TIDMINFA
RNS Number : 1772Z
Infrastrata PLC
08 January 2020
InfraStrata plc
("InfraStrata" or the "Company")
Final Results and AGM Notice
InfraStrata plc (AIM: INFA), the UK quoted company focused on
strategic infrastructure projects, is pleased to announce its final
results for the year ended 31 July 2019.
FY Company Highlights
-- The Islandmagee gas storage project was advanced
substantially and a binding term sheet for a gas storage capacity
offtake deal signed with leading energy trading company, Vitol
S.A.
-- Significant progress made in relation to transforming
InfraStrata from a one-asset entity into an organisation that has
multiple assets in its portfolio
o Potential Floating Storage and Regasification Unit Project in
Barrow-in-Furness
Post-Period End Company Highlights
-- Transformational acquisition of the assets of the iconic
Harland and Wolff shipyard in Belfast
-- Successfully raised over GBP6 million to fund the acquisition
-- Initial contracts secured for Harland & Wolff, fulfilling
the Company's objective to become revenue generative in 2019, and
appointment of new Harland & Wolff management team
-- Appointment of new Chairman, Clive Richardson, effective 1 February 2020
-- Progress made in relation to securing the marine licence and
delivering the Final Investment Decision ("FID") for the
Islandmagee Gas Storage Project
o Decision made to delay FID beyond Q4 2019 due to General
Election outcome, which has potentially opened up beneficial new
funding opportunities
o Confirmation from the Department of Agriculture, Environment
and Rural Affairs that the public consultation in relation to the
marine licence will run from 20 December 2019 until 7 February
2020
John Wood, interim Chairman and CEO of InfraStrata, said:
"2019 was a monumental year for InfraStrata. When we reached the
end of the period under review, we had a binding term sheet for a
gas storage capacity offtake agreement with one of the world's
largest energy trading firms and exclusivity over an exciting new
FRSU project.
"This set the scene for a transformational 2019/2020 fiscal
year, which so far has seen us complete the landmark acquisition of
the assets of the iconic Harland & Wolff shipyard in Belfast,
deliver maiden revenue, welcome new employees and institutional
investors to the Group, and make substantial progress at our
Islandmagee gas storage project.
"As we enter 2020, we are extremely excited about the
opportunities which lie ahead of us. Not only will we be delivering
the FID for Islandmagee, but we will be securing new contracts at
Harland & Wolff, to build our revenue and to return this
globally renowned brand to its former glory."
AGM Notice
The Company is also pleased to announce that its Annual General
Meeting ("AGM") will be held on Friday 31 January 2020 at 12:00
p.m. at the offices of Fieldfisher LLP, 9th Floor, Riverbank House,
2 Swan Lane, London EC4R 3T.
The Company's Annual Report and Accounts for 2019 together with
the formal notice of the AGM will be posted today to those
shareholders who have elected to receive paper copies and those
documents will be available on the Company's website later
today.
For further information, please visit www.infrastrataplc.com or
contact:
InfraStrata plc c/o Newgate Communications
John Wood, Chief Executive +44 (0)20 3735 8825
Allenby Capital Limited (AIM Nominated
Adviser & Joint Broker)
Jeremy Porter / Liz Kirchner +44 (0)20 3328 5656
Arden Partners plc (Joint Broker)
Paul Shackleton / Dan Gee-Summons (Corporate
Finance)
Simon Johnson (Corporate Broking) +44 (0)20 7614 5900
Newgate Communications (PR)
Elisabeth Cowell/ Ian Silvera/Jamie Williams +44 (0)20 3757 6880
Chairman's Report
It has been a privilege to serve as interim Chairman of
InfraStrata plc (the "Company") since March 2019; we have had a
transformational year. I am delighted to be writing what will be my
first and last yearly statement as interim Chairman, looking back
at what we have achieved and looking forward, as we move into the
next phase.
2019 has been a very active year on various fronts. As reported
last year, we successfully completed the Front-End Engineering and
Design Study ("FEED Study") for the Islandmagee gas storage
project. The FEED Study and its results underpinned further
negotiations with both offtake partners and project financiers. We
are very pleased to have entered into a binding term sheet for a
gas storage capacity offtake deal with Vitol S.A. ("Vitol") in June
2019. Once we have entered into the final Gas Storage Agreement
with Vitol based on this term sheet, the deal will run for a
minimum of 12 years. The commercial structure agreed with Vitol
allows us to not only capture the baseload winter-summer price
spread annually but also provides us with significant upside
through participation in spot and short-term price arbitrage
opportunities. Our salt caverns are designed to respond rapidly to
changes in the physical conditions of the UK gas market (under or
over supply) which in turn creates opportunities to absorb price
volatilities in the spot gas markets. Therefore, whilst the salt
caverns facilitate the balancing of the UK gas network in periods
of stress, this deal also allows us to capture incremental margins
associated with spot price volatilities.
The technical and commercial capabilities of the gas storage
project have now been proven and independently assessed by numerous
potential partners. The final piece of the licensing regime that
needs to be put in place is the full marine licence. Between August
2018 and April 2019, the Department of Agriculture, Environment and
Rural Affairs ("DAERA") had a change in stance in relation to the
issuance of the full marine licence, from having accepted the data
submitted till until April 2019 to requiring us to update the
various marine related reports. Upon reflection, this changed
position provided DAERA and, consequently, the Company adequate
protection respectively against any potential legal challenges at
subsequent stages of the project life cycle. Whilst the Company has
always worked towards maintaining its "draft" marine license
status, any pre-enabling marine works would inevitably require a
marine environmental baseline study as a starting point. Taking
this into consideration, we decided to proceed as DAERA determined
in order to achieve the best outcome for all parties involved. I am
very pleased to report that DAERA has studied our latest reports in
great depth and has instructed the Company to issue notices to
commence the formal 42-day public consultation period. Upon
completion of this period and satisfaction of any questions
received, we are confident that DAERA will be able to grant the
full marine licence. Once that is achieved, we will formally have
all the licences in place, and it would enable us to take the next
steps towards project construction. All the above provides the
foundations to raise equity and debt at the project level as well
as capitalise on any potential government assistance that may
become available. Further, discussions are currently on-going with
various financing partners, with the intention to complete project
financing and commence construction. As a Board, we are trying to
ensure that we extract the best value that is available in the
financing markets in order to protect shareholder value. We will be
making announcements in due course as soon as all the various
financing avenues have been thoroughly analysed and a robust
financing deal has been agreed. The report of our Chief Financial
Officer in subsequent sections of this report provides more details
on the various financing activities at the corporate and project
levels.
As early as December 2018, we, as a Board, took a decision that
we would embark on a mission of transforming the Company from a
one-asset entity into an organisation that has multiple assets in
its portfolio, each asset being at different phases of its
respective life-cycle. In keeping with that strategy, we entered
into an exclusivity agreement in July 2019 for a Floating Storage
and Regasification Unit Project ("FSRU Project") located in
Barrow-in-Furness. I am pleased to report that since then, we have
conducted a substantial amount of technical and commercial due
diligence in order to ascertain the viability of this project. Our
findings have been very encouraging thus far, yet more work needs
to be done before we are able to secure this project on
commercially attractive terms. Further, since we announced our
intention to acquire the FSRU Project, we have seen a very healthy
interest from globally recognised Liquified Natural Gas ("LNG")
companies that operate across the spectrum of the LNG chain, from
construction to monetisation. Expressions of Interest ("EoI") have
been received from the largest LNG companies in Japan, South Korea
and North West Europe who desire to partner with us on the
construction of the FSRU Project. In addition, very healthy
interest has now been established with some of the largest LNG
trading houses in the world to book storage and regasification
capacity on a long-term basis. With the ongoing debate surrounding
climate change, we believe that natural gas will become the
predominant feedstock for power generation and will overtake coal
and fuel oil consumption in the years to come. This bodes well for
our vision and strategy of deploying capital and other resources
into such energy related infrastructure projects.
As a Company, we welcome the introduction and commercialisation
of new technologies and projects to mitigate the adverse effects of
climate change. It is a pressing concern that needs to be addressed
both at the policy and project levels. However, clean energy
technologies that exist today, while very exciting, still suffer
from intermittency in power generation. Until such time as clean
energy technologies are capable of delivering steady baseload
energy, natural gas will continue to support global energy networks
making sure that our offices and homes are lit and heated.
Additionally, we have now confirmed that our gas storage caverns
can be suitable for storing hydrogen. Should the use of hydrogen
across the UK gas network grid become mainstream, the Islandmagee
gas storage project will be ideally placed to play a crucial role
in the hydrogen storage market.
In line with our vision of expanding our portfolio of assets,
the single biggest achievement for the Company this year, post the
balance sheet date, was the acquisition of the assets of Harland
and Wolff. On 5 December 2019, we formally completed the
acquisition and acquired the keys to this iconic and historic
facility in Belfast and are rapidly on the way to generating our
first ever operating revenues in the Company's history. The
acquisition of Harland and Wolff was hard fought. We are proud of
the fact that our executive management team secured the assets in
the face of significant global competition. It was the
single-minded focus, determination and nimbleness of the team that
achieved this historic and commercially significant outcome. The
acquisition of Harland and Wolff enables us to not only bring
in-house a large part of the engineering and fabrication
requirements for the Islandmagee gas storage project and FSRU
project, with resultant time and cost savings, but also opens a
plethora of commercial revenue generating opportunities for the
Company across multiple business segments. Our CEO's report in
subsequent sections of this report provides a detailed vision and
strategy for the Company in the months and years to come. As a
Board, we remain firmly committed to this strategy.
The Board made a commitment to our shareholders that we would be
revenue generating by the end of calendar year 2019 and with our
contract win announced on 6 December 2019, we have fulfilled that
commitment. We will now focus our attention towards growing those
revenue numbers and achieving a position of being self-sustaining
and cashflow positive.
The financial year that has gone past has been challenging in
numerous ways - Brexit uncertainties, difficult capital market
conditions, geo-political tensions etc. The single biggest
challenge for the Board has been to break the perception associated
with the Company's legacy of being a semi-dormant AIM company
regularly seeking funding via share placings in order to sustain
its activities. We believe that with at least three projects in
play, the Islandmagee gas storage project, the FSRU project and
Harland and Wolff, we have broken that market perception and have
positioned ourselves as a dynamic and ambitious organisation that
seeks to build a substantial business creating significant value
for its shareholders in the process. Until such time that we are
consistently revenue generating, there will continue to be
pressures on cash. We took a conscious decision to limit our
cash-burn rate as much as possible and raise monies in the capital
market only for specific purposes. I am pleased that we have
achieved a significant set of project results with a highly
restricted monthly cash-outflow. Going forward, we will continue to
monitor and restrict our overheads in order to ensure that we
extract the maximum value for every pound spent. I understand and
appreciate the pain that equity dilution causes. However, I
strongly believe that we have added substantially more value than
the dilution that has been caused in the short term. This is
primarily because the book value of the assets purchased are
significantly higher than the monies that we have raised to acquire
them. Looking further out, we believe that the longer-term value
accretion to shareholders has increased substantially and our
overall corporate financial risk is now spread across the two
assets that we currently own.
As we move into the new calendar year, we will be introducing
new non-executive directors and expanding the Board of Directors.
As a Board, we must be aligned, share a common ethos and, most
importantly, be unanimous in our strategy for the Company. The
reconstituted Board of Directors will be mandated to oversee and
strengthen our corporate governance protocols and adequately
challenge the executive management team. As a Company, we are set
to grow rapidly in the forthcoming year, and we recognise the
critical need for a well-qualified, astute and motivated Board of
Directors. The appointment of Clive Richardson as Chairman of the
Company, with effect from 1 February 2020 and as announced on 27
December 2019, is a firm step forward towards building such a Board
of Directors.
Finally, I wish to place on record my heart-felt thanks to
everyone who has been associated with the Company through this year
- our suppliers, contract counterparties and advisers. I would
especially like to thank our shareholders for the faith that they
have placed in the Company and for having supported us during the
Harland and Wolff acquisition. Without their support, this would
not have been possible. I also wish to thank our new institutional
shareholders who subscribed to our shares during the equity
fundraise that took place in November 2019. I warmly welcome them
into the Company.
As we move forward, we have surrounded ourselves with some of
the biggest and most credible names across all aspects of the
Company's activities - institutional shareholders, world class
advisers and contractors, globally renowned clients and joint
venture partners and, of course, ownership of one of the most
iconic heavy engineering brands in the world. To distil our
thinking using a famous quotation: "We can see further than others
because we are standing on the shoulders of giants."
John Wood
Interim Chairman & CEO, 08 January 2020
Chief Executive Officer's Strategic Report
Overview
As I pass my first anniversary as Chief Executive Officer of
InfraStrata plc, it has been a very challenging but exciting twelve
months to consolidate our position as a small but growing company.
At the same time, I believe that we have made tremendous progress
in the various activities that we have undertaken through the
year.
After successfully completing the Front-End Engineering and
Design (FEED) for our Islandmagee gas storage project at the end of
2018, we commenced a deep detailed review of all aspects of the
business Additionally we had a number of work streams that had to
be completed in their entirety over and above the FEED scope and we
put significant resources into completing these legacy workstreams.
Upon reflection, 2019 has been a year of stabilisation and building
the foundations for 2020 and beyond. With the acquisition of the
assets of Harland and Wolff in December 2019, we are set up for a
thrilling 2020 and beyond as we start to realise the potential of
the business that we are building and the substantial increase in
shareholder value that will come as a part of this journey.
In last year's Annual Report, I set out some clear
objectives:
1. Being revenue generative during 2019 after twelve years of regular dilution
I am delighted to report that we have achieved that milestone
through our subsidiary, Harland & Wolff (Belfast) Limited, by
securing two ship maintenance contracts from Sea Trucks on the day
we completed the acquisition transaction of the assets of Harland
and Wolff.
2. Moving away from being a one project company
With the completion of the purchase of the assets of Harland and
Wolff in December 2019, we have completed this objective as well.
We also have several exciting projects under evaluation, especially
the Floating Storage and Regasification Unit Project ("FSRU
project") for which we currently have exclusivity until 8 January
2020.
3. Delivering the Final Investment Decision ("FID") for our Islandmagee Gas Storage Project
Whilst we are well advanced and have made excellent progress
this year in our financing negotiations for the Islandmagee gas
storage project, we have taken a key decision to delay FID from Q4
2019 as a result of the outcome of the General Election and the
fact that we are now extremely likely to leave the European
Union.
The equity deal offered that we were carefully considering and
the offers that we received previously would have resulted in the
Company selling down a substantial portion of equity in the project
to the incoming project equity funding partner. Following on from
the General Election, we believe that there will be other funding
options that may enable the Company to retain more equity in the
project by utilising new schemes that are likely to be put in place
in 2020 as a consequence of Brexit.
We understand there will be more clarity on what these new
funding schemes are during the first part of 2020. If they are
found to be unsuitable, commercially, strategically or
procedurally, we will not pursue them. Instead, we will seek to
revert to the arrangements that we were working on in 2019. It is
the Board's opinion that we need to fully explore these new options
prior to making a final commitment on FID given the potentially
significant impact that these new funding options might have on our
project equity position. We have had discussions with our potential
project equity partners, and they understand our position to delay
FID given the changing political and associated financial
landscape.
Although we have only been able to complete two out of our three
main objectives, we believe this approach to FID is in the best
long-term interests of the business, which may substantially
improve shareholder value in the mid to long term.
We are delighted to welcome Clive Richardson to the business as
our new Chairman (with effect from 1 February 2020). We believe
that the skills and experience that he brings will position us well
for the future. We are extremely lucky that he has agreed to join
us, and we now have a diverse and experienced board with strength
and depth.
The task of converting the draft marine licence to a full marine
license became more complicated during 2019. The Department of
Agriculture, Environment and Rural Affairs ("DAERA") moved the goal
posts as a result of a few local protestors who do not want gas
storage or, for that matter, any other project in "their back
yard", as it were. This group has opposed every project in the
region over the past five years. We have, however, dealt with the
change in requirements with good grace and announced the
commencement of the 42-day public consultation to enable the full
marine licence to be issued to us as soon as such public
consultation period closes, and responses have been assessed.
Clearly this is a high-profile work stream and we have
undertaken substantial amounts of additional environmental surveys
and baseline establishment works to ensure that our data set is
complete, up-to-date and goes over and above the legal
requirements. We are not aware of any reason as to why the marine
licence will not be issued. We expect this to be done early in 2020
after following due process. We have not had any issues raised by
DAERA, which we believe indicates that they are comfortable with
the data and reports produced that satisfy full compliance with
current regulations.
We are extremely pleased to have completed the acquisition of
the assets of Harland and Wolff. The deal from commencement to
completion was achieved in three months. Given the multiple
stakeholder groups involved in this process, completion within
these timelines is an achievement that we are all very pleased
with. The final acquisition cost was well under the Board's
valuation as well as independent valuations conducted and,
therefore, represents an excellent investment. The income stream
for this multi-purpose fabrication facility will come from internal
group projects and external projects. Early indications show that
revenue generation is likely to come from the following
sectors:
-- Internal projects
-- Ship Repair & Maintenance
-- Ship Conversion
-- Offshore infrastructure/assets
-- Fabrication
-- Recycling
When operating at full capacity, the Board estimates that the
facility could eventually generate significant revenues, dependent
on our marketing efforts, flow of internal projects and the
development of our pool of skilled labour.
This acquisition provides the Company with the opportunity to
substantially reduce the overall CAPEX of our flagship Islandmagee
gas storage project in addition to being cash generating and
self-sufficient, potentially negating the need to return to the
stock market on a regular basis in order to provide cash inflow for
ongoing operations.
We remain in constant dialogue with Meridian Holdings in
relation to the proposed FSRU project. We now have several
potential offtake partners who are very keen on acquiring the
capacity that this asset will bring to the market. Preliminary
discussions thus far have indicated that they may also provide some
funding as part of the offtake agreement. Whilst this is a highly
exciting project we will only proceed when we are fully satisfied
with our evaluation of the risks involved. We expect a decision to
be taken on our involvement within H1 2020.
Within Islandmagee Energy Hub Ltd we have several additional and
interesting projects that are still in the incubation stage. We
will look at developing these projects given that the hydrogen and
carbon capture markets are showing some interesting levels of
traction as we move into 2020.
We have introduced a new approach to Safety, Health and
Environment (SHE) which we will be rolling out during 2020. Safety
is of upmost importance in our minds and we will do all we can to
ensure that no harm comes to any of our employees or to our
environment.
Board
At the beginning of 2019, our then Chairman Graham Lyon tendered
his resignation from the business in order to concentrate on other
projects. I would like to place on record my thanks to Graham for
all his efforts in arresting the free fall of the Company and its
subsidiaries, commencing the turnaround of the business, laying the
foundations of a new team and providing a stable platform.
I have had the privilege of acting, in an interim capacity, as
Chairman for the remainder of 2019. Whilst in an ideal world, we
would have appointed an immediate replacement, the Board wished to
find the right candidate, limit cash burn and ensure that it had a
clear strategic direction prior to making a new appointment.
Dealing with all the legacy matters and ironing out the regulatory
issues in relation to Islandmagee opened up an entirely new long
list of high-quality candidates who had decades of corporate and
strategy experience.
We have, therefore, concluded that the board moving into 2020
will now be expanded with the addition of a new Non-Executive
Director and our new chairman thus positioning us for growth in
2020 and beyond.
We have now made one board appointment, Clive Richardson, who
will fulfill the role of Chairman from 1 February 2020. We are
confident that Clive will add extensive value to our business in
the long term. Clive has extensive experience in large contract
delivery across multiple markets including defence and maritime and
has been on the board of several organisations.
The added strength and depth of knowledge that Clive brings will
complement the skills of the existing board and provide significant
support to the executive team.
Clive Richardson - Chairman
On 27 December 2019 we were delighted to announce that Clive
Richardson has been appointed as our new Chairman, with effect from
1 February 2020. Whilst I have enjoyed my interim stint in this
role, it is great to welcome Clive with his wealth of experience
into the role in order to allow me to fully concentrate on my main
objective of driving the business forward as CEO during 2020. Clive
will take up this position from 01 February 2020. This appointment
will strengthen our board substantially, provide further governance
and facilitate a clear strategic path going forward.
Most recently, Clive was Group CEO of V. Group, one of the
world's largest providers of commercial ship management services
with over 1,000 vessels under management. Clive held P&L
responsibility, reporting to the main board, and achieved
significant organic growth for shareholders throughout his tenure,
also making several acquisitions. Clive also introduced a core
operating framework and enhanced controls and governance which led
to a significant reduction in overheads, as well as leading the
recapitalisation of the business as required.
Between 2007 and 2009, Clive was Chief Operating Officer, EMEA,
and Chairman, QinetiQ Ventures for QinetiQ plc, formerly known as
the Defence Evaluation and Research Agency which was subsequently
privatised in February 2006. This signalled the start of rapid
growth and the business now reports annual revenues of GBP1.4
billion. Clive held P&L responsibility for all operations
outside of North America and during his tenure, undertook three
acquisitions in Australia and two acquisitions in the information
security sector. Clive was also Chairman of QinetiQ Ventures'
partnership with Coller Capital in the GBP80m Cody Gate Ventures
fund.
Between 1989 and 2007 Clive was an executive at BAE Systems Plc.
He held several senior roles during his time there, including Chief
Executive of Insyte, Managing Director at Royal Ordnance plc and
Commercial Director at BAe Airbus. During his career Clive also
held senior positions at Marconi Electronic Devices Ltd and
Westland Helicopters Limited.
Between 2004 and 2009 Clive was a member of the National Defence
Industries Council, (the Government and Industry defence
consultation authority) and he was President of Tech UK, (the UK
trade association for the IT, telecoms and electronics sector),
between 2009 and 2011.
Strategic vision
The development of a long-term strategic vision for the Company
was the first activity that I undertook after being appointed Chief
Executive Officer. It was clear that a one project company was very
high risk and unsustainable in the long term. Our vision is,
therefore, to be a leading, global energy infrastructure
development and asset management company, being intimately involved
through the entire lifecycle of projects from conception to
decommissioning. We will participate in some projects from end to
end of the lifecycle, whilst in the case of others, we may only
develop or acquire to operate them.
Our goal is to spread the Company's risk profile over several
projects and operations. Whilst, initially, we have restricted
ourselves to a single geographical location, we have global
aspirations in the longer term. The key update in our strategy from
last year to this year is a more concentrated approach to asset
management, operations and maintenance.
The model, whilst relatively simple, will allow us to continue
to enhance our balance sheet year on year. Income will be generated
from four main areas of operations; each new project may be
different and have specific nuances that need to be critically
assessed. Therefore, individual technical and commercial models
will be developed to ensure that maximum value is derived from
every potential project. The four areas of expertise that we hold
and that will lead to income generation and incremental shareholder
value are:
-- Front End Project Development to FID (Final Investment Decision) - Carried equity interest
-- Construction Management & Project Delivery - Management fee agreement
-- Asset Operation, Management and Optimisation - Management and operations fee agreement
-- Retained equity income generation - project profit sharing via dividend distribution
Our strategic goal is to have numerous projects and facilities
at various stages of their respective lifecycles. The Board will
identify and assess projects that substantially fit the following
criteria:
-- Substantial infrastructure;
-- Facility operational management;
-- Key strategic requirement for the assets;
-- Political stability in the project location;
-- Long life operations of between 20 and 40 years;
-- Risk of development can be mitigated to an acceptable level; and/or
-- State backed projects where grants for feasibility and construction may be available.
The Board is focused on being in a position to consider
returning cash to shareholders in the form of dividends, whilst
retaining sufficient funds to invest in new value enhancing
projects, as soon as possible.
Harland and Wolff Asset Acquisition
During the FEED study it was clear that one of the challenges
for the Islandmagee gas storage project was the transportation of
several large items of plant and equipment onto site.
Given the restrictions relating to weight and physical size of
component structures, we put a lot of detailed analysis into the
transportation plan. In an effort to determine the most
cost-effective transportation route, numerous locally available
sites and facilities were considered. The Harland and Wolff site
was visited in March 2019 and considered to be an optimum staging
facility for the project.
The advantage of being able to construct larger modules and have
less assembly work on-site was calculated to offer a substantial
CAPEX cost reduction for the Islandmagee Gas Storage project. With
the relatively short coastal passage of 23 nautical miles Harland
and Wolff is a fantastic acquisition from, inter alia, a
geographical perspective.
With more modules/components that can now be transported via
barge, this will lead to significantly less traffic on the local
roads. In addition, it will facilitate a higher level of
utilisation of the Northern Irish workforce. We have made a
commitment at all stages of our flagship Islandmagee gas storage
project to utilise, where possible, the local workforce.
The utilisation of local labour and construction within a nearby
facility like Harland and Wolff will ease the supervisory burden on
the Company, increase efficiency and save on costs. From an overall
Group perspective, retention of margins on fabrication work within
a group company as opposed to passing it on to a third-party
fabrication company added to the attractiveness of Harland and
Wolff.
The other potential projects that are held within Islandmagee
Energy Hub Limited and the potential FRSU project, further
strengthen the Harland and Wolff acquisition rationale. In addition
to our internal projects, we believe that there are other lucrative
asset management markets that we can penetrate over time in order
to reduce the overheads burden on our internal projects as they
come through into Harland and Wolff. On that premise, clearly the
facility lends itself to other asset-based activities such as ship
maintenance, conversion and fabrication works across multiple
sectors.
The corporate structure that is currently in place consists of
four subsidiaries that are 100% owned by InfraStrata UK Ltd, which
in turn is 100% owned by the Company. All subsidiaries should be
able to be self-sufficient whilst benefiting from trading
relationships, where possible, with each other. Harland & Wolff
(Belfast) Limited has a 100% owned subsidiary, Harland & Wolff
Technical Services Limited which will carry out preliminary and
detailed design as well as consultancy works across a wide variety
of projects.
Islandmagee Energy Limited
Overview
Our flagship Islandmagee gas storage project was first
established back in 2010 when a layer of salt was discovered 1500m
underneath Larne Lough. This salt layer is ideal for the
establishment of underground gas storage caverns. The storage
caverns are formed by drilling wells from the well pad into the
salt layer thereafter removing the salt (in a brine solution) and
discharging it into the fast-flowing Irish Sea via the leaching
plant and pumping station. The rates and levels of discharge are
highly regulated activities governed by the regulations set by the
Department of Agriculture, Environment and Rural Affairs ("DAERA").
Our proposed discharge rates are well within the legal
environmental limits and we have further proposed a monitoring
programme that is in excess of these legal requirements.
The gas injection and withdrawal facility will be constructed on
the surface and this will facilitate moving gas from the network to
be injected into the caverns in times of excess supply and,
conversely, withdrawn from the caverns back into the gas network
when there is a shortage of gas supply.
The project is at an advanced stage and technically ready to
award a construction contract. Whilst the project has progressed
over the years, all areas of the project had not previously been
brought up to the same level of completion. This year has been
about just that, following on from feedback during the tender
process undertaken in Q1 2019. Clearly this has taken longer than
we would have liked. After moving into the CEO's position, I
undertook a full gap analysis of all the elements of the project.
This gap analysis highlighted several additional work streams that
needed to be completed in order to bring the project to a
"shovel-ready" status. I am pleased to report that these additional
work streams have now been successfully completed.
We have additionally revisited all aspects of the project to
ensure that it complies with or exceeds regulatory standards. We
have also established internal systems and processes that
significantly exceed current regulations. This has achieved two
objectives: one, it has sought to mitigate concerns of locally
formed protest groups; and two, it has created an environment that
is likely to avoid potential delays in the future. One area where,
legally, we could have argued that the data was still compliant
regardless of it being old in nature was that surrounding the
marine licence. We took the decision to bring forward the
pre-baselining environmental work in order to protect against the
possibility of objections that might be raised at a later stage
when construction is well underway. This work has now been
undertaken and submitted to DAERA. As part of this work stream, a
public consultation exercise will be conducted between 20(th)
December 2019 and 7(th) February 2020 upon satisfaction of any
questions raised. This process is routine in nature, and we see no
reason why the full marine licence will not be issued in due course
early in 2020. Unfortunately, with the establishment of a local
protest group it has lengthened the processing time to advance
through the various stages of the regulatory system, over which we
have no control.
Marine Licence
During 2019 we made excellent progress to seek to convert the
draft marine licence into a full marine licence. The marine licence
is required to discharge salt into the Irish sea inside the 12
nautical mile limit. As part of the marine licence, an abstraction
and discharge licence is also required. Discharge outside the 12
nautical mile limit was an option that was considered as plan "B"
given that the discharge requirements to be put in place were less
onerous. A review was undertaken during 2019 in relation to this
plan "B". However, this has not been taken any further due to all
planned activities currently falling well inside the existing
environmental limits.
The project currently has a draft marine licence as well as a
full abstraction and discharge licence. Given the age of the
previously available environmental studies and the potential for
objections, the Board took the decision to bring forward the
pre-construction baseline activities for all environmental survey
works. These works were carried out in the waters and coastal areas
surrounding the point of brine discharge. Numerous activities were
undertaken including measuring tidal flows, noise studies, bird
studies, various marine habitat studies, seabed samples, trawl
sampling and other marine related field work in order to collate
and prepare a complete set of data.
The field work was undertaken by independent marine scientists.
The samples were then analysed in laboratories prior to the final
reports being submitted to InfraStrata. In addition, brine
discharge models were constructed by a third-party expert and
further independently verified and corroborated by another
independent third-party expert. These workstreams were carried out
during the summer and autumn of 2019 and have been now adopted by
DAERA as core project documentation.
Whilst not legally necessary, the Board believed the data from
these workstreams would be required in early 2020 given that this
was always a condition of the draft licence. With the completion of
all the work and collation of the latest data, there will now be
substantial protection against any challenge that may be posed in
relation to historic data. In addition, a public consultation has
been agreed to share the new data that has been gathered throughout
2019. The new data shows no adverse effects and demonstrates an
improvement in some areas. As a result of these efforts we believe
a full marine licence incorporating an updated abstraction and
discharge licence will be awarded in 2020.
The documents, inter alia, supplied, reviewed and approved by
DAERA are as follows:
-- Environmental Conditions Update Report
Appendix A - General Arrangement Drawings
Appendix B - Brine Dispersion Modelling Report - FEED Update
Appendix C - Underwater Noise Modelling Plots
Appendix D - Benthic Survey Reports (Aquatic Services Unit)
Appendix E - Ecological Survey for Birds (RPS)
Appendix F - Cumulative Effects Assessment Stage 1 & 2
Appendix G - Biodiversity Data received from CEDaR
-- The Updated Shadow Habitats Regulation Assessment
As part of the marine licence, we will be installing a
monitoring system. This system is designed to ensure that we only
discharge into the Irish Sea what has been licensed to be
discharged. There will be a system of buoys installed at sea at
agreed distances from the discharge point. These buoys will come
with a suite of sophisticated and fully calibrated scientific
equipment that will measure the discharge of brine at specific
points.
The equipment will relay data back to shore in real time where
it will be monitored by the Company and DAERA. Should at any point
the level of brine discharge increase over the licensed limits, an
alarm message will be sent to DAERA and the brine discharge
operation will be ceased until such time as the level of brine
reverts to the licensed levels.
We are aware of no reason why the marine licence will not be
issued. The public consultation commenced on 20 December 2019 and
will end on 07 February 2020. Whilst only 42 days are legally
required for a public consultation process, we have allowed a few
extra days due to the intervening holiday season. During this
period the Company will hold several consultation sessions that
will build on the sessions that were conducted between March and
October 2019.
Project Funding
We have always assumed in our economic modellings that the
Islandmagee gas storage project would be funded via commercial
equity and debt. Whilst there remains the possibility of acquiring
some government or quasi-government funding especially after the
outcome of the December 2019 General Election, we have been
cautious in our approach towards making funding assumptions for our
flagship project. Additionally, we have had various offers that we
have been negotiating to term sheet stage. Each term sheet would
require the Company to sell down a portion of the equity to the
incoming equity provider resulting in our remaining equity stake to
be in the region of circa 20-30% along with the return of our back
costs which currently sit at circa GBP15m.
We have been working hard towards signing heads of terms on an
equity deal in 2019. The Board has, however, decided to pause this
process for a limited period. With the recent General Election
result clearly indicating that we will be leaving the European
Union, we believe that this change in circumstance will open up
access to several funding initiatives in the UK which may
facilitate the Company retaining the majority of the equity in
Islandmagee Energy Limited. This is significant given the
significant revenue streams that are expected to flow from this
project through its lifetime.
Whilst some shareholders will view this decision and delay as
disappointing, I have always stated that we are continually seeking
to improve long term shareholder value. We have been monitoring the
situation for several months and have held back from making a
decision. With the marine licence consultation running through
until February and the assessment period that will follow, we
believe there is a window of opportunity to explore this option. We
will seek to revert to the offers that we recently had on the table
should this current initiative not yield the results that we
desire. We believe that we will need a window of between three and
six months during 2020 to fully assess the options, timescales and
criteria involved in any new proposed funding routes.
Reversal of the Scotland Northern Ireland Pipeline (SNIP)
Earlier in 2019, the Company, in conjunction with Mutual Energy,
submitted a speculative application to the European Union to fund a
FEED study for reversal, twinning and various upgrade works in
relation to the SNIP. When it became clear that the UK was leaving
the EU, we were advised that no further grants would be made
available.
The Board believed this would be the most probable outcome but
decided to make an application nevertheless to determine if any
real appetite existed to award us a grant for studies as opposed to
a grant for works. Our previous cost estimates already have an
allowance for the FEED costs to progress this project. Ultimately,
if we are to fund the CAPEX of this project it will generate an
income stream over an extended period that will cover the cost of
development. Equally, Mutual Energy, as the operator, may choose to
fund this directly and enter into a utilisation agreement with
Islandmagee Energy Limited.
Given the perilous state of gas storage in the UK, especially
with the United Kingdom now set to leave the European Union, it is
essential for the United Kingdom and the Island of Ireland to have
immediately available gas storage. The risk of blackouts will
increase significantly given that interconnectors from the EU will
be closed in an emergency situation, at which point gas supplies
will be restricted. When fully operational, the Islandmagee gas
storage project is expected to contribute 25% of the UK's available
gas storage capacity and is set to become a key strategic asset to
ensure security of gas supply to the island of Ireland and the UK
mainland as well.
The binding Heads of Terms that have been signed with Vitol,
prior to the Gas Storage Agreement, facilitate bringing the caverns
online sequentially up to a total of 500 million cubic metres of
gas storage. The cavern formation and operational schedule would
not have the requirement for the reversal of the SNIP until five
years after the commencement of construction of the initial three
caverns. We remain confident of agreeing a commercially viable
solution with Mutual Energy in this intervening period so that we
do not have any capacity related restrictions when all 7 caverns
are in full commercial operation.
Gas Storage Agreement (GSA)
As previously mentioned, a lot of detailed work was undertaken
during the negotiation of the Heads of Terms stage. Implementation
of these terms into the GSA is progressing well and will be brought
to conclusion in 2020. Drafts have now been exchanged between the
parties. Given that the commercial model that is being used is
pioneering and has not been devised previously, a number of back
tests and independent assessments have been conducted in order to
prove the effectiveness of this new commercial gas storage model.
The fact that we have managed to secure an element of the traders'
profit into our agreement in addition to receiving 100% of the
classic seasonal spread bodes well for the future. For the
avoidance of doubt, the funding model that we adopt to construct
the project will not affect the GSA.
Harland & Wolff (Belfast) Limited
Harland & Wolff (Belfast) Limited is the group's new
subsidiary company that was used to acquire the assets of Harland
and Wolff from the administrators. This acquisition was completed
on 5 December 2019. We launched an initial bid for the assets by
paying a non-refundable deposit of GBP500,000 in order to get first
mover advantage.
The final deal that has been agreed with the administrators is
as follows:
Structured payments
1 October 2019 Deposit paid - exclusivity GBP0.5m
secured
4 December 2019 Interim part payment GBP3.30m
30 April 2020 Final payment GBP1.45m
TOTAL COST GBP5.25M
The Facility is made up of two sites. Site one includes the
Belfast Dry Dock and site two includes the new building and
fabrication dock along with 30,000m(2) of undercover fabrication
space.
The facilities have deep water access and over 900m of quayside
berths between the two facilities. There are various deep water
pockets around both sites that will facilitate larger deep drafted
vessels and structures to berth and be worked on.
Whilst our primary purpose for acquiring the assets of Harland
and Wolff and establishing Harland & Wolff (Belfast) Limited is
to undertake various fabrication activities for our flagship
Islandmagee gas storage project and subsequent projects to be
developed over time, we are conscious that we need to keep the rate
of cash burn on overheads down to a minimum.
It is still early days given that we formally acquired the
assets only on 05 December 2019, but we have been able to identify
certain sectors where we will be able to secure some additional
projects to ensure continuity of employment and further develop the
skill set of the employees whilst reducing the overhead burden of
owning the facility. We have been fortunate to have secured the
first two vessel dockings for asset maintenance, the first of which
docked on 21 December 2019. These contracts represent the first
ever operating revenues for the Company.
Across all the markets from which we may look to secure
projects, the addressable market size in the UK is circa GBP15.15bn
before applying sensitivities, capacity constraints,
competitiveness and competency. The key indicator at this stage is
that we clearly have a large addressable market and of which we are
confident that we can obtain a small yet significant market share.
The new management team will further evaluate each market and the
opportunities available as we progress through 2020.
Internal Projects
The Company will continue to work through various valuation
processes and consider new projects to develop. It is likely that
these projects will require a certain degree of fabrication and
utilisation of the facilities available at Harland and Wolff.
Typical projects in this sector will range in value from
GBP100-300m with a duration of 2-4 years.
Ship Repair
Projects in this area will cover general routine maintenance and
asset management of marine assets including vessels and will
utilise mainly the Belfast Dry Dock and the numerous quayside
berths available onsite. This sector will be split further down
into cruise & ferry, defence, commercial and high-speed
vessels. Contracts can vary in value from GBP150,000 - GBP5m with a
duration of between 7-14 days in dock or alongside the quay. Ease
of entry into this market and relatively low commercial risks are
positive factors for this sector. We have already entered this
activity with the award of two contracts in December 2019 by Sea
Truck Ferries Limited.
Ship Conversion
This area is more complex than standard ship repairs and
requires a more experienced management team. As detailed later on
in this report, we have assembled a team capable of handling these
types of projects. The general sectors for this type of work are
across cruise, construction vessels, defence and ferry. Contract
values can vary from GBP10m - GBP70m with a normal duration of
14-30+ days. The entry point for this level of projects is more
complex and requires an experienced team to ensure the
techno-commercial risks are understood and adequately mitigated.
With an experienced team now in place, we will be well positioned
to enter this market during 2020.
Offshore infrastructure / assets
The facilities and employees of Harland & Wolff already
enjoy vast experience in this sector. The dock sizes lend
themselves to larger projects such as Floating Production Storage
and Operating vessels ("FPSO"), offshore structures and vessels as
well as spooling and subsea structures. This sector has a mixed use
of the facilities ranging from the utilisation of the fabrication
halls through to blasting and painting rooms and finally, the use
of the quayside and dry docks. Contracts can vary in value from
GBP1m - GBP70m+ with project durations ranging from 14 days to in
excess of 120 days for more complex projects. Given their
experience over the last decade, the team are well positioned to
enter this market in the near future.
Steel Fabrication
The facility has 30,000m2 of undercover fabrication space and
has blast and paint coating facilities that complement fabrication.
Clearly, this area will be extremely busy dealing with internal
projects and it is, therefore, essential that this sector makes
progress early in 2020 to upskill the workforce. There are numerous
contracts that we may be able to secure to advance this area
including construction industry steel for office buildings and
factories, renewable and offshore infrastructure projects and
completing defence vessel blocks including the construction of new
vessels. The contract value in this sector is varied and can be
from GBP0.1m up to GBP200m+. This forms an integral part of
physical asset lifecycle management and each project will always be
handled on a case by case basis in order to understand its risk
profile whilst maintaining economic efficiency.
Recycling / Decommissioning
The facility is one of a limited number in the UK that has a
recycling licence into which disused and damaged structures and
vessels can be brought and decommissioned in an environmentally
friendly manner. General markets include offshore structures,
production and defence vessels and subsea structures.
New Management Team
In addition to Harland & Wolff (Belfast) Limited we have
also recently incorporated a new company, Harland & Wolff
Technical Services Limited, which is 100% owned by Harland &
Wolff (Belfast) Limited. This company shall incorporate all
engineering functions internally, as well as serving external
clients globally. The formation of the new team is a blend of
global experience and the decades of experience of operations in
the Harland & Wolff facility. The team has the experience to
deliver the Islandmagee gas storage project, ship repair, ship
conversion, fabrication, offshore and recycling projects.
The new team at Harland and Wolff includes:
John Petticrew Managing Director
Paul Blake Operations Director
TBA Commercial & BD Director
Stephen Mills Director Sales Cruise & Ferry
Mark Giles Director Sales Defence & Commercial
Con O Neil Financial Director (Existing
H&W employee)
Alan Haley GM Harland & Wolff Technical
Services Limited (Existing H&W
employee)
Eoghan Rainey Acting Health & Safety Director
(Existing H&W Employee)
John Petticrew has had decades of experience running similar
facilities globally, his recent role was Vice President Operations
at Seaspan Shipyard in Vancouver, Canada. John had 2,000 employees
reporting into him with 5 divisional directors. In this role John
oversaw the production for the National Shipbuilding Strategy for
Canada building six vessels for the Navy and Coast Guard.
John was the Vice President of Engineering also for Seaspan,
Technical Director for Gulf Marine Services and the Senior Project
Director for Lamprell Energy Limited and held the position of New
Building Manager for Dubai Dry Docks.
Commencing in 1987, John spent a decade at Saint John Ship
Building serving as Superintendent and Production Manager. He
brings with him a wealth of experience across fabrication, oil
& gas, defence, ship repair and vessel construction.
Paul Blake has recently accepted the position as Operations
Director of Harland and Wolff. Until recently Paul was the Head of
Projects at ASRY (Arab Shipbuilding & Repair Yard Co in
Bahrain. Prior to this Paul was a Project Manager at the Grand
Bahamas Shipyard specialising in cruise vessel upgrades. Paul also
held posts as Director and General Manager Atlantic & Peninsula
Pty Ltd in Australia and as General Manager/Ship Repair Director at
Topaz Energy & Marine in Dubai.
Stephen Mills and Mark Giles are proven sales executives and
have decades of experience across all sectors and are a great
addition to the team. We are currently in the process of finalising
the appointment of the new Commercial and Business Development
Director.
The new team at Harland and Wolff along with the existing
workforce now have the requisite depth of knowledge and experience
to turn this facility around into an efficient and profitable
business in the months and years to come. I look forward to
building a profitable and sustainable business around this iconic
facility and globally renowned brand.
John Wood
Chief Executive Officer, 08 January 2020
Consolidated Statement of Comprehensive Income for the Year
Ended 31 July 2019
Continuing operations Note 2019 2018
GBP GBP
Revenue - -
Management and administrative expenses (1,383,294) (863,413)
Other income 3 300,000 -
------------ ----------
Operating loss 4 (1,083,294) (863,413)
18 -
Finance income
Finance costs (99,436) (100,000)
Loss before tax (1,182,712) (963,413)
Taxation 9 - -
------------ ----------
Loss for the year (1,182,712) (963,413)
============ ==========
Other comprehensive income - -
Total comprehensive loss for the
year attributable to the equity holders
of the parent (1,182,712) (963,413)
============ ==========
Earnings Per Share:
Basic and diluted 10 (0.09)p (0.15)p
======== ========
Consolidated Statement of Financial Position as at 31 July
2019
Note 31 July 31 July 1August
2019 2018 2017
GBP GBP GBP
(As restated)
Assets
Non-current assets
Intangible assets 11 10,168,605 7,479,690 6,591,302
Property, plant and equipment 12 738,825 440,100 440,100
Other asset - - 42,000
------------- --------------- -------------
Total non-current assets 10,907,430 7,919,790 7,073,402
------------- --------------- -------------
Current assets
Trade and other receivables 14 202,066 264,491 98,718
Other asset - - 100,000
Cash and cash equivalents 15 11,240 1,790,979 1,548,169
------------- --------------- -------------
Total current assets 213,306 2,055,470 1,746,887
------------- --------------- -------------
Current liabilities
Trade and other payables 16 (1,111,342) (840,523) (149,625)
Grant received in advance - (924,642) (1,440,913)
Short-term borrowings 26 (785,095) (163,344) -
Short-term financial liability 17 (988) (200,000) -
------------- --------------- -------------
Total current liabilities (1,897,425) (2,128,509) (1,590,538)
------------- --------------- -------------
Net current liabilities (1,684,119) (73,039) 156,349
------------- --------------- -------------
Non-current liabilities
Financial liability 26 (200,000) (200,000) (200,000)
------------- --------------- -------------
Net assets 9,023,311 7,646,751 7,029,751
============= =============== =============
Shareholders' funds
Share capital 19 10,949,504 10,919,117 10,853,460
Share premium 18,427,728 16,005,216 14,297,307
Merger reserve 8,988,112 8,988,112 8,988,112
Share based payment reserve 113,220 6,847 616,096
Warrant reserve 28 - - -
Retained earnings (29,455,253) (28,272,541) (27,725,224)
------------- --------------- -------------
Total equity 9,023,311 7,646,751 7,029,751
============= =============== =============
Consolidated Statement of Changes in Equity for the Year Ended
31 July 2019
Share capital Share premium Merger Share based Warrant Retained Total equity
GBP GBP reserve payment Reserve earnings GBP
GBP reserve GBP GBP
GBP
At 1 August
2018 (As
restated) 10,919,117 16,005,216 8,988,112 6,847 - (28,272,541) 7,646,751
Loss for the
year - - - - - (1,182,712) (1,182,712)
Total
comprehensive
income - - - - - (1,182,712) (1,182,712)
Shares issued 30,387 2,422,512 - - - - 2,452,899
Share option
expense - - - 106,373 - - 106,373
-------------- -------------- ------------- ------------- --------- ------------- -------------
At 31 July
2019 10,949,504 18,427,728 8,988,112 113,220 - (29,455,253) 9,023,311
============== ============== ============= ============= ========= ============= =============
Share capital: This represents the nominal value of equity
shares in issue.
Share premium: This represents the premium paid above the
nominal value of shares in issue.
Merger Reserve: 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 lnfraStrata UK
Limited at the date of the demerger.
Share-based payments reserve: This represents the value of
share-based payments provided to employees and Directors as part of
their remuneration as part of the consideration paid. The reserve
represents the fair value of options and performance share rights
recognised as an expense. Upon exercise of options or performance
share rights, any proceeds received are credited to share capital
and share premium.
Retained earnings: This represents the accumulated profits and
losses since inception of the business and adjustments relating to
options and warrants.
Consolidated Statement of Cash Flows for the Year Ended 31 July
2019
2019 2018
Note GBP GBP
Cash flows from operating activities
Loss for the year (1,182,712) (863,413)
Adjustments to cash flows from non-cash
items
Depreciation and amortisation 4 892 -
Profit on disposal of intangible assets 3 (100,000) -
Profit from disposals of investments 3 (200,600) -
Foreign exchange loss 4 11,055 (26,590)
Finance income (18) -
Finance expense 102,460 -
Share option expense 172,638 96,597
------------------------ ----------------------
(1,196,285) (793,406)
Working capital adjustments
Decrease/(increase) in trade and other
receivables 14 38,121 (123,827)
Increase in trade and other payables 16 239,646 690,952
Cash generated from operations (918,518) (226,281)
Income taxes received 9 - -
------------------------ ----------------------
Net cash flow from operating activities (918,518) (226,281)
------------------------ ----------------------
Cash flows from investing activities
Interest received 18 -
Proceeds from issue of ordinary shares 2,386,634 1,683,816
Short term borrowings 621,751 163,344
Acquisitions of property plant and
equipment (299,617) -
Acquisition of intangible assets 11 (3,613,559) (1,378,069)
Proceeds from sale of intangible assets 100,000 -
------------------------ ----------------------
Net cash flows from investing activities (804,773) 469,091
Net increase/(decrease) in cash &
cash equivalents (1,723,291) 242,810
Cash flows from financing activities
Interest paid (57,436) -
------------------------ ----------------------
Net decrease in cash and cash equivalents (1,780,727) 242,810
Cash and cash equivalents at 1 August 1,790,979 1,548,169
------------------------ ----------------------
Cash and cash equivalents at 31 July 10,252 1,790,979
======================== ======================
Cash and cash equivalents consist
of:
Cash at bank 10,252 1,790,979
======================== ======================
Notes to the Financial Statements for the Year Ended 31 July
2019
Net Debt Reconciliation
Consolidated Net Debt Reconciliation for the Year Ended 31 July
2019
Other assets Liabilities from
financing activities
Cash/bank Liquid investments Borrowings Borrowings
overdraft due within due after
1 year 1 year
Net debt as at 1 August
2017 1,548,169 (1,491,820) - (200,000)
Cash flows 242,810 (50,854) (363,344) -
Foreign exchange adjustments - - - -
Other changes (ii) - - - -
------------ ------------------- ------------ -----------
Net debt as at 31 July
2018 1,790,979 (1,542,674) (363,344) (200,000)
Cash flows (1,779,739) 633,398 (422,739) -
Foreign exchange adjustments - - - -
Other changes (ii) - - - -
------------ ------------------- ------------ -----------
Net debt as at 31 July
2019 11,240 (909,276) (786,083) (200,000)
------------ ------------------- ------------ -----------
Company Net Debt Reconciliation for the Year Ended 31 July
2019
Other assets Liabilities from
financing activities
Cash/bank Liquid investments Borrowings Borrowings
overdraft due within due after
1 year 1 year
Net debt as at 1 August
2017 1,545,779 5,653,131 - (200,000)
Cash flows 125,223 1,670,406 (200,000) -
Foreign exchange adjustments - - - -
Other changes - - - -
------------ ------------------- ------------ -----------
Net debt as at 31 July
2018 1,671,002 7,323,537 (200,000) (200,000)
Cash flows (1,662,219) 2,986,095 199,012 -
Foreign exchange adjustments - - - -
Other changes - - - -
------------ ------------------- ------------ -----------
Net debt as at 31 July
2019 8,783 10,309,632 (988) (200,000)
------------ ------------------- ------------ -----------
1 General information
The company is a public company limited by share capital,
incorporated and domiciled in the UK.
The address of its registered office is:
Fieldfisher Riverbank House
2 Swan Lane
London
EC4R 3TT
United Kingdom
The company's ordinary shares are traded on the Alternative
Investment Market (AIM) of the London Stock Exchange under the
ticker symbol INFA.
The principal activities of the Group throughout the year was
the development of sub-surface gas storage facility.
The financial statements were authorised for issue by the Board
on 8 January 2020.
2 Accounting policies
Statement of compliance
The group financial statements have been prepared in accordance
with International Financial Reporting Standards and its
interpretations adopted by the EU ("adopted IFRS's") and the
Companies Act 2006 applicable to companies reporting under
IFRS.
Summary of significant accounting policies and key accounting
estimates
The principal accounting policies applied in the preparation of
these financial statements are set out below. These policies have
been consistently applied to all the years presented, unless
otherwise stated.
Basis of preparation
The financial statements have been prepared in accordance with
adopted International Financial Reporting Standards (IFRS) as
adopted by the European Union and under historical cost accounting
rules.
The financial statements are presented in Sterling which is the
functional currency of the group and all values are rounded to the
nearest Pound Sterling (GBP) unless otherwise stated.
Basis of consolidation
Subsidiaries are all entities (including structured entities)
over which the Group has control. The Group controls an entity when
the Group is exposed to, or has rights to, variable returns from
its involvement with the entity and has the ability to affect those
returns through its power over the entity. Subsidiaries are fully
consolidated from the date on which control is transferred to the
Group. They are deconsolidated from the date that control
ceases.
Inter-company transactions, balances and unrealised gains on
transactions between group companies are eliminated. Unrealised
losses are also eliminated. When necessary, amounts reported by
subsidiaries have been adjusted to conform with the group's
accounting policies.
Adoption of new and revised standards
(a) New standards, amendments and interpretations adopted by the
Group
The company has applied the following standards and amendments
for the first time for its annual reporting period commencing 1
August 2018:
-- IFRS 9 Financial Instruments;
-- IFRS 15 Revenue from contracts with customers;
-- Classification and Measurement of Share-based Payment Transactions - Amendments to IFRS 2;
-- Annual improvements 2014-2016 cycle;
-- Transfers to Investment Properties - Amendments to IAS 40; and
-- Interpretation 22, Foreign Currency Transactions and Advance Consideration
IFRS 9
IFRS 9 (2014) "Financial Instruments" supersedes IFRS 9 (2009),
IFRS 9 (2010) and IFRS 9 (2013). The finalised version of IFRS 9
contains accounting requirements for financial instruments,
replacing IAS 39 "Financial Instruments: Recognition and
Measurement". The content of IFRS 9 (2014) includes:
-- Classification and measurement - financial assets are
classified by reference to the business model within which they are
held and their contractual cash flow characteristics. The standard
introduces a fair value through other comprehensive income category
for certain debt instruments. Financial liabilities are classified
in a similar manner to that under IAS 39 however there are
differences in the requirements applying to the measurement of an
entity's own risk.
-- Impairment - The standard introduces an expected credit loss
model for the measurement of the impairment of financial assets, so
it is no longer necessary for a credit event to have occurred
before a credit loss is recognised.
-- Hedge accounting - The standard introduces a new hedge
accounting model that is designed to be more closely aligned with
how entities undertake risk management activities when hedging
financial and non-financial risk exposures.
-- Derecognition - the requirements for the derecognition of
financial assets and liabilities are carried from IAS 39.
None of these standards are considered to have a material effect
on the Group financial statements.
(b) New standards, amendments and interpretations not yet
adopted
The International Accounting Standards Board (IASB) has issued
the following new and revised standards, amendments and
Interpretations to existing standards that are not effective for
the financial year ended 31 July 2019 and have not been adopted
early.
New Standards _Effective Date_
IFRS 16 - Leases 1 January 2019
IFRS 17 - Insurance Contracts 1 January 2021
Amendments to Existing Standards
IFRSIC 23 Uncertainty over Income Tac Treatments* 1 January 2019
Annual Improvements to IFRSs (2015-2017 Cycle) 1 January 2019
*
Amendments to IFRS 9 Prepayment Features with 1 January 2019
Negative Compensation
Amendments to IAS 28 Long-term Interests in Associates 1 January 2019
and Joint Ventures
Amendments to IAS 19 Plan Amendment, Curtailment 1 January 2019
or Settlement
* Not yet adopted by European Union
IFRS 16 'Leases'
IFRS 16 'Leases' address the definition of a lease, recognition
and measurement of leases and it establishes principles for
reporting useful information to users of financial statements about
the leasing activities of both lessees and lessors. A key change
arising from IFRS 16 is that most operating leases will be
accounted for on the balance sheet. The standard replaces IAS 17,
'Leases' and related interpretations. The standard is effective for
annual periods beginning on or after 1 January 2019, with earlier
adoption permitted.
Following the acquisition of Harland and Wolff, the directors
are in the process of reviewing contracts to identify any
additional lease arrangements that would need to be recognised
under IFRS 16 in the next financial year.
There are no other IFRSs or IFRIC interpretations that are not
yet effective that would be expected to have a material impact on
the Group.
Going concern
The financial statements have been prepared on a going concern
basis. The Group's assets are not generating revenues, operating
cash outflows have been incurred in the year and an operating loss
and cash outflow from operations is expected in the 12 months
subsequent to the date of these financial statements being signed,
and, as a result, the Group will need to raise funding to finance
their ongoing activities.
Key considerations regarding going concern are in respect of the
Islandmagee gas storage project ("the project") and Harland and
Wolff ("H&W").
The next phase of the development of the Project is the
co-ordinated assembly of the contracts and long-term funding
arrangements for the Final Investment Decision ("FID") to be made.
These include a long-term Gas Storage Agreement with an offtaker,
an Engineering, Procurement and Construction ("EPC") contract with
a managing contractor, and debt and equity financing. Only in the
event that all of these elements are in place can the board confirm
FID. The directors remain confident that the Project is
economically viable and that, based on current discussions, funding
will be available.
In December 2019, the Company announced its maiden operating
revenues that has validated the acquisition of H&W and the
newly assembled team at H&W are actively seeking to win new
contracts. In addition, the directors are also in discussions with
debt providers to raise additional capital for the operating costs
of Harland and Wolff.
Based on the above management have prepared cash flow budgets
and based on these the Directors have a reasonable expectation that
the Group has access to adequate resources to continue in
operational existence for the foreseeable future. Thus, they
continue to adopt the going concern basis of accounting in
preparing the annual financial statements for the year ended 31
July 2019.
Should the Group be unable to continue trading, adjustments
would have to be made to reduce the value of the assets to their
recoverable amounts, to provide for further liabilities which might
arise and to classify fixed assets as current.
The auditors make reference to a material uncertainty in
relation to going concern within their audit report.
The directors remain confident that the Project is economically
viable and following the successful completion of FEED, further
funding for the Company and the Project will be secured. Having
reviewed the value of gas storage assets in accordance with the
principles set out below, and the value of balances due to the
parent Company from its subsidiaries, the directors are of the
opinion that these assets are not impaired in value.
However, the success of the current fund raising is uncertain,
as is the outcome of the FID. The directors have concluded that
without additional funding the group would be unable to meet its
corporate and project costs and thus a material uncertainty exists
that may cast significant doubt upon the Group's ability to
continue as a going concern and therefore the Group may be unable
to realise its assets and discharge its liabilities in the normal
course of business. Were the Group no longer a going concern, or if
the FID is not positive, the Group's capitalised project
development costs totalling GBP13,406,503 and amounts due to the
Company from its subsidiaries amounting to GBP10,145,784 may become
impaired in value. A provision would be required for the future
liabilities arising as a consequence of the Group ceasing business
and assets and liabilities currently classified as non-current
would be reclassified as current.
With the acquisition of Harland and Wolff, the directors believe
that the Company will be in a position to diversify the overall
business of the Group and attract new business and revenue streams
via the various business segments discussed in the Chief Executive
Officer's Strategic Report. In December 2019, the Company announced
its maiden operating revenues that has validated the acquisition of
Harland and Wolff. The directors are currently in discussions with
debt providers to raise additional capital for the operating costs
of Harland and Wolff. Although the directors believe that this
acquisition will lead to further revenue generation, the Group may
be unable to discharge its liabilities in the event revenue
generation does not come to fruition as envisaged or additional
capital, whether debt or equity, is not injected into the
Group.
Government grants
Governments grants are recognised only when there is reasonable
assurance that the Group will comply with the conditions attaching
to the grant and that the grants will be received. Capital grants
are recognised to match the related development expenditure and are
deducted in arriving at the carrying value of the related assets.
Any grants that are received in advance of recognition are
deferred.
Foreign currency transactions and balances
Transactions in foreign currency are recorded at the rates of
exchange prevailing on the dates of the transactions. At each
statement of financial position date, monetary assets and
liabilities that are denominated in foreign currencies are
retranslated at the rates prevailing on the statement of financial
position date and gains or losses are taken to operating
profit.
Tax
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 statement of comprehensive income 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 Group's liability for current tax is calculated
using tax rates that have been enacted or substantively enacted by
the statement of financial position 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 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
statement of financial position 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 statement of
comprehensive income, 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.
Property, plant and equipment
Property, plant and equipment is stated in the statement of
financial position at cost, less any subsequent accumulated
depreciation and subsequent accumulated impairment losses.
The cost of property, plant and equipment includes directly
attributable incremental costs incurred in their acquisition and
installation.
Depreciation
Depreciation is charged so as to write off the cost of assets,
other than land and properties under construction over their
estimated useful lives, as follows:
Depreciation method and
Asset class rate
Freehold land 0% Straight line basis
Office equipment 20-33% Straight line basis
Business combinations
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 profit or loss 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 profit or loss and is not subsequently
reversed. The financial effect of any change in ownership interest
of a subsidiary that does not result in a change in control is
recognised in equity
Segment reporting
Operating segments are reported in a manner consistent with the
internal reporting provided to the chief operating decision-maker
("CODM") 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 CODM consider, for
under review, there to be only one operating segment being the
development of gas storage facilities within the United Kingdom. As
such no operating segment note is shown as it would be same as that
shown in the primary statements.
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, including any directly attributable finance costs. No
amortisation or depreciation is provided until the storage facility
is available for use.
An impairment test is performed annually and whenever events or
circumstances arising during the development phase indicate that
the carrying value of a development asset may exceed its
recoverable amount. The aggregate carrying value is compared
against the expected recoverable amount of the cash generating
unit, generally by reference to the present value of the future net
cash flows expected to be derived from storage revenue. The present
value of future cash flows is calculated on the basis of future
storage prices and cost levels as forecast at the statement of
financial position date.
The cash generating unit applied for impairment test purposes is
generally an individual gas storage facility. Where the carrying
value of the facility is greater than the present value of its
future cash flows a provision is made. Any such provisions are
charged to cost of sales.
Amortisation
Amortisation is provided on intangible assets so as to write off
the cost, less any estimated residual value, over their expected
useful economic life as follows:
Amortisation method and
Asset class rate
Storage facility None until facility available
for use.
Investments
Investments in subsidiaries are stated at cost less provision
for impairments.
Cash and cash equivalents
Cash and cash equivalents comprise cash on hand and call
deposits, and other short-term highly liquid investments that are
readily convertible to a known amount of cash and are subject to an
insignificant risk of changes in value.
Trade receivables
Trade receivables are amounts due from customers for merchandise
sold or services performed in the ordinary course of business. If
collection is expected in one year or less (or in the normal
operating cycle of the business if longer), they are classified as
current assets. If not, they are presented as non-current
assets.
Trade receivables are recognised initially at the transaction
price. They are subsequently measured at amortised cost using the
effective interest method, less provision for impairment. A
provision for the impairment of trade receivables is established
when there is objective evidence that the group will not be able to
collect all amounts due according to the original terms of the
receivables.
Trade payables
Trade payables are obligations to pay for goods or services that
have been acquired in the ordinary course of business from
suppliers. Accounts payable are classified as current liabilities
if payment is due within one year or less (or in the normal
operating cycle of the business if longer). If not, they are
presented as non-current liabilities.
Trade payables are recognised initially at the transaction price
and subsequently measured at amortised cost using the effective
interest method.
Borrowings
All borrowings are initially recorded at the amount of proceeds
received, net of transaction costs. Borrowings are subsequently
carried at amortised cost, with the difference between the
proceeds, net of transaction costs, and the amount due on
redemption being recognised as a charge to the statement of
comprehensive income over the period of the relevant borrowing.
Interest expense is recognised on the basis of the effective
interest method and is included in finance costs.
Borrowings are classified as current liabilities unless the
group has an unconditional right to defer settlement of the
liability for at least 12 months after the reporting date.
Leases
Rental costs under operating leases are charged on a
straight-line basis over the lease term.
Share based payment transactions
Employees (including senior executives) of the Group receive
part of their remuneration in the form of share-based payment
transactions, whereby employees render services as consideration
for equity instruments (equity settled transactions).
The cost of equity settled transactions is recognised, together
with a corresponding increase in equity, over the period in which
the 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 statement of
comprehensive income 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 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.
Share capital
Ordinary shares are classified as equity. Equity instruments are
measured at the fair value of the cash or other resources received
or receivable, net of the direct costs of issuing the equity
instruments. If payment is deferred and the time value of money is
material, the initial measurement is on a present value basis.
Defined contribution pension obligation
The Company has a defined contribution plan which requires
contributions to be made into an independently administered fund.
The amount charged to the statement of comprehensive income 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 statement of financial position.
Financial instruments
IFRS 9 requires an entity to address the classification,
measurement and recognition of financial assets and
liabilities.
a) Classification
The Group classifies its financial assets in the following
measurement categories:
-- those to be measured subsequently at fair value (either
through OCI or through profit or loss); and
-- those to be measured at amortised cost.
The classification depends on the Group's business model for
managing the financial assets and the contractual terms of the cash
flows.
For assets measured at fair value, gains and losses will be
recorded either in profit or loss or in OCI. For investments in
equity instruments that are not held for trading, this will depend
on whether the Group has made an irrevocable election at the time
of initial recognition to account for the equity investment at fair
value through other comprehensive income (FVOCI). See Note 24 for
further details.
The Group classifies financial assets as at amortised costs only
if both of the following criteria are met:
-- the asset is held within a business model whose objective is
to collect contractual cash flows; and
-- the contractual terms give rise to cash flows that are solely
payment of principal and interest.
b) Recognition
Purchases and sales of financial assets are recognised on trade
date (that is, the date on which the Group commits to purchase or
sell the asset). Financial assets are derecognised when the rights
to receive cash flows from the financial assets have expired or
have been transferred and the Group has transferred substantially
all the risks and rewards of ownership.
Measurement
At initial recognition, the Group measures a financial asset at
its fair value plus, in the case of a financial asset not at fair
value through profit or loss (FVPL), transaction costs that are
directly attributable to the acquisition of the financial
asset.
Transaction costs of financial assets carried at FVPL are
expensed in profit or loss.
Debt instruments
Amortised cost: Assets that are held for collection of
contractual cash flows, where those cash flows represent solely
payments of principal and interest, are measured at amortised cost.
Interest income from these financial assets is included in finance
income using the effective interest rate method. Any gain or loss
arising on derecognition is recognised directly in profit or loss
and presented in other gains/(losses) together with foreign
exchange gains and losses. Impairment losses are presented as a
separate line item in the statement of profit or loss.
Equity instruments
The Group subsequently measures all equity investments at fair
value. Where the Group's management has elected to present fair
value gains and losses on equity investments in OCI, there is no
subsequent reclassification of fair value gains and losses to
profit or loss following the derecognition of the investment.
Dividends from such investments continue to be recognised in profit
or loss as other income when the Group's right to receive payments
is established. Changes in the fair value of financial assets at
FVPL are recognised in other gains/(losses) in the statement of
profit or loss as applicable. Impairment losses (and reversal of
impairment losses) on equity investments measured at FVOCI are not
reported separately from other changes in fair value.
Impairment
The Group assesses, on a forward looking basis, the expected
credit losses associated with any debt instruments carried at
amortised cost. The impairment methodology applied depends on
whether there has been a significant increase in credit risk. For
trade receivables, the Group applies the simplified approach
permitted by IFRS 9, which requires expected lifetime losses to be
recognised from initial recognition of the receivables.
Earnings per share
Basic earnings per share is calculated by dividing:
-- The loss attributable to the owners of the company, excluding
any costs of servicing equity other than ordinary shares;
-- By the weighted average number of ordinary shares outstanding
during the financial year, adjusted for bonus elements in ordinary
shares issued during the year and excluding treasury shares.
Critical accounting judgements and key sources
of estimation uncertainty
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.
Judgements
Capitalisation of gas storage costs - Note 11.
The assessment of whether costs incurred on gas storage
development should be capitalised or expensed involves judgement.
Any expenditure 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 it is probable
that the expenditure will result future economic benefits that are
attributable to the assets.
Estimates
Review of gas storage project asset carrying values- Note
11.
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% (2018: 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 a project life of 40 years (2018: -
40 years). It is assumed that 100% (2018: 100%) of a project's
capacity will be sold from the date that the capacity becomes
operational.
Recoverability of intercompany balances
The directors remain confident that the project is economically
viable and following the successful completion of FEED, further
funding for the Company and the project will be secured. Having
reviewed the value of gas storage assets in accordance with the
principles set out below, and the value of balances due to the
parent Company from its subsidiaries, the directors are of the
opinion that these assets are not impaired in value.
However, the success of the current fund raising is uncertain,
as is the outcome of the FID. The directors have concluded that
without additional funding the group would be unable to meet its
corporate and project costs and thus a material uncertainty exists
that may cast significant doubt upon the Group's ability to
continue as a going concern and therefore the Group may be unable
to realise its assets and discharge its liabilities in the normal
course of business. Were the Group no longer a going concern, or if
the FID is not positive, the Group's capitalised project
development costs totalling GBP13,406,503 and amounts due to the
Company from its subsidiaries amounting to GBP10,145,784 may become
impaired in value. A provision would be required for the future
liabilities arising as a consequence of the Group ceasing business
and assets and liabilities currently classified as non-current
would be reclassified as current.
Share Based Payments
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 and the following inputs: share price volatility of 85%
based on the daily movement in the Company's share price during the
course of the financial year, risk free interest rate of 0.93%
based on a UK Government Bond 2 year Note Yield, no dividends to be
paid over the options lives, and early exercise is not
applicable.
3 Other income
The analysis of the group's other gains and losses for the year
is as follows:
2019 2018
GBP GBP
Gain on disposal of intangible assets 100,000 -
Gain from reversal of deferred consideration 200,000 -
300,000 -
The Company announced in October 2018 the disposal of its
net profit interests in three offshore UK oil and gas licences
to Westmount Energy Limited for GBP100,000.
Following repayment and cancellation of a loan with Baron
Oil dated 5 January 2017 loan, Baron was entitled to receive
an additional GBP200,000 in the event of a sale or disposal
by InfraStrata or its subsidiaries, IMEL and InfraStrata
UK, of substantially all of their assets, which comprise
interests in the Islandmagee gas storage project, and/or
a change in control of InfraStrata, IMEL or InfraStrata UK,
within two years from the date of the loan agreement. This
potential liability expired on 05 January 2019 as none of
the conditions that could trigger payment to Baron Oil were
met. Therefore, the liability of GBP200,000 to Baron Oil
has been written off in full.
4 Expenses by Nature
Arrived at after charging/(crediting)
2019 2018
GBP GBP
Management & administrative expenditure 1,263,478 764,811
Share based payments 106,373 96,597
Depreciation expense 892 -
Foreign exchange gains 12,551 2,005
--------- -------
1,383,294 863,413
========= =======
5 Staff costs
The aggregate payroll costs (including directors' remuneration)
were as follows:
2019 2018
GBP GBP
Wages and salaries 477,098 296,110
Social security costs 47,906 22,091
Pension costs, defined contribution scheme 9,510 441
Share-based payment expenses 106,373 -
Other employee expense 3,673 250
------- -------
644,560 318,892
======= =======
The average monthly number of persons employed by the group
(including directors) during the year, analysed by category was as
follows:
2019 2018
No. No.
Administration and support 5 3
================ ====================
6 Directors' remuneration
2019 Salary Benefits Share Pension Total
& fees based 2019
payments
GBP GBP GBP GBP GBP
Executive Directors
John Wood 212,500 - 32,739 4,750 249,989
Adrian Pocock
(resigned
12 September 2018) 33,576 - 50 33,626
Arun Raman 97,267 - 15,000 2,494 114,761
Non-Executive
Directors
Graham V Lyon
(resigned
7 March 2019) 20,000 - - - 20,000
Matthew Beardmore
(resigned
18 December 2018) 13,952 - - - 13,952
Malcolm Groat
(appointed
22 March 2019) 10,511 - - 60 10,571
Judith Tweed 26,000 - - 640 26,640
Key Management
Andy Duncan (resigned) 70,417 - - 1,517 71,933
484,222 - 47,739 9,510 541,472
----------------- -------------- ---------------- -------------------- ------------
Note: Salary and fees paid to John Wood includes GBP75,000 as
bonus payment made on successful completion of the FEED process.
This bonus payment is a contractual payment agreed by the
Board.
7 Auditors' remuneration
During the year, the Group obtained the following services
from the Company's auditor:
2019 2018
GBP GBP
Fees payable to the Company's auditor:
- For the audit of these financial statements 15,000 17,050
- For the audit of the subsidiaries 13,750 12,950
- For other services relating to taxation - 11,645
- For other services - 3,400
28,750 45,045
8 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 were Enterprise Management
Incentive share options for qualifying employees. These options have
now lapsed following the departure of these employees.
The following table illustrates the number and weighted average exercise
prices (WAEP) of, and movements in, share options during the year. 2019 2019 2018 2018
Number WAEP Number WAEP
GBP GBP
Outstanding at the beginning
of the year 30,000,000 0.01 6,379,167 0.1807
Granted during the year 45,000,000 0.0076 30,000,000 0.01
Forfeited during the
year (38,862,108) (0.01) (6,379,167) (0.1807)
Outstanding at the end
of the year 36,137,892 0.0076 30,000,000 0.01
------------- ------- ------------ ---------
Exercisable at the end - - - -
of the year
------------- ------- ------------ ---------
A total of 45,000,000 options over 50% of the quantity of the Option
Shares as to GBP0.0001p for each Option Share and 50% of the quantity
of the Option Shares as to GBP0.0150p for each Option Share in the
Company ("Options") were granted to all the directors of the Company
on 11 January 2019, with J Wood receiving 35,000,000 Options and
A Duncan receiving 10,000,000 Options.
After the reporting period 38,862,108 options lapsed as a result
of G Lyon, A Pocock, M Beardmore, K Campbell and A Duncan departure
from the business during the year.
Options are exercisable in one tranche noted above with estimated
dates ranging from January 2020 through to end 2027 at an average
price of 0.0076p per share. The options will expire after five
years.
The weighted average remaining option life for the share options
outstanding at 31 July 2019 is 5 years (2018: 4 years).
The fair value of equity settled options granted is estimated
as at the date of the grant using a Black-Scholes model, taking
into account the terms and conditions upon which the options
were granted and the following inputs: share price volatility
of 85%, risk free interest rate of 0.93%, no dividends to be
paid over the options lives, and early exercise is not applicable.
9 Income tax
The tax on profit before tax for the year is the same as the
standard rate of corporation tax in the UK (2018 - the same as the
standard rate of corporation tax in the UK) of 19% (2018 -
19%).
The differences are reconciled below:
2019 2018
GBP GBP
Loss before tax (1,182,712) (963,413)
=========== =========
Corporation tax at standard rate (224,715) (183,048)
Increase from effect of unrelieved tax
losses carried forward 224,715 183,048
----------- ---------
Total tax charge/(credit) - -
=========== =========
No tax charge/ credit arises in 2019 or in 2018 due to expenses
not permitted for tax purposes and losses carried forward.
Factors that may affect the future tax charge
The Group has trading losses of GBP7,704,980 (2018:
GBP6,565,719) which may reduce future tax charges. Future tax
charges may also be reduced by capital allowances on cumulative
capital expenditure.
No balance is recognised due to the uncertainty of future
results.
10 Earnings per Share
2019 2018
GBP GBP
(Loss) profit
The (loss) profit for the purposes
of basic and diluted loss per share
being the net (loss) profit attributable
to equity shareholders
Continuing operations (1,182,712) (963,413)
Number of shares
Weighted average number of ordinary
shares for the purpose of:
Basic earnings per share 1,336,479,710 647,957,629
Basic and diluted earnings per share
Continuing Operations (0.09)p (0.15)p
11 Intangible assets
Group
Gas storage Exploration
development & evaluation
GBP GBP
Cost
At 1 August 2017 6,591,302 19,459
Additions 1,378,069 6,902
Grant accrual during year (489,681) -
------------ -------------
At 31 July 2018 7,479,690 26,361
------------ -------------
At 1 August 2018 7,479,690 26,361
Grant accrual during year (950,622) -
Additions 3,639,537 -
Disposals - (26,361)
------------ -------------
At 31 July 2019 10,168,605 -
------------ -------------
Impairment - 26,361
------------ -------------
At 31 July 2018 - 26,361
------------ -------------
Net book value
At 31 July 2019 10,168,605 -
============ =============
At 31 July 2018 7,479,690 -
============ =============
The Exploration and evaluation asset was written off during the
year as the assets were fully impaired.
Group
Freehold land Office equipment Total
GBP GBP GBP
Cost or valuation
At 1 August 2017 440,100 - 440,100
------------- ---------------- -------
At 31 July 2018 440,100 - 440,100
------------- ---------------- -------
At 1 August 2018 440,100 - 440,100
Additions 290,699 8,918 299,617
------------- ---------------- -------
At 31 July 2019 730,799 8,918 739,717
------------- ---------------- -------
Depreciation
At 1 August 2018 - - -
Charge for the year - 892 892
At 31 July 2019 - 892 892
------------- ---------------- -------
Carrying amount
At 31 July 2019 730,799 8,026 738,825
============= ================ =======
At 31 July 2018 440,100 - 440,100
============= ================ =======
13 Investments
Group subsidiaries
Details of the group subsidiaries as at 31 July 2019 are as
follows:
Proportion
of ownership
interest
and voting
rights held
Name of subsidiary Principal activity Registered office 2019 2018
Fieldfisher Riverbank
Intermediate holding House
and gas storage 2 Swan Lane
Infrastrata project research London EC4R 3TT
UK Limited* company. England and Wales 100% 100%
8 Portmuck Road
Gas storage and Islandmagee
energy infrastructure County Antrim
Islandmagee development and BT40 3TW
Energy Limited operation Northern Ireland 100% 100%
8 Portmuck Road
Islandmagee
County Antrim
Islandmagee BT40 3TW
Energy Hub Limited Dormant Northern Ireland 100% 0%
Fieldfisher Riverbank
House
2 Swan Lane
Infrastrata London EC4R 3TT
Energy UK Limited Dormant England and Wales 100% 0%
Fieldfisher Riverbank
House
2 Swan Lane
Infrastrata London EC4R 3TT
Project 2 Limited Dormant England and Wales 100% 0%
* indicates direct investment of the company
14 Trade and other receivables
Group Company
31 July 31 July 31 July 31 July
2019 2018 2019 2018
GBP GBP GBP GBP
Receivables from
related parties - - 10,351,634 8,831,741
Other receivables 177,985 198,538 73,258 197,706
Prepayments 24,081 23,953 24,081 23,953
------- ------- ---------- ---------
202,066 222,491 10,448,973 9,053,400
======= ======= ========== =========
The trade and other receivables classified as financial
instruments are disclosed below. The company's exposure to credit
and market risks, including maturity analysis, relating to trade
and other receivables is disclosed in the financial risk review
note.
15 Cash and cash equivalents
Group Company
31 July 31 July 31 July 31 July
2019 2018 2019 2018
GBP GBP GBP GBP
Cash on hand 646 - 646 -
Cash at bank 10,594 1,790,979 8,140 1,671,002
--------- --------- ------- ---------
11,240 1,790,979 8,786 1,671,002
Bank overdrafts (988) - (988) -
--------- --------- ------- ---------
Cash and cash equivalents
in statement of cash
flows 10,252 1,790,979 7,798 1,671,002
========= ========= ======= =========
16 Trade and other payables
Group Company
31 July 31 July 31 July 31 July
2019 2018 2019 2018
GBP GBP GBP GBP
Trade payables 999,392 560,803 59,051 555,822
Social security and
other taxes 43,758 7,474 43,758 7,474
Outstanding defined
contribution pension
costs 4,708 - 4,708 -
Preference shares
(see note 19) 12,500 12,500 12,500 12,500
Other creditors 12,355 13,135 (179) -
Accrued expenses 38,629 246,611 19,504 229,425
--------- --------- ------- ---------
1,111,342 840,523 139,342 805,221
========= ========= ======= =========
The group's exposure to market and liquidity risks, including
maturity analysis, related to trade and other payables is disclosed
in the financial risk review note.
17 Loans and borrowings
Group Company
31 July 31 July 31 July 31 July
2019 2018 2019 2018
GBP GBP GBP GBP
Current loans and borrowings
Bank overdrafts 988 - 988 -
Other borrowings - 200,000 - 200,000
------- ------- ------- -------
988 200,000 988 200,000
======= ======= ======= =======
Baron Loan
Following repayment and cancellation of a loan with Baron Oil
dated 5 January 2017 loan, Baron remains entitled to receive an
additional GBP200,000 in the event of a sale or disposal by
InfraStrata or its subsidiaries, IMEL and InfraStrata UK, of
substantially all of their assets, which comprise interests in the
Islandmagee gas storage project, and/or a change in control of
InfraStrata, IMEL or InfraStrata UK, within two years from the date
of the loan agreement. The loan was not interest bearing and has
been written off as this liability expired in January 2019.
The loans and borrowings classified as financial instruments are
disclosed in the financial instruments note 26.
The group's exposure to market and liquidity risk; including
maturity analysis, in respect of loans and borrowings is disclosed
in the financial risk management and impairment note.
18 Pension and other schemes
Defined contribution pension scheme
The group operates a defined contribution pension scheme. The
pension cost charge for the year represents contributions payable
by the group to the scheme and amounted to GBP9,403 (2018 -
GBP441).
Contributions totalling GBP (4,708) (2018 - GBPNil) were payable
to the scheme at the end of the year and are included in
creditors.
19 Share capital and redeemable preference shares
Allotted, called up and fully paid shares
31 July 31 July
2019 2018
No. GBP No. GBP
Ordinary shares 0.01p 1,336,479,710 133,648 1,032,607,285 103,261
Deferred shares 1p of
GBP0.01 each 895,424,391 8,954,244 895,424,391 8,954,244
Second deferred shares
0.01p of GBP0.00 each 18,616,118,301 1,861,612 18,616,118,301 1,861,612
10,949,504 10,919,117
============== ========== ============== ==========
Allotted, 1p Ordinary Shares 0.01p Ordinary Shares Total
called
up and fully
paid
Ordinary
shares
Number GBP Number GBP GBP
At July 2017
Share
subdivision - - 376,041,599 37,604 37,604
Issue of
0.01p
Ordinary
shares - - 656,565,686 65,657 65,657
At 31 July
2018 - - 1,032,607,285 103,261 103,261
Issue of
0.01p
Ordinary
shares - - 303,872,425 30,387 30,387
At 31 July
2019 - - 1,336,479,710 133,648 133,648
Allotted, 1p Ordinary Shares 0.01p Ordinary Shares Total
called
and fully
paid
Deferred
Shares
Number GBP Number GBP GBP
At July 2017 895,424,391 8,954,244 18,616,118,301 1,861,612 10,815,856
Share - - - - -
subdivision
-------------------------- ----------------- --------------------------- ------------------------- ---------------------
At 31 July
2018 and
31 July
2019 895,424,391 8,954,244 18,616,118,301 1,861,612 10,815,856
-------------------------- ----------------- --------------------------- ------------------------- ---------------------
Redeemable preference shares Allotted called up
of GBP1 each and pert paid
(classified as liabilities) Number GBP
At 31 July 2019, 2018 and 31
July 2017 50,000 12,500
=========================== ======================
Redeemable preference shares
The Redeemable preference shares of GBP1 each are redeemable at
the option of the company. They are redeemable at GBP1 per share
and carry no voting rights. 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.
Authorised share capital
The Company's articles do not specify an authorised share capital.
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
and there are no restrictions in place over the different types
of shares.
20 Warrants
As at the date of this report, the Company has the following
warrants outstanding that remain to be exercised and converted into
the Company's ordinary shares:
Expiry date Number of warrants Strike Price Value GBP
GBP per share
10/04/2020 92,113,427 0.0048 442,144.45
------------------- --------------- -------------
30/04/2020 43,796,148 0.0048 210,221.51
------------------- --------------- -------------
20/07/2020 4,817,708 0.0048 23,125.00
------------------- --------------- -------------
18/01/2021 5,000,000 0.0048 24,000.00
------------------- --------------- -------------
22/02/2021 155,555,555 0.01 1,555,555.55
------------------- --------------- -------------
04/12/2021 45,652,174 0.0069 315,000.00
------------------- --------------- -------------
04/12/2021 52,083,334 0.0048 250,000.00
------------------- --------------- -------------
Total 399,018,346 2,820,046.51
------------------- --------------- -------------
21 Related party transactions
The executive services of Graham Lyon are provided through
Soncer Limited, a private oil and gas leadership consulting firm,
in which Graham is sole director. The executive fees paid during
the period were GBP20,000 (2018: GBP16,000) and the balance
outstanding at 31 July 2019 was GBPNil.
Prior to his employment in April 2019, the non-executive
services of Arun Raman were provided through Mira Energy Group
Limited, a private consulting company in which Arun is a sole
director. The executive fees paid during the period were GBP35,600
(2018: GBPNil) and the balance outstanding at 31 July 2019 was
GBPNil.
Details of directors' remuneration is disclosed in Note 6.
22 Control of the Group
There is no ultimate controlling party of Infrastrata Plc
23 Grants received in advance
In May 2016, the Company signed a grant agreement with the
European Commission's Connecting Europe Facility in relation to the
Islandmagee gas storage project for a maximum of EUR4.024 million
or up to 50% of the costs of Front End Engineering and Design
("FEED") for the project. An advance of 40% of the maximum grant
amounting to EUR1.6 million was received and held in a Euro
denominated bank account (included in Cash and cash equivalents in
the statement of financial position).
24 Financial instruments
Financial assets
Group Group Company Company
2019 2018 2019 2018
GBP GBP GBP GBP
----------------------------- -------- ---------- ----------- ----------
Trade and other receivables 202,066 26,978 84,838 26,978
Due from subsidiary
undertakings - - 10,351,634 8,831,740
Cash and Cash Equivalents 11,240 1,790,979 7,799 1,671,002
----------------------------- -------- ---------- ----------- ----------
Financial liabilities
Group Group Company Company
2019 2018 2019 2018
GBP GBP GBP GBP
-------------------------- -------- -------- -------- --------
Current liabilities
Baron loan - 200,000 - 200,000
Costain loan 785,095 163,344 - -
-------------------------- -------- -------- -------- --------
785,095 363,344 - 200,000
-------------------------- -------- -------- -------- --------
Non-current liabilities
Baron loan - - - -
Moyle investments 200,000 200,000 200,000 200,000
-------------------------- -------- -------- -------- --------
200,000 200,000 200,000 200,000
-------------------------- -------- -------- -------- --------
Baron Loan
Following repayment and cancellation of a loan with Baron Oil
dated 5 January 2017 loan, Baron remains entitled to receive an
additional GBP200,000 in the event of a sale or disposal by
InfraStrata or its subsidiaries, IMEL and InfraStrata UK, of
substantially all of their assets, which comprise interests in the
Islandmagee gas storage project, and/or a change in control of
InfraStrata, IMEL or InfraStrata UK, within two years from the date
of the loan agreement. The loan was not interest bearing and has
been written off as this liability expired in January 2019.
Under IFRS 9 - Financial Instruments the Company is required to
recognise the fair value of this contingent settlement financial
liability at inception and to subsequently recognise the liability
at its amortised cost. The full liability of GBP200,000 has now
been written off in the consolidated statement of financial
position, as this liability expired in January 2019.
Costain Loan
In April 2018, IMEL concluded a Secured Development Loan
Agreement with Costain Oil, Gas & Process Limited ("Costain").
Costain is the principal contractor in the FEED programme and in
return for its services to IMEL, it agreed to provide a secured
loan so as to facilitate the further development of the Islandmagee
gas storage project. The loan is secured on the assets of
Islandmagee Energy Limited.
At 31 July 2019 the Costain loan required to be repaid, together
with accrued interest of 10% per annum, on the earlier of FID being
taken to proceed with the Project; or any sale of IMEL or the
Project itself; or 31 July 2019. The loan terms were amended on 25
September 2018 to change the backstop date from 31 July 2019 to 31
December 2019. At 31 July 2019, IMEL had drawn down GBP785,095 of
this loan and this is disclosed as short-term borrowings in the
Group accounts.
Moyle Investments - amounts due
In December 2017, the Company's wholly-owned subsidiary,
InfraStrata UK Limited increased its ownership in IMEL from 90% to
100% by acquiring the remaining 10% interest from Moyle Energy
Investments Limited at par value. In recognition of the support by
Moyle of the gas storage project at Islandmagee, InfraStrata plc
will pay Moyle GBP200,000 on first storage of gas.
The Group and Company's financial instruments comprise cash and
cash equivalents, long and short-term borrowings and items such as
trade and other receivables and trade and other payables which
arise directly from the Group's operations. The Group's operations
expose it to a variety of financial risks including credit risk,
interest rate risk, foreign currency exchange risk and liquidity
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 staff.
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. The Group has held all funds in Bank of Scotland
during the last two years. In the directors' view there is a low
risk of the bank holding the Group's funds at year end failing in
the foreseeable future. The carrying amount of financial assets
represents the maximum credit exposure.
The reconciling items between the trade and other receivables
presented above and that presented in note 13 are VAT receivable
and prepayments. No receivables are past due but not impaired.
Interest rate risk
The Company and Group are exposed to interest rate risk as a
result of positive cash balances, denominated in sterling, which
earn interest at variable rates. Any surplus cash is held on
deposit with Bank of Scotland. 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 of GBP112 (2018: GBP17,910).
As disclosed in note 28, the Group and Company's long-term
borrowings at 31 July 2019 bear interest at a fixed rate of 10% per
annum. No sensitivity has been disclosed as the rate is fixed for
the duration of the loan.
Liquidity risk
The total carrying value of Group and Company financial
liabilities is disclosed in note 28 (financial liability) and in
note 15 (trade and other payables). The Company seeks to issue
share capital, gain loan funding and/or dispose of assets when
external funds are required. The reconciling items between the
contractual maturities presented below and that presented in notes
28 and 15 are taxes and accruals. 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 Group Company Company
2019 2018 2019 GBP 2018 GBP
GBP GBP
--------------------------- -------- -------- ---------- ----------
Trade and other payables
Within one month 999,392 560,803 59,051 555,822
More than one month less
than one year - - - -
Financial liability (Note
28)
Within one month - - - -
More than one month less
than one year 785,095 363,344 - 200,000
More than one year 200,000 200,000 200,000 200,000
--------------------------- -------- -------- ---------- ----------
25 Prior year adjustment
The 2019 financial statements include a prior year adjustment in
relation to the warrant reserve in the Company's statement of
financial position. Prior year adjustments reflect a reversal of
the share based payment expense recognised against the share
premium account as warrants were investor warrants, and were not
issued in respect of services provided to the Company. As a result,
the warrant reserve now shows a balance of nil (2018: GBP285,432)
and the share premium account has been increased by GBP285,432.
This prior year adjustment has neither impacted the Company's
Statement of Comprehensive Income for either period presented nor
retained earnings.
26 Post Balance Sheet Events
On 01 August 2019, the Company announced that is had raised
GBP700,000 (before expenses) through a placing of 155,555,555 new
ordinary shares of 0.01p each in the Company ("Placing Shares") at
an issue price of 0.45p per share (the "Placing"). For each Placing
Share subscribed in the Placing, the Company issued one warrant to
subscribe for one new ordinary share of 0.01p in the Company
("Ordinary Share") at 1p per share (the "Warrants"). The net
proceeds of the Placing were used to fund the costs of establishing
a pre-construction environmental baseline. An environmental
baseline is required to track changes against it throughout the
construction and operational phases of the Islandmagee gas storage
project. This work has now been completed following which the
Department of Agriculture, Environment and Rural Affairs ("DAERA")
has instructed the Company to commence a 42-day public consultation
period commencing on 20 December 2019 and ending on 07 February
2020 as announced on 19 December 2019. Following completion of this
public consultation period and subject to any questions raised
therein being satisfactorily resolved, the Company expects that
DAERA will issue a full marine licence after following due
process.
On 01 October 2019 the Company announced that it had signed
heads of terms to purchase the principal assets of Harland and
Wolff Heavy Industries Limited and Harland and Wolff Group Plc (the
"Assets") from administrator BDO NI ("Administrators") for a total
consideration of GBP6 million (the "Acquisition"). The Assets
comprise of a multi-purpose fabrication facility, quaysides and
docking facilities (the "Facility") in the port of Belfast,
Northern Ireland, ideally suited for the energy infrastructure
industry and the Company's projects. The key highlights announced
on this date included the following:
-- This strategic acquisition enables InfraStrata to bring
in-house a large part of the fabrication requirements for the
Company's Islandmagee Gas Storage Project and proposed FSRU project
(the "Projects").
-- By utilising the Assets, the Company anticipates reducing the
capital cost ("Capex") of each of its Projects by 10% - 15% and the
construction timelines are expected to be reduced by 3-5
months.
-- 100% of the 79 employees who did not opt for voluntary
redundancy earlier in the year will be retained immediately
following completion of the Acquisition.
-- The InfraStrata Board plans to significantly increase the
size of the workforce by several hundred over the next five years
as it progresses the development of its infrastructure projects.
The number of employees at the Islandmagee Gas Storage Project will
also scale to 400 during construction and will employ circa 60
personnel when in operation.
-- New management team for the Facility anticipated to be
employed by the end of 2019 in addition to bringing on-board the
experience of those employees who were previously employed - the
Assets will be run independently to InfraStrata's other
projects.
-- The highly skilled workforce presents the Company with an
opportunity to create secondary revenue streams through the
provision of services to the energy, maritime and defence sectors
should such opportunities arise in future.
-- Exclusivity over the Assets has been secured, and with a
GBP500,000 cash deposit payment to the Administrator, BDO NI, to be
made imminently from a new loan facility. The Acquisition is
subject to, inter alia, final contract and funding by 31 October
2019, or 31 December 2019 if the Backstop Date (as defined below)
comes into force. The GBP5.5 million balance of the Acquisition
consideration is payable in two tranches: GBP3.3 million by 31
October 2019 (or the Backstop Date) and GBP2.2 million by 30 April
2020, which is proposed to be funded by a debt and equity mix. The
Company is already in advanced discussions with asset backed
lenders and financial institutions to put in place medium to long
term debt structures.
On the same date, the Company announced that it had entered into
a GBP2.20 million conditional loan agreement ("Loan") with
Riverfort Global Opportunities PCC and YA II PN Ltd (the
"Investors"). Of the total loan amount, GBP700,000 was initially
drawn down in order to pay for the non-refundable deposit to the
Administrator. This GBP700,000 of the initial drawdown is subject
to conversion rights. At the date of this report, the total amount
converted by the Investors is GBP450,000 leaving the outstanding
balance at GBP250,000.
On 11 November 2019, the Company announced a proposed placing of
new Ordinary Shares by way of an accelerated bookbuild to raise a
minimum of GBP6.0 million (the "Placing") and that, further to the
announcements on 1 October and 1 November 2019, it has entered into
a conditional contract to purchase the principal assets of the
former Harland and Wolff Heavy Industries Limited and Harland and
Wolff Group Plc (together, "Harland & Wolff") from
administrator BDO NI (the "Acquisition"). Immediately thereafter,
on 11 November 2019, the Company announced that the conditional
Placing has raised GBP6.0 million (before expenses) through the
placing of 1,999,999,950 new Ordinary Shares with certain existing
and new institutional investors at an issue price of 0.3 pence per
share. Additionally, the Company exercised its option with the
Investors to drawdown a further GBP500,000 (GBP555,555 gross) of
the Loan to pay the Administrators the running costs of the Assets
for the month of November. This second drawdown is a mezzanine debt
facility with no conversion rights save in the event of a default
on its repayment that is due on 15 February 2020.
In order to provide the Company's current shareholders the
opportunity to subscribe to further ordinary shares, on 20 November
2019, the Company announced an offer of new ordinary shares of 0.1p
each in the Company ("Ordinary Shares") to shareholders (the
"Offer") and an offer of Ordinary Shares on the PrimaryBid platform
(the "PrimaryBid Offer") to raise collectively gross proceeds of up
to GBP1 million (the "Fundraise"). The Company announced on 06
December 2019 that it had raised a total of GBP210,209.73 (before
expenses) which resulted in the issue of 70,069,903 Fundraise
Shares at 0.3p per share.
As at the date of this report, the Company's issued share
capital now stands at 3,682,856,289 ordinary shares of 0.01 pence
each.
On 05 December 2019, the Company announced the formal
acquisition of the Assets of Harland and Wolff. The total
consideration for the acquisition was as follows:
Particulars Value GBP Remarks
Tranche 1 500,000 Paid on 01 October 2019
---------- -----------------------------
Tranche 2 3,300,000 Paid on 04 December 2019
---------- -----------------------------
Tranche 3 1,450,000 Payable on 30 April 2020
---------- -----------------------------
Total 5,250,000 Full and final consideration
---------- -----------------------------
The directors are currently assessing the fair value of the
assets acquired on completion of the Harland and Wolff transaction.
An independent third-party valuation conducted in August 2019 has
ascribed a value for all the assets to be between GBP10.90 million
and GBP11.80 million.
On 06 December 2019, the Company announced its first ever
operating revenues via its fully owned subsidiary, Harland and
Wolff (Belfast) Limited. The Company was awarded the repair and
maintenance work for two vessels of Sea Truck Ferries Limited and
their dockings were due to take place on 20 December 2019 and 28
December 2019. As at the date of this report, both dockings have
been successfully completed, contracts duly executed and monies
received from the client.
With the EU funds not being received before 31 December 2019,
the Board has agreed with Costain Plc to extend the repayment date
of the Costain Loan Facility ("Costain Loan"), originally announced
on 04 November 2016 and due on 31 December 2019, with an accrued
value of GBP810,669 as at 31 December 2019, to 31 December 2020 or
on receipt of the EU grant reclaim, whichever is earlier.
27 Chief Operating Decision Maker ("CODM")
The Chief Operating Decision Maker (" CODM") is the Board of
directors and that the directors consider there to be, for the year
in question, only one operating segment, being the development of
gas storage facilities in the UK. As such no operating is segment
is shown as it would be the same as that shown in the primary
statements.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
FR UPUUGGUPUGPR
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January 08, 2020 07:15 ET (12:15 GMT)
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