1、 Company registration number:06409712 InfraStrata plc Annual Report&Financial Statements 2016 Table of Contents InfraStrata plc Annual Report and Financial Statements 2016 2 Page Directors,secretary,advisors and shareholder information 3 Chairmans statement 4-5 Strategic Report 6-13 Report of the di
2、rectors 14-19 Independent auditors report 20-21 Consolidated statement of comprehensive income 22 Consolidated statement of financial position 23 Company statement of financial position 24 Consolidated statement of changes in equity 25 Company statement of changes in equity 26 Consolidated statement
3、 of cash flows 27 Company statement of cash flows 28 Notes to the financial statements 29-51 Letter from the Chairman with Notice of Annual General Meeting 52-56 Notice of AGM 57-60 Proxy Form with Notes 61-62 Directors,secretary,advisors and shareholder information InfraStrata plc Annual Report and
4、 Financial Statements 2016 3 Directors Kenneth Maurice Ratcliff(Non-executive Chairman)Stewart McGarrity(Joint Managing Director)Anita Elizabeth Gardiner(Joint Managing Director)Andrew David Hindle(Non-executive Director)Maurice Edward Hazzard(Non-executive Director)Company secretary Walter Rookehur
5、st Roberts Registered office Blackstable House Longridge Sheepscombe Stroud Gloucestershire,GL6 7QX Auditor Nexia Smith&Williamson Statutory Auditor 1 Bishops Wharf,Walnut Tree Close Guildford Surrey,GU1 4RA Tax advisors Smith&Williamson LLP Chartered Accountants 1 Bishops Wharf,Walnut Tree Close Gu
6、ildford Surrey,GU1 4RA Registrars Capita Registrars Limited The Registry 34 Beckenham Road Beckenham Kent,BR3 4TU Nominated advisor and broker Allenby Capital Limited 3 St Helens Place London,EC3A 6AB Solicitors Fieldfisher LLP Riverbank House 2 Swan Lane London,EC4R 3TT Bankers Bank of Scotland plc
7、 33 Old Broad Street London,EC2N 1HZ Chairmans Statement InfraStrata plc Annual Report and Financial Statements 2016 4 Following a strategic review in the second half of 2015,InfraStrata has now completed the disposal of almost all of its exploration assets and,whilst continuing to act in an adminis
8、trative capacity until the transfer of responsibility to operate certain licences has been completed,we will make no further financial commitments in respect of exploration activities going into 2017.As previously announced,the entire focus of InfraStrata will be on delivery of value to shareholders
9、 through the realisation of our gas storage project at Islandmagee.Our last significant exploration activity was the drilling of the Woodburn Forest-1 well on licence PL1/10 for which we completed the funding in January 2016.Drilling took place in May and June 2016,and whilst the drilling operations
10、 reached the intended objectives no significant hydrocarbons were encountered and the well was plugged and abandoned.InfraStrata was fully carried for the costs of the well and also secured very important contributions to our cash flow requirements for 2016.These included 300,000 from Corallian Ener
11、gy Limited as proceeds for an interest in licence PL1/10,which was conditional on the well being funded,the recovery of 252,481 of costs already incurred on the well under the associated farmout agreements and the operator overheads recovered.It is unfortunate that the well was not a success for Inf
12、raStrata and its joint venture partners,but these funds were in any event crucial to the continuation of our programme of work on the Islandmagee gas storage project.At Islandmagee,the feasibility phase of the project was completed via a salt core well programme in late 2015,and during 2016 we worke
13、d closely with our advisors to explore options for monetisation of our interest in the project.These options included direct investment into the project by third parties,risk sharing with contractors and the potential sale of the entire project to a third party.The outcome of this exercise was a dec
14、ision by the Board that best value would be secured for our shareholders by taking the project through its next phase,the Front End Engineering and Design(“FEED”),whilst concurrently embarking upon a commercialisation process.The purpose of this approach would be to add sufficient certainty with reg
15、ard to revenues,including contracted revenues where possible,in order to support the overall project financing requirements necessary to seek to achieve a Final Investment Decision(FID)prior to commencing full construction.This decision was taken against a background where our long held views of the
16、 projects viability have recently been supported by positive changes in the fundamentals of the gas storage market as reflected in the Competent Person Report on the project and the market potential announced in October 2016 and available on the Companys website.Approximately half of the required fu
17、nding for the 6 million FEED and commercialisation programme,to be completed during 2017 subject to timely receipt of the necessary funding,was secured by a further EU grant towards the FEED itself and loans from the selected FEED contractors.The grant from the EU under the Connecting Europe Facilit
18、y is for up to 50%of the cost of FEED and insitu downhole testing up to a maximum of 4.024 million.The loans from the selected FEED contractors,of in aggregate up to 1.1 million based on a total anticipated engineering budget of 4 million,will be secured on the assets of Islandmagee Storage Limited
19、and will be repayable with interest when the FID decision is made,or on 31 December 2018,whichever is earlier.Both the EU grant and contractors loans are conditional upon securing the balance of funding required for the FEED.Baron Oil plc has agreed to provide the Company with a secured working capi
20、tal loan facility of up to 300,000,sufficient to meet InfraStratas minimum level of corporate costs to the end of 2017 on a care and maintenance basis.Further details of this loan and its terms can be found in note 29 to the financial statements.As of the date of this report we are seeking the balan
21、ce of the funding required,3.0 million,to complete the FEED and commercialisation programme,as well as to repay the new Baron Oil loan.The directors anticipate that this additional funding can be secured through an equity fundraising in the first quarter of 2017.However the success of such fundraisi
22、ng cannot be guaranteed.It is proposed that the Companys ordinary share capital be restructured to a par value of 0.01p at the forthcoming AGM(the“Share Capital Reorganisation”)to facilitate access to the equity markets,given that the Companys ordinary shares are currently trading on AIM below the c
23、urrent par value of 1p.Further details of the Share Capital Reorganisation can be found in the letter from the Chairman with the Notice of Annual General Meeting which accompanies this Annual Report.We have made significant progress towards restructuring our business in preparation for our work prog
24、ramme in 2017,including restructuring the interest of Mutual Energy Limited(“Mutual”)in the project such that our own interest in the project has now increased from 65%to 90%.We are delighted that Mutual continues to be committed to this strategically important project.We are in the process of restr
25、ucturing the teams at InfraStrata and Islandmagee Storage Limited over the coming months,to match the skill requirements for the next phase of the project,as well as to appoint necessary advisers and technical consultants.The Board of InfraStrata will be geared towards regulatory and corporate gover
26、nance matters,with a focus on securing the funds to develop the project.As part of this focus and to further reduce corporate overheads,InfraStrata will re-locate to Belfast in January 2017,with all of its resources being dedicated to the project.Andrew Hindle has stepped down from his role as CEO o
27、f InfraStrata effective 1 January 2017,but remains a Non-Executive Director of the Company.Andrew,a Chartered Geologist,will continue to advise on the project in a technical capacity.Stewart McGarrity and Anita Gardiner became Joint Managing Directors effective 1 January 2017,bringing vital and comp
28、lementary skills required for the execution of the next phase of the project.Chairmans Statement InfraStrata plc Annual Report and Financial Statements 2016 5 I would like to thank Andrew Hindle for his commitment and dedication to the development of InfraStratas projects over many years and in very
29、 difficult market conditions.We look forward to Andrews continued substantive involvement on the Islandmagee project and to the continued dedication of the other members of our management team as we renew our focus on securing best value from the Islandmagee gas storage project.Ken Ratcliff Non-exec
30、utive Chairman,5 January 2017 Strategic Report InfraStrata plc Annual Report and Financial Statements 2016 6 STRATEGY AND BUSINESS MODEL Strategic review and divestment of exploration assets In the second half of 2015 we implemented a strategic review which resulted in the divestment of most of the
31、Groups exploration and evaluation assets.This was in response to a very difficult market in which to secure new funding for our exploration activities,following the very significant fall in oil prices since the summer of 2014,and with upcoming commitments in 2016 the Board determined that a cash con
32、sideration and a retained interest in the assets represented the best outcome for shareholders.In November 2015 we entered into Sale&Purchase Agreements(“S&P Agreements”)to sell substantially all of the Groups oil and gas exploration interests,including its interest in its two associates,to two newl
33、y formed special purpose vehicles Corallian Energy Limited(“Corallian”)and its subsidiary Osmington Holdings Limited(“Osmington”).The initial disposal,covering the Groups UK oil and gas exploration interests and the two associates,Brigantes Energy Limited(“Brigantes”)and Corfe Energy Limited(“Corfe”
34、)resulted in an immediate cash inflow of 240,000.The Group also retained a Net Profits Interest(“NPI”)in the licences and the former associates.Following this disposal,the Group now has no exposure to any future exploration costs,including cost overruns,in these assets,but,through the NPIs,will part
35、icipate in any future profits.The second disposal of a 10%interest each in licences PL1/10 and P2123 was completed in February 2016 following the completion of the funding for the Woodburn Forest-1 Well on Licence PL1/10,generating a further cash inflow of 300,000.InfraStratas business going forward
36、 The focus of InfraStratas business is now the Islandmagee Gas Storage Facility(currently 90%owned)where we have completed the feasibility study phase for the project and now turn to readying the project for full development through progressing its Front End Engineering and Design(“FEED”)and the nec
37、essary steps towards a full financing of the project.We have a retained 10%interest in each of licences PL1/10 and P2123 but will not make any further commitments to incur costs on these licences and seek to transfer our interests and operatorship to other parties as soon as practicable.Our NPI inst
38、ruments in licences P1918,P2222 and P2235 together with NPI interests in Brigantes and Corfe also provide upside in the underlying exploration activities in the event of successful exploration,but without a commitment to pay exploration costs on the assets disposed of.KEY PERFORMANCE INDICATORS Key
39、performance indicators(“KPIs”),both financial and non-financial,are used by the Board to monitor progress against predetermined objectives and our strategy:Objective Definition KPIs We endeavour to develop projects in accordance with project schedules Predetermined and agreed project development sch
40、edules adhered to including submission of planning applications Delivery of projects to sensible time schedules.Submit and achieve planning permission approvals in a cost effective and timely manner We aim to manage Group working capital prudently Management and control of working capital ensuring l
41、iquidity as is necessary Management of working capital to ensure liquidity to develop projects as planned in development schedules The KPIs are reported at Board meetings.Measurement entails analysing variance between expected and actual progress,financial position and financial performance.Relevant
42、 performance measures since our last annual report include:Completed strategic re-positioning in light of challenges to funding exploration commitments delivery of divestment of most of exploration assets for a cash consideration plus carried interests.Conclusion of formal grant agreement with Europ
43、ean Commision for 50%of the cost of the Front End Engineering and Design for the Islandmagee gas storage project.Operated the drilling of the Woodburn Forest-1 exploration well on licence PL1/10.Implementation of further changes to company project management and administration to reflect a Group foc
44、ussed on the Islandmagee gas storage project.Strategic Report InfraStrata plc Annual Report and Financial Statements 2016 7 OPERATIONAL REVIEW ISLANDMAGEE GAS STORAGE PROJECT Outline Islandmagee Storage Limited(“IMSL”)is a Northern Ireland registered company and is a joint venture between InfraStrat
45、a UK Limited(“IS-UK”)a wholly-owned subsidiary of InfraStrata and Moyle Energy Investments Limited(“Moyle”),part of the Mutual Energy group of companies.In September 2016 we announced that we had increased our interest in the project from 65%to 90%effected by the issue of new shares in IMSL which re
46、duced Moyles interest from 35%to 10%.The transaction will mean that at Final Investment Decision(“FID”)Moyle will no longer have to advance IMSL approximately 2 million plus interest to enable IMSL to partially repay shareholders loans paid to date by IS-UK.IMSL plans to create seven caverns,capable
47、 of storing up to a total of 420 million cubic metres of gas in Permian salt beds approximately 1,400 metres beneath Larne Lough.The project has a number of advantages,including being immediately adjacent to gas and electrical infrastructure,the salt being at an optimum depth for gas storage and clo
48、se to a water source for solution mining of the salt to create the caverns.The project is also designed to access the extrinsic value of the gas storage market in the UK and Ireland by being able to respond to short-term volatility.We believe that no other location on the island of Ireland is as sui
49、table for the development of salt cavern gas storage;Northern Ireland has a valuable geological asset,which,when developed for underground salt cavern gas storage should make a significant contribution towards security of gas supplies to the wider region,including the north and south of the island o
50、f Ireland and mainland Great Britain.Ireland is dependent on gas for around 40%of its electricity generation,with the majority of the islands gas imported via a single pipeline from Scotland.The Islandmagee facility,when complete,is intended to store enough gas to satisfy Northern Irelands current d
51、emand for around 50 days.In October 2016 we announced the publication of a competent person report(the“CPR”)on the gas storage market in the UK and a review of the revenue assumptions for InfraStratas economic model of the Islandmagee gas storage project by The Energy Contract Company(“ECC”),a leadi
52、ng commercial consultancy in the global oil and gas industry.The full report titled“The gas storage market in the UK and review of revenue assumptions in economic model for the Islandmagee gas storage project”is available on the Companys website,www.infrastrata.co.uk,with a summary of its findings b
53、elow.The revenue model for the project was based on assumptions of volatility and summer-winter price spreads by Baringa Partners(“Baringa”),an independent business and technology consultancy,for InfraStrata.ECC concluded that the underlying assumptions in the Baringa model are reasonable.This reven
54、ue model formed the basis for InfraStrata determining the projects cashflow over a 20 year period.InfraStratas economic model assumes a capital expense and pre-operations operating expense of 308m in aggregate,utilising 65%debt.InfraStrata has estimated the net present value(NPV)of the project to be
55、 67m at an 8%discount rate and 38m at a 10%discount rate.ECC did not review these NPV estimates.The executive summary points in the CPR are as follows:Most gas sold in the UK is used for space heating,so demand has always varied significantly from day to day,due to temperature variations.In future t
56、hese short term variations in demand should become significantly greater.UK Government energy policy now emphasises the need to replace power generation from fossil fuels with electricity generated from renewable sources,such as wind.As wind is not consistent,gas fired generation will have to make u
57、p any deficit.Short term gas demand levels will therefore vary increasingly,depending on whether the wind is blowing or not.Many traditional means of meeting peak gas demand such as swing from offshore fields and interruptible gas sales contracts have almost disappeared to be replaced by other sourc
58、es of peak supply,such as pipeline gas imports from the rest of Europe and LNG imports.However,there are drawbacks to reliance on these sources in future.Historic data shows gas suppliers in the rest of Europe are reluctant to supply the UK in cold winter conditions,if it means that they might be ri
59、sking their own supply requirements.There are also problems with LNG as a source of peak gas,as the long-time lags for the delivery of LNG cargoes mean it is difficult for LNG producers and traders to react to short term high prices in the UK market,which might have collapsed by the time a cargo arr
60、ives in the UK.In continental Europe the traditional means of supplementing gas supplied to meet peak demand was through the use of gas storage,which remains much less common in the UK.Gas storage levels in the UK are very low compared to the rest of Europe.Average UK storage capacity is only equiva
61、lent to 6.4%of annual demand in the UK compared to 25-35%in the other major European markets.Strategic Report InfraStrata plc Annual Report and Financial Statements 2016 8 OPERATIONAL REVIEW ISLANDMAGEE GAS STORAGE PROJECT(CONTINUED)The situation in the UK has been exacerbated by recent technical pr
62、oblems on the Rough storage facility,which has severely restricted injection this summer.There have also been problems on the Hornsea storage facility.Both Rough and Hornsea,which account for almost 75%of UK gas storage capacity,are now over 30 years old and their continuing availability in the long
63、er term must be subject to some doubt.The cessation of injection at Rough this summer seems to have led to a surge in price volatility from late August onwards.From October 2013 to July 2016 the Short term Gas Volatility Index averaged 34%.However in the last month or so this has more than trebled t
64、o 126%.This surge in volatility has potentially great significance for the Islandmagee project.Salt cavern storage projects such as Islandmagee depend on short term volatility to enable the users to gain from injecting gas on low price days and producing later on when prices have risen.The greater t
65、he volatility the more profitable the project.Overall the conclusion is that as a result of increased use of renewable generation,gas demand will become even more variable on a short term basis in future.The existing means of meeting this variation in demand may well be inadequate in future,so price
66、 volatility is likely to increase,perhaps significantly.The strategic importance of the Islandmagee gas storage facility is recognised by the project being awarded Project of Common Interest(“PCI”)status by the European Union.This status was first awarded in November 2013 and reconfirmed in November
67、 2015 for a further two years.PCI status also means that the project benefits from accelerated permitting procedures and improved regulatory conditions making it more attractive to investors.In addition,a PCI can apply for significant financial support from the European Unions Connecting Europe Faci
68、lity(“CEF”)including grants for both studies and works.A budget of 5.35 billion has been allocated under CEF for 2014-20 for PCI projects.Assistance may be in the form of direct grant or other forms of financial backing from institutions such as the European Investment Bank.As detailed below,the pro
69、ject has already received grant assistance for the 2015 salt core well programme and for the forthcoming FEED programme to be undertaken in 2017.To date over 11 million has been expended on the project,to acquire 3D seismic data,drill a well to acquire salt cores,undertake engineering design work,ac
70、quire rights on the full land assembly,and obtain planning permission and other consents required to construct the project.Salt Core Well programme During 2015 a data gathering well(Islandmagee-1)was successfully drilled to a total depth of 1,753 metres,obtaining wireline data and cores of the 185.8
71、 metre Permian salt sequence encountered.Core samples were sent to Germany to undertake laboratory analyses and the test results on the salt cores and rock mechanics have now been incorporated into the subsurface and surface facility preliminary design and cost estimates for the project have been up
72、dated.This 3.8m programme of work was co-funded by a 2.5 million grant from the CEF.The overall results from the technical programme of work were positive and the objective to confirm the feasibility of the development of an underground gas storage facility in salt caverns in this location was met.I
73、n May 2015 the Company concluded a Convertible Loan Facility Agreement with Baron Oil Plc(“Baron”)under which Baron provided a loan for 1.8 million(1.4 million)to InfraStrata which was used as working capital to bridge the receipt of the CEF grant,70%of which amounting to 1.75 million(1.3 million)wa
74、s due upon completion of the work and application for the balance.The balancing 1.75 million grant monies were received from the EU in May 2016 and placed into an escrow arrangement as security for the loan.In August 2016 the loan was repaid in full by release to Baron of the 1.75 million(1,358,063)
75、then held in escrow,a payment of 50,000(42,301)and a further payment of 160,904(136,134)for the interest on the loan at a fixed rate of 8%up to the effective repayment date of 1 August 2016.Baron had an accompanying option to convert the entire balance of the loan into an equity participation of 15%
76、of the share capital in IMSL.Under the terms of an amendment to the loan agreement in August 2016 Barons option could be exercised until 31 March 2017 for a payment of 1,536,498,equivalent to the capital and interest repaid on the loan.On 26 September 2016 we announced that the option has been furth
77、er revised,so that Baron now has an option to acquire the number of ordinary shares of 1p in InfraStrata that represents 16.666%of the enlarged ordinary share capital of InfraStrata(from time to time)for a payment of 1,536,498,until 31 March 2017.Exercise of the option in full is conditional on Infr
78、aStrata having the requisite authorities under the Companies Act 2006 to issue new ordinary shares in the Company.This is part of an ongoing programme of re-structuring of the Company,as it seeks to focus entirely on the Islandmagee gas storage project.Strategic Report InfraStrata plc Annual Report
79、and Financial Statements 2016 9 OPERATIONAL REVIEW ISLANDMAGEE GAS STORAGE PROJECT(CONTINUED)2016 Monetisation process During 2016 the Company organised an extensive monetisation process through Centrus Advisors LLP and VSA Capital Ltd,both having been appointed in March 2016.A wide range of options
80、 were explored,from investment into the project alongside the EU grant,risk sharing with contractors,or the sale of the entire project to a third party.As a result of the feedback from this process,together with the positive changes in the fundamentals of the gas storage market and the supportive CP
81、R announced in October 2016,the Board decided to restructure the Companys business with the goal of attracting the remaining risk capital required to take the project through to FID.The restructuring has included increasing InfraStratas equity position from 65%to 90%in IMSL and seeking to divest all
82、 the Companys other remaining business interests,as announced in September 2016.As part of a commercialisation process to run alongside the FEED in 2017,InfraStrata will seek to secure contracts for storage capacity to support further project finance.During the monetisation process,the Company had a
83、 number of discussions regarding the project with interested parties.The feedback at that time with respect to investment in gas infrastructure was that it would be preferable for the FEED to be completed and for the project to have sufficient certainty with regards to revenues,including pre-contrac
84、ted revenues where possible,in order to support the additional project finance that would be required.2017 FEED and commercialisation programme The next phase in the development of the project comprises the closely interrelated work streams associated with the FEED(including associated insitu downho
85、le testing)and the commercialisation process running concurrently with the FEED to secure capacity contracts to support project finance.In June 2016 we announced that we had concluded a further grant from the EU under the CEF for 50%of the cost of FEED and insitu downhole testing up to a maximum of
86、4.024 million.An advance payment of 40%of the maximum grant amounting to 1.6 million was received in July 2016 and has since been held in a Euro denominated bank account pending completion of the remaining 50%funding required to both match the grant for FEED and also to complete the commercialisatio
87、n programme during 2017.On 3 November 2016 we announced that following the completion of a tendering process,the Company had selected FEED contractors for the projects above-ground facilities and for the sub-surface elements.The FEED will include a detailed plant design specification for the project
88、,a detailed project plan and cost estimate.Both the FEED contractors have an international reputation and have experienced working on many of the existing salt cavern storage projects in the UK.Both FEED contractors will provide loans in aggregate of up to 1.1m based on a total anticipated engineeri
89、ng budget of 4m.These loans,which are subject to contracts being agreed and upon InfraStrata securing the remaining funding for the FEED,will be repayable at the Final Investment Decision(“FID”),when a decision will be made whether to proceed to construction,or on 31 December 2018,whichever is earli
90、er.The loans will be secured on the assets of IMSL and attract interest at 10 per cent.per annum,which will be rolled up and paid on the loan repayment date.These will be repayable at the FID.In addition to funding from the EU and the loans,further funding of approximately 3m is required to complete
91、 the FEED and commercialisation process during 2017,inclusive of corporate project management costs,overheads,external technical and commercial consultancy,working capital and bridging finance on the EU grant.The bridging finance,which could be in the form of debt,is required to cover the timing of
92、receipt of funds from the European Commission grant which they pay in two stages:1.6m of EU grant monies has already been received by the Company with the balance receivable once the FEED work has been completed,which is targeted for the end of 2017.Strategic Report InfraStrata plc Annual Report and
93、 Financial Statements 2016 10 OPERATIONAL REVIEW OIL&GAS EXPLORATION County Antrim Onshore PL1/10,Offshore P2123 Licence ownership In November 2015 we signed an agreement,alongside Brigantes,with Ermine Resources Limited(“Ermine”)whereby Ermine would acquire a 15%interest(paying 20%of the Woodburn F
94、orest-1 well costs)in the PL1/10 licence,subject to the full well funding being completed.In January 2016 we announced that a series of Farmout Agreements(“FOAs”)had been entered into by InfraStrata and Brigantes,both together and separately,which together resulted in completion of the funding for W
95、oodburn Forest-1 well.The additional new investors that entered into FOAs for the remaining 45%are Tudor Hall Energy Limited(10%),Baron Oil Plc(10%),Horizon Energy Partners Limited(formerly called Southwestern Resources Limited)(16%)and Petro River UK Limited(9%).All the parties except Tudor Hall En
96、ergy Limited acquired corresponding interests in licence P2123.The terms of the FOAs provided for reimbursement of costs already incurred on the Woodburn Forest-1 well and on licence P2123,resulting in cash payments to InfraStrata totalling 252,481.In order to facilitate the FOAs,the Company also si
97、gned a Supplemental Sale and Purchase Agreement with Brigantes under which there was a transfer of a 5%interest in PL1/10 from Brigantes to InfraStrata,a 10%interest in P2123 from InfraStrata to Brigantes and a payment of 86,459 in cash from Brigantes to InfraStrata.Under the sale and purchase agree
98、ments with Corallian Energy Limited(“Corallian”)announced in November 2015,on completion of the Woodburn Forest-1 well funding 10%of InfraStratas remaining 20%interest in PL1/10 and a 10%interest in P2123 was to be assigned to Corallian,subject to the respective approvals of the Department for Econo
99、my(“DfE”)and the Oil and Gas Authority(“OGA”),in return for a further payment to InfraStrata by Corallian of 300,000 in cash.Woodburn Forest-1 well Permitted Development rights for the Woodburn Forest-1 well were granted in December 2013 and in February 2015 a Consent to Drill was granted by DfE.A s
100、eparate consent issued by the Northern Ireland Environment Agency(Water Management Unit)under the Water(Northern Ireland)Order 1999,which regulates the well in terms of surface water and groundwater impacts,was also granted in February 2015.Site construction commenced on 10 March 2016 and drilling c
101、ommenced on 15 May 2016.The well was drilled to a depth of 2,000 metres and encountered two conventional sandstone reservoir intervals,the Triassic Sherwood and the Lower Permian Sandstones.Wireline log analysis has calculated porosities of over 20%in the upper parts of both the Sherwood and the Low
102、er Permian Sandstones but both targets were water wet.Following completion of the drilling,the well was plugged and abandoned and the rig released on 21 June 2016.The site was restored in compliance with the Permitted Development.Other exploration interests Following the divestment of exploration as
103、sets to Corallian and its subsidiary Osmington Holdings Limited(Osmington)completed in November 2015,InfraStrata has the following retained interests in the disposed exploration assets:Net profits interest(“NPI”)instruments in each of P1918(Dorset Offshore),P2222(East Shetland Basin Offshore)and P22
104、35(Moray Firth Offshore)of 0.5%,0.5%and 1%respectively of the gross,representing 4%of Corallians anticipated interest in the licences at the time of drilling the first well on the licences;and a 4%share of any future profits derived by Osmington from the 40%shareholdings in former associates Brigant
105、es and Corfe sold to Osmington,again in the form of NPI instruments.Corfe and Brigantes have interests in licence P1918 and Brigantes has interests in PL1/10 and P2123.No value has been ascribed to any of the NPI instruments retained in the Groups statement of financial position as at 31 July 2016,a
106、s it is not possible to determine a fair value for these instruments.InfraStrata will remain as operator under the P1918 licence until the formal assignment of the licence interest to Corallian has been approved in due course by OGA.However InfraStrata has no commitment to pay exploration costs and
107、is receiving a small income for services rendered during the interim period.The licence administratorship on the P2222 and P2235 licences has been transferred to Corallian.Strategic Report InfraStrata plc Annual Report and Financial Statements 2016 11 OPERATIONAL REVIEW FUNDING Financing Gross capit
108、al expenditure on the Islandmagee gas storage project during the year to 31 July 2016 was 608,760,most of which related to the completion of the salt core well programme.In August 2015 the remaining 300,000 was drawn down on the Baron Convertible Loan Facility Agreement.The balancing 1.75 million(1,
109、358,063)grant monies were received from the EU in May 2016 and placed into an escrow arrangement as security for the loan and disclosed as restricted cash in the statement of financial position.Subsequent to the year end in August 2016 the loan of 1.80 million(1,400,364)was repaid in full by release
110、 to Baron of the cash held in escrow,a payment of 50,000(42,301)and a further payment of 160,904(136,134)for the interest on the loan which had been accrued and capitalised to intangible gas storage development costs at 31 July 2016.Our share of expenditure on our oil and gas exploration licences du
111、ring the year to 31 July 2016 was 43,158,mostly related to farmout activities and our share of annual licence fees.We were fully carried through the drilling of the Woodburn Forest-1 well and therefore did not incur any costs on our own account.The book value of the Groups intangible Exploration and
112、 Evaluation assets which were disposed of in November 2015,including interests in P1918,P2222 and the Groups interests in associated companies Brigantes and Corfe,were impaired such that they equated to the immediate cash inflow of 240,000 from Corallian.The further receipt from Corallian of 300,000
113、 upon successful funding of the Woodburn Forest-1 well together with reimbursement of costs already incurred of 252,481 under the terms of the Woodburn Forest-1 FOAs and a receipt of 86,459 from Brigantes in relation to a licence interest sale to facilitate the FOAs,resulted in the Group recording a
114、 profit on disposal of Exploration and Evaluation assets during the year to July 2016 totalling 453,945.The Companys remaining 10%interest in each of PL1/10 and P2123 is carried at a book value of 19,459 being the estimated proceeds from a future disposal of these interests.On 18 December 2015 the C
115、ompany announced a placing to raise 450,625(421,963 after expenses)through the issue of 36,050,000 new ordinary shares of 1p each in two tranches.The first tranche of 18,880,000 shares were issued on 23 December 2015 and the second tranche of 17,170,000 shares was issued on 26 January 2016 following
116、 approval of shareholders at the Companys annual general meeting on 26 January 2016 of resolutions to provide authority to the Directors to issue and allot further new ordinary shares with exemption rights dis-applied.On 2 February 2016,the Group concluded an agreement for the sharing,interpretation
117、 and integration of data in respect of proprietary data in Northern Ireland acquired by InfraStrata for the Islandmagee gas storage project.The consideration for sharing this data was 500,000 in cash which is accounted for as revenue in the consolidated statement of comprehensive income.InfraStrata
118、has recorded a profit for the year to 31 July 2016 of 66,955(2015 loss of 6,106,070 after impairments totalling 6,072,785).Excluding cash held in escrow and classified as restricted cash,the Groups cash and cash equivalents at 31 July 2016 were 2,454,006(2015-430,199)and net current assets were 542,
119、336(2015-42,122).Cash balances at 31 July 2016 included 1.6 million(1.35 million)EU grant received in advance in July 2016 and held in a Euro denominated bank account pending completion of the remaining 50%funding required to match the grant and to complete the commercialisation programme during 201
120、7.As explained in note 2 to the financial statements the directors have prepared the accounts on the going concern basis which assumes that the Group will continue in operational existence without significant curtailment of its activities for the foreseeable future.On 5 January 2017 the Company ente
121、red into a secured loan agreement with Baron for a facility up to 300,000 to provide working capital for the Group.The loan is for a term of 12 months from the date of the loan agreement.Baron is entitled,acting in its sole discretion,to extend the term of the loan agreement by an additional 12 mont
122、hs.The directors believe that the facility provides sufficient funding to meet InfraStratas minimum level of management and administrative expenditure and to make the necessary payments in relation to the maintenance of the Islandmagee gas storage for a period of 12 months to the end of December 201
123、7,but not to undertake the FEED and commercialisation programme.The directors anticipate that the additional funding of 3.0m required to complete the FEED and commercialisation programme during 2017 and to repay the new Baron loan can be generated through an equity fundraising in the first quarter o
124、f 2017.However the success of such fundraising cannot be guaranteed.Following the completion of the FEED and commercialisation programme the project will be ready to move into construction and delivery and at that time the Company will further evaluate the optimum way to structure the funding of the
125、 initiation and delivery of that programme for our shareholders and will evaluate the available sources of funding,including both debt and equity participation,to fund both the continuing operations of the company and the commencement of construction.The full project construction is expected to be d
126、elivered over a number of years at an aggregate cost of approximately 300 million and to be delivered on a phased basis.Strategic Report InfraStrata plc Annual Report and Financial Statements 2016 12 OPERATIONAL REVIEW FUNDING(CONTINUED)The directors remain confident that the project is economically
127、 viable and that following the completion of the FEED and commercialisation programme,the project should be capable of attracting further new investment for the Company and the project.However the success of the Q1 2017 fundraising and a further fundraising following FID are both uncertain.Should th
128、e Group not be successful in obtaining future funding for the Islandmagee gas storage project or realising value for the project in excess of current book value,the Groups capitalised project development costs totalling 6,116,114 and amounts due to the Company from its subsidiaries amounting to 5,87
129、3,052 may become impaired in value.In addition the Company may be unable to continue as a going concern.Project management and company administration costs During 2016 every member of the management team was required to make an indispensable contribution to the effective delivery of our projects,the
130、 performance against our key performance indicators and the effective management of the risks and uncertainties our business faces.We have,however,continued to implement cost reductions.Total management and administrative expenditure is further analysed in note 5 to the financial statements,which sh
131、ows that the cash cost of management and administrative costs in the year to 31 July 2016 was 853,850(2015-1,065,161).In October 2015 the Company implemented a Performance Incentive Scheme under which voluntary salary reductions were taken in return for participation in the scheme.The scheme expired
132、 on 30 September 2016 with no incentive payments being due.Plans have been developed to restructure the teams at InfraStrata and IMSL in the coming months,to match the skill requirements for the next phase of the project,as well as to appoint necessary advisers and technical consultants.The Board of
133、 InfraStrata will be geared towards regulatory and corporate governance matters,with a focus on securing the funds to develop the project.As part of this focus and to minimise corporate overheads,InfraStrata will re-locate to Belfast in January 2017,with all of its resources being dedicated to bring
134、ing the project to construction.Andrew Hindle has stepped down from his role as CEO of InfraStrata effective 1 January 2017,but will remain a Non-Executive Director of the Company.Andrew,a Chartered Geologist,will continue to advise on the project in a technical capacity.Stewart McGarrity and Anita
135、Gardiner became Joint Managing Directors effective 1 January 2017,bringing vital and complementary skills required for the execution of the next phase of the Project.Strategic Report InfraStrata plc Annual Report and Financial Statements 2016 13 PRINCIPAL RISKS&UNCERTAINTIES The directors are respon
136、sible for the effectiveness of the Groups risk management activities and internal control processes.As a participant in the gas storage development industry,the Group is exposed to a wide range of business risks in the conduct of its operations.The Group is exposed to financial,operational,strategic
137、 and external risks which are further described below.These risks are not exhaustive and additional risks or uncertainties may arise or become material in the future.Any of these risks,as well as other risks and uncertainties in this document,could have a material effect on the Groups business.Finan
138、cing the risk of not obtaining sufficient financing Access to adequate working capital is critical to our ability to pursue our existing and future projects and to continue as a going concern.We work closely with our advisors and brokers to identify the optimum approach and timing to secure new equi
139、ty financing to provide working capital.The Group seeks to manage risk for our shareholders by attracting investment through quality partners where possible thereby minimising our own commitments to pay project development costs.We do not make financial commitments unless such funding has been secur
140、ed through joint venture partners or otherwise new investment in our projects or we have a high degree of confidence that it will be secured.Strategic and external risks-failure to manage and grow the business while creating shareholder value There is no assurance that the Groups gas storage develop
141、ment will be successful.The directors have sought to manage and mitigate the exploration risks by divesting substantially all of our exploration assets.We place a premium on recruitment and retention of suitably skilled personnel,compliance with applicable legislation and careful management of cash
142、resources and requirements.The successful progression of the Groups activities depends not only on technical success,but also on the ability of the Group to obtain appropriate financing through equity or debt financing or disposing of interests in projects or via other means.A deterioration of the c
143、apital markets may reduce our ability to raise new equity funding.Group management works closely with our advisors and brokers to identify the optimum approach and timing to secure new equity financing to provide working capital and flexibility in the way we fund our projects.We place great emphasis
144、 on regular communication with shareholders,including the release of announcements for the interim and annual results,and after significant developments.We seek to ensure that through such communication our shareholders are aware of our strategy and operations and that management has their continuin
145、g support.The Companys system of Corporate Governance is set out in the Report of the Directors on pages 14 to 18.Operational risks-damage to shareholder value,environment,personnel or communities caused by operational failures InfraStrata attracts and retains a high quality management team to manag
146、e the operational risks of our projects and ensure they are progressed in the shortest possible timescales in a cost effective manner.We have built up our core competencies in project development and have developed excellent relationships with government and public stakeholders in the geographical a
147、reas in which we operate.Our management team works alongside strong and experienced joint venture partners in all projects and is supported by a highly effective network of carefully selected service delivery specialists such as environmental consultants and drilling engineering services.In this way
148、 we seek to mitigate the potential risk that we fail to be seen to be acting in a socially responsible manner and/or fail to maintain good local community relations.On behalf of the Board Andrew Hindle,5 January 2017 Report of the Directors for the year ended 31 July 2016 InfraStrata plc Annual Repo
149、rt and Financial Statements 2016 14 The directors have pleasure in presenting their report and audited financial statements for the year ended 31 July 2016.General InfraStrata plc is incorporated and domiciled in England and Wales.Health,safety and environment There were no reportable health,safety
150、or environmental incidents during the financial year.Share capital At the date of this report 188,041,599 ordinary shares are issued and fully paid.Details of movements in share capital during the year are given in note 23 to the financial statements RESULTS AND DIVIDENDS Petroleum exploration and e
151、valuation operations have been classified as discontinued.The Group recognised cash revenue from continuing operations of 500,000(2015:408,526).Administrative expenses totalled 932,635(2015:1,144,393)of which 677,735(2015:757,473)was attributable to continuing operations.The Group generated a profit
152、 of 66,955(2015:loss of 6,106,070)including a profit of 244,569(2015:loss of 5,758,228)from discontinued operations.The profit for the current year is stated after crediting a profit on the disposal of Exploration and Evaluation assets of 453,945.The loss in 2015 was after charging impairments of Ex
153、ploration and Evaluation assets and interests in associates of 3,577,659 and 2,459,126 respectively.The profit when added to the cumulative losses of 26,828,048 brought forward leaves a retained loss of 26,761,093 to be carried forward.The directors do not recommend the payment of a dividend(2015:ni
154、l).RISK MANAGEMENT The financial risk management objectives and policies of the Company in relation to the use of financial instruments,and the exposure of the Company and its subsidiary undertakings to its main risks,credit risk and liquidity risk,are set out in note 22 to the financial statements.
155、The principal risks and uncertainties relating to the Groups business and how we mitigate them are detailed in the Strategic Report on page 13.DIRECTORS The directors,who served during the year and subsequently,were as follows:K M Ratcliff S McGarrity A E Gardiner A D Hindle M E Hazzard A Booth(resi
156、gned 11 November 2015)Report of the Directors for the year ended 31 July 2016 InfraStrata plc Annual Report and Financial Statements 2016 15 DIRECTORS(continued)All directors benefit from the provisions of individual directors Personal Indemnity insurance policies.Premiums payable to third parties a
157、re as described in note 7 to the financial statements.The Company operates a share option scheme and the particulars of share options granted to directors at 31 July 2016 are detailed in note 7 to the financial statements.Directors of the Company at the date of this Annual Report and their abridged
158、CVs for their roles as at 31 July 2016 are as follows:Ken Ratcliff(Non-Executive Chairman)Ken Ratcliff,JP,BSc,FCA,is a Chartered Accountant with extensive finance and business experience.He was formerly the College Accountant at Epsom College and co-founder of Geokinetics Processing UK Limited,an oi
159、l and gas industry seismic contractor.He was an audit manager with Touche Ross&Co in London before moving into accountancy and finance positions within the oil and gas industry in 1978.Ken has previously held senior management positions with Ensign Geophysics Limited,Seismic Geocode Limited,Tenneco
160、Corporation and Merlin Geophysical Limited.He joined the Board in 2007 and became Chairman in October 2007.Ken has been a non-executive director of Egdon Resources plc since 2001.Stewart McGarrity(Joint Managing Director)Stewart McGarrity,BCom,CA,has 30 years of UK and international experience in bo
161、th senior finance and commercial roles.Following qualification as a Chartered Accountant,Stewart spent a number of years with Deloitte in Zimbabwe and Hong Kong in senior audit and technical roles.Stewart then held a senior financial position with the Airport Authority in Hong Kong during the constr
162、uction and commercial development of Hong Kong International Airport.Since returning to the UK he has worked with property investor and developer MEPC plc,based in London as Group Financial Controller and with tie Limited,in Edinburgh,developing and maintaining the business case for Edinburgh Trams
163、and other transport projects.Anita Gardiner(Joint Managing Director)Anita Gardiner,BA,MA,MCIPS graduated from Queens University,Belfast and started her career at the Prudential plc where she worked in a number of commercial roles in procurement and supply chain,real estate and operations.She moved t
164、o BP in 2005 and held various project and managerial positions in the UK and India,most recently as Business Development Manager for BP Gas Marketing where she had responsibility for asset development and origination activities across Europe.Andrew Hindle(Non-Executive Director)Andrew Hindle,BSc,MSc
165、,PhD,FGS,CGeol,is a highly experienced geologist with over 30 years worldwide experience.He holds a degree in Geological Sciences gained in 1983 from Leeds University and,following a year with BP,gained a MSc.degree in Petroleum Geology in 1985 from Aberdeen University.In 1998 he completed a PhD(par
166、t-time)through the Open University.He received the J.C.“Cam”Sproule Memorial Award from the American Association of Petroleum Geologists in 1999.He worked for Texaco from 1985 until 1996 on UK and international petroleum exploration and development projects,working overseas from 1990 to 1994.Subsequ
167、ently,he worked for Anadarko Algeria Corporation from 1996 to 1997.In 1997 he became a founding director of Egdon Resources plc and,following the demerger of Egdon and InfraStrata,remained a non-executive director of Egdon until February 2011.Andrew was the Chief Executive of the Group from the deme
168、rger in 2008 till 1 January 2017.Andrew is also a director of Geofocus Limited and Toffee Limited.Maurice Hazzard(Non-Executive Director)Maurice Hazzard,has extensive business experience in the oil and gas industry,particularly in large offshore projects.He has held senior positions with Phillips Pe
169、troleum,Hamilton Bros.Oil&Gas Limited and Halyard Offshore Limited.Between 1979 and 1989 Maurice was responsible for development of the Energy Division of the Tung Group of companies,based in Hong Kong,and during this period was Executive Chairman of Houlder Marine Drilling Limited.From 1989 to 1996
170、 he was a consultant with Maritime Audit&Technical Services Limited,consulting to the international offshore oil and marine services industry.From 1996 to 1999 he was Chairman and CEO of PD Systems International Limited,a UK electronics manufacturer.Report of the Directors for the year ended 31 July
171、 2016 InfraStrata plc Annual Report and Financial Statements 2016 16 DIRECTORS EMOLUMENTS The directors emoluments are disclosed in note 7 to the Financial Statements.DIRECTORS AND SUBSTANTIAL SHAREHOLDINGS The directors of the Company held the following beneficial shareholdings as at 30 November 20
172、16:Ordinary shares of 1p each Number%Ken Ratcliff 154,000 0.08 Andrew Hindle 9,737,625 5.18 Stewart McGarrity 1,000,000 0.53 Anita Gardiner-Maurice Hazzard 69,326 0.04 The Company has also received notification of the following interests in 3%or more of the Companys issued share capital at 30 Novemb
173、er 2016.The holdings and percentages presented are at the date of notification.Ordinary shares of 1p each Number%Legal&General Investment Management Ltd 17,975,000 9.56 AXA Investment Managers S.A.12,500,000 6.65 Mark Abbott 5,739,545 3.78 Eugene Whyms 5,659,725 3.72 Peter V Wale 6,163,950 3.28 CORP
174、ORATE GOVERNANCE The UK Corporate Governance Code The directors recognise the value of the UK Corporate Governance Code(“the Code”)and whilst under the AIM Rules compliance with the Code is not required the directors have regard to the recommendations of the Code in so far as is appropriate for a pu
175、blic company of its size.The Board At the financial year end the Board was comprised of three Executive Directors and two Non-executive directors whose background and experience are relevant to the Companys activities.The directors are of the opinion that the Board has a suitable balance.The Board,t
176、hrough the directors,maintain regular contact with its advisors and public relations consultants in order to ensure that the Board develops an understanding of the views of major shareholders about the Company.All directors have access to the advice and services of the company secretary who is respo
177、nsible to the Board for ensuring that the Board procedures are followed and that the applicable rules and regulations are complied with.In addition,the company secretary will ensure that the directors receive appropriate training as necessary.The appointment and removal of the company secretary is a
178、 matter for the Board as a whole.The table below contains details on the number of meetings held during the period and individual director attendance.Board Audit Committee Remuneration Committee Number of meetings held during the 2016 financial year 16 2 3 No.of meetings attended No.of meetings atte
179、nded No.of meetings attended Executive Directors Andrew Hindle 16-Stewart McGarrity 16-Anita Gardiner 16-Non-executive Directors Ken Ratcliff 14 2 4 Maurice Hazzard 14 2 4 Alan Booth(resigned 11 November 2015)3-Of which two were with limited attendance as they were to finalise business already appro
180、ved by all directors.Report of the Directors for the year ended 31 July 2016 InfraStrata plc Annual Report and Financial Statements 2016 17 CORPORATE GOVERNANCE(continued)Audit Committee The Audit Committee met twice in the year to 31 July 2016.Its members currently are Ken Ratcliff(Chairman)and Mau
181、rice Hazzard.Members of the committee attended all meetings either in person or by telephone.Senior representatives of the external auditors attend these meetings if considered appropriate.The external auditor has unrestricted access to the Chairman of the committee.The role of the Audit Committee i
182、ncludes:Consideration of the appointment of the external auditor and the audit fee.Reviewing the nature,scope and results of the external audit.Monitoring the integrity of the financial statements and interim report.Discussing with the Groups auditors problems and reservations arising from the inter
183、im and final results.Reviewing the external auditors management letter and managements response.Reviewing on behalf of the Board the Groups system of internal control and making recommendations to the Board.The Committee also keeps under review the necessity for establishing an internal audit functi
184、on but considers that,given the size of the Group and the close involvement of senior management in day-to-day operations,there is currently no requirement for such a function.Notwithstanding the absence of an internal audit function,the Committee keeps under review the effectiveness of the Groups i
185、nternal controls and risk management systems.Remuneration Committee The members of the Remuneration Committee are Maurice Hazzard(Chairman)and Ken Ratcliff.The committee met four times during the year.The Groups policy is to remunerate senior executives fairly in such a manner as to facilitate the r
186、ecruitment,retention and motivation of staff.The Remuneration Committee recommends to the Board a framework for the remuneration of the Executive Directors and the senior management of the Group.The principal objectives of the Committee include:Determining and recommending to the Board the remunerat
187、ion policy for the Chief Executive and Executive Directors.Reviewing the design of share incentive plans for approval by the Board and determining the annual award policy to Executive Directors under existing plans.On 1 October 2015 the Company implemented a Performance Incentive Scheme under which
188、voluntary salary reductions were taken to preserve the Groups cash resources.The scheme ended on 30 September 2016 without the crystallisation of any incentive payments under the scheme.The Committee remains acutely aware of the need to balance the financial performance of the Company with the need
189、to maintain incentive and motivation for the executive team.Relations with Shareholders Communication with shareholders is given high priority and the Company therefore communicates regularly with shareholders including the release of announcements for the interim and annual results and after signif
190、icant developments.The Annual General Meeting is normally attended by all directors.Shareholders,including private investors,are invited to ask questions on matters including the Groups operations and performance and to meet with the directors after the formal proceedings have ended.The Company main
191、tains a website(www.infraStrata.co.uk)for the purpose of improving information flow to shareholders as well as potential investors.The website contains all regulatory and press announcements and financial reports as well as extensive operational information about the Groups activities and enquiries
192、from individual shareholders on matters relating to their shareholdings and the business of the Group are welcomed.The Board encourages shareholders to attend the Annual General Meeting,at which members of the Board are available to answer questions.Allenby Capital Limited,the companys Nominated Adv
193、isor and broker,actively researches the Company and its business followed by research notes being issued.Report of the Directors for the year ended 31 July 2016 InfraStrata plc Annual Report and Financial Statements 2016 18 CORPORATE GOVERNANCE(continued)Internal controls The directors are responsib
194、le for the Groups system of internal controls,the setting of appropriate policies on those controls,and regular assurance that the system is functioning effectively and that it is effective in managing business risk.Internal control systems are designed to meet the particular needs of the Group and
195、to manage rather than eliminate the risk of failure to meet business objectives.The internal controls cover financial,operational and compliance matters and are reviewed on an on-going basis.The directors consider that the frequency of Board meetings and the information provided to the Board in rela
196、tion to Group operations assists the identification,evaluation and management of significant risks relevant to its operations on a continuous basis.The Groups internal controls can only provide reasonable and not absolute assurance against material misstatement or loss or the risk of failure to meet
197、 business objectives.Having thus monitored risk management and internal control processes in place,the Board considers that the Companys internal control systems operated appropriately during the year and up to the date of signing of the Annual Report and Financial Statements.GOING CONCERN The direc
198、tors have prepared the financial statements on the going concern basis which assumes that the Group will continue in operational existence for the foreseeable future.The basis of this assumption is detailed in the Strategic Report and the accounting policies in note 2 to the financial statements.DIR
199、ECTORS RESPONSIBILITIES The directors are responsible for preparing the Strategic Report,the Report of the Directors and the financial statements in accordance with applicable law and regulations.UK Company law requires the directors to prepare Group and Company financial statements for each financi
200、al year.Under that law the directors have elected(as required by the rules of the AIM market of the London Stock Exchange)to prepare Group financial statements in accordance with International Financial Reporting Standards(“IFRS”)as adopted by the European Union(“EU”)and have elected to prepare the
201、Company financial statements in accordance with IFRS as adopted by the EU and as applied in accordance with the provisions of the Companies Act 2006.The Group financial statements are required by law and IFRS adopted by the EU to present fairly the financial position and performance of the Group;the
202、 Companies Act 2006 provides in relation to such financial statements that references in the relevant part of that Act to financial statements giving a true and fair view are references to their achieving a fair presentation.Under company law the directors must not approve the financial statements u
203、nless they are satisfied that they give a true and fair view of the state of affairs of the Company and of the Group and of the profit or loss of the Group for that period.In preparing each of the Group and Company financial statements,the directors are required to:select suitable accounting policie
204、s and then apply them consistently;make judgements and estimates that are reasonable and prudent;state whether they have been prepared in accordance with IFRSs as adopted by the EU;and prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group an
205、d the Company will continue in business.The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Companys transactions and disclose with reasonable accuracy at any time the financial position of the Company and to enable them to ensure that th
206、e financial statements comply with the Companies Act 2006.They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.The directors are responsible for the maintenance and integrity of t
207、he corporate and financial information included on the InfraStrata plc website.Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.Report of the Directors for the year ended 31 July 2016 InfraStrata
208、plc Annual Report and Financial Statements 2016 19 DISCLOSURE OF INFORMATION TO THE AUDITOR In the case of each person who was a director at the time this report was approved:-so far as the director was aware there was no relevant audit information of which the Companys auditor was unaware;and the d
209、irector had taken all steps that the director ought to have taken as a director to make himself or herself aware of any relevant audit information and to establish that the Companys auditor was aware of that information.This information is given and should be interpreted in accordance with the provi
210、sions of s418 of the Companies Act 2006.AUDITOR A resolution to re-appoint the auditor,Nexia Smith&Williamson,will be proposed at the forthcoming Annual General Meeting.On behalf of the Board A Hindle Director 5 January 2017Independent auditors report to the members of InfraStrata plc InfraStrata pl
211、c Annual Report and Financial Statements 2016 20 We have audited the financial statements of InfraStrata plc for the year ended 31 July 2016 which comprise the Consolidated Statement of Comprehensive Income,the Consolidated and Parent Company Statements of Financial Position,the Consolidated and Par
212、ent Company Statements of Cash Flow,the Consolidated and Parent Company Statements of Changes in Equity,and the related notes 1 to 30.The financial reporting framework that has been applied in their preparation is applicable law and International Financial Reporting Standards(IFRSs)as adopted by the
213、 European Union and as regards the parent Company financial statements,as applied in accordance with the provisions of the Companies Act 2006.This report is made solely to the companys members,as a body,in accordance with Chapter 3 of Part 16 of the Companies Act 2006.Our audit work has been underta
214、ken so that we might state to the Companys members those matters we are required to state to them in an auditors report and for no other purpose.To the fullest extent permitted by law,we do not accept or assume responsibility to anyone other than the Company and the Companys members as a body,for ou
215、r audit work,for this report,or for the opinions we have formed.Respective responsibilities of directors and auditor As explained more fully in the Directors Responsibilities Statement on pages 18 and 19,the directors are responsible for the preparation of the financial statements and for being sati
216、sfied that they give a true and fair view.Our responsibility is to audit and express an opinion on the financial statements in accordance with applicable law and International Standards on Auditing(UK and Ireland).Those standards require us to comply with the Financial Reporting Councils(FRCs)Ethica
217、l Standards for Auditors.Scope of the audit of the financial statements A description of the scope of an audit of financial statements is provided on the FRCs website at www.frc.org.uk/auditscopeukprivate.Opinion on financial statements In our opinion:the financial statements give a true and fair vi
218、ew of the state of the Groups and the parent Companys affairs as at 31 July 2016 and of the Groups loss for the year then ended;the Group financial statements have been properly prepared in accordance with IFRSs as adopted by the European Union;and the parent Company financial statements have been p
219、roperly prepared in accordance with IFRSs as adopted by the European Union and as applied in accordance with the provisions of the Companies Act 2006;and the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.Emphasis of matter carrying value of the
220、 Groups development costs relating to the Islandmagee gas storage facility and the amounts due to the Company from its subsidiaries In forming our opinion on the financial statements,which is not modified,we have considered the adequacy of the disclosure made in note 2 to the financial statements co
221、ncerning the Groups development costs relating to the proposed Islandmagee gas storage facility with a carrying value of 6,116,114 and the balances of 5,873,052 due to the company from its subsidiaries.As described in note 2,to continue to develop the Groups Islandmagee gas storage facility and to e
222、nable the Company to recover balances due to it from its subsidiaries,the Group is dependent upon securing further funds in 2017.The financial statements do not include the impairment of the Groups development costs relating the project or the impairment of the Companys balances due from its subsidi
223、aries that would result if the Group were unable to raise such funds.Independent auditors report to the members of InfraStrata plc InfraStrata plc Annual Report and Financial Statements 2016 21 Emphasis of matter going concern In forming our opinion on the financial statements,which is not modified,
224、we have considered the adequacy of the disclosure made in note 2 to the financial statements concerning the Groups and the Companys ability to continue as going concerns.Financial projections prepared by the directors show that future funding is required in 2017 for the Group and the Company to cont
225、inue to develop the Islandmagee project and to continue as going concerns.If such funding is not available,the Group and Company would need to seek alternative sources of funding to enable them to meet their liabilities as they fall due for the foreseeable future.These conditions indicate the existe
226、nce of a material uncertainty which may cast significant doubt about the Group and Companys abilities to continue as going concerns.The financial statements do not include the adjustments that would result if the Group and/or Company were unable to continue as going concerns.Opinion on other matter
227、prescribed by the Companies Act 2006 In our opinion the information given in the Strategic Report and the Report of the directors for the financial year for which the financial statements are prepared is consistent with the financial statements.Matters on which we are required to report by exception
228、 We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if,in our opinion:adequate accounting records have not been kept by the parent Company,or returns adequate for our audit have not been received from branches not visited by us;or
229、the parent Company financial statements are not in agreement with the accounting records and returns;or certain disclosures of directors remuneration specified by law are not made;or we have not received all the information and explanations we require for our audit.Guy Swarbreck Senior Statutory Aud
230、itor,for and on behalf of Nexia Smith&Williamson Statutory Auditor Chartered Accountants Walnut Tree Close 1 Bishops Wharf Walnut Tree Close Guildford,GU1 4RA 5 January 2017 Consolidated statement of comprehensive income for the year ended 31 July 2016 InfraStrata plc Annual Report and Financial Sta
231、tements 2016 22 Notes 2016 2015 Continuing operations Revenue 4 500,000 408,526 Cost of sales -Gross profit 500,000 408,526 Management and administrative expenses 5 (677,735)(757,473)Operating loss (177,735)(348,947)Finance income 10 121 1,105 Loss before taxation (177,614)(347,842)Taxation 11 -Loss
232、 for the year from continuing operations 3 (177,614)(347,842)Profit(loss)for the year from discontinued operations 3 244,569 (5,758,228)Profit(loss)for the year attributable to the equity holders of the parent 66,955 (6,106,070)Other comprehensive income -Total comprehensive profit(loss)for the year
233、 attributable to the equity holders of the parent 66,955 (6,106,070)Basic and diluted earnings per share 12 Continuing operations Discontinued operations Continuing and discontinued operations (0.10)p 0.14p 0.04p (0.28)p(4.72)p(5.00)p Consolidated statement of financial position as at 31 July 2016 I
234、nfraStrata plc Annual Report and Financial Statements 2016 23 Notes 2016 2015 Non-current assets Intangible fixed assets:Gas Storage Development Exploration&Evaluation Property,plant and equipment 14 15 16 6,116,114 19,459 440,744 5,704,951 429,139 440,453 Investments in associates 17 -600 Total non
235、-current assets 6,576,317 6,575,143 Current assets Trade and other receivables 18 1,182,572 300,408 Grant receivable 19 -1,066,306 Restricted cash 19 1,358,063 -Cash and cash equivalents 20 2,454,006 430,199 Total current assets 4,994,641 1,796,913 Current liabilities Trade and other payables 21 (1,
236、693,055)(754,791)Grant received in advance 19 (1,358,886)-Short-term convertible borrowings 19 (1,400,364)(1,000,000)Total current liabilities (4,452,305)(1,754,791)Net current assets 542,336 42,122 Net assets 7,118,653 6,617,265 Shareholders funds Share capital 23 10,834,660 10,474,160 Share premiu
237、m 13,440,878 13,379,415 Merger reserve 24 8,988,112 8,988,112 Share based payment reserve 25 616,096 603,626 Retained earnings (26,761,093)(26,828,048)Total equity 7,118,653 6,617,265 Company registration number:06409712 Approved and authorised for issue by the Board on 5 January 2017 A Hindle S McG
238、arrity Director Director Company statement of financial position as at 31 July 2016 InfraStrata plc Annual Report and Financial Statements 2016 24 Notes 2016 2015 Non-current assets Intangible exploration assets 15 19,459 280,877 Property,plant and equipment Investments 16 17 644-353 600 Total non-c
239、urrent assets 20,103 281,830 Current assets Trade and other receivables 18 7,049,850 5,377,201 Grant receivable 19 -1,066,306 Restricted cash 19 1,358,063 -Cash and cash equivalents 20 2,442,818 256,192 Total current assets 10,850,731 6,699,699 Current liabilities Trade and other payables 21 (1,631,
240、577)(658,436)Grant received in advance 19 (1,358,886)-Short-term convertible borrowings 19 (1,400,364)(1,000,000)Total current liabilities (4,390,827)(1,658,436)Net current assets 6,459,904 5,041,263 Net assets 6,480,007 5,323,093 Shareholders funds Share capital 23 10,834,660 10,474,160 Share premi
241、um 13,440,878 13,379,415 Merger reserve 24 8,466,827 8,466,827 Share based payment reserve 25 616,096 603,626 Retained earnings (26,878,454)(27,600,935)Total equity 6,480,007 5,323,093 Company registration number:06409712 Approved and authorised for issue by the Board on 5 January 2017 A Hindle S Mc
242、Garrity Director Director Consolidated statement of changes in equity for the year ended 31 July 2016 InfraStrata plc Annual Report and Financial Statements 2016 25 Share capital Share premium Merger reserve Share based payment reserve Retained earnings Total equity Balance at 31 July 2014 9,949,160
243、 11,920,219 8,988,112 530,410(20,721,978)10,665,923 Loss for the year-(6,106,070)(6,106,070)Total comprehensive loss for the year-(6,106,070)(6,106,070)Shares issued 525,000 1,459,196-1,984,196 Share based payments-73,216-73,216 Balance at 31 July 2015 10,474,160 13,379,415 8,988,112 603,626(26,828,
244、048)6,617,265 Profit for the year-66,955 66,955 Total comprehensive profit for the year-66,955 66,955 Shares issued 360,500 61,463-421,963 Share based payments-12,470-12,470 Balance at 31 July 2016 10,834,660 13,440,878 8,988,112 616,096(26,761,093)7,118,653 Company statement of changes in equity fo
245、r the year ended 31 July 2016 InfraStrata plc Annual Report and Financial Statements 2016 26 Share capital Share premium Merger reserve Share based payment reserve Retained earnings Total equity Balance at 31 July 2014 9,949,160 11,920,219 8,466,827 530,410(26,467,225)4,399,391 Loss for the year-(1,
246、133,710)(1,133,710)Total comprehensive loss for the year-(1,133,710)(1,133,710)Shares issued 525,000 1,459,196-1,984,196 Share based payments-73,216 -73,216 Balance at 31 July 2015 10,474,160 13,379,415 8,466,827 603,626(27,600,935)5,323,093 Profit for the year-722,481 722,481 Total comprehensive pr
247、ofit for the year-722,481 722,481 Shares issued 360,500 61,463-421,963 Share based payments-12,470 -12,470 Balance at 31 July 2016 10,834,660 13,440,878 8,466,827 616,096(26,878,454)6,480,007 Consolidated statement of cash flows for the year ended 31 July 2016 InfraStrata plc Annual Report and Finan
248、cial Statements 2016 27 Notes 2016 2015 Operating activities Operating loss for the year (177,735)(348,947)Depreciation 167 71 Increase in trade and other receivables (882,164)(155,585)Increase(Decrease)in trade and other payables 938,264 (81,496)Share option expense 12,470 73,216 Exchange differenc
249、es 33,301 -Cash(used in)discontinued operations (180,933)(381,340)Net cash(used in)continuing and discontinued operating activities (256,630)(894,081)Investing activities Interest received 121 1,105 Purchase of intangible assets:Gas Storage Development Exploration and Evaluation(discontinued)(608,76
250、0)(43,158)(3,663,514)(179,732)Proceeds from Exploration and Evaluation assets(discontinued):Disposals Receipt of back costs under farmout agreements 626,459 252,481 -Grants received 2,689,852 533,694 Purchase of equipment (458)(424)Net cash generated from(used in)investing activities 2,916,537 (3,30
251、8,871)Financing activities Proceeds on issue of ordinary shares 421,963 1,984,196 Drawdown of short-term borrowings 300,000 1,000,000 Net cash generated from financing activities 721,963 2,984,196 Net increase(decrease)in cash and cash equivalents 3,381,870 (1,218,756)Cash and cash equivalents at be
252、ginning of year 430,199 1,648,955 Cash and cash equivalents at end of year 3,812,069 430,199 Cash and cash equivalents consist of:Restricted cash 19 1,358,063 -Cash at bank 20 2,454,006 430,199 3,812,069 430,199 Significant non-cash transactions As disclosed in note 19,at 31 July 2015 the Group had
253、accrued 1,066,306 as the portion of the Grant from the European Commission in respect of the Islandmagee gas storage project attributable to work done at that date.This accrual is a non-cash item,as are the impairment charges of 28,443(2015 6,072,785);therefore these items do not appear in the state
254、ment of cash flows.Company statement of cash flows for the year ended 31 July 2016 InfraStrata plc Annual Report and Financial Statements 2016 28 Notes 2016 2015 Operating activities Operating profit(loss)for the year 329,529 (753,475)Impairment of intercompany receivables -523,650 Depreciation 167
255、71 Increase in trade and other receivables (1,870,246)(3,361,643)Increase(Decrease)in trade and other payables 973,141 (122,029)Share option expense 12,470 73,216 Exchange differences 33,301 -Cash(used in)discontinued operations (180,933)(381,340)Net cash(used in)continuing and discontinued operatin
256、g activities (702,571)(4,021,550)Investing activities Interest received 121 1,105 Purchase of exploration intangible assets(discontinued)(43,158)(179,732)Proceeds from Exploration and Evaluation assets(discontinued):Disposals Receipt of back costs under farmout agreements 626,459 252,481 -Grants rec
257、eived 2,689,852 533,694 Purchase of equipment (458)(424)Net cash generated from investing activities 3,525,297 354,643 Financing activities Proceeds on issue of ordinary shares 421,963 1,984,196 Drawdown of short-term borrowings 300,000 1,000,000 Net cash generated from financing activities 721,963
258、2,984,196 Net increase(decrease)in cash and cash equivalents 3,544,689 (682,711)Cash and cash equivalents at beginning of year 256,192 938,903 Cash and cash equivalents at end of year 3,800,881 256,192 Cash and cash equivalents consist of:Restricted cash 19 1,358,063 -Cash at bank 20 2,442,818 256,1
259、92 3,800,881 256,192 Significant non-cash transactions As disclosed in note 19,at 31 July 2015 the Group had accrued 1,066,306 as the portion of the Grant from the European Commission in respect of the Islandmagee gas storage project attributable to work done at that that date.This accrual is a non-
260、cash item and therefore does not appear in the in the statement of cash flows.Notes to the financial statements for the year ended 31 July 2016 InfraStrata plc Annual Report and Financial Statements 2016 29 1.General information InfraStrata plc is a company incorporated in England&Wales under the Co
261、mpanies Acts 2006 and is domiciled in the United Kingdom and is listed on the AIM market of the London Stock Exchange.2.Accounting policies The financial statements are based on the accounting policies set out below which have been consistently applied.Basis of preparation InfraStrata plc adopted In
262、ternational Financial Reporting Standards(IFRS)as adopted by the European Union effective in July 2016,as the basis for preparation of its financial statements.The financial information has been prepared under the historical cost convention as modified by the revaluation of certain financial assets.
263、Going concern All future exploration costs associated with retained licence interests will continue to be funded by joint venture partners.The next phase of the development of the Islandmagee gas storage project is the completion of the FEED and commercialisation programme which will take to the end
264、 of December 2017 at a total estimated cost including all the Groups financial commitments during that period of 6 million.Of that total 3m is being met by a grant from the EU and loans from the selected FEED contractors leaving a further 3m additional funding requirement.On 5 January 2017 the Compa
265、ny entered into a secured loan agreement with Baron Oil plc for a facility of up to 300,000 to provide working capital for the Group.This Loan is for a term of 12 months from the date of the loan agreement.Baron is entitled,acting in its sole discretion,to extend the term of the loan agreement by an
266、 additional 12 months.After preparing cash flow forecasts the directors have concluded that this facility would provide sufficient funding to meet the Companys minimum level of management and administrative expenditure and to make necessary payments in relation to the maintenance of the Islandmagee
267、gas storage for a period of 12 months to the end of December 2017 but not to undertake the FEED and commercialisation programme.The directors anticipate that the additional funding of 3.0m required to complete the FEED and commercialisation programme during 2017 and to repay the new Baron loan can b
268、e secured through an equity fundraising in the first quarter of 2017.However the timing and success of such fundraising cannot be guaranteed.After preparing cash flow forecasts,making enquiries and considering the loan facility from Baron Oil plc and the intention to raise the additional funding as
269、described above,the directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future.For these reasons,they continue to adopt the going concern basis of accounting in preparing the annual financial statements.Following the
270、completion of the FEED and commercialisation programme at the end of 2017 the project will be ready to move into construction and delivery and at that time the Company will further evaluate the optimum way to structure the funding of the initiation and delivery of that programme for our shareholders
271、 and will evaluate the available sources of funding,including both debt and equity participation,to fund both the continuing operations of the Company beyond December 2017 and the commencement of construction.The full project construction is expected to be delivered over a number of years at an aggr
272、egate cost of approximately 300 million and to be delivered on a phased basis.The directors remain confident that the project is economically viable and that following the completion of the FEED and commercialisation programme,further new investment for the Company and the project will be secured.Ha
273、ving reviewed the value of gas storage assets in accordance with the principles set out below,and the value of balances due to the Company from its subsidiaries,the directors are of the opinion that these assets are not impaired in value.However the success of the 2017 fundraising is uncertain.The d
274、irectors have concluded that a material uncertainty exists that may cast significant doubt upon the Groups ability to continue as a going concern and therefore the Group may be unable to realise its assets and discharge its liabilities in the normal course of business.Were the Group no longer a goin
275、g concern,the Groups capitalised project development costs totalling 6,116,114 and amounts due to the Company from its subsidiaries amounting to 5,873,052 may become impaired in value,provision would be required for the future liabilities arising as a consequence of the Group ceasing business and as
276、sets and liabilities currently classified as non-current would be reclassified as current.Notes to the financial statements for the year ended 31 July 2016 InfraStrata plc Annual Report and Financial Statements 2016 30 2.Accounting policies(continued)Adoption of new and revised standards IFRS 9 Fina
277、ncial Instruments and IFRS 15 Revenue from Contracts with Customers have been adopted by the EU and minor changes to other standards arising from annual improvements have been issued but are yet to be adopted.None of these standards are expected to have a material effect on the Group financial state
278、ments.IFRS 16 Leases has also been issued and may have an impact on the Group financial statements,as leases it may require future payments made under operating leases to be capitalised.The Group will assess the impact of the new standard in the Group in due course.Basis of consolidation The financi
279、al information incorporates the financial information of the Company and entities controlled by the Company.Control is achieved where the Company has power to govern the financial and operating policies of an investee entity so as to obtain benefits from its activities.Business combinations and good
280、will On acquisition,the assets and liabilities and contingent liabilities of subsidiaries are measured at their fair values at the date of acquisition.Any excess of cost of acquisition over the fair values of the identifiable net assets acquired is recognised as goodwill.Any deficiency of the cost o
281、f acquisition below the fair values of the identifiable net assets acquired(i.e.discount on acquisition)is credited to profit or loss in the period of acquisition.Goodwill arising on consolidation is recognised as an asset and reviewed for impairment at least annually.Any impairment is recognised im
282、mediately in the income statement and is not subsequently reversed.Oil and gas exploration joint operations The Group is engaged in oil and gas exploration and development which may lead to production through unincorporated joint operations.The Group accounts for its share at cost of the results and
283、 net assets of these joint operations as jointly controlled assets based on its percentage ownership of these joint operations.In addition,where the Group acts as operator to the jointly controlled operation,the gross liabilities and receivables(including amounts due to and from non-operating partne
284、rs)of the jointly controlled operation are included in the statement of financial position.Details of the Groups oil&gas exploration joint operations accounted for as jointly controlled assets are provided in note 28.Farm-outs in the exploration and evaluation phase The Group does not record any exp
285、enditure made by the farminee on its account.In entering into a farm-out arrangement any costs previously capitalised in relation to the whole interest are re-designated as relating to the partial interest retained.Any cash consideration received directly from the farminee is credited against costs
286、previously capitalised in relation to the whole interest with any excess accounted for as a gain on disposal.Interests in associates The Group has interests in associates,which are entities over which the Group has significant influence but not control and which are not joint ventures.The Group reco
287、gnises its interest in associates using equity accounting.The financial statements of the associates are prepared for the same reporting year as the parent company,using consistent accounting policies.Notes to the financial statements for the year ended 31 July 2016 InfraStrata plc Annual Report and
288、 Financial Statements 2016 31 2.Accounting policies(continued)Segment reporting Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker as required by IFRS 8“Operating Segments”.The chief operating decision-maker,who is respon
289、sible for allocating resources and assessing performance of the operating segments,has been identified as the Board of directors.The accounting policies of the reportable segments are consistent with the accounting policies of the Group as a whole.Segment profit or loss represents the profit or loss
290、 attributable to equity holders of the parent attributable to each segment.This is the measure of profit that is reported to the Board of directors for the purpose of resource allocation and the assessment of segment performance.When assessing segment performance and considering the allocation of re
291、sources,the Board of directors review information about segment assets and liabilities.Property plant and equipment Property plant and equipment is stated at cost less accumulated depreciation and any recognised impairment loss.The initial cost of an asset comprises its purchase price or constructio
292、n cost and any costs directly attributable to bringing the asset into operation.Depreciation is charged so as to write off the cost of assets,over their estimated useful lives,using the straight-line method,once the asset has been brought into use,on the following basis:Office equipment 20-33%Freeho
293、ld land 0%The carrying values of property plant and equipment are reviewed for impairment when events or changes in circumstances indicate that the carrying value may not be recoverable.Capitalisation and impairment of intangible gas storage assets Costs of development of gas storage facilities are
294、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 cer
295、tainty 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
296、 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
297、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 impairmen
298、t test purposes is generally an individual gas storage facility.Where the carrying value of the facility is greater than the present value of its future cash flows a provision is made.Any such provisions are charged to cost of sales.Oil&gas exploration and evaluation expenditure and assets The Group
299、 accounts for oil&gas expenditure under the full cost accounting method.Pre-licence costs(other than payments to acquire rights to explore)are those costs incurred prior to acquiring the rights to explore and are charged directly to the statement of comprehensive income.All costs incurred after the
300、rights to explore an area have been obtained,such as geological,geophysical,data costs and other direct costs of exploration and appraisal are accumulated and capitalised as exploration and evaluation assets(“E&E”).E&E costs are not amortised prior to the conclusion of appraisal activities.If techni
301、cal feasibility is demonstrated and commercial reserves are discovered,then following development sanction,the carrying value of the relevant E&E asset will be reclassified as a development and production asset,but only after the carrying value of the E&E asset has been assessed for impairment,and w
302、here appropriate,its carrying value adjusted.Development assets will be depreciated on the unit production method.Notes to the financial statements for the year ended 31 July 2016 InfraStrata plc Annual Report and Financial Statements 2016 32 2.Accounting policies(continued)Oil&gas exploration and e
303、valuation expenditure and assets(continued)If after completion of appraisal activities in an area,it is not possible to determine technical feasibility or commercial viability,then the costs of such unsuccessful exploration and evaluation are written off to the statement of comprehensive income as a
304、 component of costs of sales in the period the relevant events occur.The costs associated with any wells which are abandoned are fully amortised when the abandonment decision is taken.Government grants Government grants are recognised only when there is reasonable assurance that the Group will compl
305、y 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.Investments Investments in subsidiaries are stated at cost less provis
306、ion for impairments.Taxation Tax expense represents the sum of the tax currently payable and any deferred tax.The taxable result differs from the net result as reported in the statement of comprehensive income because it excludes items of income or expense that are taxable or deductible in other yea
307、rs and it further excludes items that are never taxable or deductible.The Groups liability for current tax is calculated using tax rates that have been enacted or substantially enacted by the statement of financial position date.Deferred tax is the tax expected to be payable or recoverable on differ
308、ences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit,and is accounted for using the balance sheet liability method.Deferred tax liabilities are generally recognised for all taxable temporary
309、 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 init
310、ial 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 Gr
311、oup 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 long
312、er 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 statemen
313、t 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 liab
314、ilities and when they relate to income taxes levied by the same taxation authority and the Group intends to settle its current assets and liabilities on a net basis.Foreign currency Transactions in foreign currency are recorded at the rates of exchange prevailing on the dates of the transactions.At
315、each statement of financial position date,monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the statement of financial position date and gains or losses are taken to operating profit.Leases Leases are classified as finance leases o
316、r hire purchase lease contracts whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee.All other leases are classified as operating leases.Rental costs under operating leases are charged on a straight-line basis over the lease term.Notes to the fi
317、nancial statements for the year ended 31 July 2016 InfraStrata plc Annual Report and Financial Statements 2016 33 2.Accounting policies(continued)Share based payment transactions Employees(including senior executives)of the Group receive part of their remuneration in the form of share based payment
318、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,
319、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 Groups best esti
320、mate 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,e
321、xcept 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 veste
322、d 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 modifica
323、tion of the original award,as described in the previous paragraph.Retirement benefit costs The Company has a defined contribution plan which requires contributions to be made into an independently administered fund.The amount charged to the statement of comprehensive income in respect of pension cos
324、ts reflects the contributions payable in the year.Differences between contributions payable during the year and contributions actually paid are shown as either accrued liabilities or prepaid assets in the statement of financial position.Financial instruments Financial assets and financial liabilitie
325、s are recognised on the statement of financial position when the Group becomes a party to the contractual provisions of the instrument.Trade,other receivables and cash and cash equivalents are measured at initial recognition at fair value and are subsequently measured at amortised cost using the eff
326、ective interest method.A provision is established when there is objective evidence that the Group will not be able to collect all amounts due.The amount of any provision is recognised in the statement of comprehensive income.Cash and cash equivalents comprise cash held by the Group,short-term bank d
327、eposits with an original maturity of three months or less,and cash held in escrow(“restricted cash”).Restricted cash relates to amounts held in escrow which may only be used to repay the Baron Oil loan.Trade and other payables are initially measured at fair value,and are subsequently measured at amo
328、rtised cost,using the effective interest rate method.Financial liabilities and equity instruments issued by the Group are classified in accordance with the substance of the contractual arrangements entered into and the definitions of a financial liability and an equity instrument.Equity instruments
329、issued by the Company are recorded at the proceeds received,net of direct issue costs.Convertible financial instruments denominated in foreign currencies are not treated as compound financial instruments on initial recognition or subsequently,including when the repayment of the instrument is agreed
330、at a specific sterling rate using funds held in escrow.Interest bearing bank loans,overdrafts and other loans are recorded at the proceeds received,net of direct issue costs.Finance costs are accounted for on an accruals basis in the statement of comprehensive income using the effective interest met
331、hod.Revenue Revenue is recognised as the fair value of the consideration received or receivable and represents the amounts receivable for services delivered during the normal course of business.Revenue is recognised as the services are delivered.Notes to the financial statements for the year ended 3
332、1 July 2016 InfraStrata plc Annual Report and Financial Statements 2016 34 2.Accounting policies(continued)Data licensing Revenue from licensing of data to other parties is recognised in full upon the delivery of the data to the licensee.Judgements in applying accounting policies and key sources of
333、estimation uncertainty Amounts included in the financial statements involve the use of judgement and/or estimation.These estimates and judgements are based on managements 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 c
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