TIDMINFA
RNS Number : 8409M
Infrastrata PLC
26 January 2021
26 January 2021
InfraStrata plc
("InfraStrata" or the "Company")
Annual Report and Accounts and Notice of General Meeting
InfraStrata plc (AIM: INFA), the UK quoted company focused on
strategic infrastructure projects and physical asset lifecycle
management, confirms that the Notice of its General Meeting and
proxy voting information have been sent to shareholders today along
with the Annual Report and Accounts for the year ended 31 July
2020. Copies will shortly be available on the Company's website:
www.infrastrataplc.com.
FY Company Highlights
-- First ever operating revenues of GBP1.48 million made by the Company
-- Successful re-activation of Harland & Wolff (Belfast); both docks fully operational
-- Over 30 vessels welcomed and redelivered to clients as at the date of this report
-- Successfully raised GBP9 million during the financial year
-- Agreement reached with the Department of Agriculture,
Environment and Rural Affairs (DAERA) in relation to the
determination of the Marine Licence by 31 March 2021
Post-Period End Company Highlights
-- Acquisition of Harland & Wolff (Appledore) for GBP7 million
-- Successfully raised GBP7.40 million in December 2020 / January 2021
-- Significant uptick in revenue generation since September
2020; current monthly revenue generation equivalent to FY 2020
revenues
-- Cash break-even position achieved and maintained within the cruise and ferry business
-- Progress being made on large contract fabrication for
renewables and defence; pre-qualification achieved and contract
negotiations being undertaken
John Wood, CEO of InfraStrata, said:
"2020 was a challenging year for the Group. When we acquired
Harland & Wolff (Belfast) in December 2019, we did not expect a
global pandemic to hit us and disrupt our lives so dramatically.
Despite that, we have remained focussed and committed to growing
our business. Our yards have been open throughout this period and
we have had the privilege of welcoming over 30 vessels as at the
date of this report and successfully re-delivering them back to our
clients.
The new financial year brings with it a number of challenges
but, equally, untapped opportunities. We have spent the last 12
months laying the foundations for a robust business, with a
particular focus on cruise and ferry, renewables and defence. We
believe that these markets will be the growth drivers for the
business over the next few years.
Having successfully completed all public consultations for the
Islandmagee gas storage facility, we expect to be granted the
Marine Licence by 31 March 2021, that will enable us to take Final
Investment Decision (FID) by the H1 2021 and commence construction
of the project. We believe that this project is critical not only
for the security of natural gas supply for the island of Ireland
and mainland UK, but also for the commercialisation of large-scale
hydrogen production and consumption in the future.
We have successfully managed to navigate our business through
the adverse economic and social impacts of COVID-19. With the
introduction and distribution of the vaccine, we hope to see a
return to normalcy that will facilitate a much higher growth rate
for the overall business that we are well prepared for.
I wish to place my thanks to all our shareholders who have
supported us during this tumultuous period and welcome new
shareholders into the InfraStrata family. More importantly, I wish
to thank our colleagues in Belfast, Appledore and London who have
tirelessly worked through this difficult period to keep the yards
open and fully functioning. This would simply have not been
possible without their commitment to the business and to our
clients."
General Meeting Notice
The Company is also pleased to announce that its General Meeting
will be held on Friday 19 February 2021 at 11:00 p.m. at the
offices of InfraStrata plc, 8th Floor, Northern & Shell
Building, 10 Lower Thames Street, London EC4R 6AF.
The Company's Annual Report and Accounts for 2020 together with
the formal notice of the Accounts Meeting 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 +44 (0)20 3900 2122
John Wood, Chief Executive investor@infrastrataplc.com
Seena Shah, Head of Marketing & Communications
Cenkos Securities plc (Nominated Adviser
& Broker)
Stephen Keys / Callum Davidson (Corporate
Finance)
Michael Johnson (Sales) +44 (0)20 7397 8900
-----------------------------
Chairman's Report
I am delighted to be writing my first report as Chairman of
InfraStrata plc (the Company), following my appointment on 1(st)
February 2020. It has been a privilege to chair the Company during
this challenging period and to see it continue to prosper, despite
the impact of the Covid-19 pandemic. This is testament to the hard
work and dedication of the entire executive team, ably led by our
CEO, John Wood. Following the stabilisation of the Islandmagee gas
storage project and the acquisition of the Harland & Wolff
shipyard in 2019, the Board has turned its attention to growth and
continued its strategy of developing multiple strategic
infrastructure projects, enhancing revenue opportunities and
carefully managing cash balances as we monetise those projects.
2020 was a notable year for the Company, with the end of the
consultation period on the application for a marine licence for the
brine discharge from the Islandmagee gas storage facility (the IM
project), the commencement of operations at the Harland & Wolff
(Belfast) shipyard (H&W), partnership negotiations on the
Floating Storage and Regasification project at Barrow-in-Furness
(the FSRU project), the raising of GBP9m of additional equity on
the AIM market in July and, just after the end of this financial
year, the acquisition of the land and assets at the Appledore
Shipyard in Devon. Finally, we were delighted to secure a further
raise of cGBP7.40m, announced at the end of December 2020, which
was supported strongly by existing and new shareholders.
Islandmagee Gas Storage Project
The 42-day consultation process on the IM marine licence
application concluded in March this year and we now await the
decision of the Department of Agriculture, Environment and Rural
Affairs (DAERA). The Company firmly believes that it has now
completed all formalities regarding the marine licence application
and that no further work should be required. The matter is now in
the hands of DAERA and we continue to cooperate closely with the
Department and offer any further assistance that they might
require. There is no doubt that the Covid-19 pandemic has disrupted
the work of Government departments and there is no certainty on how
long this disruption may continue. However, we will continue to
work hard to remove this last impediment to a final investment
decision. Latest discussions with DAERA as announced to the market
indicates a determination on the Marine Licence will be made by the
end of Q1 2021 and we will work with DAERA to ensure that this
timeline is met. We are delighted that our offtake partnership with
Vitol remains in place and indeed, that bipartite discussions are
continuing with other interested parties. The Company remains
confident that, once the marine licence has been secured, we will
move very rapidly to a final investment decision and the next stage
of this exciting project.
Harland & Wolff (Belfast)
Following the completion of the acquisition of H&W (Belfast)
on 5(th) December 2019, the yard was reactivated and a carefully
planned capital expenditure programme was put in place to ensure
that the yard could very quickly accept vessels for repair and
refurbishment, such that the Company's objective of achieving a
cash break-even position could be realised within a calendar year.
A new leadership team has been recruited and has been focussed on
rebuilding the capability of the yard across multiple sectors and
offerings, whilst carefully managing the reactivation of facilities
as work is won. Spanning five key markets; cruise and ferry,
defence, commercial fabrication, oil & gas and renewables,
H&W operates six core services; technical services, fabrication
& construction, repairs & maintenance, in-service support,
conversions and decommissioning.
We are delighted to have established a strong reputation with
blue-chip clients such as Stena, P&O, Irish Ferries etc., and
we are confident that we will continue to build our customer base,
despite the slowdown being experienced in some sectors of the
shipping market due to the impact of the pandemic. H&W
(Belfast) is also focussed on bidding for major defence programmes
alongside establishing a Teaming Agreement with Navantia for the UK
MoD Fleet Solid Support Warships requirement - a proposed fleet of
three supply ships for the Royal Fleet Auxiliary. As further
announcements are made by the Ministry of Defence over the course
of 2021, we shall be keeping the market informed.
Due to the Covid-19 pandemic, trading conditions at H&W
(Belfast) have remained tough for the first half of the new
financial year and achieving our target of cash break-even for the
next full year period, would, I believe, be an excellent result
following the first year of operations at H&W (Belfast).
FSRU project
The Company continues to negotiate the required agreements with
potential partners to put in place the FSRU project in Morecombe
Bay, Barrow-in-Furness. Technical and commercial due diligence has
been completed and we continue to see significant interest from
globally recognised Liquefied Natural Gas (LNG) companies, across
the spectrum of the LNG supply chain. We have not yet formed the
optimum partnerships and it is important that we do not commit
funding to this project until a clear route forward is mapped
out.
We remain on the bench and are viewed as the partner of choice
for the project. When we consider conditions to be right, we will
be in a strong position to move forward to the Front End
Engineering and Design phase of the project. We continue to be
confident that, at that time, we will have access to the required
funding for further investment in this potentially lucrative
project.
Future Projects
With the continuing focus on cleaner energy and carbon
emissions, we believe that natural gas will become the feedstock
for power generation and will overhaul coal and fuel oil
consumption at power stations as alternative energy sources come
on-line. Equally, given current government policy and the impetus
being provided to kickstart what is termed as the "Green Industrial
Revolution", we must focus our attention on exciting renewable
energy projects and new technologies.
We will continue to remain aligned with government policy. More
importantly, definitive market soundings and routes to funding will
determine which energy infrastructure projects we prioritise and
monetise.
Investor Backing
Given our continued success in identifying exciting
infrastructure projects and positioning the Company for further
investment and growth, the Board decided in March of this year that
further equity would be required to fund the Company's ambitious
programme throughout the next financial year. I am delighted that
in July the Company was able to announce that it had raised an
additional GBP9m of equity through a placing on the Alternative
Investment Market in London and that, in addition to existing
retail and institutional investors increasing their shareholdings,
we attracted new institutions into the share register. A further
GBP7.4m was announced to be raised by the Company in December. The
overarching rationale for the placings was to strengthen the
Company's balance sheet and provide management with the growth
capital needed to buy new assets and to win key contracts that will
underpin the growth of the Company and enable it to maximise its
potential. On any measure, the placings were a great success and I
warmly welcome our new shareholders and thank existing shareholders
for your continued support.
Harland & Wolff (Appledore)
The Company has demonstrated its ability to capitalise on
opportunities quickly as they arise and this was demonstrated again
in August through the acquisition of the land and assets at the
Appledore shipyard in Devon, for a total consideration of GBP7m. We
were delighted to receive the Prime Minister, Rt. Hon. Boris
Johnson MP, at the yard on the day of the announcement and to hear,
first-hand, his commitment to supporting the National Shipbuilding
Strategy for the UK. The Company believes that there is a
compelling case for the acquisition of the Appledore yard, to
operate in tandem with H&W (Belfast) under the latter's
corporate identity.
H&W (Belfast)'s core competence lies in vessels that require
a dock length in excess of 300 metres. With two dry docks at 356
metres and 556 metres in length respectively, H&W (Belfast) has
the largest drydock capability in the UK and the second largest in
Europe which, therefore, puts it in a prominent position in
relation to larger vessels. H&W (Appledore), on the other hand,
will focus on the smaller vessel in the market, requiring a dock
length of 119 metres. There are very few shipyards in the UK that
can offer this type of undercover building dock and repair facility
and, given the number of sovereign vessels required in this
category over the next ten years, the Company believes that this is
a market segment that cannot be ignored. H&W (Appledore) will
operate across the five markets and six core services targeted by
H&W (Belfast) and the Company is confident that together, the
two yards can access a significant short, medium, and long-term
market opportunity. It is important to note that we do not envisage
meaningful expenditure at H&W (Appledore) until work is secured
- a strategy that we have deployed successively at H&W
(Belfast).
The InfraStrata Team
As the Company's operations expand and its revenues grow, we
continue to recruit talented people at an operational and corporate
level. Our current focus is on HR, Finance and Project Management
support and I have been delighted to welcome several new additions
to the team in the last few months. However, it is important to
note that we continue to be fully aware of the need to balance
increased overhead costs with additional revenue, and only increase
our cost base at a level that is sustainable.
At Board level, we continue to strengthen governance and the
Non-Executives are encouraged to constructively challenge the
Executive team on major decisions. Given this increased Board
workload, and following the acquisition of Appledore, it was with
regret that I accepted the resignation of Deborah Saw as a
Non-Executive Director, for personal reasons. The Board is actively
working to replace Deborah but would like to place on record its
thanks for her help and counsel in the months that she served.
Finally, I thank those who have been supportive of the Company
this year and in the past; our team, our shareholders, our
customers, our suppliers and partners. The Company is confident
that, with your continued support, we will continue to prosper.
Clive Richardson
Chairman, 26 January 2021
Chief Executive Officer's Strategic Report
We entered 2020 with excitement for the year ahead having just
accepted the keys to the iconic Harland & Wolff facility in
Belfast. However, none of us could have expected the tsunami of
disruption that we encountered this year across our entire business
as a result of COVID-19.
Whilst it has been tough, I am extremely proud of the way our
team has dealt with the various challenges thrown at them, some of
which were very unexpected; for example, when the initial lockdown
was announced we saw the cancellation of numerous dry dockings
(some contracted for and others close to contract execution)
totaling tens of millions of pounds within a single week. Many
companies took the easier path of furloughing employees and riding
out the storm. We, on the other hand, made the strategic decision
to carry on and utilise the downtime to our advantage by bringing
forward planned maintenance work which would inevitably enable us
to capitalise on the resurgence in activity that we expect to see
in the maritime industry towards the end of the current COVID
environment. At every stage, the health and safety of all our
employees and that of the environment has been at the forefront of
every discussion and decision. I am pleased to report that with the
various measures put in place from social distancing to regular
sanitising, our facilities have remained open for business
throughout this tumultuous period. I wish to place my heartfelt
thanks to the entire management team and the workforce for their
commitment to keep our yard open for business.
I set out some clear objectives to further realise our Group
strategy in 2020:
1. Delivering the Final Investment Decision ("FID") for our Islandmagee Gas Storage Project
Given the amount of interest in the award of our Marine
Construction License, it is now more likely than ever that Final
Investment Decision (FID) on the Islandmagee Gas Storage Project
will be taken after the license has been awarded. We remain of the
firm opinion that there is no reason why the marine license will
not be granted, given that we are dealing with proven technology,
meeting and, in some cases, exceeding environmental regulations,
and have a legal opinion on the consultation process. This project
is effectively a transition project that will help facilitate the
UK government's clean energy 2050 targets. It is quite clear that
natural gas will be consumed for many years to come as we have only
just started the real transition away from coal. We expect that
natural gas will be the transitional fuel of choice as we progress
towards a greener future with renewables and hydrogen. We remain
sure that salt caverns are critical not only to facilitate the
transition but also to provide baseload security of energy supply
when the wind does not blow, irradiation for solar power generation
is inadequate or physical gas molecules cannot flow through
existing pipeline infrastructure because of geo-political and / or
commercial impediments. As an island nation that is on the brink of
a new era outside the European Union and with imported natural gas
as the predominant energy provider, we believe that InfraStrata
will have a large part to play in ensuring security of energy
supplies in the UK, especially on the island of Ireland. Whilst
some progress has been made in relation to hydrogen and adapting
everyday products to use it, the key will be mass production,
monetisation and storage of hydrogen as well as the ability to
blend it back into the network. Subject to further consents, our
facilities at Islandmagee will be strategically well placed to
capitalise on this transition in the future.
Having held meetings with Northern Ireland's First Minister and
Minister for the Economy in the devolved government and the
Secretary of State for Northern Ireland, we firmly believe that
there has been, eventually, a realisation that this project is
critical, not only for security of energy supply but also for
providing primary, secondary and tertiary employment in a
desperately needed post-COVID economic recovery.
2. Fully Integrating the Harland & Wolff Brand into InfraStrata Plc
We have now fully integrated Harland & Wolff into the
InfraStrata group. As part of that process, we are now running on
an integrated enterprise-wide business management system (ERP
system). Whilst system integration and change management projects
are complex, undertaking a substantial portion of this work whilst
in lockdown has demonstrated what can be achieved by teams
collaborating remotely. Our business systems are now set up for
further expansion of the Group and will capitalise on operational
synergies where available.
3. Achieving cash breakeven for the first twelve months of operations
I believe in setting tough but achievable goals. Whilst we have
not met our cash breakeven target for the entire Harland &
Wolff group, we achieved an important milestone by reaching our
first month of cash breakeven on our drydock operations in October
last year. Whilst not in our original plan, we had to make some key
decisions at the start of lockdown in March 2020 that made our
breakeven goal much harder to achieve. With the second national
lockdown now upon us there has not, unfortunately, yet been the
massive upsurge in re-certification work that we expected to see at
the end of 2020.
During the first national lockdown in March 2020, we made the
decision to take our Belfast dock out of operation and undertake a
fifteen year cycle maintenance project along with upgrade works.
This dock is one of our key assets due to its depth and access
arrangements allowing it to handle some of the largest vessels.
With the upcoming tender for the Queen Elizabeth aircraft carriers,
we wanted to ensure that our facilities, being one of only two
across the UK capable of handling these carriers, was ready for
this tender. Additionally, by undertaking these upgrade works now,
we have ensured that the facility would not be out of service when
the anticipated high revenue projects flow into the yard once the
current COVID-19 uncertainty passes. During the various lockdowns
throughout the year, we have seen a greater number of emergency and
routine dry dockings rather than conversion and upgrade works.
Whilst the former provides a certain amount of baseload work, the
latter set of contracts provide for larger revenue and cashflows as
well as higher margins.
We are humbled by the amount of support that we have received
from ship owners and operators globally. The overall outlook for
the Belfast yard in the medium to long term is extremely positive
and we have several large projects that are currently at tender
stage. We expect to execute sales contracts in 2021 that have
longer project lifecycles when compared to what we have today. This
means that we expect to achieve cash breakeven across the business
during the current calendar year and across two financial
years.
There is no doubt that COVID-19 has slowed our efforts down,
reduced our efficiency and added costs to the business. We are
several months behind where we would have liked to be at this stage
in our lifecycle. However, this is not unexpected given that we
operate in an environment that bears little resemblance to when we
accepted the keys to the Belfast facility in December 2019. Having
said that, from all accounts, the short to mid-term outlook for the
shipyard across cruise & ferry, renewables and defence is
looking very strong and, in fact, far better than what we had
estimated. Despite lower revenues than we expected, we are pleased
that we are taking all the right steps to achieve our margin target
whilst operating the shipyard in a less than optimal manner. We
achieved an overall margin of slightly over 20% by the year end and
we expect this to grow to the c25% levels in the future.
4. Reactivating Harland & Wolff Belfast via a phased approach
When the acquisition of Harland & Wolff (Belfast) was
completed on the 5(th) of December 2019 it was our aim to get the
Belfast dock (335m) up and running immediately. This reactivation
work was undertaken in short order as we welcomed a Seatruck ferry
on the 23(rd) of December as our first project, eighteen days after
the acquisition. Numerous vessels have passed through the Belfast
dock over the months that have followed. With the onset of the
COVID-19 pandemic, we made the decision to step up and accelerate
our efforts to reactivate our larger building dock (556m) in order
to enable the Belfast dock to be taken out of service for a four
month period and to undertake a fifteen year upgrade on its dock
gate.
The required works were undertaken to reactivate the building
dock successfully and due credit to our team who undertook these
works in an expedited manner to allow us to take advantage of a
downturn in activity. All works have now been completed on the
Belfast dock gate and that dock is now fully back in service such
that we now have a fully functioning two dock operation. This puts
us in an ideal position as we expect a major resurgence of high
value docking and recertification works in 2021 as we start to see
COVID-19 disruption end and business activities recover. We expect
to see a sizeable amount of business in the yards as we deal with
the enormous backlog of dry dockings that have been deferred by
ship owners globally but now need to be conducted in order to start
sailing again.
Our last area of reactivation is the fabrication side of the
business. Whilst a lot of work has been ongoing for internal
projects, we hope to secure our first fabrication project in early
2021. Key to securing fabrication works is to have the right
equipment to in order to ensure efficiency. We have, therefore,
ordered a robotic welding panel line which will reduce fabrication
costs and increase volume flow through the facility.
5. Developing the Harland & Wolff Brand
We have progressed well introducing our new brand and commercial
offering to the market. When commencing trading from zero, there is
a fine balance that needs to be struck between increasing overheads
to generate sales and overburdening the business before it gets
enough revenue-led traction. We have been very careful to strike
this balance and have, therefore, brought in a small number of more
experienced leaders who can cover multiple disciplines.
We have been actively engaged across all of our five core
markets and six sectors. As one would expect, some markets have a
longer gestation period than others but we are, nevertheless,
pleased to have secured orders onboard vessels in the following
markets: commercial, cruise & ferry and oil & gas which,
given our relative state of infancy, is a significant achievement.
As with our initial market focus, we have chosen to initially focus
on some of our six sectors too. Clearly, repairs and maintenance
has been our early "low hanging fruit". We believe that we are
extremely close to securing our first fabrication project into the
yard and given the Prime Minister's recent announcements, we
consider ourselves to be well placed to capitalise on the increased
focus on renewable projects with our partner Navantia who is a
world leader in this area and have already delivered several large
fixed and floating wind structures over the last few years. We have
only scratched the surface in relation to sectors that we can build
on as we move forward, and there are substantial opportunities that
lie ahead.
Key to our brand development is organic growth whilst taking
advantage of any opportunistic acquisitions that are a
complimentary fit to our strategy. Post the financial year end, we
announced the acquisition of the Appledore shipyard which we are
delighted to have brought into the Group. We believe that the
Appledore facilities are an ideal fit, and they complement our two
existing drydocks; we now have two of the largest drydocks in the
UK (Belfast) and the largest small fully undercover drydock
(Appledore). Strategically it is imperative to have facilities that
carry a proportionate level of overhead for the type of work being
undertaken. The Appledore facility is ideal for smaller vessels up
to 120m given that the cost of accommodating these types of smaller
vessels in Belfast would be disproportionate to the value of
contracts for such vessels. The Appledore facility was
traditionally only used for new build work. We have now established
that there is a substantial number of sovereign vessels due for
replacement over the coming years that would be an ideal fit for
Appledore. In addition, we intend to ensure that the facility,
where required, can undertake docking works.
Just like Belfast, this facility will cater to all our key
markets and sectors apart from cruise and large ferries. It was the
highlight of our year to have the Prime Minister in attendance when
the deal to acquire Appledore completed and to hear his passionate
comments and underlying commitment to revitalise UK shipbuilding
and restart vessel exports as well as marine related projects
generated from the UK.
We are progressing well with our objectives for this year
despite the global pandemic and the chaos that COVID-19 has caused.
During the year we have had to think on our feet and act fast.
Being nimble across the business is one of our biggest strengths
that we will continue to use this to our advantage. All aspects of
our business have remained open and operational throughout the
restrictions and shutdowns. Our shipyard in Belfast played a vital
role during the first national lockdown, helping ensure that sea
freight remained operational across the Irish Sea. In order to
facilitate continued operations we have introduced new processes
and procedures not only for our own staff but also for our clients
and suppliers. It is not until it is gone that we truly appreciate
the high level of close human contact that we have all become
accustomed to in our work and social lives. We can never become
complacent, and we will continue to review and bring in additional
measures as we feel are appropriate and proportional to ensure
continued operations and strive to make as much progress as we can
in the circumstances we find ourselves in.
The effects that we have felt and continue to feel given the
unstable nature of this virus make it very hard fully forecast our
expected performance for the next financial year. We are confident
that we will pass our cash breakeven point for the Belfast facility
in the current calendar year (2021). When market conditions settle
and volatility reduces, we will endeavour to provide updates and
guidance where appropriate.
During 2020 we have managed to complete three out of our five
objectives and strive to get the others completed as soon as
possible. We believe that we are starting to create real and
demonstratable shareholder value and we will continue to build on
the foundations that we have put in place through 2021 and
beyond.
It is inevitable, in my opinion, that we will see significant
shipbuilding back in our facilities due to the lack of capacity at
other yards and the number of replacement vessels on the horizon
over the next decade. This is even before we consider renewables,
new power station construction requirements for structural steel
and major conversion works on vessels. In summary, large scale and
substantial volumes of steel fabrication work will lead our
transformational change and we are confident of securing that this
year. Having already welcomed over 20 ships through the Belfast
facility during 2020, we are seeing momentum building. We hope that
with the introduction of the new vaccines to tackle COVID-19, this
momentum will be sustained and that we can hit our sales target for
the calendar year 2021.
Key to our development is our strategy for our shipyard and
fabrication facilities, not just focussing on one market but five
along with operations occurring in six sectors within each of these
markets. This gives us substantial opportunities with a skilled
workforce that is common across all markets and sectors. By
controlling risk and not specialising in one sector alone, it
affords us the opportunity to keep generating revenues should
either any markets and / or any sectors experience a downturn.
Within the markets in which we operate, there will always be
cyclical peaks and troughs. Our strategy is specifically designed
to control that risk and provide for long term stability of
cashflows.
Whilst much mention has been made of our newer assets, perhaps
due to their ability to fund, in part, the Group's ongoing
operations in the short to medium term whilst adding significant
long term value, we remain committed to delivering on our initial
Islandmagee gas storage project. We continue to believe that this
project has the potential to add significant value to the Company
in the medium to long term. When I joined the Company in 2018,
several key components of the project, on the face of it, had been
completed. However, as the new team delved into greater detail,
under the surface, a substantial portion of work remained to be
undertaken. We have worked tirelessly over the last two years to
ensure that we are ready to proceed to the construction stage. To
this end, we were proud to welcome Mark Jessop as our Projects
Director this year. Mark brings with him decades of experience
within the gas storage and renewables sectors not only in
operations but also in the construction of such facilities.
Much time has been spent working in consultation with DAERA to
get the Marine License issued but despite our best efforts, we have
had significant delays which have been exacerbated by COVID-19 and
the department effectively being shut down throughout 2020. We
carried out the first formal consultation back in December 2019,
having it pre-approved by the department. In order to be thorough,
we agreed to a second (additional) consultation to cover a small
error in DAERA's process in relation to an advertisement (which had
been pre-approved by the department in advance). That second
consultation was duly completed in March 2020. We currently await
the outcome of the recommendation to be made by DAERA to the
Minister for Environment. In addition, we have sought a legal
opinion and shared this with DAERA in order to try and expedite the
process, particularly around the other licenses within the family
i.e., the Abstraction and Discharge Licences. For the avoidance of
doubt, the Company is currently in possession of a valid Extraction
and Discharge license and it is their review, due to the passage of
time that has been brought into question. I am pleased to report
that after months of discussion, we agreed with DAERA that a
consultation period would commence in December 2020 and formally
complete on 13 January 2021, which marks the end of all such
consultations. We have further been advised by DAERA of their
intention to make a formal recommendation to the Minister for
Environment on or before the end of the first quarter of 2021. The
fact that we now have a formal date on which such recommendation
will be made is vitally important for our Final Investment Decision
(FID) and we can now look at planning for the next stage of the
project with a higher degree of certainty.
With the end of the transition period and our departure from the
European Union on 31(st) December 2020, we believe that it is
clearer now more than ever that the island of Ireland needs a
storage project to protect it from price and supply volatility that
will inevitably follow. As we move away from coal as a fuel source
it is our view that natural gas will act as the transitional fuel
of choice whilst moving towards a green energy mix. This will not
be a quick process and it is likely to take a couple of decades (if
not many) to occur. Gas storage is in a unique position in that it
will likely be the cornerstone to any meaningful hydrogen
development. Currently, numerous end user technologies are being
developed; however, the key will be access to mass and large scale
production and storage. It is likely that at some point (subject to
further approvals ) that the caverns will transition over to
hydrogen storage in the future. There are a lot of unknowns at this
point, including the pace of technological and commercial
development but when there is a shift from gas to hydrogen at some
point in the future, we believe that the caverns will be able to
solve at least one aspect of the hydrogen commercialisation
conundrum.
As was recently confirmed in an independent report published by
Oxford Analytics, by 2035, 74% of all gas will be imported, which
is a substantial increase from today's 48%. This will inevitably
cause operational flexibility issues and make the country
susceptible to shock events like the "beast from the East" in 2018.
With the storage caverns also being suitable for hydrogen (subject
to approval), we believe that the facility is, by far the most
appropriate technology to meet the UK's growing flexibility
requirements. Oxford Analytics commented further on the key
economic benefits of the Islandmagee gas storage project:-
Employment
400 direct jobs during construction as well as between 800 and
1200 indirect jobs
60 direct jobs during operation as well as 120 and180 indirect
jobs
Wider Economy in Northern Ireland
During construction every GBP1m of capital expenditure will
result in a further GBP2m being created in the economy. Even if 25%
of the work required is not sourced locally the wider economy could
still benefit by around GBP400m with a further GBP13m flowing into
the local economy as a result of employment.
Our view remains that this project is a critical requirement for
grid stability given the intermittency of the growing renewables
portfolio within the broader energy mix. Given that this is
strategic energy infrastructure, we believe that there may be
opportunities to retain 100% ownership of this project. As it
stands today, we are in a holding pattern until the marine license
award has been confirmed. We remain fully committed to getting this
project underway and expect to commence construction with some pre
enabling work in early in 2021, preparations for which are already
underway. This will facilitate a sharper ramp up when we take the
Final Investment Decision (FID) which we expect will be in H1 2021.
The key to unlocking the next phase of this project is, clearly,
the grant of the Marine Licence.
When I joined the business in 2018, we were a company with just
one project and facing several challenges. We are a totally
different business today, with the building blocks now in place to
build into a large and profitable corporate organisation. Key to
sustainable growth is to ensure that the overall strategy is
aligned to government policy and closely following global trends.
Whilst we have spent many months considering the right strategic
projects to develop we have had to consider and rank all potential
projects according to where we believe the industry in which they
operate will be in the future. Whilst we still have a huge belief
in the LNG import market and the ability to create additional
shareholder value in that sector, we believe that there are other
sectors which will create far greater opportunities at this time,
viz., fixed and floating wind, hydrogen, tidal, battery and
strategic energy infrastructure projects. In light of the changing
energy infrastructure environment, we will continue to pursue the
FSRU project but only in partnership with existing infrastructure,
should we be able to close a commercial deal with partners who own
such infrastructure in Barrow. As a greenfield standalone project,
the project does not lend itself to robust economics any longer.
Discussions are currently underway and we hope to make further
announcements about the FSRU project through the course of the
year.
The Belfast acquisition provided the Company with the
opportunity to substantially reduce the overall CAPEX of our
Islandmagee gas storage project in addition to being cash
generating and self-sufficient, potentially negating the need to
constantly return to the market on a regular basis in order to
provide cash inflow for ongoing operations. The addition of
Appledore has substantially reduced the risk of operation of the
Belfast facility and has provided the ability to share work in
order to deliver larger projects in shorter time frames. With
several centralised functions operating from Belfast there are
substantial synergies achievable by running the yards together
under the iconic Harland & Wolff brand.
Islandmagee Energy Hub Ltd continues to be the holding company
for projects or concepts that are in the incubation stage. We are
looking at several projects currently in the new technology space
including hydrogen. These new technologies may bring with them some
grant funding to help us trial some of these concepts and undertake
engineering design works.
We have introduced a new approach to Safety, Health and
Environment (SHE) which was rolled out during 2020. Safety is of
upmost importance in our minds and we will ensure no harm comes to
any of our employees or to our environment.
The board has very clear ambition and a strategy for growth,
works well together and has very complimentary skill sets. The
board has remained stable throughout 2020 with the only change
being the departure of Deborah Saw who was unable to meet the
increase in time requirements given her prior and future
commitments. I would like to place on record my thanks to Deborah
for the work that she has undertaken for the Company and wish her
well for the future.
As we progress it is essential that we have the right
composition and balance on the board. The Chairman and the rest of
the Non-Executives have provided tremendous support to myself and
the rest of the executive team during 2020.
During Q3 each year we carry out a detailed review of the
overall business strategy which then leads into the formation of
budgets and plans for the individual businesses. This year we went
a stage further, reversed back and considered our original strategy
as our starting point. Whilst COVID-19 has made this job so much
harder, we have undertaken a full review commencing with assessing
where we are today against the initial strategy presented to
shareholders back on the 5(th) of December 2018.
As I have mentioned several times, on my appointment, it was
clear that a one project company was very high risk and
unsustainable in the long term. The vision we developed was to be a
leading, global infrastructure development & asset management
company, being intimately involved through the entire lifecycle of
projects from conception to decommissioning. In some projects we
will participate from end to end of their respective lifecycles,
whilst in other cases, we may choose to either only develop or
acquire to operate them. One of the distinguishing features in all
types of projects that we are currently involved in or wish to be
involved in is that they have substantial heavy engineering and
fabrication requirements. In order to control the lifecycle process
more fully and retain a higher percentage of the development costs
within the Group it was decided to acquire a facility in December
2019 in order to give us that long run capability. The added
advantage of acquiring Harland & Wolff (Belfast) was that it
also gave us the ability to have a standalone business, in its own
right, that has significant growth potential to be cash positive in
a relatively short period as well as being vertically integrated
into our larger development projects.
Our goal is to spread the Company's risk profile over several
projects/operations or businesses. Whilst, initially, we restricted
ourselves to a single geographical location in Northern Ireland we
have now branched out into Devon. Additionally, we have global
aspirations for the longer term. The key update in our strategy
from last year, is a more concentrated approach to asset
management, operations and maintenance thereby ensuring vertical
integration as well as a clear focus on heavy engineering and
fabrication.
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 or company 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 or operating company. The four areas of
expertise that we hold and that will continue to 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 - Income generation
-- Asset Operation, Management and Optimisation - Income generation
-- Retained equity in development projects - Income generation
While carving out our future strategy, it is essential that the
macro economic and political policy environment is considered in
order to ensure that the Company's future strategy is in keeping
with the fast pace of changing government policy in order to ensure
as close an alignment as possible. We have focused on two key
areas; national energy policy including renewable energy policy and
the National Shipbuilding Strategy. Both areas of policy are
interlinked and fall into Harland & Wolff's core business.
On the energy side, in order to meet our 2050 climate change
ambitions the Prime Minister has set out his vision to have every
home powered by wind derived power by 2030 in addition to
fast-tracking the transition from natural gas into hydrogen. The
government is also keen to develop nuclear power in order to
provide baseload support to the power grid.
As a company, we are uniquely placed to deliver on this
government's ambitious strategies. On the one hand we have two
shipyards in the UK that can deliver on the National Shipbuilding
Strategy. On the other hand, the multi-purpose nature of these
facilities means that they are capable to carry out heavy
engineering and fabrication of several hundred fixed and floating
wind structures that will be needed over the course of the next
decade. Maritime, heavy engineering and fabrication capabilities
are inextricably linked to each other. Our business is, therefore,
ideally positioned to help meet the challenges of successfully
delivering on the National Shipbuilding Strategy, the government's
climate change targets and, on the energy infrastructure side, the
ability to store large volumes of hydrogen to transition into clean
fuels for heating and power generation.
Over the past year we have had many meetings with cross party
politicians in the UK Government, Northern Irish and Scottish
devolved governments along with a number of international
governments. In order to fully realise our strategy, we must be
fully engaged with all political leaders across the spectrum. We
believe that our current strategy is aligned with government policy
and that we have the assets and infrastructure to capitalise on the
conditions that will arise in the market in 2021 and beyond. As we
look to the future, we must keep ourselves flexible in order to
respond to any change in Government policy, especially its Net Zero
ambitions by 2050. Whilst these targets are challenging, the focus
is on getting as close to them as possible. By way of an example,
the Prime Minister announced that wind farms could power every home
by 2030 with an increased target from 30 gigawatts to 40 gigawatts.
The government is, therefore, targeting to achieve this goal in
less than 10 years' time. InfraStrata owns one of the few UK
facilities in the UK capable of undertaking this type of work and
was previously involved in fabrication activities for East Anglia 1
which was a pioneering development in the UK and estimated to cost
GBP2.5bn when it was commenced in 2016. In order to meet these
ambitious targets, approval is likely to be fast tracked for
numerous projects that are currently in the pipeline. Additionally,
fabrication capabilities will need to be expanded rapidly including
all existing and new facilities to swing into 24/7 operations in
order to deliver on these upcoming huge projects.
The recent government announcement on shipbuilding is not a new
one. The UK government has, for many years, been trying to identify
why other developed economies with equally high labour costs are
able to develop booming defence & commercial shipbuilding
sectors with high export elements. Sir John Parker was commissioned
in 2017 to develop a National Shipbuilding Strategy (NSBS), the
clear focus of which has been on defence. Only in recent times and
with the departure from the European Union has the government
doubled down on efforts to widen the NSBS to cover commercial
shipbuilding opportunities. As is common knowledge, there have been
many failures in the shipbuilding sector globally. We believe that
this is primarily due to shipyards maintaining a very narrow focus
on only one, possibly two markets. In contrast, our strategy to
build our shipyard and fabrication capacity has a focus on five key
markets and six sectors. With each yard focusing on all five
markets but providing a different offering relative to the size of
each contract. Whilst operating across a broad range of markets the
business will be able to withstand traditional downturn periods
that are cyclical across industries like Defence, Oil & Gas and
Commercial. Equally, whilst operating in the five key markets it is
also essential to operate across multiple sectors to generate
income both inside and away from the shipyard and fabrication
facilities (such as through in-service support).
It is critical that the assets we acquire that have real
strategic importance. For example, Harland & Wolff (Belfast)
has two of the largest drydocks in Europe and the biggest in the UK
ensuring that the top end of the market is protected. Likewise,
with the recent acquisition of Appledore at the smaller end of the
market, we have one of the only facilities with direct access to
the sea with relatively deep water for its size.
There is work available across all markets and sectors. However,
it will take time to build relationships and confidence in these
markets that we have very recently entered, although we do feel
well positioned to capitalise on clear gaps that we see in the
market. Whilst the yards will be standalone in their own right,
they will most likely form a link in our supply chain especially
for our infrastructure project development in the future. By making
good use of vertical integration we can keep a proportion of the
development costs of a project within the Group from which we aim
to add substantial shareholder value.
Key to sustainable growth is to ensure that the overall strategy
is aligned to government policy and closely following global
trends. Whilst we have spent many months considering the right
strategic projects to develop we have had to consider and rank all
potential projects according to where we believe the industry they
operate in will be in the future. For every project that we look at
we go through a robust set of criteria to ensure it's the right fit
for the Company and, equally, it is essential that at each gate
review we continue to make that assessment as policy and markets
evolve during the lifecycle of each project. From that perspective,
the challenge is to assess where markets are likely to be in 4-5
years' time as opposed to where they are today.
We are seeing some key trends emerging and believe that our long
term opportunities exist within fixed and floating wind, hydrogen
storage, tidal, battery and other green energy infrastructure
projects. We are now seeing our strategy coming together following
the acquisition of the two Harland & Wolff facilities which, by
themselves, will start growing organically in the months and years
ahead with the ultimate ability to generate funds in order to
invest in new projects.
John Wood
Chief Executive Officer, 26 January 2021
Chief Finance Officer's Report
I am delighted to write to all shareholders and stakeholders
with the hope to share a few thoughts with all of you. At the very
outset, I am delighted that the Company has received such
overwhelming support from. The fact that we raised cGBP17 million
during 2020 is, indeed, very humbling. I wish to thank all
shareholders for this show of confidence in the management team of
the Company. It has been a tough year of "unknown unknowns" but I
firmly believe that we have come out of it stronger, wiser and more
determined to succeed in the businesses in which we are
engaged.
Operational Highlights
We ended the year with a net operating loss before tax of
GBP10.40 million (2019: loss of GBP1.18 million). During the course
of the year, we announced our maiden revenues in December 2019 and
closed the year with a revenue line of GBP1.48 million. Whilst our
revenues are still insufficient to absorb all our Group costs and
break-even / generate a cash profit, I am pleased that we broke
through the psychological GBP1 million revenue mark by the end of
the financial year. Our gross margins were c20.50%, slightly lower
than our expectations of achieving the c25% levels. As a start-up
with a zero-order book and with COVID-19 dominating the year, we
know that we can do better under more normal business conditions.
Our total operating costs for the year were GBP9.48 million (2019:
GBP1.38 million) largely reflecting a much larger business and
consequent cost base. Given the scale of our activities through the
year, we have been very careful about our cash-burn rate and have
kept it to appropriate levels. Payments to employees, suppliers and
counterparties have been at market and, sometimes, sub-market rates
in a combination of cash and shares, primarily with a view to
preserving as much cash as possible. We are now revenue generating
and meeting some of our costs through earned margins. We achieved a
cash break-even position in the cruise and ferry market in
September 2020 and repeated that performance in the closing months
of 2020. We expect to maintain similar run rates going into 2021 at
the very least and expect to further upscale these revenue numbers
through some large contract wins that we have bid for. Given that
the bulk of our revenues stemmed from the cruise and ferry repairs
business, we have a limited segmental reporting analysis this year.
Going forward, as we enter into contracts across our five core
markets, we will be breaking down or segmental analysis in greater
granularity. The placing of new shares in January 2021 helped us
raise GBP7.40 million before expenses and this cash reserve on the
balance sheet will help us bid more competitively for larger
businesses. The placings over the course of the year have
strengthened our balance sheet and, accordingly, we are accounting
for the Group's operations on a going concern basis.
We made a commitment to our shareholders that we would be
revenue generating in 2019. Whilst we have fulfilled that
commitment, it was equally important for us, as a Board, to embark
on the path of being financially self-sustaining and cash positive.
In calendar year 2021, I expect us to manage our cash
conservatively until we reach a position of being cash break-even.
I believe that we are closer than ever to achieving that objective
given our exposure to five distinct markets and offering six
services within each market. With the growing stability of Harland
& Wolff (Belfast), the acquisition of Harland & Wolff
(Appledore) and funding progress being made on the Islandmagee gas
storage project, we now have the capability of achieving this goal.
In the meantime, we will continue to closely monitor our overheads
and preserve as much cash as we can without compromising the
operations of our businesses.
Business reorganisation
As a business, we have changed dramatically over the past 12
months. When we joined the business in 2018, we were determined to
change the business from a one-project company to one that has
multiple assets in the Group portfolio, thereby diversifying
ourselves and de-risking the balance sheet. Accordingly, we have
formally transitioned into a Group that has been structured along
two main specialisations; energy infrastructure and shipyards.
Recognising this, we have restructured the Group such that all
energy infrastructure assets will sit under InfraStrata UK Limited
and all shipyard / fabrication assets will come under Harland &
Wolff Group Holdings Limited. Both these intermediate companies are
100% owned by Infrastrata plc. Given their diverse nature, we have
also restructured our human resources. We are now a matrix
organisation. The two divisions will be led by two different
directors, both of whom have decades of experience in energy
infrastructure and shipyards respectively. They will be supported
at an operational level by their own teams and will receive
strategic, legal and financial support from the parent company.
This structure allows for more flexible and nimble working across
the Group, better communication between the different Group
companies, and most importantly, a deep sense of ownership for
departments heads and leaders of the respective business units.
As we move forward, we need to have the depth of personnel and
experience to successfully run the Group's businesses. We have,
therefore, made sure that each business function is headed by an
expert in that particular area and he / she is adequately supported
by experienced staff. The biggest challenge for any business is to
find, recruit and retain highly skilled talent. Brexit and COVID-19
have made this pursuit even more challenging. Over the course of
the year, we have spent significant time and resources to find and
hire some of the best minds for our Group's businesses. This is
effectively an investment for our future and in preparation for a
much larger business within 12 months' time.
We will continue to pursue and mature our existing assets,
turning them from investments of today into cash generators of
tomorrow. Equally, we are going to be opportunistic in our
acquisitions across both strands of the Group. We have the core
advantages of deep knowledge and agility and we must retain these
qualities in order to achieve our objectives. Equally, as CFO, I am
acutely aware of the financial strains that any acquisition brings
along with it. Therefore, every acquisition opportunity is robustly
challenged. We will continue making acquisitions, but only if there
is a clear strategic and economic advantage in doing so. There is a
fine balance between consolidation and growth and we believe that
both are possible to achieve together with an optimum strategy and
a pragmatic financing structure.
Islandmagee Gas Storage Project
In regard to the Islandmagee gas storage project, the challenge
was to bring the project to a point that made it bankable. The
completion of the FEED study and the entering into a binding term
sheet with Vitol to become a long-term capacity offtake client for
100% of the storage capacity have achieved that objective. Today,
we consider that we have a project that is "shovel-ready", bankable
and worthy of project finance investment.
The last financial year was devoted to obtaining the Marine
Licence. Resources, both capital and human, were deployed in this
effort. Whilst COVID-19 has inevitably slowed this process down, we
are determined not to let up and are taking all possible steps to
bring this matter to fruition. I believe that we are now very close
to determination on the Marine Licence and, as soon as that
decision has been taken in our favour, we shall be progressing to
Final Investment Decision.
The route to FID has multiple paths. The path well trodden is
for us to farm out a substantial portion of our project equity in
favour of incoming project partners who will be funding the
required project CAPEX. Whilst this may seem like the easy route,
the overall energy complex has fundamentally changed in light of
the Government's position in relation to renewable energy,
especially hydrogen. Subject to further planning and regulatory
approvals, the project's salt caverns are ideally suited for large
scale hydrogen storage. For any commodity to be tradeable, it needs
to have certain foundations; demand and supply, a traded market
with transparent pricing and the ability to move it from areas of
supply surplus to centres of demand. It is this physical movement
of commodities that is the most crucial aspect and storage, as a
mid-stream component within that supply to demand chain, becomes
vital. It is a foregone conclusion that natural gas will provide
baseload feedstock for power generation and to heat our homes and
offices. We believe that this trend will continue to persist over
the next 2-3 decades. Indeed, long strides have been taken to boost
the installed capacity of renewable power and, equally, there have
been breakthroughs in the technologies for large scale hydrogen
production. Once hydrogen starts becoming more mainstream, its
storage will become crucial, first for blending hydrogen with
natural gas and, thereafter, the supply and consumption of pure
hydrogen.
It is within this context that we need to determine what is the
optimum funding solution for the project. With natural gas being a
transition fuel, we have sought to future proof the facility such
that it is capable of storing and moving hydrogen in and out of the
caverns. With possible government funding available for shovel
ready strategic infrastructure, it is possible for us to take
advantage of new government financing schemes and retain a higher
equity interest in the project. Equally, we are conscious that this
project has been on our balance sheet for a large number of years
and it is imperative to reach a conclusion sooner rather than
later. Therefore, all steps are being taken and all funding
opportunities are being assessed in parallel such that we should be
in a position to take FID as quickly as possible once the Marine
Licence has been granted.
Gas markets have continued to show resilience despite demand
falling due to COVID-19. The last few weeks have seen spot gas
prices rising to 2018 levels, with both the UK and EU relying on
pipeline and storage gas, in the absence of sufficient LNG cargoes,
given their diversion to the Far East, who are currently paying
circa 5 times more than what the NBP and TTF are offering. This
situation has clearly highlighted the underlying supply risk that
the UK is facing with highly limited storage capacity along with
attendant consequences of Brexit.
Within this overall macro picture, we continue to firmly believe
that the Islandmagee gas storage project has a very bright future
and will constitute an important asset within the Group's
portfolio. The Company will be making announcements through the
course of this year as and when material events occur for this
project, chiefly among them being the award of the marine licence,
FID, project financing and commencement of construction.
Capital raising activities
In July 2020, we raised a sum of GBP9 million before costs
through an equity placing at 0.35 pence per share. The proceeds
were utilised for paying off smaller bridging loans that the
Company had taken in the previous year, and providing for
additional working capital for the Group.
Additionally, we consolidated our shares on a 1:100 basis with a
view to reducing the total volume of outstanding shares. This
consolidation has inevitably reduced our stock's liquidity albeit
marginally but, more importantly, it has significantly reduced the
spot volatility in our share price. Our share price has remained
relatively stable and is now less susceptible to sudden peaks and
troughs on days of low volume trades.
Having raised GBP4 million in December 2020 before costs, post
the balance sheet date, in January 2021, we raised a further
GBP3.40 million before costs at 0.45 pence per share in order to
further strengthen the balance sheet and prepare ourselves for
tendering and winning larger contracts.
We raised GBP2 million before costs in February 2020 against an
asset backed debt facility at Harland & Wolff (Belfast)
Limited. This debt facility was taken to fund working capital for
our Belfast operations.
We consider our capital structure to be lean and that the
balance sheet is not overly leveraged. With the extinguishing of
the smaller bridging loans through the year, we now have only the
asset backed debt facility that we are servicing and that will come
to maturity in February 2022. Given the growing size of our Group
and that of our balance sheet, I believe that there is potential to
raise more debt over time. However, a stable and long term debt
structure at sensible coupons can be put in place on the back of a
series of larger contract wins. We are in discussions with
institutional debt providers to understand terms offered on long
term debt instruments. I believe that over the course of the year
and subject to larger contract wins, our corporate debt structure
will evolve and we will be able to take advantage of the historical
low rates of interest that we are seeing across debt markets. In
summary, alongside our organically generated cashflows, we have
variety of options to meet our cash requirements through 2021 and
beyond.
Our future
The world has fundamentally changed in the last 12 months.
Climate change, pandemics and geo-political uncertainties are the
some of the most pressing issues that we face today. As your CFO,
it is my role to provide that safety net for the Group and to
maintain the highest standards of reporting and corporate integrity
whilst enabling the CEO and the business development team to fulfil
the strategy that the Board has envisaged for the business.
Every shareholder who has invested in the Company expects a
healthy return on investment. Equally, shareholders expect their
investment to make a significant and positive difference to society
at large; creating gainful employment, utilising breakthrough
technologies that will reduce resource consumption and drive down
costs whilst increasing efficiencies, minimising one's carbon
footprint and ultimately leaving a legacy that is fit for purpose
for future generations. The aspirations of generating wealth and,
at the same time, leaving a positive social impact, are not
incongruent to each other. As CFO and part of the Group's board, I
am sensitive to both these aspirations. Therefore, whilst the
immediate and most important task is to stabilise the financial
position of the Group and make it cash-positive, we will always
have an eye on the impact our operations have on society at large.
We can contribute in a more meaningful manner when we are stronger
and more stable. Keeping that in mind, our focus for the short and
near term is to take our current operations into a profitable
environment and grow the business even further, through the pursuit
of larger contracts and acquisition of complementary assets.
Finally, I wish to, once again, thank all our shareholders for
supporting us through the year and to warmly welcome our new
shareholders to the InfraStrata family.
Arun Raman
Chief Finance Officer, 26 January 2021
Consolidated Statement of Comprehensive Income
for the Year Ended 31 July 2020
31 July 31 July
2020 2019
GBP GBP
Continuing operations - -
Revenue 1,482,081 -
Cost of sales (1,178,534) -
------------ ------------------------------------
Gross profit 303,547 -
Management and administrative expenses (9,482,379) (1,383,294)
Other income - 300,000
------------ ------------------------------------
Operating loss (9,178,832) (1,083,294)
Finance income 5 18
Finance costs (1,231,046) (99,436)
------------ ------------------------------------
Loss before tax (10,409,873) (1,182,712)
Taxation - -
------------ ------------------------------------
Loss for the year (10,409,873) (1,182,712)
============ ====================================
Items that may be subsequently reclassified
to profit or loss
Revaluation of fixed assets 6,074,895 -
------------ ------------------------------------
Total comprehensive income for the year (4,334,978) (1,182,712)
============ ====================================
Total comprehensive income for the year
attributable to:
Owners of the Company (4,334,978) (1,182,712)
============ ====================================
Earnings Per Share
Basic and diluted (0.34)p (0.09)p
============ ====================================
Consolidated Statement of Financial Position as at 31 July
2020
31 July 31 July
2020 2019
GBP GBP
Assets
Non-current assets
Intangible assets 11,206,831 10,168,605
Property, plant and equipment 25,407,771 738,825
------------ ------------
Total non-current assets 36,614,602 10,907,430
------------ ------------
Current assets
Inventories 331,465 -
Trade and other receivables 1,933,254 202,066
Cash and cash equivalents 6,723,236 11,240
------------ ------------
Total current assets 8,987,955 213,306
------------ ------------
Current liabilities
Trade and other payables (6,102,983) (1,111,342)
Grant received in advance (24,272) -
Short-term borrowings (863,655) (785,095)
Short-term financial liability (1,917,885) (988)
------------ ------------
Total current liabilities (8,908,795) (1,897,425)
------------ ------------
Net current assets/(liabilities) 79,160 (1,684,119)
Non-current liabilities
Loans and borrowings (15,789,579) -
Financial liability (200,000) (200,000)
------------ ------------
Net assets 20,704,183 9,023,311
============ ============
Shareholders' funds
Share capital 11,457,457 10,949,504
Share premium 33,923,172 18,427,728
Merger reserve 8,988,112 8,988,112
Share based payment reserve 125,673 113,220
Revaluation reserve 6,074,895 -
Retained earnings (39,865,126) (29,455,253)
------------ ------------
Total equity 20,704,183 9,023,311
============ ============
Company Statement of Financial Position as at 31 July 2020
31 July 31 July
2020 2019
GBP GBP
Assets
Non-current assets
Property, plant and equipment 2,668,186 8,026
Intangible assets 21,732 -
------------ ------------
Total non-current assets 2,689,918 8,026
------------ ------------
Current assets
Trade and other receivables 17,378,511 10,448,974
Cash and cash equivalents 6,686,057 8,783
------------ ------------
Total current assets 24,064,568 10,457,757
------------ ------------
Current liabilities
Trade and other payables (1,314,708) (139,342)
Short-term financial liability (813,000) (988)
------------ ------------
Total current liabilities (2,127,708) (140,330)
------------ ------------
Total current assets 21,936,860 10,317,427
============ ============
Non-current liabilities
Loans and borrowings (2,287,378) -
Financial liability (200,000) (200,000)
------------ ------------
Net assets 22,139,400 10,125,453
============ ============
Shareholders' funds
Share capital 11,457,457 10,949,504
Share premium 33,423,172 18,427,728
Merger reserve 8,466,827 8,466,827
Share based payment reserve 125,673 113,220
Retained earnings (31,333,730) (27,831,826)
------------ ------------
Total equity 22,139,399 10,125,453
============ ============
Consolidated Statement of Changes in Equity for the Year Ended
31 July 2019
Share based
Share capital Share premium Merger reserve payment reserve Retained earnings Total equity
GBP GBP GBP GBP GBP GBP
At 1 August 2018 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)
Transactions with
owners recorded
directly in equity:
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
============= ============= ============== ================ ================= ============
Consolidated Statement of Changes in Equity for the Year Ended
31 July 2020
Share based
Revaluation payment Retained
Share capital Share premium reserve Merger reserve reserve earnings Total equity
GBP GBP GBP GBP GBP GBP GBP
At 1 August
2019 10,949,504 18,427,728 - 8,988,112 113,220 (29,455,253) 9,023,311
Loss for the
year - - - - - (10,409,873) (10,409,873)
Other
comprehensive
income - - 6,074,895 - - - 6,074,895
------------- ------------- ----------- -------------- -------------- ------------- ------------
Total
comprehensive
income - - 6,074,895 - - (10,409,873) (4,334,978)
Transactions
with owners
recorded
directly in
equity:
Shares issued 507,953 14,995,444 - - - - 15,503,397
Share option
expense - - - - 12,453 - 12,453
Capital
Contribution - 500,000 - - - - 500,000
------------- ------------- ----------- -------------- -------------- ------------- ------------
At 31 July
2020 11,457,457 33,923,172 6,074,895 8,988,112 125,673 (39,865,126) 20,704,183
============= ============= =========== ============== ============== ============= ============
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.
Revaluation reserve: This represents the difference between the
carrying value and fair value of certain assets.
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.
Capital contribution: This represents investment made by
InfraStrata Plc in Harland & Wolff (Belfast) Limited for which
shares have not been issued as at balance sheet date.
Company Statement of Changes in Equity for the Year Ended 31
July 2020
Share based
Share capital Share premium Merger reserve payment reserve Retained earnings Total equity
Company GBP GBP GBP GBP GBP GBP
At 1 August 2018 10,919,117 16,005,216 8,466,827 6,847 (26,761,468) 8,636,539
Loss for the year - - - - (1,070,358) (1,070,358)
------------- ------------- -------------- ---------------- ----------------- ------------
Total comprehensive
income for
the year - - - - (1,070,358) (1,070,358)
Transactions with
owners recorded
directly in equity:
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 8,466,827 113,220 (27,831,826) 10,125,453
============= ============= ============== ================ ================= ============
Share based
Share capital Share premium Merger reserve payment reserve Retained earnings Total equity
Company GBP GBP GBP GBP GBP GBP
At 1 August 2019 10,949,504 18,427,728 8,466,827 113,220 (27,831,826) 10,125,453
Loss for the year - - - - (3,501,904) (3,501,904)
------------- ------------- -------------- ---------------- ----------------- ------------
Total comprehensive
income - - - - (3,501,904) (3,501,904)
Transactions with
owners recorded
directly in equity:
Shares issued 507,953 14,995,444 - - - 15,503,397
Share option expense - - - 12,453 - 12,453
------------- ------------- -------------- ---------------- ----------------- ------------
At 31 July 2020 11,457,457 33,423,172 8,466,827 125,673 (31,333,730) 22,139,399
============= ============= ============== ================ ================= ============
Consolidated Statement of Cash Flows for the Year Ended 31 July
2020
31 July 31 July
2020 2019
GBP GBP
Cash flows from operating activities
Loss for the year (10,409,873) (1,182,712)
Adjustments to cash flows from non-cash
items
Depreciation and amortisation 1,224,655 892
Profit on disposal of intangible assets - (100,000)
Profit from disposals of investments - (200,600)
Foreign exchange loss 717 11,055
Finance income (5) (18)
Finance costs 1,231,046 102,460
Share option expense 12,453 172,638
------------ ----------------
(7,941,007) (1,196,285)
Working capital adjustments
Increase in inventories (331,465) -
(Increase)/decrease in trade and other
receivables (706,815) 38,121
Increase in trade and other payables 4,491,542 239,646
Net cash flow from operating activities (4,487,745) (918,518)
------------ ----------------
Cash flows from investing activities
Interest received 5 18
Proceeds from issue of shares 15,503,396 2,386,634
Short term borrowing 908,560 621,751
Long term borrowing 2,090,000 -
Repayment of borrowings and lease liabilities (1,245,041) -
Acquisitions of property plant and
equipment (5,776,709) (299,617)
Acquisition of intangible assets (1,030,043) (3,613,559)
Grants received in advance 1,130,149 -
Proceeds from sale of intangible assets - 100,000
------------ ----------------
Net cash flows from investing activities 11,580,317 (804,773)
------------ ----------------
Net increase/(decrease) in cash & cash
equivalents 7,092,572 (1,723,291)
------------ ----------------
Cash flows from financing activities
Interest paid (379,588) (57,436)
------------ ----------------
Net decrease in cash and cash equivalents 6,712,984 (1,780,727)
Cash and cash equivalents at 1 August 10,252 1,790,979
------------ ----------------
Cash and cash equivalents at 31 July 6,723,236 10,252
============ ================
Company Statement of Cash Flows for the Year Ended 31 July
2020
31 July 31 July
2020 2019
GBP GBP
Cash flows from operating activities
Loss for the year (3,501,903) (1,070,358)
Adjustments to cash flows from non-cash
items
Depreciation and amortisation 133,001 892
Profit on disposal of intangible assets - (100,000)
Profit from disposals of investments - (200,600)
Foreign exchange loss 586 9,527
Finance income (5) (18)
Finance costs 192,215 42,000
Share option expense 12,453 172,638
----------- ----------------
(3,163,653) (1,145,919)
Working capital adjustments
Increase in trade and other receivables (6,929,539) (1,383,071)
Increase/(decrease) in trade and other
payables 1,175,366 (665,879)
Decrease in deferred income, including
government grants - (946,070)
----------- ----------------
Net cash flow from operating activities (8,917,826) (4,140,939)
----------- ----------------
Cash flows from investing activities
Interest received 5 18
Proceeds from issue of shares 15,503,396 2,386,634
Short term borrowing 300,000 -
Repayment of borrowings and lease liabilities (39,554) -
Acquisitions of property plant and
equipment (22,858) (8,918)
Acquisition of intangible assets (21,732) -
Proceeds from sale of intangible assets - 100,000
----------- ----------------
Net cash flows from investing activities 15,719,257 2,477,734
Net increase/(decrease) in cash & cash
equivalents 6,801,431 (1,663,205)
----------- ----------------
Cash flows from financing activities
Interest paid (123,171) -
----------- ----------------
Net decrease in cash and cash equivalents 6,678,260 (1,663,205)
Cash and cash equivalents at 1 August 7,797 1,671,002
----------- ----------------
Cash and cash equivalents at 31 July 6,686,057 7,797
=========== ================
Consolidated net debt reconciliation
for the year ended 31 July 2020
Other assets Liabilities
from Financing
activities
Cash/Bank overdraft Liquid investments
Borrowing Borrowings
due within due after
1 year 1 year
============================= ===================== ======================== ================= ==============
Net debt as at 1 August 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)
Cash flows 6,711,996 (3,260,453) (1,995,457) (15,789,579)
Foreign exchange adjustments - - - -
Other changes (ii) - - - -
============================= ===================== ======================== ================= ==============
Net debt as at 31 July 2020 6,723,236 (4,169,729) (2,781,540) (15,989,579)
============================= ===================== ======================== ================= ==============
Notes to the Financial Statements for the Year Ended 31 July
2020
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 LLP
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 together with
that of shipbuilding, heavy engineering, ship repair and
maintenance of production and drilling vessels for the offshore oil
and gas industry.
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,
modified, where applicable, by the measurement at fair value.
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.
Changes to accounting policies, disclosures, standards and
interpretations
(a) New and amended standards adopted by the Group
IFRS 16 Leases became applicable to the current reporting
period, replacing IAS 17 Leases. The key change under IFRS 16 is
that most leases designated as "operating leases" under IAS 17 now
qualify for balance sheet recognition, subject to certain
exceptions. Following the acquisition of Harland & Wolff, the
directors reviewed contracts to identify any additional lease
arrangements that would need to be recognised under IFRS 16 in the
current financial year and identified a couple of contracts and an
associated right-of-use asset was recognised for each lease.
Lease liabilities were measured at the present value of the
remaining lease payments, discounted using the lessee's incremental
borrowing rate, which averaged 10% across the Group.
In applying IFRS 16 for the first time, the Group has used the
following practical expedients permitted by the standard:
-- Use of a single discount rate to a portfolio of leases with
reasonably similar characteristics; and
-- The accounting for operating leases with a remaining lease
term of less than 12 months as at 4 October 2019 as short term
leases.
On 4 October 2019, the Group recognised
the following lease liabilities which arose
following the H & W asset acquisition: GBP
Current -
Non-current 14,021,132
----------
14,021,132
==========
The associated right-of-use assets for property leases were
measured on a retrospective basis as if the new rules had always
been applied. There were no onerous lease contracts that would have
required an adjustment to the right-of-use assets at the date of
initial application.
Right-of-use assets recognised on 4 October 2019 were:
GBP
Leasehold land & buildings 14,021,132
----------
(b) New standards not yet adopted
There are no new International Financial Reporting Standards and
Interpretations issued but not effective for the reporting period
ending 31 July 2020 that will materially impact the Group.
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 to the group's
accounting policies.
Accounting policies (continued)
Going concern
The financial statements have been prepared on a going concern
basis. The Group's assets are now generating revenue following the
acquisition of Harland & Wolff. Operating cash outflows have
been incurred in the year and an operating loss has been recorded
in the profit and loss account for the year. The Group has raised
GBP16.40 million through 2020, of which GBP7.40 million has been
raised in January 2021. There is a baseload level of work flowing
through the shipyard and a current pipeline of opportunities for
which the Group is bidding. However, given the uncertainty
surrounding bid success and the lack of bid to success history,
management have prepared a worst case scenario for a period of 12
months from the date of the signing of these financial statements
in respect of their going concern assumptions. This assumes no bid
contract wins and that the sole revenue generated by the Group will
arise from ship repairs. The scenario includes all expected costs
associated with such works as well as the repayment of all
liabilities that fall due within this twelve month period and takes
into account all cost savings and process efficiencies considered
achievable as well as any COVID-19 related impacts.
Based on this worst case forecast scenario 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 2020.
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.
Revenue recognition
Revenue represents income derived from contracts for the
provision of goods and services, over time or at a point in time,
by the Group to customers in exchange for consideration in the
ordinary course of the Group's activities.
Performance Obligations
Upon approval by the parties to a contract, the contract is
assessed to identify each promise to transfer either a distinct
good or service or a series of distinct goods or services that are
substantially the same and have the same pattern of transfer to the
customer. Goods and services are distinct and accounted for as
separate performance obligations in the contract if the customer
can benefit from them either on their own or together with other
resources that are readily available to the customer and they are
separately identifiable in the contract.
The Group provides warranties to its customers to give them
assurance that its products and services will function in line with
agreed-upon specifications. Warranties are not provided separately
and, therefore, do not represent performance obligations.
Transaction price
At the start of the contract, the total transaction price is
estimated as the amount of consideration to which the Group expects
to be entitled in exchange for transferring the promised goods and
services to the customer, excluding sales taxes. Variable
consideration, such as price escalation, is included based on the
expected value or most likely amount only to the extent that it is
highly probable that there will not be a reversal in the amount of
the cumulative revenue recognised. The transaction price does not
include estimates of consideration resulting from contract
modifications, such as change orders, until they have been approved
by parties to the contract. The total transaction price is
allocated to the performance obligations identified in the contract
in proportion to their relative stand-alone selling prices. Given
the nature of many of the Group's products and services, which are
designed and/or manufactured under contract to customers'
individual specifications, there are typically no observable
stand-alone selling prices. Instead, stand-alone selling prices are
typically estimated based on expected costs plus contract margin
consistent with the Group's pricing principles.
Whilst payment terms vary from contract to contract, an element
of the transaction price may be received in advance of delivery.
The Group may therefore have contract liabilities depending on the
contracts in existence at a period end. The Group's contracts are
not considered to include significant financing components on the
basis that there is no difference between the consideration and the
cash selling price.
Revenue recognition
Revenue is recognised as performance obligations are satisfied
as control of the goods and services is transferred to the
customer.
For each performance obligations within a contract the Group
determines whether it is satisfied over time or at a point in time.
Performance obligations are satisfied over time if one of the
following criteria is satisfied:
-- The customer simultaneously receives and consumes the
benefits provided by the Group's performance as it performs;
-- The Group's performance creates or enhances an asset that the
customer controls as the asset is created or enhanced; or
-- The Group's performance does not create an asset with an
alternative use to the Group and it has an enforceable right to
payment for performance completed to date.
The Group has determined that most of its contacts satisfy the
overtime criteria, either because the customer simultaneously
receives and consumes the benefits provided by the Group's
performance as it performs or the Group's performance does not
create an asset with an alternative use to the Group and it has an
enforceable right to payment for performance completed to date.
For each performance obligation recognised over time, the Group
recognises revenue using an input method, based on costs incurred
in the period. Revenue and attributable margin are calculated by
reference to reliable estimates of transaction price and total
expected costs, after making suitable allowances or technical and
other risks. Revenue and associated margin are therefore recognised
progressively as costs are incurred, and as risks have been
mitigated or retired. The Group has determined that this method
appropriately depicts the Group's performance in transferring
control of the goods and services to the customer.
If the overtime criteria for revenue recognition is not met,
revenue is recognised at the point in time that control is
transferred to the customer which is usually when legal title
passes to the customer and the business has the right to
payment.
When it is expected that total contract costs will exceed total
contract revenue, the expected loss is recognised immediately as an
expense.
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 executive board of Directors.
Government grants
Government 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.
2 Accounting policies (continued)
Foreign currency transactions and balances
In preparing the Financial Statements, transactions in
currencies other than the entity's functional currency (foreign
currencies) are recorded at the rates of exchange prevailing on the
dates of the transactions. At each reporting date, monetary assets
and liabilities that are denominated in foreign currencies are
retranslated at the rates prevailing on the reporting date.
Non-monetary items carried at fair value that are denominated in
foreign currencies are translated at the rates prevailing at the
date when the fair value was determined. Non-monetary items that
are measured in terms of historical cost in a foreign currency are
not retranslated. Exchange differences arising, if any, are
recognised in profit or loss.
Translation from functional currency to presentational
currency
When the functional currency of a Group entity is different from
the Group's presentational currency (US dollars), its results and
financial position are translated into the presentational currency
as follows:
(i) Assets and liabilities are translated using exchange rates
prevailing at the balance sheet date.
(ii) Income and expense items are translated at average exchange
rates for the year, except where the use of such average rates does
not approximate the exchange rate at the date of a specific
transaction, in which case the transaction rate is used.
(iii) All resulting exchange differences are recognised in other
comprehensive income and presented in the translation reserve in
equity and are reclassified to profit or loss in the period in
which the foreign operation is disposed of.
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.
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 useful
economic lives as follows:
Amortisation method and
Asset class rate
Storage facility None until facility available
for use.
Harland Heritage Project
Project costs related to Harland Heritage are capitalised as
incurred.
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
Artefacts Over 20 years - Straight
line basis
Trade marks Over 20 years - Straight
line basis
Gas storage facility None until facility available
for use.
Development costs Over 20 years - Straight
line basis
Harland Heritage Project None until facility available
for use.
Floating Storage Regasification Project None until facility available
for use.
Tangible assets
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 Not depreciated
Leasehold land and buildings Over 50 years Straight
line basis
Modular buildings Over 20 years Straight
line basis
Right of use Over 50 years Straight
line basis
Plant and machinery Over 10 years Straight
line basis
Motor vehicles Over 5 years Straight
line basis
Office equipment Over 5 years Straight
line basis
Investments
Investments in subsidiaries are stated at cost less provision
for impairments.
Financial Instruments
Financial assets and liabilities are recognised in the Company's
statement of financial position when the Company becomes a party to
the contractual provisions of the instrument. The Company currently
does not use derivative financial instruments to manage or hedge
financial exposures or liabilities.
Financial Assets
The financial assets currently held by the Group and Company are
classified as financial assets held at amortised cost. These assets
are non-derivative financial assets with fixed or determinable
payments that are not quoted in an active market. They are
initially recognised at fair value plus transaction costs that are
directly attributable to their acquisition or issue, and are
subsequently carried at amortised cost using the effective interest
rate method, less provision for impairment under the expected
credit loss model.
The expected credit loss is calculated as a function of the
probability of default (PD), the exposure at default (EAD) and the
loss given default (LGD).
The amount of the expected credit loss is measured as the
difference between all contractual cash flows that are due in
accordance with the contract and all the cash flows that are
expected to be received (i.e. all cash shortfalls), discounted at
the original effective interest rate (EIR).
The carrying amount of the asset is reduced through use of
allowance account and recognition of the loss in the Statement of
Comprehensive Income. Allowances for credit losses on financial
assets are assessed collectively. Collectively assessed impairment
allowances cover credit losses inherent in portfolios of financial
assets with similar credit risk characteristics when there is
objective evidence to suggest that they contain impaired financial
assets, but the individual impaired items cannot yet be
identified.
In assessing collective impairment, the Group uses information
including historical trends in the probability of default (although
this is limited given the relatively short trading history of the
Group), timing of recoveries and the amount of expected loss,
adjusted for management's judgement as to whether current economic
and credit conditions are such that the actual losses are likely to
be greater or less than suggested by historical evidence. Default
rates, loss rates and the expected timing of future recoveries are
regularly benchmarked against actual outcomes to ensure that they
remain appropriate.
IFRS 9 suggests the use of reasonable forward-looking
information to enhance ECL models. The Group incorporates relevant
forward-looking information into the loss provisioning model.
Financial assets at amortised cost comprise trade and other
receivables and cash and cash equivalents in the statement of
financial position
Cash and cash equivalents include cash in hand and amounts held
on short term deposit. Any interest earned is accrued monthly and
classified as finance income. Short term deposits comprise deposits
made for varying periods of between one day and three months.
For the purposes of the statement of cash flows, cash and cash
equivalents consist of cash and cash equivalents as defined
above.
Derecognition of Financial Assets
The Group and Company derecognise a financial asset when the
contractual rights to the cash flows from the asset expire, or it
transfers the asset and substantially all the risk and rewards of
ownership of the asset to another entity.
Financial Liabilities
The Group and Company classify their financial liabilities into
one category, being other financial liabilities measured at
amortised cost.
The Group's accounting policy for the other financial
liabilities category is as follows:
Trade payables and other short-term monetary liabilities are
initially recognised at fair value and subsequently carried at
amortised cost using the effective interest method. All interest
and other borrowing costs incurred in connection with the above are
expensed as incurred and reported as part of financing costs in
profit or loss. The Group and Company derecognise financial
liabilities when, and only when, the obligations are discharged,
cancelled or they expire.
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.
Inventories
Inventories are stated at the lower of cost and net realisable
value. Cost is determined using the first-in, first-out (FIFO)
method.
The cost of finished goods and work in progress comprises direct
materials and, where applicable, direct labour costs and those
overheads that have been incurred in bringing the inventories to
their present location and condition. At each reporting date,
inventories are assessed for impairment. If inventory is impaired,
the carrying amount is reduced to its selling price less costs to
complete and sell; the impairment loss is recognised immediately in
profit or loss.
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 income statement
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
Definition
A lease is a contract, or a part of a contract, that conveys the
right to use an asset or a physically distinct part of an asset
("the underlying asset") for a period of time in exchange for
consideration. Further, the contract must convey the right to the
group to control the asset or a physically distinct portion
thereof. A contract is deemed to convey the right to control the
underlying asset if, throughout the period of use, the group has
the right to:
-- Obtain substantially all the economic benefits from the use of the underlying asset, and;
-- Direct the use of the underlying asset (e.g. direct how and
for what purpose the asset is used)
Where contracts contain a lease coupled with an agreement to
purchase or sell other goods or services (i.e., non-lease
components), the group has made an accounting policy election, by
class of underlying asset, to account for both components as a
single lease component.
Initial recognition and measurement
The group initially recognises a lease liability for the
obligation to make lease payments and a right-of-use asset for the
right to use the underlying asset for the lease term.
The lease liability is measured at the present value of the
lease payments to be made over the lease term. The lease payments
include fixed payments, purchase options at exercise price (where
payment is reasonably certain), expected amount of residual value
guarantees, termination option penalties (where payment is
considered reasonably certain) and variable lease payments that
depend on an index or rate.
The right-of-use asset is initially measured at the amount of
the lease liability, adjusted for lease prepayments, lease
incentives received, the group's initial direct costs (e.g.,
commissions) and an estimate of restoration, removal and
dismantling costs.
Subsequent measurement
After the commencement date, the group measures the lease
liability by:
(a) Increasing the carrying amount to reflect interest on the
lease liability;
(b) Reducing the carrying amount to reflect the lease payments
made; and
(c) Re-measuring the carrying amount to reflect any reassessment
or lease modifications or to reflect revised in substance fixed
lease payments or on the occurrence of other specific events.
Interest on the lease liability in each period during the lease
term is the amount that produces a constant periodic rate of
interest on the remaining balance of the lease liability. Interest
charges are [presented separately as non-operating /included in
finance cost] in the income statement, unless the costs are
included in the carrying amount of another asset applying other
applicable standards. Variable lease payments not included in the
measurement of the lease liability, are included in operating
expenses in the period in which the event or condition that
triggers them arises.
The related right-of-use asset is accounted for using the Cost
model in IAS 16 and depreciated and charged in accordance with the
depreciation requirements of IAS 16 Property, Plant and Equipment
as disclosed in the accounting policy for Property, Plant and
Equipment. Adjustments are made to the carrying value of the right
of use asset where the lease liability is re-measured in accordance
with the above. Right of use assets are tested for impairment in
accordance with IAS 36 Impairment of assets as disclosed in the
accounting policy in impairment.
Lease modifications
If a lease is modified, the modified contract is evaluated to
determine whether it is or contains a lease. If a lease continues
to exist, the lease modification will result in either a separate
lease or a change in the accounting for the existing lease.
The modification is accounted for as a separate lease if
both:
(a) The modification increases the scope of the lease by adding
the right to use one or more underlying assets; and
(b) The consideration for the lease increases by an amount
commensurate with the stand-alone price for the increase in scope
and any appropriate adjustments to that stand-alone price to
reflect the circumstances of the particular contract.
If both of these conditions are met, the lease modification
results in two separate leases, the unmodified original lease and a
separate lease. The group then accounts for these in line with the
accounting policy for new leases.
If either of the conditions are not met, the modified lease is
not accounted for as a separate lease and the consideration is
allocated to the contract and the lease liability is re-measured
using the lease term of the modified lease and the discount rate as
determined at the effective date of the modification.
For a modification that fully or partially decreases the scope
of the lease (e.g., reduces the square footage of leased space),
IFRS 16 requires a lessee to decrease the carrying amount of the
right-of-use asset to reflect partial or full termination of the
lease. Any difference between those adjustments is recognised in
profit or loss at the effective date of the modification.
For all other lease modifications which are not accounted for as
a separate lease, IFRS 16 requires the lessee to recognise the
amount of the re-measurement of the lease liability as an
adjustment to the corresponding right-of-use asset without
affecting profit or loss.
Short term and low value leases
The group has made an accounting policy election, by class of
underlying asset, not to recognise lease assets and lease
liabilities for leases with a lease term of 12 months or less
(i.e., short-term leases).
The group has made an accounting policy election on a
lease-by-lease basis, not to recognise lease assets on leases for
which the underlying asset is of low value.
Lease payments on short term and low value leases are accounted
for on a straight line basis over the term of the lease or other
systematic basis if considered more appropriate. Short term and low
value lease payments are included in operating expenses in the
income statements.
Leases are recognised as a right-of-use asset and a
corresponding lease liability at the date at which the leased asset
is available for use by the Group.
Assets and liabilities arising from a lease are initially
measured on a present value basis. Lease liabilities include the
net present value of the following lease payments:
-- Fixed payments (including in-substance fixed payments), less
any lease incentives receivable;
-- Variable lease payment that are based on an index or a rate,
initially measured using the index or rate as at the
-- commencement date;
-- Amounts expected to be payable by the Group under residual value guarantees;
-- The exercise price of a purchase option if the Group is
reasonably certain to exercise that option; and
-- Payments of penalties for terminating the lease, if the lease
term reflects the Group exercising that option.
Lease payments to be made under reasonably certain extension
options are also included in the measurement of the liability.
The lease payments are discounted using the interest rate
implicit in the lease. If that rate cannot be readily
determined, which is generally the case for leases in the Group,
the lessee's incremental borrowing rate is used, being the rate
that the individual lessee would have to pay to borrow the funds
necessary to obtain an asset of similar value to the right-of-use
asset in a similar economic environment with similar terms,
security and conditions.
Lease payments are allocated between principal and finance cost.
The finance cost is charged to profit or loss over the lease
period.
Right-of-use assets are measured at cost which comprises the
following:
-- The amount of the initial measurement of the lease liability;
-- Any lease payments made at or before the commencement date
less any lease incentives received;
-- Any initial direct costs; and
-- Restoration costs.
Right-of-use assets are generally depreciated over the shorter
of the asset's useful life and the lease term on a straight-line
basis. If the Group is reasonably certain to exercise a purchase
option, the right-of-use asset is depreciated over the underlying
asset's useful life.
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.
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.
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.
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
Carrying value of gas storage project asset.
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% (2019: 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 (2019:
40 years). It is assumed that 100% (2019: 100%) of a project's
capacity will be sold from the date that the capacity becomes
operational.
Valuation of assets
Management make judgements in respect of the valuation and
carrying value of assets used in operations. A revaluation exercise
was undertaken at the time of acquiring certain assets of Harland
& Wolff Heavy Industries Limited from the administrators. This
revaluation was undertaken based on valuations provided by third
party independent valuation experts. At the year-end management
made a judgement that the basis for revaluations remained and that
on the basis on future expected work there were no indications of
impairment. Key estimates and assumptions considered were in
respect of expected contract wins and gross margins (25%).
Segmental analysis
As at 31 July 2020, the Group was organised into 3 segments: H
& W, Gas storage and other being head office related. As the
Group expands and seeks to meet the goals laid out in the front end
of these financial statements these segments are likely to change.
The operating segments are organised, managed and reported to the
Chief Operating Decision Maker (the Board of Directors) on their
current business type being H & W relating to ship repair
related activities, Gas storage and Other which relates to Head
office activities.
All operations are continuing and all inter-segment transactions
are priced and carried out at arm's length.
The segmental results for the year ended 31 July 2020 are as
follows:
Ship Repair Gas Storage Head Office Group
Total Revenue 1,482,081 - - 1,482,081
Cost of sales (1,168,334) (10,200) -- (1,178,534)
---------------------------------- ------------------ ----------------- -------------------------- ---------------
Gross profit 313,747 (10,200) - 303,547
Selling, marketing and
administration expenses (4,322,185) (79,159) (3,856,239) (8,257,583)
Trading EBITDA* (4,008,438) (89,359) (3,856,239) (7,954,036)
---------------------------------- ------------------ ----------------- -------------------------- ---------------
Depreciation, amortisation and
impairment (1,090,938) (724) (133,003) (1,224,665)
Share based compensation - - - -
Finance income - - 5 5
Finance expense (941,301) (97,663) (192,213) (1,231,177)
---------------------------------- ------------------ ----------------- -------------------------- ---------------
Loss before tax (6,040,677) (187,746) (4,181,450) (10,409,873)
Taxation
Loss after tax (6,040,677) (187,746) (4,181,450) (10,409,873)
================================== ================== ================= ========================== ===============
No single customer accounted for more than 10% of revenue.
The CODM considered, that for the financial period ending 31
July 2019, there was only one operating segment being the
development of gas storage facilities within the United Kingdom. As
such no operating segment note is shown for the comparatives as it
would be same as that shown in the primary statements.
Other income
The analysis of the group's other gains and losses for the year
is as follows:
31 July 31 July
2020 2019
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.
Expenses by nature
Arrived at after charging/(crediting)
31 July 31 July
2020 2019
GBP GBP
Wages and salaries 4,307,672 477,098
Social security costs 581,624 47,906
Other short-term employee benefits 19,634 -
Pension contributions 102,841 9,403
Share-based payment expenses 12,453 106,373
Other employee expense 260,026 8,030
Depreciation expense 1,222,400 892
Amortisation expense 2,256 -
Light, heat and power 234,518 -
Insurance 334,150 9,214
Computer software and maintenance costs 237,641 29,073
Advertising 252,706 77,742
Legal and professional fees 606,337 131,523
Other expenses 1,365,097 486,040
Taxation
31 July 31 July
2020 2019
GBP GBP
Deferred tax - -
Current tax - -
---- ---
Total tax charge/(credit) - -
==== ===
The tax on profit before tax for the year is the same as the
standard rate of corporation tax in the UK (2019: the same as the
standard rate of corporation tax in the UK) of 19% (2019: 19%).
The differences are reconciled below:
31 July 31 July
2020 2019
GBP GBP
Loss before tax (10,409,873) (1,182,712)
============ ===========
Corporation tax at standard rate (1,977,876) (224,715)
Increase from effect of capital allowances
depreciation 364,974 -
Increase from effect of expenses not deductible
in determining taxable profit (tax loss) 32,111 -
Increase from effect of unrelieved tax
losses carried forward 1,580,791 224,715
------------ -----------
Total current tax charge/(credit) - -
============ ===========
No tax charge/ credit arises in 2020 or in 2019 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 GBP7,778,041 (2019:
GBP7,704,980) which may reduce future tax charges. Future tax
charges may also be reduced by capital allowances on cumulative
capital expenditure.
No deferred tax asset has been recognised due to uncertainty as
to when profits will be generated against which to relieve said
asset.
Earnings per Share
2019 2019
GBP GBP
The loss for the purposes of basic and
diluted earnings per share being the net
loss attributable to equity shareholders
Continuing operations (10,409,875) (1,182,712)
Number of shares
Weighted average number of ordinary shares
for the purpose of:
Basic earnings per share 3,066,492,177 1,336,479,710
Basic and diluted earnings per share
Continuing Operations (0.34)p (0.09)p
Given the Group made a loss during the current financial year no
diluted EPS is shown. Details of those potential shares that would
be diluted can be found in notes under Share based payments.
Intangible assets
Group
Development Gas storage
Artefacts Trademarks costs development Project costs Total
GBP GBP GBP GBP GBP GBP
Cost
At 1 August 2018 - - - 7,479,690 26,361 7,506,051
Grant accrual during year - - - (950,622) - (950,622)
Additions - - - 3,639,537 - 3,639,537
Disposals - - - - (26,361) (26,361)
--------- ---------- ----------- ------------ ------------- -----------
At 31 July 2019 - - - 10,168,605 - 10,168,605
--------- ---------- ----------- ------------ ------------- -----------
At 1 August 2019 - - - 10,168,605 - 10,168,605
Grant accrual during year - - - (1,130,149) - (1,130,149)
Additions 200,000 170,000 55,000 583,311 21,732 1,030,043
Revaluation 447,395 693,192 - - - 1,140,587
--------- ---------- ----------- ------------ ------------- -----------
At 31 July 2020 647,395 863,192 55,000 9,621,767 21,732 11,209,086
--------- ---------- ----------- ------------ ------------- -----------
Amortisation
At 1 August 2018 - - - - - -
--------- ---------- ----------- ------------ ------------- -----------
At 31 July 2019 - - - - - -
--------- ---------- ----------- ------------ ------------- -----------
Amortisation charge - - 2,255 - - 2,255
--------- ---------- ----------- ------------ ------------- -----------
At 31 July 2020 - - 2,255 - - 2,255
--------- ---------- ----------- ------------ ------------- -----------
Net book value
Intangible assets (continued)
Development Gas storage
Artefacts Trademarks costs development Project costs Total
GBP GBP GBP GBP GBP GBP
At 31 July 2020 647,395 863,192 52,745 9,621,767 21,732 11,206,831
========= ========== =========== ============ ============= ==========
At 31 July 2019 - - - 10,168,605 - 10,168,605
========= ========== =========== ============ ============= ==========
Intangible assets carried at revalued amounts
The fair value of the company's Artefacts was revalued on 30
June 2019 by Hilco Valuation services.
Had this class of asset been measured on a historical cost
basis, their carrying amount would have been GBP200,000.
The revaluation surplus (gross of tax) recognised in profit and
loss amounted to GBP447,395.
The revaluation surplus (gross of tax) recognised in other
comprehensive income amounted to GBP447,395.
The fair value of the company's Trademarks was revalued on 30
June 2019 by Hilco Valuation Services.
--
Had this class of asset been measured on a historical cost
basis, their carrying amount would have been GBP170,000.
The revaluation surplus (gross of tax) recognised in profit and
loss amounted to GBP693,192.
The revaluation surplus (gross of tax) recognised in other
comprehensive income amounted to GBP693,192.
Property, plant and equipment
Group
Right of use
Land and buildings Office equipment Motor vehicles asset Plant & machinery Total
GBP GBP GBP GBP GBP GBP
Cost or valuation
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
------------------ ---------------- -------------- ------------ ----------------- ----------
At 1 August 2019 730,799 8,918 - - - 739,717
Revaluation
recognised in
other
comprehensive
income 3,066,738 25,972 373,464 - 2,346,331 5,812,505
Additions 2,806,171 203,574 297,056 14,302,133 2,469,908 20,078,842
------------------ ---------------- -------------- ------------ ----------------- ----------
At 31 July 2020 6,603,708 238,464 670,520 14,302,133 4,816,239 26,631,064
------------------ ---------------- -------------- ------------ ----------------- ----------
Depreciation
At 1 August 2018 - - - - - -
------------------ ---------------- -------------- ------------ ----------------- ----------
Charge for year - 892 - - - 892
------------------ ---------------- -------------- ------------ ----------------- ----------
At 31 July 2019 - 892 - - - 892
------------------ ---------------- -------------- ------------ ----------------- ----------
At 1 August 2019 - 892 - - - 892
Charge for the year 276,050 62,974 55,478 283,616 544,283 1,222,401
------------------ ---------------- -------------- ------------ ----------------- ----------
At 31 July 2020 276,050 63,866 55,478 283,616 544,283 1,223,293
------------------ ---------------- -------------- ------------ ----------------- ----------
Property, plant and equipment (continued)
Carrying amount
Right of use
Land and buildings Office equipment Motor vehicles asset Plant & machinery Total
GBP GBP GBP GBP GBP GBP
At 31 July 2020 6,327,658 174,598 615,042 14,018,517 4,271,956 25,407,771
================== ================ ============== ============ ================= ==========
At 31 July 2019 730,799 8,026 - - - 738,825
================== ================ ============== ============ ================= ==========
Included within the net book value of land and buildings above
is GBP1,096,982 (2019: GBP730,799) in respect of freehold land and
buildings and GBP5,230,676 (2019: GBPNil) in respect of short
leasehold land and buildings.
Revaluation
The fair value of the company's Land and buildings was revalued
on 30 June 2019 by Hilco. Had this class of asset been measured on
a historical cost basis, their carrying amount would have been
GBP5,506,046. The revaluation surplus (gross of tax) amounted to
GBP3,066,738.
The fair value of the company's Furniture, fittings and
equipment was revalued on 30 June 2019 by Hilco Valuation Services.
Had this class of asset been measured on a historical cost basis,
their carrying amount would have been GBP61,726. The revaluation
surplus (gross of tax) amounted to GBP25,972.
The fair value of the company's Motor vehicles was revalued on
30 June 2019 by Hilco Valuation Services. Had this class of asset
been measured on a historical cost basis, their carrying amount
would have been GBP670,520. The revaluation surplus (gross of tax)
amounted to GBP373,464.
The fair value of the company's Plant and machinery was revalued
on 30 June 2019 by Hilco Valuation Services. Had this class of
asset been measured on a historical cost basis, their carrying
amount would have been GBP4,212,621. The revaluation surplus (gross
of tax) amounted to 2,346,331.
Company Property, plant and equipment
Furniture,
fittings and Right of use
equipment asset Total
GBP GBP GBP
Cost
At 1 August 2019 8,918 - 8,918
Additions 22,857 2,770,305 2,793,162
------------- ------------ ---------
At 31 July 2020 31,775 2,770,305 2,802,080
------------- ------------ ---------
Depreciation
At 1 August 2019 892 - 892
Charge for the period year 3,145 129,858 133,003
------------- ------------ ---------
At 31 July 2020 4,037 129,858 133,895
------------- ------------ ---------
Carrying amount
At 31 July 2020 27,738 2,640,447 2,668,185
============= ============ =========
At 31 July 2019 8,026 - 8,026
============= ============ =========
Investments (continued)
Proportion
of ownership
interest
and voting
rights held
Name of subsidiary Principal activity Registered office 2020 2019
C/o Donaldson Legal
Consulting Llp
Shore Studios
Harland and Wolff 18c Shore Road
Technical Services Holywood, BT18 9HX
Limited Dormant Northern Ireland 100% 0%
* indicates direct investment of the company
Summary of the company investments
31 July
2020
GBP
Subsidiaries GBP
Cost
At 1 August 2018 15,247,011
Impairment (15,247,011)
------------
At 31 July 2019 -
------------
At 1 August 2019 15,247,011
Revaluation (15,247,011)
------------
At 31 July 2020 -
------------
Net book value
At 31 July 2020 -
============
At 31 July 2019 -
============
Inventories
Group Company
31 July 31 July 31 July 31 July
2020 2019 2020 2019
GBP GBP GBP GBP
Work in progress 20,872 - - -
Other inventories 310,593 - - -
--------- ------- ---------- ------------
331,465 - - -
========= ======= ========== ============
Trade and other receivables
Group Company
31 July 31 July 31 July 31 July
2020 2019 2020 2019
GBP GBP GBP GBP
Trade receivables 225,276 - - 3
Receivables from
related parties - - 17,158,325 10,351,634
Other receivables 1,397,183 177,985 158,539 73,257
Prepayments 310,795 24,081 61,647 24,081
--------- ------- ---------- ------------
1,933,254 202,066 17,378,511 10,448,975
========= ======= ========== ============
The trade and other receivables classified as financial
instruments are disclosed below. The group's exposure to credit and
market risks, including maturity analysis, relating to trade and
other receivables is disclosed in "Financial risk review".
Cash and cash equivalents
Group Company
31 July 31 July 31 July 31 July
2020 2019 2020 2019
GBP GBP GBP GBP
Cash on hand 109 646 - 647
Cash at bank 6,723,127 10,594 6,686,057 8,137
--------- --------- --------- -------
6,723,236 11,240 6,686,057 8,784
Bank overdrafts - (988) - (988)
--------- --------- --------- -------
Cash and cash equivalents
in statement of cash
flows 6,723,236 10,252 6,686,057 7,796
========= ========= ========= =======
Trade and other payables
Group Company
31 July 31 July 31 July 31 July
2020 2019 2020 2019
GBP GBP GBP GBP
Trade payables 2,127,487 999,392 202,039 59,051
Social security and
other taxes 1,786,782 43,758 1,028,267 43,758
Outstanding defined
contribution pension
costs 50,352 4,708 2,626 4,708
Other payables 278,347 24,855 12,321 12,321
Accrued expenses 1,860,015 38,629 69,455 19,504
--------- --------- --------- -------
6,102,983 1,111,342 1,314,708 139,342
========= ========= ========= =======
The group's exposure to market and liquidity risks, including
maturity analysis, related to trade and other payables is disclosed
in "Financial risk review".
Loans and borrowings
Group Company
31 July 31 July 31 July 31 July
2020 2019 2020 2019
GBP GBP GBP GBP
Current loans and borrowings
Bank overdrafts - 988 - 988
Short-term borrowings 863,655 785,095 - -
Lease liabilities-
right of use 1,087,885 - 513,000 -
Other borrowings 830,000 - 300,000 -
--------- ------- ------- -------
2,781,540 786,083 813,000 988
========= ======= ======= =======
Group Company
31 July 31 July 31 July 31 July
2020 2019 2020 2019
GBP GBP GBP GBP
Non-current loans and borrowings
Lease liabilities-
right of use 13,699,579 - 2,287,378 -
Other borrowings 2,090,000 - - -
Financial liability 200,000 200,000 200,000 200,000
---------- ------- --------- -------
15,989,579 200,000 2,487,378 200,000
========== ======= ========= =======
Loans and borrowings (continued)
Group
Other borrowings
Riverfort Global Opportunities PCC Limited Loan
Harland & Wolff (Belfast) Ltd ("H & W") obtained an
unsecured short term loan amounting to GBP530,000 as at 31 July
2020 and this amount is repayable by February 2021. The loan has
been provided by Riverfort Global Opportunities PCC Limited and a
guarantee has been provided by InfraStrata Plc.
The Riverfort Global Opportunities PCC Limited loan is repayable
in full by February 2021. The loan has an interest rate of 1.5% per
month.
YA & Riverfort loan
On 10 February 2020, InfraStrata Plc (the "Company") announced
the restructuring of the sum of GBP555,555.58 that was outstanding,
and was drawn down as the second tranche, of the GBP2.2 million
loan facility with Riverfort Global Opportunities PCC Limited and
YA II PN Limited (the "Investors") (the "Loan"). Details of this
second drawdown under the Loan were announced on 14 November 2019.
Under the restructuring, the Company was no longer required to make
a bullet repayment of GBP555,555.58 on 14 February 2020. Instead, a
sum of GBP55,555.58 of the principal plus fees and accrued interest
in aggregate, GBP110,624.98 was paid to the Investors immediately
and the remaining GBP500,000 of principal ("Remaining Loan") has
been amortised over a period of 10 months commencing 31 March 2020
and ending on 31 December 2020. The amortised payment schedule
carries an interest rate of 12% per annum from 14 February 2020,
payable monthly in arrears. The Remaining Loan is not convertible
into shares, save in the event of default. At 31 July 2020 the
outstanding loan amounts to GBP300,000. This sum has been paid in
full as at 31 December 2020.
Portnum Capitis Ltd Loan
H & W obtained a term loan amounting to GBP2,090,000 and has
been secured by Portnum Capitis Ltd by way of a debenture over the
assets of H & W and a guarantee has been provided by
InfraStrata Plc.
The Portnum Capitis Ltd loan is an interest only loan and is
repayable in full by February 2022. The loan has a fixed interest
rate of 13.2% per annum.
Moyle Investments
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 interest from Moyle Energy
Investments Limited ("Moyle") 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 gas being
injected into storage.
The loans and borrowings classified as financial instruments are
disclosed in the financial instruments note.
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.
Financial instruments
Financial assets at amortised cost
Group Group Company Company
===================================
2020 2019 2020 2019
===================================
GBP GBP GBP GBP
=================================== ========== ========= ========== ==========
Trade and other receivables 1,933,254 202,066 84,838 84,838
Due from subsidiary undertakings - - 17,583,325 10,351,634
Cash and Cash Equivalents 6,723,236 11,240 6,686,057 7,799
=================================== ========== ========= ========== ==========
Financial liabilities at amortised
cost
Group Group Company Company
2020 2019 2020 2019
GBP GBP GBP GBP
=================================== ========== ========= ========== ==========
Current liabilities
Trade and other payables 6,102,983 1,111,342 1,314,708 139,342
Other borrowings 830,000 - 300,000 -
Costain loan 785,095 785,095 - -
=================================== ========== ========= ========== ==========
8,805,963 1,896,437 2,127,708 139,342
=================================== ========== ========= ========== ==========
Non-current liabilities
Lease liabilities - right of
use 13,699,579 - 2,287,378 -
Moyle investments 200,000 200,000 200,000 200,000
=================================== ========== ========= ========== ==========
13,899,579 200,000 200,000 200,000
Financial risk review
Group
This note presents information about the group's exposure to
financial risks and the group's management of capital.
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 three 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 notes under Loans and
Borrowings are VAT receivable and prepayments. No receivables are
past due but not impaired.
Liquidity risk
The total carrying value of Group and Company financial
liabilities is disclosed in notes under financial liability and in
trade and other payable. 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 under financial
liability and Financial Instruments 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
2020 2019 2020 GBP 2019 GBP
GBP GBP
-------------------------- ---------- -------- ---------- ----------
Trade and other payables
Within one month 2,185,362 999,392 247,380 59,051
More than one month
less than one year - - - -
Financial liability
Within one month - - - -
More than one month
less than one year 1,693,655 785,095 300,000 -
More than one year 2,290,000 200,000 200,000 200,000
-------------------------- ---------- -------- ---------- ----------
Financial risk review (continued)
The Group's trade receivables are all denominated in UK Sterling
and the ageing of gross trade
receivables is as follows:
Group Group Company Company
2020 2019 2020 2019
GBP GBP GBP GBP
0-2 months 225,276
2-3 months - - - -
Over 3 months - - - -
225,276 - - -
------------------------------------- ------------------ --------------- --------------- ---------------
Capital management
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.
Related party transactions
During the course of the year, the Company utilised the services
of Arrow Marine Management Limited ("AMM"), in which John Wood is
sole director, for the various survey works and studies required to
the undertaken in order to update the necessary environmental
information required for the marine licence in relation to the
Islandmagee gas storage project. The total fees paid for
utilisation of the survey boat and personnel by the Company was
GBP258,930 (2019:GBPNil) and the balance outstanding at 31 July
2020 was GBPNil.
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 GBPNil (2019: GBP20,000) and the balance
outstanding at 31 July 2020 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 GBPNil
(2019: GBP35,600) and the balance outstanding at 31 July 2020 was
GBPNil.
Post Balance Sheet Events
Acquisition of Harland & Wolff (Appledore)
On 25 August 2020, the Company announced the acquisition of
substantially all the assets of Appledore Shipyard located in
Bideford, North Devon, to be renamed H&W (Appledore), (the
"Acquisition").
Key highlights:
-- Highly strategic asset with a rich shipbuilding heritage
-- Significant opportunity to build a prominent presence in mainland UK
-- Ship and block building, ship repair and fabrication
activities for the renewable industry and commercial market, with
particular focus on vessels <119m and, therefore, complementary
to H&W (Belfast)
-- Significant synergies between Appledore and Harland & Wolff Belfast (H&W)
-- 29 acres of freehold land
-- 322,975 square feet of undercover fabrication halls
-- 119 metre length of undercover dry-dock
-- 500 metre quayside at the Newquay yard for ship repairs
-- Total consideration payable of GBP7million, of which
GBP5.60million in cash and GBP1.40million in Ordinary Shares
-- Consideration payable in 5 tranches over 30 months
Rationale for the Acquisition
Since the Company acquired H&W (Belfast) in December 2019
and announced its maiden revenues, H&W (Belfast) has welcomed a
number of vessels, including but not limited to, ferries, cruise
vessels and offshore support vessels. H&W (Belfast's) core
competence lies in vessels that require a dock length in excess of
300 metres. With two dry docks at 356 metres and 556 metres in
length respectively, H&W (Belfast) has the largest drydock
capability in the UK, the second largest in Europe and, therefore,
puts it in a unique position in relation to larger vessels.
The Company considers the mid-sector space of shipyards having
dock lengths between 120 metres and 300 metres to be busy, crowded
and highly competitive. The Company believes that entering the
market of mid-sized shipyards would not lead to any significant
competitive advantage, vis-à-vis other established players and this
will not be an area of focus for the Company at this time. H&W
(Appledore), on the other hand, will focus on the smaller end of
the market, with a dock length of 119 metres. There are very few
shipyards in the UK that can offer this type of undercover building
dock and repair facility and, given the number of sovereign vessels
required in this category over the next ten years, the Company
believes that this is a market segment that cannot be ignored.
Having studied several smaller facilities, the Directors believe
that H&W (Appledore) is, by far, the most suitable, from a
locational, strategic and operational point of view and is well
positioned to win contracts in this sector.
With this Acquisition, the Company believes that it can achieve
a dominant position at two distinct ends of the shipyard market;
the lower end of the market at less than 119 metres of dock length
(with H&W (Appledore)) and the upper end of the market,
requiring dock lengths of 300+ metres (with H&W (Belfast)).
With less competition at both ends of the market, the Company
believes that it is now in a unique situation to attract, win and
retain business specifically targeting both ends of the size
spectrum.
Post Balance Sheet Events (continued)
H&W (Appledore) is strategically situated in North Devon and
the Company believes that it is ideally placed to win and service
contracts across the five key markets that the Company has laid out
as its strategy for the future: ferry, defence, commercial
fabrication, oil & gas and renewables. As with H&W
(Belfast), H&W (Appledore) will offer the Company's six core
services to each of these markets that include technical services,
fabrication & construction, repairs & maintenance,
in-service support, conversions and decommissioning. Given H&W
(Appledore's) size and capabilities, the Company believes that it
will be the "go-to" yard in the region for small vessel
requirements across these five markets and six sectors.
Just like H&W (Belfast), H&W (Appledore) enjoys the
advantage of an existing and robust supply chain and a skilled
workforce in the area. Whilst the yard has been dormant in recent
months and the Acquisition therefore only comes with one employee
(who is the current site manager), the Company believes that the
workforce can be very quickly ramped up upon execution of
contracts, discussions for which are already being undertaken with
both Government and private vessel owners. There was no turnover
attributable to the assets over the last 12 months.
H&W (Belfast) has been involved in the bidding process for a
number of large contracts and, should they come to fruition, the
facilities would have limited room for incremental business.
H&W (Appledore) would be ideally placed to handle any
spill-over of work from H&W (Belfast) in addition to tendering
and bidding for its own set of contracts. Whilst the two yards are
completely distinct in terms of their respective sizes, both have a
number of common capabilities that are expected to create operating
synergies and economies of scale.
The Company envisages each yard to be a standalone business unit
in its own right, i.e., each yard will have its own profit and loss
account, balance sheet, business contracts and lines of financing.
H&W (Belfast's) contracts will tend to be large and spread over
a number of months and years, given the scale of the business that
it is currently negotiating. H&W (Appledore's) contractual
profile, on the other hand, is expected to consist of smaller
contracts and will tend to be fast-moving in addition to larger new
build contracts that will be spread over several years.
The Government's policy in relation to levelling up, "build,
build, build" and, most importantly, the rolling out of its
national shipbuilding policy, are further drivers to the success of
Appledore in due course. The Company has always taken a position
that it will not be reliant on Ministry of Defence (MoD) contracts
for the long-term sustainability of its business. However, with
Appledore's strategic presence in mainland UK, it offers the MoD
and other government departments such as the Home Office and
Department for Transport an exciting and cost-effective domestic
option for a number of smaller vessel builds that are in the
pipeline in the months to come. In addition, a number of wind farm
projects in the surrounding areas are planned in the near future
and they will require UK fabrication with load-out capacity. Whilst
Government policy stipulates the requirement for a substantial
proportion of locally fabricated content, the availability of such
fabrication capability across the UK is highly limited. As such,
the Company believes that H&W (Appledore) is ideally positioned
to fill that gap and bid for these fabrication contracts.
Discussions have already commenced with wind farm developers and
the Company hopes to make tangible progress in due course.
Consideration
The Company has agreed to pay a total Consideration of
GBP7million for the Acquisition of substantially all the assets of
Appledore. The Consideration will be payable in the following
tranches:
Tranche 1 on Completion:
A total of GBP1.50million consisting of cash of GBP1.20million
and 784,404 ordinary shares of 1 penny each in the capital of the
Company ("Ordinary Shares") equivalent to GBP300,000
Tranche 2 on the first anniversary of Completion of
GBP1.50million:
A total of GBP1.50million consisting of cash of GBP1.20million
and Ordinary Shares in the Company equivalent to GBP300,000
Tranche 3 on the second anniversary of Completion:
A total of GBP2million consisting of cash of GBP1.60million and
Ordinary Shares in the Company equivalent to GBP400,000
Tranche 4 on the 30th month anniversary of Completion:
A total of GBP2million consisting of cash of GBP1.60million and
Ordinary Shares in the Company equivalent to GBP400,000
The number of Ordinary Shares that are issued on each respective
tranche date will be calculated using the Volume Weighted Average
Price ("VWAP") of InfraStrata's Ordinary Shares for the 14 trading
days prior to the third business day before the respective tranche
date (or before completion in respect of the first tranche).
Accordingly, an application has been made for 784,404 new
Ordinary Shares to be admitted to trading on AIM, which is expected
to occur on 28 August 2020. Upon admission, the Company's issued
share capital will consist of 64,944,486 Ordinary Shares with one
voting right each. The Company does not hold any Ordinary Shares in
treasury. Therefore, the total number of Ordinary Shares and voting
rights in the Company will be 64,944,486. This figure may be used
by shareholders in the Company as the denominator for the
calculations by which they will determine if they are required to
notify their interest in, or a change to their interest in, the
share capital of the Company under the FCA's Disclosure Guidance
and Transparency Rules.
Acquisition Assets:
The Acquisition will include, amongst other things, the
following key assets:
-- 29 acres of freehold land situated on waterfront
-- 322,975 square feet of undercover fabrication halls
-- 118 metre length of undercover dry-dock
-- 500 metre quayside at the Newquay yard for ship repairs
-- Panel hall and bar preparation area
-- Burning hall and design offices
-- Minor assembly and cold frame bending shop
-- Steel stockyard and shot blast plant
-- Pipeline fabrication equipment
-- Fitting and machining equipment
-- Other assets including but not limited to stock, main stores,
electrical substation and back-up generators, office and training
centre buildings
Placing of new shares
On 23 December 2020, the Company announced that it had
conditionally raised, in aggregate, up to GBP7.4 million (before
expenses) by way of a placing of new 14,222,225 Ordinary Shares at
a price of 45 pence per share to existing and new investors (the
"Placing"), as well as an Open Offer of up to 2,239,465 new
Ordinary Shares to be issued to Qualifying Shareholders at a price
of 45 pence per share. The Placing is being conducted in two
tranches.
The First Placing will utilise the Company's existing
authorities to allot shares and disapply pre-emption rights granted
at its most recent general meeting, whilst the Second Placing and
Open Offer will be subject to the approval of Shareholders to allot
the Second Placing Shares and the Open Offer Shares at a General
Meeting. A circular (the "Circular") containing further details of
the General Meeting to be held on 13 January 2021 was posted to
Shareholders and was available to view on the Company's
website.
Transaction Highlights:
-- Placing to raise GBP6.4 million (before expenses) in two
tranches, the First Placing of approximately GBP4.0 million and the
Second Placing of approximately GBP2.4 million.
-- The net proceeds from the Placing will strengthen the
Company's balance sheet and continue to enable it to tender for and
win larger contracts, as well as to:
-- provide capital expenditure for inter alia, the acquisition
of a robotic welding panel line and other yard refurbishment
programmes in preparation for the potential award and subsequent
execution of fabrication contracts; and
-- provide sufficient working capital to improve negotiating
position on new contract opportunities by removing the potential
for an emphasis of matter statement within upcoming full year
results.
On 13 January 2021, the Company announced that all resolutions
put to Shareholders at the General Meeting held on that day in
connection with the Placing and Open Offer to raise up to GBP7.4
million (before expenses), were duly passed.
The Company further announced that it has raised the maximum
amount possible under the Open Offer of GBP1.0 million (before
expenses), having received valid applications for 5,173,144 Open
Offer Shares in aggregate, including 4,025,457 Open Offer Shares
applied for under the Excess Application Facility. Accordingly, the
Company has issued the maximum of 2,239,465 Open Offer Shares to be
admitted to trading on AIM.
As the Open Offer was oversubscribed, the Directors of the
Company undertook a scaling back process, on a pro-rata basis, with
the same scaling methodology to be applied to each shareholder who
applied for excess applications.
Application has been made for the Second Placing Shares and Open
Offer Shares, totalling 7,622,082 new Ordinary Shares, to be
admitted to trading on AIM ("Admission"). It is anticipated that
Admission will become effective and that dealings in the Second
Placing Shares and Open Offer will commence at 8.00 a.m. on 14
January 2021. Following Admission, the Company will have 81,406,176
Ordinary Shares in issue, admitted to trading on AIM. This figure
(81,406,176) may be used as the denominator for the calculation by
which Shareholders will determine if they are required to notify
their interest in, or a change to their interest in, the Company
under the FCA's Disclosure Guidance and Transparency Rules.
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END
FR UVSORAUUAUUR
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