued activities
Group
2012
£
2011
£
Cash (used in)/from discontinued operations
(96,737)
34,170
Investing activities
Financing activities
Cash from/(used in) operations
Company
Operating loss for the year
Depreciation
Decrease/(Increase) in trade and other receivables
Increase/(Decrease) in trade and other payables
Share option expense
Shares issued in lieu of salary or bonus
Loss on sale of subsidiary
Impairment of inter-company receivables
(371,510)
(415,846)
475,689
2012
£
(23,793,664)
6,869
8,142,456
721,110
11,304
50,000
-
15,247,011
-
2011
£
(858,467)
3,358
(892,408)
(174,050)
60,888
49,000
8,355
-
Cash from/(used) in operations
385,086
(1,803,324)
30. Operating lease 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
2012
£
765,000
-
-
Land and
buildings
2011
£
30,000
22,438
-
765,000
52,438
InfraStrata plc
49
Notes to the financial statements for the year ended 31 July 2012
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
which is on 30 October 2012, exercisable at the Company’s option. The landlord and the Company agreed on
16 May 2012 that there will be no rent review and that either party may terminate the lease at any time on or
after 30 October 2012 by serving six months written notice.
At 31 July 2012 rent due by Portland Gas Storage Limited is payable under the gas storage development land
leases and deed of variation dated 1 June 2012. The lease payments are fixed with variations linked to business
development trigger events. The deed has break dates of 1 June 2013, 1 June 2014, 1 June 2015, 1 June 2016
and 1 June 2017. Prior to the execution of the deed of variation the leases were 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 in terms of lease agreements entered into in April 2008 and 20 October 2006. These leases
provided for a break clauses 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 were
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. This loan liability ceased to exist on execution of the 1 June
2012 lease deed of variation.
31. Contingent liability
Portland Gas Storage Limited entered into a Section 106 deed of agreement relating to the development of the
gas storage facility on the Isle of Portland on 13 June 2012 which supersedes the original deed of agreement
dated 17 June 2008.
On first material operation of the development of the gas storage facility gas pipeline block value at Osmington,
Dorset, Portland Gas Storage Limited covenants:
•
To work with the Portland Gas Trust to complete the Engine Shed refurbishment at a cost of approximately
£2,000,000.
• On completion of the Engine Shed to pay to the Portland Gas Trust a sum of £100,000 per annum for a
•
period of not less than twenty years.
To pay to the Portland Gas Trust a sum of not less than £350,000 to fund projects on the gas storage
pipeline route and Portland.
32. 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 (2011: £45,000). The
balance outstanding at 31 July 2012 was £nil (2010: £nil). The Company paid professional fees to Pinnacle
Energy Limited of £nil (2011: £35,000), a company of which Walter Roberts is a director. The balance
outstanding at 31 July 2012 was £nil (2011: £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 £161,856
(2011: £212,655).
The following balances were outstanding at
31 July 2012:
Amounts owed
by related parties
£
Amounts owed
to related parties
£
Associates
Other
-
600
50
The following balances were outstanding at 31 July 2011:
Amounts owed
by related parties
£
Amounts owed
to related parties
£
22,865,368
21,090
-
-
-
600
Joint ventures
Nominal value of convertible
unsecured loan notes
Other
Associates
Other
InfraStrata plc
Notes to the financial statements for the year ended 31 July 2012
Company
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 £177,242
(2011: £182,863), Portland Gas Storage Limited of £35,746 (2011: £193,450), Islandmagee Storage Limited
of £123,282 (2011: £113,826) and Portland Gas Transportation Limited of £nil (2011: £19,205).
The balances outstanding at 31 July 2012, which are not secured,
are provided in the following table.
The balances outstanding at 31 July 2011, which are not secured,
are provided in the following table.
Related party
Amounts owed by
related parties
£
Amounts owed to
related parties
£
Related party
Amounts owed by
related parties
£
Amounts owed to
related parties
£
Subsidiaries
InfraStrata UK Limited
Portland Gas Storage Limited
Islandmagee Storage Limited
Corfe Energy Limited
Brigantes Energy Limited
10,687,534
102,247
583,818
-
-
-
-
-
300
300
Subsidiaries
InfraStrata UK Limited
Islandmagee Storage Limited
Corfe Energy Limited
Brigantes Energy Limited
11,082,221
543,231
-
-
-
-
300
300
The amounts due from Group undertakings in note 18 are stated net of an impairment provision of £8,248,775
(2011 - £nil) relating to Infrastrata UK Limited.
33. 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 whether rights to explore
an area have been obtained, 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.
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.
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 gas storage 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.
InfraStrata plc
51
Notes to the financial statements for the year ended 31 July 2012
Impairments of exploration and evaluation assets
IFRS 6 requires that exploration and evaluation assets be assessed for impairment when facts and circumstances
suggest that the carrying amount of an exploration and evaluation asset may exceed its recoverable amount.
Management therefore consider annually whether there are any such facts and circumstances and, if so,
undertake an impairment review. In making the initial judgements, management consider the outcome of
exploration and evaluation activities to date and, in particular, data from any seismic surveys and drilling
activities. Management also consider the continuity of the license interests and market data, including oil
and gas prices.
Where an impairment test is required, a comparison is made between the carrying value of the assets at the
reporting date with the expected discounted cash flow from the Group’s license interest. For the discounted
cash flows to be calculated, management use production profiles based on its best estimate of reserves and a
range of assumptions, including oil/gas prices and discount rates.
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.
Going concern
The preparation of the financial statements requires an assessment on the validity of the going concern
assumption and the estimates supporting that 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.
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.
Identification of assets and liabilities arising on a business combination
Management are required to identify the assets and liabilities arising on a business combination, having
regard to contractual rights and obligations and whether cash flows are expected to arise from such rights
and obligations.
52
InfraStrata plc
Notes to the financial statements for the year ended 31 July 2012
Fair values
Management are required to assess the fair value of assets and liabilities acquired on business combinations.
As part of this assessment management considers:
• Third party disposals or acquisitions of the asset or liability (or part thereof)
•
•
In respect of assets, any costs avoided as a result of owning the asset
Expected future discounted cash flows
Management also need to fair value the interests in the joint venture on disposal. Management consider the
fair value of any underlying assets and liabilities and use these to impute a value to the joint venture as a
whole and thence to the Group’s share of the interest in the joint venture.
34. Significant change to estimated amounts reported in the interim report
The Group interim result at 31 January 2012 were presented prior to the impairment of the Portland Project
assets and the investment in the Portland Gas Limited joint venture. Following the issue of these interim
results the Portland Project assets and the investment were impaired – refer to note 16. The significant change
in estimate relates predominately to the uncertainty of project construction commencement date.
35. Guarantee
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 2012 is £750,000 (2011: £18,474,200).
36. Jointly controlled oil & gas exploration activities
Group and Company
Country
Northern Ireland
England
Licence
PL1/10
PL1918
Field name
Operator
Licence
Larne-Lough Neagh Basin
English Channel
InfraStrata
InfraStrata
46%
78%
The Company has entered into agreements with partners whereby the Company’s share of initial exploration
costs to reporting date are covered by the partners to the extent of £2.3 million, therefore the company has
incurred expenditure to the extent of £34,564 (2011: £nil) in developing its share of the assets.
37. Events after the reporting period
Islandmagee Storage Limited received planning approval on 18 October 2012 for its development of a natural
gas storage facility at Islandmagee, County Antrim.
38. Control of the Group
There is no ultimate controlling party of InfraStrata plc.
InfraStrata plc
53
Letter from the Chairman
with Notice of Annual General Meeting
Directors:
Kenneth Ratcliff (Non-executive Chairman)
Andrew Hindle (Chief Executive Officer)
Craig Gouws (Chief Financial Officer)
Walter Roberts (Legal and Commercial Director)
William Colvin (Non-executive Director)
Maurice Hazzard (Non-executive Director)
Dear Shareholder,
1
Introduction
Registered Office:
Blackstable House
Longridge
Sheepscombe
Stroud
GL6 7QX
12 December 2012
Notice of the Company’s forthcoming annual general meeting to be held on Friday 25 January 2013 (“AGM”
or “Annual General Meeting”) appears on the following pages.
As in previous years your Board is not recommending the payment of a dividend.
2
Resolutions to be proposed at the AGM
Ordinary Business
Annual Report and Accounts (Resolution 1)
A copy of the annual report and accounts (together with the Directors’ and Auditors’ reports on the annual
report and accounts) for the Company for the financial year ended 31 July 2012 (the “Accounts”) has been
sent to you with this document. Shareholders will be asked to receive the Accounts at the Annual General
Meeting.
Re-appointment of Auditors (Resolution 2)
The Company is required at each general meeting at which accounts are presented to appoint auditors to hold
office until the next such meeting. Nexia Smith & Williamson Audit Limited have indicated their willingness
to continue in office. Accordingly, Resolution 2 proposes their re-appointment as auditors of the Company
to hold office from the conclusion of the Annual General Meeting until the conclusion of 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 & 4)
Craig Gouws and Maurice Hazzard are the Directors retiring by rotation this year and each offers himself for
reelection. 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 15 of the Accounts.
Special Business
Authority of Directors to Allot Shares (Resolution 5)
The authority given to the Directors to allot further shares in the capital of the Company requires the prior
authorisation of the shareholders in general meeting under section 551 Companies Act 2006. Upon the
passing of Resolution 5, pursuant to paragraph (A) of the Resolution, the Directors will have authority to allot
shares up to a maximum of £3,033,053 which is approximately one third of the current issued share capital
as at 12 Decemeber 2012, being the latest practicable date before the publication of this Letter. This authority
will expire immediately following the next annual general meeting or, if earlier, six months following the date
54
InfraStrata plc
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 5, the Directors will have authority (pursuant to paragraph (B) of the Resolution) to
allot an additional number of ordinary shares up to a maximum of £3,033,053, which is approximately a
further third of the current issued ordinary share capital as at 12 December 2012, being the latest practical
date before the publication of this Letter. However, the Directors will only be able to allot those shares for the
purposes of a rights issue in which the new shares are offered to existing shareholders in proportion to their
existing shareholdings. This authority will also expire immediately following the next annual general meeting
or, if earlier, six months following the date to which the Company’s next annual report and accounts are made
up to.
As a result, if Resolution 5 is passed, the Directors could allot shares representing up to two-thirds of the
current issued share capital pursuant to a rights issue.
Disapplication of Pre-emption Rights (Resolution 6)
If the Directors wish to exercise the authority under Resolution 5 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 6 would authorise the Directors to do this by allowing the Directors to allot shares for cash (i) by
way of a rights issue (subject to certain exclusions), (ii) by way of an open offer or other offer of securities
(not being a rights issue) in favour of existing shareholders in proportions to their shareholdings (subject to
certain exclusions) and (iii) to persons other than existing shareholders up to an aggregate nominal value of
£1,819,831 which is equivalent to 20 per cent of the issued share capital of the Company on 12 December
2012, being the latest practicable date prior to the publication of this Letter. If given, the authority will expire
on the conclusion of the next annual general meeting or, if earlier, six months following the date to which the
Company’s next annual reports and accounts are made up.
For this purpose the ABI recommendation for companies on the LSE main list is 5% although it is generally
recognised that for smaller companies and those on AIM this may be too constrictive. The nature of our
business 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 8,943,282 ordinary
shares (representing 9.83 per cent. of the Company’s issued share capital as at the date of this Letter).
A form of proxy is included for use at the AGM. Forms of proxy should be completed, signed and returned
as soon as possible and in any event so as to be received by Capita Registrars at The Registry, 34 Beckenham
Road, Beckenham, Kent BR3 4TU not less than 48 hours prior to the time appointed for the holding of the
AGM on 25 January 2013.
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
55
Notes:
1. A proxy need not be a member of the Company but must attend the meeting
to represent you. If you wish to appoint as a proxy a person other than the
Chairman of the AGM, please delete the words “the Chairman of the AGM” and
insert the name of the other person. All alterations made to this Proxy Form
must be initialled by the signatory. If you sign and return this Proxy Form with
no name inserted in the box, the Chairman of the AGM will be deemed to be your
proxy. If the proxy is being appointed in relation to less than your full voting
entitlement, please enter the number of shares in relation to which they are
authorised to act as your proxy. If left blank your proxy will be deemed to be
authorised in respect of your full voting entitlement (or if this Proxy Form has
been issued in respect of a designated account for a shareholder, the full voting
entitlement for that designated account).
2. To be effective, this Proxy Form (together with any power of attorney or other
authority (if any) under which it is signed, or a notarially certified copy of such
authority) must be received by post or (during normal business hours only) by
hand at the office of the Company’s Registrars, being Capita Registrars at PXS,
The Registry, 34 Beckenham Road, Beckenham, Kent BR3 4TU, by no later than
11.00 a.m. on 23 January 2013.
3. You are entitled to appoint more than one proxy provided that each proxy is
appointed to exercise rights attached to a different share or shares held by you.
You may not appoint more than one proxy to exercise rights attached to any one
share. To appoint more than one proxy, (an) additional Proxy Form(s) may be
obtained by contacting the Registrars helpline on 0871 664 0300 if calling within
the United Kingdom or +44 (0)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. Calls to the helpline from
outside the United Kingdom will be charged at applicable international rates.
Calls may be recorded for security and training purposes. Or you may photocopy
this form. Please indicate next to the proxy holder’s name the number of shares in
relation to which they are authorised to act as your proxy. Please also indicate by
ticking the box provided if the proxy instruction is one of multiple instructions
being given. All forms must be signed and should be returned together in the
same envelope.
4. Completion and return of this Proxy Form will not prevent you from attending
in person and voting at the AGM should you subsequently decide to do so.
5. If you wish your proxy to cast all of your votes “For” or “Against” a resolution
you should insert an “X” in the appropriate box. If you wish your proxy to cast
only certain votes “For” and certain votes “Against”, insert the relevant number
of shares in the appropriate box. In the absence of instructions, your proxy may
vote or abstain from voting as he or she thinks fit on the specified resolution and,
unless instructed otherwise, may also vote or abstain from voting as he or she
things fit on any other business (including on a motion to amend a resolution
to propose a new resolution or to adjourn the AGM) which may properly come
before the AGM.
6. The “Vote Withheld” option is provided to enable you to instruct your proxy
to abstain from voting on a particular resolution. A “Vote Withheld” is not a vote
in law and will not be counted in the calculation of the proportion of the votes
“For” or “Against” a resolution. The “Discretionary” option is provided to enable
you to give discretion to your proxy to vote or abstain from voting on a particular
resolution as he or she thinks fit.
7. In accordance with the permission in Regulation 41 of the Uncertificated
Securities Regulations 1001 (SI 2001 No. 3755), only those holders of ordinary
shares who are registered on the Company’s share register at 1800 hours on 23
January 2013 shall be entitled to attend the above AGM (or 1800 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 1800 hours on 23 January 2013 shall be
disregarded in determining the rights of any person to attend and/or vote at
the AGM.
8. This Proxy Form must be signed by the shareholder or his/her attorney. Where
the shareholder is a corporation, the signature must be under seal or signed by a
duly authorised representative stating their capacity (e.g. Director, secretary). In
the case of joint shareholders, any one shareholder may sign this Proxy Form or
may vote in person at the Meeting. If more than one joint shareholder is present
at the AGM either in person or by proxy, that one of them whose name stands
first in the register of members in respect of the share shall alone be entitled to
vote (whether in person or by proxy) in respect of it.
9. To change your proxy instructions simply submit a new proxy appointment
using the methods set out above. Note that the cut-off time for receipt of proxy
appointments (see above) also apply in relation to amended instructions; any
amended proxy appointment received after the relevant cut-off time will be
disregarded.
10. In order to revoke a proxy instruction you will need to inform the Company
by sending notice in writing clearly stating your intention to revoke your proxy
appointment to the Company’s Registrars, being Capita Registrars at PXS, 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 before the time of the holding
of the meeting or any adjournment thereof. If you attempt to revoke your proxy
appointment but the revocation is received after the time specified then your
proxy appointment will remain valid. If you have appointed a proxy and attend
the meeting in person, your proxy appointment will automatically be terminated.
11. If you submit more than one valid proxy appointment in respect of the same
share or shares, the appointment received last before the latest time for the
receipt of proxies will take precedence. If the Company is unable to determine
which was received last, none of the proxy appointments in respect of that share
or shares shall be valid.
56
InfraStrata plc
Proxy form
InfraStrata plc (the “Company”)
(Incorporated and registered in England
and Wales with registered number 06409712)
Proxy Form for use by Shareholders at the Annual General Meeting (“AGM”) of InfraStrata plc (the “Company”)
to be held at the offices of Buchanan Communications Limited, 107 Cheapside, London, EC2V 6DN, United
Kingdom on Friday 25 January 2013 at 11.00 a.m.
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 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
1. To receive the Report and Accounts for
the year ended 31 July 2012
the year ended 31 July 2012
2. To
re-appoint Nexia Smith &
re-appoint Nexia Smith &
2. To
Williamson Audit Limited as auditors at
Williamson Audit Limited as auditors at
a renumeration to be determined by the
a renumeration to be determined by the
Directors
Directors
3. To re-elect Craig Gouws
3. To re-elect Craig Gouws
4. To re-elect Maurice Hazzard
4. To re-elect Maurice Hazzard
5. To grant the Directors authority to allot
5. To grant the Directors authority to allot
shares on the basis set out in the Notice
shares on the basis set out in the Notice
of AGM
of AGM
Special resolutions
6. To disapply pre-emption rights one the
basis set out in the Notice of AGM
Signature(s)
Date
(see note 8)
InfraStrata plc
PLEASE
AFFIX
POSTAGE
STAMP
HERE
e
r
e
h
1
d
o
F
l
Fold 2 here
Capita Registrars
PXS
The Registry
34 Beckenham Road
Beckenham
Kent
BR3 4TU
Fold 3 here and tuck in
InfraStrata plc
80 Hill Rise
Richmond
Surrey
TW10 6UB
www.infrastrata.co.uk