Final Results

26th Oct 2009 07:00



26 October 2009

For Immediate Release

PRESS RELEASE

Final results for the year ended 31 July 2009

Portland Gas plc (AIM: PTG) ("the Company" or "Portland Gas") the independent gas storage Company is pleased to announce final results for the year ended 31 July 2009.

Operational highlights

Portland Project funding process launched 

Pre-start planning conditions discharged for the Portland Project

Initial site works on the Portland Project wellpad area commenced

Good progress made with the Islandmagee Project

The Company has continued to pursue and evaluate international gas storage opportunities

Financial highlights

Loss for period of £1,281,002 (2008; £1,569,621) 

Loss per share of 1.82p (2008; 2.33p)

Cash and cash equivalents as at 31 July 2009 of £3,066,502 (2008; £9,276,964)

Capitalised expenditure on gas storage projects during the year of £5,729,823 (2008; £7,360,442)

Chief Executive's Report 

The Portland Gas group has during this time of economic uncertainty focused on the Portland Project funding, however it has also been able to progress its other gas storage projects. It is now well recognised that a significant programme of gas storage development is required in the United Kingdom and Ireland to secure energy supplies for the future. The two projects initiated by the Group in the United Kingdom could between them provide approximately 42 million cubic metres of gas on a cold winter day (this is approximately 10% of the total United Kingdom and Ireland peak daily demand). 

Portland Project

The first funding process for the Portland Project was halted owing to the 'credit crunch' in November 2008. There followed a period of consultation with interested parties on a bi-lateral basis until July 2009 when a new process was formally launched. During this intermediate period, BNP Paribas was appointed as project finance advisors and Field Fisher Waterhouse LLP as new legal advisors to the project company.

Following the discharge of the pre-start planning conditions, on 31 July 2009 site work commenced at Upper Osprey on Portland. 

The first task is to undertake initial works on the wellpad area from which drilling down to the salt sequence deep below Portland can take place, the first stage in creating 14 caverns providing storage for 1,000 million cubic metres of gas. These preliminary works are being performed by Hydrock, a leading national provider of consultancy and specialist contracting services for construction, infrastructure and the environment. Engineering design work is being undertaken by CB&I who have global experience in the engineering, procurement and construction of major energy infrastructure projects. The Company has reached agreement with Hydrock to undertake works to a value of £300,000. These works are being funded by a redeemable debenture created on the 7 July 2009 and granted to Hydrock. Under the terms of the debenture the Company may redeem the instrument until 31st January 2010 beyond which it is converted into 369,595 ordinary shares.

The gas storage facilities will be constructed in a number of stages, starting initially with drilling and construction of the facilities required to construct the caverns, followed by construction of the gas facilities and pipelines. The project will take approximately seven years to complete. 

After the year-end, a Co-operation Group was established following a successful first phase of the funding process. The Group consists of five companies who have each expressed an interest in possibly acquiring a working interest in the Portland Project, together with Infrastrata UK Limited (formerly Portland Gas A Limited). The Group will work together to conduct a feasibility study in respect of the Project. The Project's legal advisor, Field Fisher Waterhouse LLP, will draw up a Shareholders' Agreement and a separate Capacity Agreement. In parallel, the Project's project finance advisor, BNP Paribas, will work on the development of the financing structure. 

On the 14 July 2009 the Company agreed to place 919,474 new ordinary shares of 10p each at 81.17p per share with Portland Port Limited to settle an existing liability relating to the East Weares estate lease. These shares were issued after year end.

Islandmagee Project

The Project, a joint venture with a subsidiary of Northern Ireland Energy Holdings Limited, is designed to store 500 million cubic metres of natural gas. During 2009, technical experts developed a design for the storage caverns and surface facilities and further progress was made on the Environmental Impact Assessment. 

In June 2009 a successful two-day public exhibition to present information and gather feedback on the project was held. Further consultations with stakeholders are planned for the end of October 2009 and a target date of year end 2009 has been set for submission of the planning application.

Storage asset portfolio development

The Group made progress with its plans for new gas storage projects in Germany and Spain. In Germany, a review of the geology and infrastructure has resulted in activity being focused on a salt dome in northern Germany. In Spain, a local subsidiary Portland Gas ESP S.L. was formed to develop the Group's Spanish gas storage plans.

Outlook

The 2009/10 financial year will again be an active time for the business. The Group looks forward to the introduction of investors in the Portland Project and to continuing the development and construction of the Upper Osprey site. Islandmagee Storage Limited (the project company for the Northern Ireland Project re-named during the year from Portland Gas NI Limited) plans to complete the Environmental Impact Assessment and submit the Project planning application before the end of the 2009 calendar year. In addition the Group will continue in its stated objective of developing an international gas storage business. 

  Portland Gas plc

Consolidated income statement 

For the year ended 31 July 2009

_________________________________________________________________________

	Note		2009		2008
			£		£
Continuing operations
Revenue			-		-
Cost of sales			-		-
Gross profit/(loss)			-		-
Administrative expenses			(1,454,441)		(1,767,017)
Operating loss			(1,454,441)		(1,767,017)
Investment revenues			173,439		197,396
Loss before taxation			(1,281,002)		(1,569,621)
Taxation			-		-
Loss for the year			(1,281,002)		(1,569,621)
Basic and diluted loss per share	1		1.82p		2.33p

Portland Gas plc

Consolidated balance sheet

As at 31 July 2009

___________________________________________________________________________

			2009		2008
			£		£
Non-current assets
Plant and equipment			20,346,503		15,195,167
Intangible assets			1,821,551		1,263,659
Total non-current assets			22,168,054		16,458,826
Current assets
Trade and other receivables			149,356		305,520
Available for sale financial assets			12,500		12,500
Cash and cash equivalents			3,066,502		9,276,964
Total current assets			3,228,358		9,594,984
Current liabilities
Trade and other payables			(925,202)		(1,408,848)
Net current assets			2,303,156		8,186,136
Non-current liabilities
Obligations under contractual and operating lease agreements due after one year			(2,185,741)		(1,963,519)
Net assets			22,285,469		22,681,443
Shareholders' funds
Share capital			7,038,473		7,038,473
Share premium			8,576,705		8,576,705
Merger reserve			8,988,112		8,988,112
Shares to be issued			746,337		-
Share based payment reserve			177,189		38,498
Retained earnings			(3,241,347)		(1,960,345)
			22,285,469		22,681,443

Portland Gas plc 

Consolidated statement of changes in equity

For the year ended 31 July 2009

_____________________________________________________________________________

	Share  capital	Share premium	Merger reserve	Shares to be issued	Share based payment reserve	Retained earnings	Total equity
	£	£	£	£	£	£	£
Balance at 31 July 2007	117,782	-	11,650,514	-	-	(390,724)	11,377,572
Loss for the year	-	-	-	-	-	(1,569,621)	(1,569,621)
Total recognised income and expenses for the year	-	-	-	-	-	(1,569,621)	(1,569,621)
Issue of equity share capital (pre- demerger)	40,000	-	3,960,000	-	-	-	4,000,000
Portland Gas plc capitalisation	6,622,402	-	(6,622,402)	-	-	-	-
Issue of equity share capital (post-demerger)	258,289	8,576,705	-	-	-	-	8,834,994
Share based payments	-	-	-	-	38,498	-	38,498
Balance at 31 July 2008	7,038,473	8,576,705	8,988,112	-	38,498	(1,960,345)	22,681,443
Loss for the year	-	-	-	-	-	(1,281,002)	(1,281,002)
Total recognised income and expenses for the year	-	-	-	-	-	(1,281,002)	(1,281,002)
Commitment to issue shares	-	-	-	746,337	-	-	746,337
Share based payments	-	-	-	-	138,691	-	138,691
Balance at 31 July 2009	7,038,473	8,576,705	8,988,112	746,337	177,189	(3,241,347)	22,285,469

Portland Gas plc 

Consolidated cash flow statement 

For the year ended 31 July 2009

___________________________________________________________________________

	Note			2009		2008
				£		£
Net cash (used in) operating activities	2			(1,175,444)		(1,275,246)
Investing activities
Interest received				173,439		197,396
Purchase of intangible assets				(530,729)		(5,645,493)
Purchase of plant and equipment				(4,678,611)		(63,887)
Purchase of financial assets				-		(12,500)
Proceeds on disposal of plant and equipment				883		-
Net cash (used in) investing activities				(5,035,018)		(5,524,484)
Financing activities
Proceeds on issue of ordinary shares				-		12,639,999
Net cash generated from financing activities				-		12,639,999
Net (decrease)/increase in cash and cash equivalents				(6,210,462)		5,840,269
Cash and cash equivalents at beginning of year				9,276,964		3,436,695
Cash and cash equivalents at end of year				3,066,502		9,276,964
Cash and cash equivalents consist of:
Cash in hand and at bank				3,066,502		9,276,964
				£3,066,502		£9,276,964

Significant non-cash transaction

The above excludes the settlement of a liability of £746,337, where the supplier agreed to accept 919,474 new 10p ordinary shares in settlement; the shares were issued after year end.

 

 

Portland Gas plc 

Notes to the financial statements  

For the year ended 31 July 2009

_____________________________________________________________________________

1.	Loss per share	2009	2008
		p	p
	Basic loss per share	1.82	2.33
	The calculation of basic loss per share is based upon a loss of £1,281,002 (2008; £1,569,621) divided by the weighted average number of ordinary shares in issue of 70,384,727 (2008; 67,381,698). In accordance with IAS 33, diluted earnings per share calculations are not presented as assumed conversion of outstanding share options would be anti-dilutive, as such the diluted earnings per share is equal to the basic loss per share.

2.	Cash (used in) operations				2009	2008
	Group				£	£
	Operating loss for the year				(1,454,441)	(1,767,017)
	Depreciation				21,880	19,342
	Profit on disposal of plant & equipment				367	-
	Decrease in trade and other receivables				156,164	22,816
	(Decrease)/Increase in trade and other payables				(38,105)	216,121
	Share option expense				138,691	38,498
	Shares issued in lieu of bonus				-	194,994
	Cash (used in) operations				(1,175,444)	(1,275,246)

3.	Basis of preparation
	The financial information set out in this announcement does not comprise the Group's statutory accounts for the years ended 31 July 2009 or 31 July 2008. The financial information has been extracted from the statutory accounts of the Company for the years ended 31 July 2009 and 31 July 2008. The auditors reported on those accounts; their reports were unqualified and did not contain a statement under either Section 498 (2) or Section 498 (3) of the Companies Act 2006 or Section 237 (2) or Section 237 (3) of the Companies Act 1985 respectively and did not include references to any matters to which the auditor drew attention by way of emphasis. The statutory accounts for the year ended 31 July 2008 have been delivered to the Register of Companies; those for the year ended 31 July 2009 were approved by the board on 23 October 2009 and will be delivered to the Registrar of Companies following the Company's Annual General Meeting.

4.	Approval
	The preliminary announcement was approved by the Board on 23 October 2009.

 

For further information please contact:

Portland Gas plc
Andrew Hindle, Chief Executive Officer	020 8332 1200
Craig Gouws, Chief Financial Officer
PR - Watershed
Sara Hudston	01308 420785
Investor Relations - Buchanan Communications
Ben Willey	020 7466 5000
Nominated Advisor and Broker - Seymour Pierce
Jonathan Wright	020 7107 8000
Sarah Jacobs
Richard Redmayne

Notes to Editors:

Background on Portland Gas 

Portland Gas' business is focused on the development of two gas storage projects in the United Kingdom at Portland, Dorset and at Islandmagee, County Antrim, Northern Ireland. The two projects could between them provide over 10% of the total UK and Ireland peak daily demand in the latter part of the next decade. The Company is also developing new projects in mainland Europe initially focusing on Germany and Spain. The Company is one of only a few in Europe focused specifically on gas storage development, a sector with significant growth potential in Europe over the coming decades. In order that the "Portland Gas" name can remain with the Portland Project where it is very well established in Dorset, the Directors intend to seek approval at the next Annual General Meeting of the Company, scheduled for December 2009, to change the name of Portland Gas plc to "Infrastrata plc". The project company, Portland Gas Holdings Limited, would then be renamed to "Portland Gas Limited".

Further information is available on the Company's website www.portland-gas.com. 

ENDFR EAEESAFXNFAE

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