Infrastrata PLC Annual Report and Notice of Meeting (8409M)

TIDMINFA

RNS Number : 8409M

Infrastrata PLC

26 January 2021

26 January 2021

InfraStrata plc

("InfraStrata" or the "Company")

Annual Report and Accounts and Notice of General Meeting

InfraStrata plc (AIM: INFA), the UK quoted company focused on strategic infrastructure projects and physical asset lifecycle management, confirms that the Notice of its General Meeting and proxy voting information have been sent to shareholders today along with the Annual Report and Accounts for the year ended 31 July 2020. Copies will shortly be available on the Company's website: www.infrastrataplc.com.

FY Company Highlights

   --    First ever operating revenues of GBP1.48 million made by the Company 
   --    Successful re-activation of Harland & Wolff (Belfast); both docks fully operational 
   --    Over 30 vessels welcomed and redelivered to clients as at the date of this report 
   --    Successfully raised GBP9 million during the financial year 

-- Agreement reached with the Department of Agriculture, Environment and Rural Affairs (DAERA) in relation to the determination of the Marine Licence by 31 March 2021

Post-Period End Company Highlights

   --    Acquisition of Harland & Wolff (Appledore) for GBP7 million 
   --    Successfully raised GBP7.40 million in December 2020 / January 2021 

-- Significant uptick in revenue generation since September 2020; current monthly revenue generation equivalent to FY 2020 revenues

   --    Cash break-even position achieved and maintained within the cruise and ferry business 

-- Progress being made on large contract fabrication for renewables and defence; pre-qualification achieved and contract negotiations being undertaken

John Wood, CEO of InfraStrata, said:

"2020 was a challenging year for the Group. When we acquired Harland & Wolff (Belfast) in December 2019, we did not expect a global pandemic to hit us and disrupt our lives so dramatically. Despite that, we have remained focussed and committed to growing our business. Our yards have been open throughout this period and we have had the privilege of welcoming over 30 vessels as at the date of this report and successfully re-delivering them back to our clients.

The new financial year brings with it a number of challenges but, equally, untapped opportunities. We have spent the last 12 months laying the foundations for a robust business, with a particular focus on cruise and ferry, renewables and defence. We believe that these markets will be the growth drivers for the business over the next few years.

Having successfully completed all public consultations for the Islandmagee gas storage facility, we expect to be granted the Marine Licence by 31 March 2021, that will enable us to take Final Investment Decision (FID) by the H1 2021 and commence construction of the project. We believe that this project is critical not only for the security of natural gas supply for the island of Ireland and mainland UK, but also for the commercialisation of large-scale hydrogen production and consumption in the future.

We have successfully managed to navigate our business through the adverse economic and social impacts of COVID-19. With the introduction and distribution of the vaccine, we hope to see a return to normalcy that will facilitate a much higher growth rate for the overall business that we are well prepared for.

I wish to place my thanks to all our shareholders who have supported us during this tumultuous period and welcome new shareholders into the InfraStrata family. More importantly, I wish to thank our colleagues in Belfast, Appledore and London who have tirelessly worked through this difficult period to keep the yards open and fully functioning. This would simply have not been possible without their commitment to the business and to our clients."

General Meeting Notice

The Company is also pleased to announce that its General Meeting will be held on Friday 19 February 2021 at 11:00 p.m. at the offices of InfraStrata plc, 8th Floor, Northern & Shell Building, 10 Lower Thames Street, London EC4R 6AF.

The Company's Annual Report and Accounts for 2020 together with the formal notice of the Accounts Meeting will be posted today to those shareholders who have elected to receive paper copies and those documents will be available on the Company's website later today.

For further information, please visit www.infrastrataplc.com or contact:

 
 InfraStrata plc                                    [phone] 
  John Wood, Chief Executive                         [e-mail] 
  Seena Shah, Head of Marketing & Communications 
 Cenkos Securities plc (Nominated Adviser 
  & Broker) 
  Stephen Keys / Callum Davidson (Corporate 
  Finance) 
  Michael Johnson (Sales)                           [phone] 
                                                   ----------------------------- 
 

Chairman's Report

I am delighted to be writing my first report as Chairman of InfraStrata plc (the Company), following my appointment on 1(st) February 2020. It has been a privilege to chair the Company during this challenging period and to see it continue to prosper, despite the impact of the Covid-19 pandemic. This is testament to the hard work and dedication of the entire executive team, ably led by our CEO, John Wood. Following the stabilisation of the Islandmagee gas storage project and the acquisition of the Harland & Wolff shipyard in 2019, the Board has turned its attention to growth and continued its strategy of developing multiple strategic infrastructure projects, enhancing revenue opportunities and carefully managing cash balances as we monetise those projects.

2020 was a notable year for the Company, with the end of the consultation period on the application for a marine licence for the brine discharge from the Islandmagee gas storage facility (the IM project), the commencement of operations at the Harland & Wolff (Belfast) shipyard (H&W), partnership negotiations on the Floating Storage and Regasification project at Barrow-in-Furness (the FSRU project), the raising of GBP9m of additional equity on the AIM market in July and, just after the end of this financial year, the acquisition of the land and assets at the Appledore Shipyard in Devon. Finally, we were delighted to secure a further raise of cGBP7.40m, announced at the end of December 2020, which was supported strongly by existing and new shareholders.

Islandmagee Gas Storage Project

The 42-day consultation process on the IM marine licence application concluded in March this year and we now await the decision of the Department of Agriculture, Environment and Rural Affairs (DAERA). The Company firmly believes that it has now completed all formalities regarding the marine licence application and that no further work should be required. The matter is now in the hands of DAERA and we continue to cooperate closely with the Department and offer any further assistance that they might require. There is no doubt that the Covid-19 pandemic has disrupted the work of Government departments and there is no certainty on how long this disruption may continue. However, we will continue to work hard to remove this last impediment to a final investment decision. Latest discussions with DAERA as announced to the market indicates a determination on the Marine Licence will be made by the end of Q1 2021 and we will work with DAERA to ensure that this timeline is met. We are delighted that our offtake partnership with Vitol remains in place and indeed, that bipartite discussions are continuing with other interested parties. The Company remains confident that, once the marine licence has been secured, we will move very rapidly to a final investment decision and the next stage of this exciting project.

Harland & Wolff (Belfast)

Following the completion of the acquisition of H&W (Belfast) on 5(th) December 2019, the yard was reactivated and a carefully planned capital expenditure programme was put in place to ensure that the yard could very quickly accept vessels for repair and refurbishment, such that the Company's objective of achieving a cash break-even position could be realised within a calendar year. A new leadership team has been recruited and has been focussed on rebuilding the capability of the yard across multiple sectors and offerings, whilst carefully managing the reactivation of facilities as work is won. Spanning five key markets; cruise and ferry, defence, commercial fabrication, oil & gas and renewables, H&W operates six core services; technical services, fabrication & construction, repairs & maintenance, in-service support, conversions and decommissioning.

We are delighted to have established a strong reputation with blue-chip clients such as Stena, P&O, Irish Ferries etc., and we are confident that we will continue to build our customer base, despite the slowdown being experienced in some sectors of the shipping market due to the impact of the pandemic. H&W (Belfast) is also focussed on bidding for major defence programmes alongside establishing a Teaming Agreement with Navantia for the UK MoD Fleet Solid Support Warships requirement - a proposed fleet of three supply ships for the Royal Fleet Auxiliary. As further announcements are made by the Ministry of Defence over the course of 2021, we shall be keeping the market informed.

Due to the Covid-19 pandemic, trading conditions at H&W (Belfast) have remained tough for the first half of the new financial year and achieving our target of cash break-even for the next full year period, would, I believe, be an excellent result following the first year of operations at H&W (Belfast).

FSRU project

The Company continues to negotiate the required agreements with potential partners to put in place the FSRU project in Morecombe Bay, Barrow-in-Furness. Technical and commercial due diligence has been completed and we continue to see significant interest from globally recognised Liquefied Natural Gas (LNG) companies, across the spectrum of the LNG supply chain. We have not yet formed the optimum partnerships and it is important that we do not commit funding to this project until a clear route forward is mapped out.

We remain on the bench and are viewed as the partner of choice for the project. When we consider conditions to be right, we will be in a strong position to move forward to the Front End Engineering and Design phase of the project. We continue to be confident that, at that time, we will have access to the required funding for further investment in this potentially lucrative project.

Future Projects

With the continuing focus on cleaner energy and carbon emissions, we believe that natural gas will become the feedstock for power generation and will overhaul coal and fuel oil consumption at power stations as alternative energy sources come on-line. Equally, given current government policy and the impetus being provided to kickstart what is termed as the "Green Industrial Revolution", we must focus our attention on exciting renewable energy projects and new technologies.

We will continue to remain aligned with government policy. More importantly, definitive market soundings and routes to funding will determine which energy infrastructure projects we prioritise and monetise.

Investor Backing

Given our continued success in identifying exciting infrastructure projects and positioning the Company for further investment and growth, the Board decided in March of this year that further equity would be required to fund the Company's ambitious programme throughout the next financial year. I am delighted that in July the Company was able to announce that it had raised an additional GBP9m of equity through a placing on the Alternative Investment Market in London and that, in addition to existing retail and institutional investors increasing their shareholdings, we attracted new institutions into the share register. A further GBP7.4m was announced to be raised by the Company in December. The overarching rationale for the placings was to strengthen the Company's balance sheet and provide management with the growth capital needed to buy new assets and to win key contracts that will underpin the growth of the Company and enable it to maximise its potential. On any measure, the placings were a great success and I warmly welcome our new shareholders and thank existing shareholders for your continued support.

Harland & Wolff (Appledore)

The Company has demonstrated its ability to capitalise on opportunities quickly as they arise and this was demonstrated again in August through the acquisition of the land and assets at the Appledore shipyard in Devon, for a total consideration of GBP7m. We were delighted to receive the Prime Minister, Rt. Hon. Boris Johnson MP, at the yard on the day of the announcement and to hear, first-hand, his commitment to supporting the National Shipbuilding Strategy for the UK. The Company believes that there is a compelling case for the acquisition of the Appledore yard, to operate in tandem with H&W (Belfast) under the latter's corporate identity.

H&W (Belfast)'s core competence lies in vessels that require a dock length in excess of 300 metres. With two dry docks at 356 metres and 556 metres in length respectively, H&W (Belfast) has the largest drydock capability in the UK and the second largest in Europe which, therefore, puts it in a prominent position in relation to larger vessels. H&W (Appledore), on the other hand, will focus on the smaller vessel in the market, requiring a dock length of 119 metres. There are very few shipyards in the UK that can offer this type of undercover building dock and repair facility and, given the number of sovereign vessels required in this category over the next ten years, the Company believes that this is a market segment that cannot be ignored. H&W (Appledore) will operate across the five markets and six core services targeted by H&W (Belfast) and the Company is confident that together, the two yards can access a significant short, medium, and long-term market opportunity. It is important to note that we do not envisage meaningful expenditure at H&W (Appledore) until work is secured - a strategy that we have deployed successively at H&W (Belfast).

The InfraStrata Team

As the Company's operations expand and its revenues grow, we continue to recruit talented people at an operational and corporate level. Our current focus is on HR, Finance and Project Management support and I have been delighted to welcome several new additions to the team in the last few months. However, it is important to note that we continue to be fully aware of the need to balance increased overhead costs with additional revenue, and only increase our cost base at a level that is sustainable.

At Board level, we continue to strengthen governance and the Non-Executives are encouraged to constructively challenge the Executive team on major decisions. Given this increased Board workload, and following the acquisition of Appledore, it was with regret that I accepted the resignation of Deborah Saw as a Non-Executive Director, for personal reasons. The Board is actively working to replace Deborah but would like to place on record its thanks for her help and counsel in the months that she served.

Finally, I thank those who have been supportive of the Company this year and in the past; our team, our shareholders, our customers, our suppliers and partners. The Company is confident that, with your continued support, we will continue to prosper.

Clive Richardson

Chairman, 26 January 2021

Chief Executive Officer's Strategic Report

We entered 2020 with excitement for the year ahead having just accepted the keys to the iconic Harland & Wolff facility in Belfast. However, none of us could have expected the tsunami of disruption that we encountered this year across our entire business as a result of COVID-19.

Whilst it has been tough, I am extremely proud of the way our team has dealt with the various challenges thrown at them, some of which were very unexpected; for example, when the initial lockdown was announced we saw the cancellation of numerous dry dockings (some contracted for and others close to contract execution) totaling tens of millions of pounds within a single week. Many companies took the easier path of furloughing employees and riding out the storm. We, on the other hand, made the strategic decision to carry on and utilise the downtime to our advantage by bringing forward planned maintenance work which would inevitably enable us to capitalise on the resurgence in activity that we expect to see in the maritime industry towards the end of the current COVID environment. At every stage, the health and safety of all our employees and that of the environment has been at the forefront of every discussion and decision. I am pleased to report that with the various measures put in place from social distancing to regular sanitising, our facilities have remained open for business throughout this tumultuous period. I wish to place my heartfelt thanks to the entire management team and the workforce for their commitment to keep our yard open for business.

I set out some clear objectives to further realise our Group strategy in 2020:

   1.   Delivering the Final Investment Decision ("FID") for our Islandmagee Gas Storage Project 

Given the amount of interest in the award of our Marine Construction License, it is now more likely than ever that Final Investment Decision (FID) on the Islandmagee Gas Storage Project will be taken after the license has been awarded. We remain of the firm opinion that there is no reason why the marine license will not be granted, given that we are dealing with proven technology, meeting and, in some cases, exceeding environmental regulations, and have a legal opinion on the consultation process. This project is effectively a transition project that will help facilitate the UK government's clean energy 2050 targets. It is quite clear that natural gas will be consumed for many years to come as we have only just started the real transition away from coal. We expect that natural gas will be the transitional fuel of choice as we progress towards a greener future with renewables and hydrogen. We remain sure that salt caverns are critical not only to facilitate the transition but also to provide baseload security of energy supply when the wind does not blow, irradiation for solar power generation is inadequate or physical gas molecules cannot flow through existing pipeline infrastructure because of geo-political and / or commercial impediments. As an island nation that is on the brink of a new era outside the European Union and with imported natural gas as the predominant energy provider, we believe that InfraStrata will have a large part to play in ensuring security of energy supplies in the UK, especially on the island of Ireland. Whilst some progress has been made in relation to hydrogen and adapting everyday products to use it, the key will be mass production, monetisation and storage of hydrogen as well as the ability to blend it back into the network. Subject to further consents, our facilities at Islandmagee will be strategically well placed to capitalise on this transition in the future.

Having held meetings with Northern Ireland's First Minister and Minister for the Economy in the devolved government and the Secretary of State for Northern Ireland, we firmly believe that there has been, eventually, a realisation that this project is critical, not only for security of energy supply but also for providing primary, secondary and tertiary employment in a desperately needed post-COVID economic recovery.

   2.   Fully Integrating the Harland & Wolff Brand into InfraStrata Plc 

We have now fully integrated Harland & Wolff into the InfraStrata group. As part of that process, we are now running on an integrated enterprise-wide business management system (ERP system). Whilst system integration and change management projects are complex, undertaking a substantial portion of this work whilst in lockdown has demonstrated what can be achieved by teams collaborating remotely. Our business systems are now set up for further expansion of the Group and will capitalise on operational synergies where available.

   3.   Achieving cash breakeven for the first twelve months of operations 

I believe in setting tough but achievable goals. Whilst we have not met our cash breakeven target for the entire Harland & Wolff group, we achieved an important milestone by reaching our first month of cash breakeven on our drydock operations in October last year. Whilst not in our original plan, we had to make some key decisions at the start of lockdown in March 2020 that made our breakeven goal much harder to achieve. With the second national lockdown now upon us there has not, unfortunately, yet been the massive upsurge in re-certification work that we expected to see at the end of 2020.

During the first national lockdown in March 2020, we made the decision to take our Belfast dock out of operation and undertake a fifteen year cycle maintenance project along with upgrade works. This dock is one of our key assets due to its depth and access arrangements allowing it to handle some of the largest vessels. With the upcoming tender for the Queen Elizabeth aircraft carriers, we wanted to ensure that our facilities, being one of only two across the UK capable of handling these carriers, was ready for this tender. Additionally, by undertaking these upgrade works now, we have ensured that the facility would not be out of service when the anticipated high revenue projects flow into the yard once the current COVID-19 uncertainty passes. During the various lockdowns throughout the year, we have seen a greater number of emergency and routine dry dockings rather than conversion and upgrade works. Whilst the former provides a certain amount of baseload work, the latter set of contracts provide for larger revenue and cashflows as well as higher margins.

We are humbled by the amount of support that we have received from ship owners and operators globally. The overall outlook for the Belfast yard in the medium to long term is extremely positive and we have several large projects that are currently at tender stage. We expect to execute sales contracts in 2021 that have longer project lifecycles when compared to what we have today. This means that we expect to achieve cash breakeven across the business during the current calendar year and across two financial years.

There is no doubt that COVID-19 has slowed our efforts down, reduced our efficiency and added costs to the business. We are several months behind where we would have liked to be at this stage in our lifecycle. However, this is not unexpected given that we operate in an environment that bears little resemblance to when we accepted the keys to the Belfast facility in December 2019. Having said that, from all accounts, the short to mid-term outlook for the shipyard across cruise & ferry, renewables and defence is looking very strong and, in fact, far better than what we had estimated. Despite lower revenues than we expected, we are pleased that we are taking all the right steps to achieve our margin target whilst operating the shipyard in a less than optimal manner. We achieved an overall margin of slightly over 20% by the year end and we expect this to grow to the c25% levels in the future.

   4.   Reactivating  Harland & Wolff Belfast via a phased approach 

When the acquisition of Harland & Wolff (Belfast) was completed on the 5(th) of December 2019 it was our aim to get the Belfast dock (335m) up and running immediately. This reactivation work was undertaken in short order as we welcomed a Seatruck ferry on the 23(rd) of December as our first project, eighteen days after the acquisition. Numerous vessels have passed through the Belfast dock over the months that have followed. With the onset of the COVID-19 pandemic, we made the decision to step up and accelerate our efforts to reactivate our larger building dock (556m) in order to enable the Belfast dock to be taken out of service for a four month period and to undertake a fifteen year upgrade on its dock gate.

The required works were undertaken to reactivate the building dock successfully and due credit to our team who undertook these works in an expedited manner to allow us to take advantage of a downturn in activity. All works have now been completed on the Belfast dock gate and that dock is now fully back in service such that we now have a fully functioning two dock operation. This puts us in an ideal position as we expect a major resurgence of high value docking and recertification works in 2021 as we start to see COVID-19 disruption end and business activities recover. We expect to see a sizeable amount of business in the yards as we deal with the enormous backlog of dry dockings that have been deferred by ship owners globally but now need to be conducted in order to start sailing again.

Our last area of reactivation is the fabrication side of the business. Whilst a lot of work has been ongoing for internal projects, we hope to secure our first fabrication project in early 2021. Key to securing fabrication works is to have the right equipment to in order to ensure efficiency. We have, therefore, ordered a robotic welding panel line which will reduce fabrication costs and increase volume flow through the facility.

   5.   Developing the Harland & Wolff Brand 

We have progressed well introducing our new brand and commercial offering to the market. When commencing trading from zero, there is a fine balance that needs to be struck between increasing overheads to generate sales and overburdening the business before it gets enough revenue-led traction. We have been very careful to strike this balance and have, therefore, brought in a small number of more experienced leaders who can cover multiple disciplines.

We have been actively engaged across all of our five core markets and six sectors. As one would expect, some markets have a longer gestation period than others but we are, nevertheless, pleased to have secured orders onboard vessels in the following markets: commercial, cruise & ferry and oil & gas which, given our relative state of infancy, is a significant achievement. As with our initial market focus, we have chosen to initially focus on some of our six sectors too. Clearly, repairs and maintenance has been our early "low hanging fruit". We believe that we are extremely close to securing our first fabrication project into the yard and given the Prime Minister's recent announcements, we consider ourselves to be well placed to capitalise on the increased focus on renewable projects with our partner Navantia who is a world leader in this area and have already delivered several large fixed and floating wind structures over the last few years. We have only scratched the surface in relation to sectors that we can build on as we move forward, and there are substantial opportunities that lie ahead.

Key to our brand development is organic growth whilst taking advantage of any opportunistic acquisitions that are a complimentary fit to our strategy. Post the financial year end, we announced the acquisition of the Appledore shipyard which we are delighted to have brought into the Group. We believe that the Appledore facilities are an ideal fit, and they complement our two existing drydocks; we now have two of the largest drydocks in the UK (Belfast) and the largest small fully undercover drydock (Appledore). Strategically it is imperative to have facilities that carry a proportionate level of overhead for the type of work being undertaken. The Appledore facility is ideal for smaller vessels up to 120m given that the cost of accommodating these types of smaller vessels in Belfast would be disproportionate to the value of contracts for such vessels. The Appledore facility was traditionally only used for new build work. We have now established that there is a substantial number of sovereign vessels due for replacement over the coming years that would be an ideal fit for Appledore. In addition, we intend to ensure that the facility, where required, can undertake docking works.

Just like Belfast, this facility will cater to all our key markets and sectors apart from cruise and large ferries. It was the highlight of our year to have the Prime Minister in attendance when the deal to acquire Appledore completed and to hear his passionate comments and underlying commitment to revitalise UK shipbuilding and restart vessel exports as well as marine related projects generated from the UK.

We are progressing well with our objectives for this year despite the global pandemic and the chaos that COVID-19 has caused. During the year we have had to think on our feet and act fast. Being nimble across the business is one of our biggest strengths that we will continue to use this to our advantage. All aspects of our business have remained open and operational throughout the restrictions and shutdowns. Our shipyard in Belfast played a vital role during the first national lockdown, helping ensure that sea freight remained operational across the Irish Sea. In order to facilitate continued operations we have introduced new processes and procedures not only for our own staff but also for our clients and suppliers. It is not until it is gone that we truly appreciate the high level of close human contact that we have all become accustomed to in our work and social lives. We can never become complacent, and we will continue to review and bring in additional measures as we feel are appropriate and proportional to ensure continued operations and strive to make as much progress as we can in the circumstances we find ourselves in.

The effects that we have felt and continue to feel given the unstable nature of this virus make it very hard fully forecast our expected performance for the next financial year. We are confident that we will pass our cash breakeven point for the Belfast facility in the current calendar year (2021). When market conditions settle and volatility reduces, we will endeavour to provide updates and guidance where appropriate.

During 2020 we have managed to complete three out of our five objectives and strive to get the others completed as soon as possible. We believe that we are starting to create real and demonstratable shareholder value and we will continue to build on the foundations that we have put in place through 2021 and beyond.

It is inevitable, in my opinion, that we will see significant shipbuilding back in our facilities due to the lack of capacity at other yards and the number of replacement vessels on the horizon over the next decade. This is even before we consider renewables, new power station construction requirements for structural steel and major conversion works on vessels. In summary, large scale and substantial volumes of steel fabrication work will lead our transformational change and we are confident of securing that this year. Having already welcomed over 20 ships through the Belfast facility during 2020, we are seeing momentum building. We hope that with the introduction of the new vaccines to tackle COVID-19, this momentum will be sustained and that we can hit our sales target for the calendar year 2021.

Key to our development is our strategy for our shipyard and fabrication facilities, not just focussing on one market but five along with operations occurring in six sectors within each of these markets. This gives us substantial opportunities with a skilled workforce that is common across all markets and sectors. By controlling risk and not specialising in one sector alone, it affords us the opportunity to keep generating revenues should either any markets and / or any sectors experience a downturn. Within the markets in which we operate, there will always be cyclical peaks and troughs. Our strategy is specifically designed to control that risk and provide for long term stability of cashflows.

Whilst much mention has been made of our newer assets, perhaps due to their ability to fund, in part, the Group's ongoing operations in the short to medium term whilst adding significant long term value, we remain committed to delivering on our initial Islandmagee gas storage project. We continue to believe that this project has the potential to add significant value to the Company in the medium to long term. When I joined the Company in 2018, several key components of the project, on the face of it, had been completed. However, as the new team delved into greater detail, under the surface, a substantial portion of work remained to be undertaken. We have worked tirelessly over the last two years to ensure that we are ready to proceed to the construction stage. To this end, we were proud to welcome Mark Jessop as our Projects Director this year. Mark brings with him decades of experience within the gas storage and renewables sectors not only in operations but also in the construction of such facilities.

Much time has been spent working in consultation with DAERA to get the Marine License issued but despite our best efforts, we have had significant delays which have been exacerbated by COVID-19 and the department effectively being shut down throughout 2020. We carried out the first formal consultation back in December 2019, having it pre-approved by the department. In order to be thorough, we agreed to a second (additional) consultation to cover a small error in DAERA's process in relation to an advertisement (which had been pre-approved by the department in advance). That second consultation was duly completed in March 2020. We currently await the outcome of the recommendation to be made by DAERA to the Minister for Environment. In addition, we have sought a legal opinion and shared this with DAERA in order to try and expedite the process, particularly around the other licenses within the family i.e., the Abstraction and Discharge Licences. For the avoidance of doubt, the Company is currently in possession of a valid Extraction and Discharge license and it is their review, due to the passage of time that has been brought into question. I am pleased to report that after months of discussion, we agreed with DAERA that a consultation period would commence in December 2020 and formally complete on 13 January 2021, which marks the end of all such consultations. We have further been advised by DAERA of their intention to make a formal recommendation to the Minister for Environment on or before the end of the first quarter of 2021. The fact that we now have a formal date on which such recommendation will be made is vitally important for our Final Investment Decision (FID) and we can now look at planning for the next stage of the project with a higher degree of certainty.

With the end of the transition period and our departure from the European Union on 31(st) December 2020, we believe that it is clearer now more than ever that the island of Ireland needs a storage project to protect it from price and supply volatility that will inevitably follow. As we move away from coal as a fuel source it is our view that natural gas will act as the transitional fuel of choice whilst moving towards a green energy mix. This will not be a quick process and it is likely to take a couple of decades (if not many) to occur. Gas storage is in a unique position in that it will likely be the cornerstone to any meaningful hydrogen development. Currently, numerous end user technologies are being developed; however, the key will be access to mass and large scale production and storage. It is likely that at some point (subject to further approvals ) that the caverns will transition over to hydrogen storage in the future. There are a lot of unknowns at this point, including the pace of technological and commercial development but when there is a shift from gas to hydrogen at some point in the future, we believe that the caverns will be able to solve at least one aspect of the hydrogen commercialisation conundrum.

As was recently confirmed in an independent report published by Oxford Analytics, by 2035, 74% of all gas will be imported, which is a substantial increase from today's 48%. This will inevitably cause operational flexibility issues and make the country susceptible to shock events like the "beast from the East" in 2018. With the storage caverns also being suitable for hydrogen (subject to approval), we believe that the facility is, by far the most appropriate technology to meet the UK's growing flexibility requirements. Oxford Analytics commented further on the key economic benefits of the Islandmagee gas storage project:-

Employment

400 direct jobs during construction as well as between 800 and 1200 indirect jobs

60 direct jobs during operation as well as 120 and180 indirect jobs

Wider Economy in Northern Ireland

During construction every GBP1m of capital expenditure will result in a further GBP2m being created in the economy. Even if 25% of the work required is not sourced locally the wider economy could still benefit by around GBP400m with a further GBP13m flowing into the local economy as a result of employment.

Our view remains that this project is a critical requirement for grid stability given the intermittency of the growing renewables portfolio within the broader energy mix. Given that this is strategic energy infrastructure, we believe that there may be opportunities to retain 100% ownership of this project. As it stands today, we are in a holding pattern until the marine license award has been confirmed. We remain fully committed to getting this project underway and expect to commence construction with some pre enabling work in early in 2021, preparations for which are already underway. This will facilitate a sharper ramp up when we take the Final Investment Decision (FID) which we expect will be in H1 2021. The key to unlocking the next phase of this project is, clearly, the grant of the Marine Licence.

When I joined the business in 2018, we were a company with just one project and facing several challenges. We are a totally different business today, with the building blocks now in place to build into a large and profitable corporate organisation. Key to sustainable growth is to ensure that the overall strategy is aligned to government policy and closely following global trends. Whilst we have spent many months considering the right strategic projects to develop we have had to consider and rank all potential projects according to where we believe the industry in which they operate will be in the future. Whilst we still have a huge belief in the LNG import market and the ability to create additional shareholder value in that sector, we believe that there are other sectors which will create far greater opportunities at this time, viz., fixed and floating wind, hydrogen, tidal, battery and strategic energy infrastructure projects. In light of the changing energy infrastructure environment, we will continue to pursue the FSRU project but only in partnership with existing infrastructure, should we be able to close a commercial deal with partners who own such infrastructure in Barrow. As a greenfield standalone project, the project does not lend itself to robust economics any longer. Discussions are currently underway and we hope to make further announcements about the FSRU project through the course of the year.

The Belfast acquisition provided the Company with the opportunity to substantially reduce the overall CAPEX of our Islandmagee gas storage project in addition to being cash generating and self-sufficient, potentially negating the need to constantly return to the market on a regular basis in order to provide cash inflow for ongoing operations. The addition of Appledore has substantially reduced the risk of operation of the Belfast facility and has provided the ability to share work in order to deliver larger projects in shorter time frames. With several centralised functions operating from Belfast there are substantial synergies achievable by running the yards together under the iconic Harland & Wolff brand.

Islandmagee Energy Hub Ltd continues to be the holding company for projects or concepts that are in the incubation stage. We are looking at several projects currently in the new technology space including hydrogen. These new technologies may bring with them some grant funding to help us trial some of these concepts and undertake engineering design works.

We have introduced a new approach to Safety, Health and Environment (SHE) which was rolled out during 2020. Safety is of upmost importance in our minds and we will ensure no harm comes to any of our employees or to our environment.

The board has very clear ambition and a strategy for growth, works well together and has very complimentary skill sets. The board has remained stable throughout 2020 with the only change being the departure of Deborah Saw who was unable to meet the increase in time requirements given her prior and future commitments. I would like to place on record my thanks to Deborah for the work that she has undertaken for the Company and wish her well for the future.

As we progress it is essential that we have the right composition and balance on the board. The Chairman and the rest of the Non-Executives have provided tremendous support to myself and the rest of the executive team during 2020.

During Q3 each year we carry out a detailed review of the overall business strategy which then leads into the formation of budgets and plans for the individual businesses. This year we went a stage further, reversed back and considered our original strategy as our starting point. Whilst COVID-19 has made this job so much harder, we have undertaken a full review commencing with assessing where we are today against the initial strategy presented to shareholders back on the 5(th) of December 2018.

As I have mentioned several times, on my appointment, it was clear that a one project company was very high risk and unsustainable in the long term. The vision we developed was to be a leading, global infrastructure development & asset management company, being intimately involved through the entire lifecycle of projects from conception to decommissioning. In some projects we will participate from end to end of their respective lifecycles, whilst in other cases, we may choose to either only develop or acquire to operate them. One of the distinguishing features in all types of projects that we are currently involved in or wish to be involved in is that they have substantial heavy engineering and fabrication requirements. In order to control the lifecycle process more fully and retain a higher percentage of the development costs within the Group it was decided to acquire a facility in December 2019 in order to give us that long run capability. The added advantage of acquiring Harland & Wolff (Belfast) was that it also gave us the ability to have a standalone business, in its own right, that has significant growth potential to be cash positive in a relatively short period as well as being vertically integrated into our larger development projects.

Our goal is to spread the Company's risk profile over several projects/operations or businesses. Whilst, initially, we restricted ourselves to a single geographical location in Northern Ireland we have now branched out into Devon. Additionally, we have global aspirations for the longer term. The key update in our strategy from last year, is a more concentrated approach to asset management, operations and maintenance thereby ensuring vertical integration as well as a clear focus on heavy engineering and fabrication.

The model, whilst relatively simple, will allow us to continue to enhance our balance sheet year on year. Income will be generated from four main areas of operations; each new project or company may be different and have specific nuances that need to be critically assessed. Therefore, individual technical and commercial models will be developed to ensure that maximum value is derived from every potential project or operating company. The four areas of expertise that we hold and that will continue to lead to income generation and incremental shareholder value are:

   --    Front End Project Development to FID (Final Investment Decision) - Carried equity interest 
   --    Construction Management & Project Delivery - Income generation 
   --    Asset Operation, Management and Optimisation - Income generation 
   --    Retained equity in development projects - Income generation 

While carving out our future strategy, it is essential that the macro economic and political policy environment is considered in order to ensure that the Company's future strategy is in keeping with the fast pace of changing government policy in order to ensure as close an alignment as possible. We have focused on two key areas; national energy policy including renewable energy policy and the National Shipbuilding Strategy. Both areas of policy are interlinked and fall into Harland & Wolff's core business.

On the energy side, in order to meet our 2050 climate change ambitions the Prime Minister has set out his vision to have every home powered by wind derived power by 2030 in addition to fast-tracking the transition from natural gas into hydrogen. The government is also keen to develop nuclear power in order to provide baseload support to the power grid.

As a company, we are uniquely placed to deliver on this government's ambitious strategies. On the one hand we have two shipyards in the UK that can deliver on the National Shipbuilding Strategy. On the other hand, the multi-purpose nature of these facilities means that they are capable to carry out heavy engineering and fabrication of several hundred fixed and floating wind structures that will be needed over the course of the next decade. Maritime, heavy engineering and fabrication capabilities are inextricably linked to each other. Our business is, therefore, ideally positioned to help meet the challenges of successfully delivering on the National Shipbuilding Strategy, the government's climate change targets and, on the energy infrastructure side, the ability to store large volumes of hydrogen to transition into clean fuels for heating and power generation.

Over the past year we have had many meetings with cross party politicians in the UK Government, Northern Irish and Scottish devolved governments along with a number of international governments. In order to fully realise our strategy, we must be fully engaged with all political leaders across the spectrum. We believe that our current strategy is aligned with government policy and that we have the assets and infrastructure to capitalise on the conditions that will arise in the market in 2021 and beyond. As we look to the future, we must keep ourselves flexible in order to respond to any change in Government policy, especially its Net Zero ambitions by 2050. Whilst these targets are challenging, the focus is on getting as close to them as possible. By way of an example, the Prime Minister announced that wind farms could power every home by 2030 with an increased target from 30 gigawatts to 40 gigawatts. The government is, therefore, targeting to achieve this goal in less than 10 years' time. InfraStrata owns one of the few UK facilities in the UK capable of undertaking this type of work and was previously involved in fabrication activities for East Anglia 1 which was a pioneering development in the UK and estimated to cost GBP2.5bn when it was commenced in 2016. In order to meet these ambitious targets, approval is likely to be fast tracked for numerous projects that are currently in the pipeline. Additionally, fabrication capabilities will need to be expanded rapidly including all existing and new facilities to swing into 24/7 operations in order to deliver on these upcoming huge projects.

The recent government announcement on shipbuilding is not a new one. The UK government has, for many years, been trying to identify why other developed economies with equally high labour costs are able to develop booming defence & commercial shipbuilding sectors with high export elements. Sir John Parker was commissioned in 2017 to develop a National Shipbuilding Strategy (NSBS), the clear focus of which has been on defence. Only in recent times and with the departure from the European Union has the government doubled down on efforts to widen the NSBS to cover commercial shipbuilding opportunities. As is common knowledge, there have been many failures in the shipbuilding sector globally. We believe that this is primarily due to shipyards maintaining a very narrow focus on only one, possibly two markets. In contrast, our strategy to build our shipyard and fabrication capacity has a focus on five key markets and six sectors. With each yard focusing on all five markets but providing a different offering relative to the size of each contract. Whilst operating across a broad range of markets the business will be able to withstand traditional downturn periods that are cyclical across industries like Defence, Oil & Gas and Commercial. Equally, whilst operating in the five key markets it is also essential to operate across multiple sectors to generate income both inside and away from the shipyard and fabrication facilities (such as through in-service support).

It is critical that the assets we acquire that have real strategic importance. For example, Harland & Wolff (Belfast) has two of the largest drydocks in Europe and the biggest in the UK ensuring that the top end of the market is protected. Likewise, with the recent acquisition of Appledore at the smaller end of the market, we have one of the only facilities with direct access to the sea with relatively deep water for its size.

There is work available across all markets and sectors. However, it will take time to build relationships and confidence in these markets that we have very recently entered, although we do feel well positioned to capitalise on clear gaps that we see in the market. Whilst the yards will be standalone in their own right, they will most likely form a link in our supply chain especially for our infrastructure project development in the future. By making good use of vertical integration we can keep a proportion of the development costs of a project within the Group from which we aim to add substantial shareholder value.

Key to sustainable growth is to ensure that the overall strategy is aligned to government policy and closely following global trends. Whilst we have spent many months considering the right strategic projects to develop we have had to consider and rank all potential projects according to where we believe the industry they operate in will be in the future. For every project that we look at we go through a robust set of criteria to ensure it's the right fit for the Company and, equally, it is essential that at each gate review we continue to make that assessment as policy and markets evolve during the lifecycle of each project. From that perspective, the challenge is to assess where markets are likely to be in 4-5 years' time as opposed to where they are today.

We are seeing some key trends emerging and believe that our long term opportunities exist within fixed and floating wind, hydrogen storage, tidal, battery and other green energy infrastructure projects. We are now seeing our strategy coming together following the acquisition of the two Harland & Wolff facilities which, by themselves, will start growing organically in the months and years ahead with the ultimate ability to generate funds in order to invest in new projects.

John Wood

Chief Executive Officer, 26 January 2021

Chief Finance Officer's Report

I am delighted to write to all shareholders and stakeholders with the hope to share a few thoughts with all of you. At the very outset, I am delighted that the Company has received such overwhelming support from. The fact that we raised cGBP17 million during 2020 is, indeed, very humbling. I wish to thank all shareholders for this show of confidence in the management team of the Company. It has been a tough year of "unknown unknowns" but I firmly believe that we have come out of it stronger, wiser and more determined to succeed in the businesses in which we are engaged.

Operational Highlights

We ended the year with a net operating loss before tax of GBP10.40 million (2019: loss of GBP1.18 million). During the course of the year, we announced our maiden revenues in December 2019 and closed the year with a revenue line of GBP1.48 million. Whilst our revenues are still insufficient to absorb all our Group costs and break-even / generate a cash profit, I am pleased that we broke through the psychological GBP1 million revenue mark by the end of the financial year. Our gross margins were c20.50%, slightly lower than our expectations of achieving the c25% levels. As a start-up with a zero-order book and with COVID-19 dominating the year, we know that we can do better under more normal business conditions. Our total operating costs for the year were GBP9.48 million (2019: GBP1.38 million) largely reflecting a much larger business and consequent cost base. Given the scale of our activities through the year, we have been very careful about our cash-burn rate and have kept it to appropriate levels. Payments to employees, suppliers and counterparties have been at market and, sometimes, sub-market rates in a combination of cash and shares, primarily with a view to preserving as much cash as possible. We are now revenue generating and meeting some of our costs through earned margins. We achieved a cash break-even position in the cruise and ferry market in September 2020 and repeated that performance in the closing months of 2020. We expect to maintain similar run rates going into 2021 at the very least and expect to further upscale these revenue numbers through some large contract wins that we have bid for. Given that the bulk of our revenues stemmed from the cruise and ferry repairs business, we have a limited segmental reporting analysis this year. Going forward, as we enter into contracts across our five core markets, we will be breaking down or segmental analysis in greater granularity. The placing of new shares in January 2021 helped us raise GBP7.40 million before expenses and this cash reserve on the balance sheet will help us bid more competitively for larger businesses. The placings over the course of the year have strengthened our balance sheet and, accordingly, we are accounting for the Group's operations on a going concern basis.

We made a commitment to our shareholders that we would be revenue generating in 2019. Whilst we have fulfilled that commitment, it was equally important for us, as a Board, to embark on the path of being financially self-sustaining and cash positive. In calendar year 2021, I expect us to manage our cash conservatively until we reach a position of being cash break-even. I believe that we are closer than ever to achieving that objective given our exposure to five distinct markets and offering six services within each market. With the growing stability of Harland & Wolff (Belfast), the acquisition of Harland & Wolff (Appledore) and funding progress being made on the Islandmagee gas storage project, we now have the capability of achieving this goal. In the meantime, we will continue to closely monitor our overheads and preserve as much cash as we can without compromising the operations of our businesses.

Business reorganisation

As a business, we have changed dramatically over the past 12 months. When we joined the business in 2018, we were determined to change the business from a one-project company to one that has multiple assets in the Group portfolio, thereby diversifying ourselves and de-risking the balance sheet. Accordingly, we have formally transitioned into a Group that has been structured along two main specialisations; energy infrastructure and shipyards.

Recognising this, we have restructured the Group such that all energy infrastructure assets will sit under InfraStrata UK Limited and all shipyard / fabrication assets will come under Harland & Wolff Group Holdings Limited. Both these intermediate companies are 100% owned by Infrastrata plc. Given their diverse nature, we have also restructured our human resources. We are now a matrix organisation. The two divisions will be led by two different directors, both of whom have decades of experience in energy infrastructure and shipyards respectively. They will be supported at an operational level by their own teams and will receive strategic, legal and financial support from the parent company. This structure allows for more flexible and nimble working across the Group, better communication between the different Group companies, and most importantly, a deep sense of ownership for departments heads and leaders of the respective business units.

As we move forward, we need to have the depth of personnel and experience to successfully run the Group's businesses. We have, therefore, made sure that each business function is headed by an expert in that particular area and he / she is adequately supported by experienced staff. The biggest challenge for any business is to find, recruit and retain highly skilled talent. Brexit and COVID-19 have made this pursuit even more challenging. Over the course of the year, we have spent significant time and resources to find and hire some of the best minds for our Group's businesses. This is effectively an investment for our future and in preparation for a much larger business within 12 months' time.

We will continue to pursue and mature our existing assets, turning them from investments of today into cash generators of tomorrow. Equally, we are going to be opportunistic in our acquisitions across both strands of the Group. We have the core advantages of deep knowledge and agility and we must retain these qualities in order to achieve our objectives. Equally, as CFO, I am acutely aware of the financial strains that any acquisition brings along with it. Therefore, every acquisition opportunity is robustly challenged. We will continue making acquisitions, but only if there is a clear strategic and economic advantage in doing so. There is a fine balance between consolidation and growth and we believe that both are possible to achieve together with an optimum strategy and a pragmatic financing structure.

Islandmagee Gas Storage Project

In regard to the Islandmagee gas storage project, the challenge was to bring the project to a point that made it bankable. The completion of the FEED study and the entering into a binding term sheet with Vitol to become a long-term capacity offtake client for 100% of the storage capacity have achieved that objective. Today, we consider that we have a project that is "shovel-ready", bankable and worthy of project finance investment.

The last financial year was devoted to obtaining the Marine Licence. Resources, both capital and human, were deployed in this effort. Whilst COVID-19 has inevitably slowed this process down, we are determined not to let up and are taking all possible steps to bring this matter to fruition. I believe that we are now very close to determination on the Marine Licence and, as soon as that decision has been taken in our favour, we shall be progressing to Final Investment Decision.

The route to FID has multiple paths. The path well trodden is for us to farm out a substantial portion of our project equity in favour of incoming project partners who will be funding the required project CAPEX. Whilst this may seem like the easy route, the overall energy complex has fundamentally changed in light of the Government's position in relation to renewable energy, especially hydrogen. Subject to further planning and regulatory approvals, the project's salt caverns are ideally suited for large scale hydrogen storage. For any commodity to be tradeable, it needs to have certain foundations; demand and supply, a traded market with transparent pricing and the ability to move it from areas of supply surplus to centres of demand. It is this physical movement of commodities that is the most crucial aspect and storage, as a mid-stream component within that supply to demand chain, becomes vital. It is a foregone conclusion that natural gas will provide baseload feedstock for power generation and to heat our homes and offices. We believe that this trend will continue to persist over the next 2-3 decades. Indeed, long strides have been taken to boost the installed capacity of renewable power and, equally, there have been breakthroughs in the technologies for large scale hydrogen production. Once hydrogen starts becoming more mainstream, its storage will become crucial, first for blending hydrogen with natural gas and, thereafter, the supply and consumption of pure hydrogen.

It is within this context that we need to determine what is the optimum funding solution for the project. With natural gas being a transition fuel, we have sought to future proof the facility such that it is capable of storing and moving hydrogen in and out of the caverns. With possible government funding available for shovel ready strategic infrastructure, it is possible for us to take advantage of new government financing schemes and retain a higher equity interest in the project. Equally, we are conscious that this project has been on our balance sheet for a large number of years and it is imperative to reach a conclusion sooner rather than later. Therefore, all steps are being taken and all funding opportunities are being assessed in parallel such that we should be in a position to take FID as quickly as possible once the Marine Licence has been granted.

Gas markets have continued to show resilience despite demand falling due to COVID-19. The last few weeks have seen spot gas prices rising to 2018 levels, with both the UK and EU relying on pipeline and storage gas, in the absence of sufficient LNG cargoes, given their diversion to the Far East, who are currently paying circa 5 times more than what the NBP and TTF are offering. This situation has clearly highlighted the underlying supply risk that the UK is facing with highly limited storage capacity along with attendant consequences of Brexit.

Within this overall macro picture, we continue to firmly believe that the Islandmagee gas storage project has a very bright future and will constitute an important asset within the Group's portfolio. The Company will be making announcements through the course of this year as and when material events occur for this project, chiefly among them being the award of the marine licence, FID, project financing and commencement of construction.

Capital raising activities

In July 2020, we raised a sum of GBP9 million before costs through an equity placing at 0.35 pence per share. The proceeds were utilised for paying off smaller bridging loans that the Company had taken in the previous year, and providing for additional working capital for the Group.

Additionally, we consolidated our shares on a 1:100 basis with a view to reducing the total volume of outstanding shares. This consolidation has inevitably reduced our stock's liquidity albeit marginally but, more importantly, it has significantly reduced the spot volatility in our share price. Our share price has remained relatively stable and is now less susceptible to sudden peaks and troughs on days of low volume trades.

Having raised GBP4 million in December 2020 before costs, post the balance sheet date, in January 2021, we raised a further GBP3.40 million before costs at 0.45 pence per share in order to further strengthen the balance sheet and prepare ourselves for tendering and winning larger contracts.

We raised GBP2 million before costs in February 2020 against an asset backed debt facility at Harland & Wolff (Belfast) Limited. This debt facility was taken to fund working capital for our Belfast operations.

We consider our capital structure to be lean and that the balance sheet is not overly leveraged. With the extinguishing of the smaller bridging loans through the year, we now have only the asset backed debt facility that we are servicing and that will come to maturity in February 2022. Given the growing size of our Group and that of our balance sheet, I believe that there is potential to raise more debt over time. However, a stable and long term debt structure at sensible coupons can be put in place on the back of a series of larger contract wins. We are in discussions with institutional debt providers to understand terms offered on long term debt instruments. I believe that over the course of the year and subject to larger contract wins, our corporate debt structure will evolve and we will be able to take advantage of the historical low rates of interest that we are seeing across debt markets. In summary, alongside our organically generated cashflows, we have variety of options to meet our cash requirements through 2021 and beyond.

Our future

The world has fundamentally changed in the last 12 months. Climate change, pandemics and geo-political uncertainties are the some of the most pressing issues that we face today. As your CFO, it is my role to provide that safety net for the Group and to maintain the highest standards of reporting and corporate integrity whilst enabling the CEO and the business development team to fulfil the strategy that the Board has envisaged for the business.

Every shareholder who has invested in the Company expects a healthy return on investment. Equally, shareholders expect their investment to make a significant and positive difference to society at large; creating gainful employment, utilising breakthrough technologies that will reduce resource consumption and drive down costs whilst increasing efficiencies, minimising one's carbon footprint and ultimately leaving a legacy that is fit for purpose for future generations. The aspirations of generating wealth and, at the same time, leaving a positive social impact, are not incongruent to each other. As CFO and part of the Group's board, I am sensitive to both these aspirations. Therefore, whilst the immediate and most important task is to stabilise the financial position of the Group and make it cash-positive, we will always have an eye on the impact our operations have on society at large. We can contribute in a more meaningful manner when we are stronger and more stable. Keeping that in mind, our focus for the short and near term is to take our current operations into a profitable environment and grow the business even further, through the pursuit of larger contracts and acquisition of complementary assets.

Finally, I wish to, once again, thank all our shareholders for supporting us through the year and to warmly welcome our new shareholders to the InfraStrata family.

Arun Raman

Chief Finance Officer, 26 January 2021

Consolidated Statement of Comprehensive Income

for the Year Ended 31 July 2020

 
                                                    31 July                               31 July 
                                                       2020                                  2019 
                                                        GBP                                   GBP 
Continuing operations                                     -                                     - 
Revenue                                           1,482,081                                     - 
Cost of sales                                   (1,178,534)                                     - 
                                               ------------  ------------------------------------ 
Gross profit                                        303,547                                     - 
Management and administrative expenses          (9,482,379)                           (1,383,294) 
Other income                                              -                               300,000 
                                               ------------  ------------------------------------ 
Operating loss                                  (9,178,832)                           (1,083,294) 
Finance income                                            5                                    18 
Finance costs                                   (1,231,046)                              (99,436) 
                                               ------------  ------------------------------------ 
Loss before tax                                (10,409,873)                           (1,182,712) 
Taxation                                                  -                                     - 
                                               ------------  ------------------------------------ 
Loss for the year                              (10,409,873)                           (1,182,712) 
                                               ============  ==================================== 
Items that may be subsequently reclassified 
 to profit or loss 
Revaluation of fixed assets                       6,074,895                                     - 
                                               ------------  ------------------------------------ 
Total comprehensive income for the year         (4,334,978)                           (1,182,712) 
                                               ============  ==================================== 
Total comprehensive income for the year 
 attributable to: 

Owners of the Company                           (4,334,978)                           (1,182,712) 
                                               ============  ==================================== 
 
Earnings Per Share 
Basic and diluted                                   (0.34)p                               (0.09)p 
                                               ============  ==================================== 
 

Consolidated Statement of Financial Position as at 31 July 2020

 
                                         31 July       31 July 
                                            2020          2019 
                                             GBP           GBP 
Assets 
Non-current assets 
Intangible assets                     11,206,831    10,168,605 
Property, plant and equipment         25,407,771       738,825 
                                    ------------  ------------ 
Total non-current assets              36,614,602    10,907,430 
                                    ------------  ------------ 
Current assets 
Inventories                              331,465             - 
Trade and other receivables            1,933,254       202,066 
Cash and cash equivalents              6,723,236        11,240 
                                    ------------  ------------ 
Total current assets                   8,987,955       213,306 
                                    ------------  ------------ 
Current liabilities 
Trade and other payables             (6,102,983)   (1,111,342) 
Grant received in advance               (24,272)             - 
Short-term borrowings                  (863,655)     (785,095) 
Short-term financial liability       (1,917,885)         (988) 
                                    ------------  ------------ 
Total current liabilities            (8,908,795)   (1,897,425) 
                                    ------------  ------------ 
Net current assets/(liabilities)          79,160   (1,684,119) 
Non-current liabilities 
Loans and borrowings                (15,789,579)             - 
Financial liability                    (200,000)     (200,000) 
                                    ------------  ------------ 
Net assets                            20,704,183     9,023,311 
                                    ============  ============ 
Shareholders' funds 
Share capital                         11,457,457    10,949,504 
Share premium                         33,923,172    18,427,728 
Merger reserve                         8,988,112     8,988,112 
Share based payment reserve              125,673       113,220 
Revaluation reserve                    6,074,895             - 
Retained earnings                   (39,865,126)  (29,455,253) 
                                    ------------  ------------ 
Total equity                          20,704,183     9,023,311 
                                    ============  ============ 
 

Company Statement of Financial Position as at 31 July 2020

 
                                    31 July          31 July 
                                      2020              2019 
                                       GBP               GBP 
Assets 
Non-current assets 
Property, plant and equipment        2,668,186         8,026 
Intangible assets                       21,732             - 
                                  ------------  ------------ 
Total non-current assets             2,689,918         8,026 
                                  ------------  ------------ 
Current assets 
Trade and other receivables         17,378,511    10,448,974 
Cash and cash equivalents            6,686,057         8,783 
                                  ------------  ------------ 
Total current assets                24,064,568    10,457,757 
                                  ------------  ------------ 
Current liabilities 
Trade and other payables           (1,314,708)     (139,342) 
Short-term financial liability       (813,000)         (988) 
                                  ------------  ------------ 
Total current liabilities          (2,127,708)     (140,330) 
                                  ------------  ------------ 
Total current assets                21,936,860    10,317,427 
                                  ============  ============ 
Non-current liabilities 
Loans and borrowings               (2,287,378)             - 
Financial liability                  (200,000)     (200,000) 
                                  ------------  ------------ 
Net assets                          22,139,400    10,125,453 
                                  ============  ============ 
Shareholders' funds 
Share capital                       11,457,457    10,949,504 
Share premium                       33,423,172    18,427,728 
Merger reserve                       8,466,827     8,466,827 
Share based payment reserve            125,673       113,220 
Retained earnings                 (31,333,730)  (27,831,826) 
                                  ------------  ------------ 
Total equity                        22,139,399    10,125,453 
                                  ============  ============ 
 

Consolidated Statement of Changes in Equity for the Year Ended 31 July 2019

 
                                                                       Share based 
                       Share capital  Share premium  Merger reserve   payment reserve  Retained earnings  Total equity 
                                 GBP            GBP        GBP              GBP                      GBP           GBP 
At 1 August 2018          10,919,117     16,005,216       8,988,112             6,847       (28,272,541)     7,646,751 
Loss for the year                  -              -               -                 -        (1,182,712)   (1,182,712) 
                       -------------  -------------  --------------  ----------------  -----------------  ------------ 
Total comprehensive 
 Income                            -              -               -                 -        (1,182,712)   (1,182,712) 
Transactions with 
owners recorded 
directly in equity: 
 
  Shares issued               30,387      2,422,512               -                 -                  -     2,452,899 
Share option expense               -              -               -           106,373                  -       106,373 
                       -------------  -------------  --------------  ----------------  -----------------  ------------ 
At 31 July 2019           10,949,504     18,427,728       8,988,112           113,220       (29,455,253)     9,023,311 
                       =============  =============  ==============  ================  =================  ============ 
 

Consolidated Statement of Changes in Equity for the Year Ended 31 July 2020

 
                                                                            Share based 
                                              Revaluation                     payment           Retained 
                Share capital  Share premium      reserve  Merger reserve     reserve           earnings  Total equity 
                          GBP            GBP          GBP        GBP            GBP                  GBP           GBP 
At 1 August 
 2019              10,949,504     18,427,728            -       8,988,112         113,220   (29,455,253)     9,023,311 
Loss for the 
 year                       -              -            -               -               -   (10,409,873)  (10,409,873) 
Other 
 comprehensive 
 income                     -              -    6,074,895               -               -              -     6,074,895 
                -------------  -------------  -----------  --------------  --------------  -------------  ------------ 
Total 
 comprehensive 
 income                     -              -    6,074,895               -               -   (10,409,873)   (4,334,978) 
Transactions 
with owners 
recorded 
directly in 
equity: 
Shares issued         507,953     14,995,444            -               -               -              -    15,503,397 
Share option 
 expense                    -              -            -               -          12,453              -        12,453 
Capital 
 Contribution               -        500,000            -               -               -              -       500,000 
                -------------  -------------  -----------  --------------  --------------  -------------  ------------ 
At 31 July 
 2020              11,457,457     33,923,172    6,074,895       8,988,112         125,673   (39,865,126)    20,704,183 
                =============  =============  ===========  ==============  ==============  =============  ============ 
 

Share capital: This represents the nominal value of equity shares in issue.

Share premium: This represents the premium paid above the nominal value of shares in issue.

Revaluation reserve: This represents the difference between the carrying value and fair value of certain assets.

Merger Reserve: The merger reserve represents the difference between the nominal value of the shares issued on the demerger and the combined share capital and share premium of lnfraStrata UK Limited at the date of the demerger.

Share-based payments reserve: This represents the value of share-based payments provided to employees and Directors as part of their remuneration as part of the consideration paid. The reserve represents the fair value of options and performance share rights recognised as an expense. Upon exercise of options or performance share rights, any proceeds received are credited to share capital and share premium.

Retained earnings: This represents the accumulated profits and losses since inception of the business and adjustments relating to options and warrants.

Capital contribution: This represents investment made by InfraStrata Plc in Harland & Wolff (Belfast) Limited for which shares have not been issued as at balance sheet date.

Company Statement of Changes in Equity for the Year Ended 31 July 2020

 
                                                                       Share based 
                       Share capital  Share premium  Merger reserve   payment reserve  Retained earnings  Total equity 
Company                          GBP            GBP        GBP              GBP                      GBP       GBP 
At 1 August 2018          10,919,117     16,005,216       8,466,827             6,847       (26,761,468)     8,636,539 
Loss for the year                  -              -               -                 -        (1,070,358)   (1,070,358) 
                       -------------  -------------  --------------  ----------------  -----------------  ------------ 
Total comprehensive 
 income for 
 the year                          -              -               -                 -        (1,070,358)   (1,070,358) 
Transactions with 
 owners recorded 
 directly in equity: 
 Shares issued                30,387      2,422,512               -                 -                  -     2,452,899 
Share option expense               -              -               -           106,373                  -       106,373 
                       -------------  -------------  --------------  ----------------  -----------------  ------------ 
At 31 July 2019           10,949,504     18,427,728       8,466,827           113,220       (27,831,826)    10,125,453 
                       =============  =============  ==============  ================  =================  ============ 
 
 
                                                                       Share based 
                       Share capital  Share premium  Merger reserve   payment reserve  Retained earnings  Total equity 
Company                          GBP            GBP        GBP              GBP                      GBP       GBP 
At 1 August 2019          10,949,504     18,427,728       8,466,827           113,220       (27,831,826)    10,125,453 
Loss for the year                  -              -               -                 -        (3,501,904)   (3,501,904) 
                       -------------  -------------  --------------  ----------------  -----------------  ------------ 
Total comprehensive 
 income                            -              -               -                 -        (3,501,904)   (3,501,904) 
Transactions with 
 owners recorded 
 directly in equity: 
 Shares issued               507,953     14,995,444               -                 -                  -    15,503,397 
Share option expense               -              -               -            12,453                  -        12,453 
                       -------------  -------------  --------------  ----------------  -----------------  ------------ 
At 31 July 2020           11,457,457     33,423,172       8,466,827           125,673       (31,333,730)    22,139,399 
                       =============  =============  ==============  ================  =================  ============ 
 

Consolidated Statement of Cash Flows for the Year Ended 31 July 2020

 
                                                      31 July           31 July 
                                                         2020              2019 
                                                          GBP               GBP 
Cash flows from operating activities 
Loss for the year                                (10,409,873)       (1,182,712) 
Adjustments to cash flows from non-cash 
 items 
Depreciation and amortisation                       1,224,655               892 
Profit on disposal of intangible assets                     -         (100,000) 
Profit from disposals of investments                        -         (200,600) 
Foreign exchange loss                                     717            11,055 
Finance income                                            (5)              (18) 
Finance costs                                       1,231,046           102,460 
Share option expense                                   12,453           172,638 
                                                 ------------  ---------------- 
                                                  (7,941,007)       (1,196,285) 
Working capital adjustments 
Increase in inventories                             (331,465)                 - 
(Increase)/decrease in trade and other 
 receivables                                        (706,815)            38,121 
Increase in trade and other payables                4,491,542           239,646 
Net cash flow from operating activities           (4,487,745)         (918,518) 
                                                 ------------  ---------------- 
Cash flows from investing activities 
Interest received                                           5                18 
Proceeds from issue of shares                      15,503,396         2,386,634 
Short term borrowing                                  908,560           621,751 
Long term borrowing                                 2,090,000                 - 
Repayment of borrowings and lease liabilities     (1,245,041)                 - 
Acquisitions of property plant and 
 equipment                                        (5,776,709)         (299,617) 
Acquisition of intangible assets                  (1,030,043)       (3,613,559) 
Grants received in advance                          1,130,149                 - 
Proceeds from sale of intangible assets                     -           100,000 
                                                 ------------  ---------------- 
Net cash flows from investing activities           11,580,317         (804,773) 
                                                 ------------  ---------------- 
Net increase/(decrease) in cash & cash 
 equivalents                                        7,092,572       (1,723,291) 
                                                 ------------  ---------------- 
Cash flows from financing activities 
Interest paid                                       (379,588)          (57,436) 
                                                 ------------  ---------------- 
Net decrease in cash and cash equivalents           6,712,984       (1,780,727) 
Cash and cash equivalents at 1 August                  10,252         1,790,979 
                                                 ------------  ---------------- 
Cash and cash equivalents at 31 July                6,723,236            10,252 
                                                 ============  ================ 
 
 

Company Statement of Cash Flows for the Year Ended 31 July 2020

 
                                                     31 July           31 July 
                                                        2020              2019 
                                                         GBP               GBP 
Cash flows from operating activities 
Loss for the year                                (3,501,903)       (1,070,358) 
Adjustments to cash flows from non-cash 
 items 
Depreciation and amortisation                        133,001               892 
Profit on disposal of intangible assets                    -         (100,000) 
Profit from disposals of investments                       -         (200,600) 
Foreign exchange loss                                    586             9,527 
Finance income                                           (5)              (18) 
Finance costs                                        192,215            42,000 
Share option expense                                  12,453           172,638 
                                                 -----------  ---------------- 
                                                 (3,163,653)       (1,145,919) 
Working capital adjustments 
Increase in trade and other receivables          (6,929,539)       (1,383,071) 
Increase/(decrease) in trade and other 
 payables                                          1,175,366         (665,879) 
Decrease in deferred income, including 
 government grants                                         -         (946,070) 
                                                 -----------  ---------------- 
Net cash flow from operating activities          (8,917,826)       (4,140,939) 
                                                 -----------  ---------------- 
Cash flows from investing activities 
Interest received                                          5                18 
Proceeds from issue of shares                     15,503,396         2,386,634 
Short term borrowing                                 300,000                 - 
Repayment of borrowings and lease liabilities       (39,554)                 - 
Acquisitions of property plant and 
 equipment                                          (22,858)           (8,918) 
Acquisition of intangible assets                    (21,732)                 - 
Proceeds from sale of intangible assets                    -           100,000 
                                                 -----------  ---------------- 
Net cash flows from investing activities          15,719,257         2,477,734 
Net increase/(decrease) in cash & cash 
 equivalents                                       6,801,431       (1,663,205) 
                                                 -----------  ---------------- 
Cash flows from financing activities 
Interest paid                                      (123,171)                 - 
                                                 -----------  ---------------- 
Net decrease in cash and cash equivalents          6,678,260       (1,663,205) 
Cash and cash equivalents at 1 August                  7,797         1,671,002 
                                                 -----------  ---------------- 
Cash and cash equivalents at 31 July               6,686,057             7,797 
                                                 ===========  ================ 
 
 

Consolidated net debt reconciliation

for the year ended 31 July 2020

 
                                        Other assets                              Liabilities 
                                                                                   from Financing 
                                                                                   activities 
                                 Cash/Bank overdraft        Liquid investments 
                                                                                   Borrowing           Borrowings 
                                                                                   due within          due after 
                                                                                   1 year              1 year 
=============================  =====================  ========================  =================  ============== 
Net debt as at 1 August 2018               1,790,979               (1,542,674)          (363,344)       (200,000) 
Cash flows                               (1,779,739)                   633,398     (422,739)                    - 
Foreign exchange adjustments                       -                         -                  -               - 
Other changes (ii)                                 -                         -                  -               - 
=============================  =====================  ========================  =================  ============== 
Net debt as at 31 July 2019                   11,240                 (909,276)      (786,083)           (200,000) 
Cash flows                                 6,711,996      (3,260,453)              (1,995,457)       (15,789,579) 
Foreign exchange adjustments                       -                         -                  -               - 
Other changes (ii)                                 -                         -                  -               - 
=============================  =====================  ========================  =================  ============== 
Net debt as at 31 July 2020                6,723,236               (4,169,729)     (2,781,540)     (15,989,579) 
=============================  =====================  ========================  =================  ============== 
 

Notes to the Financial Statements for the Year Ended 31 July 2020

 
General information 
 

The company is a public company limited by share capital, incorporated and domiciled in the UK.

The address of its registered office is:

Fieldfisher LLP

Riverbank House

2 Swan Lane

London

EC4R 3TT

United Kingdom

The company's ordinary shares are traded on the Alternative Investment Market (AIM) of the London Stock Exchange under the ticker symbol INFA.

The principal activities of the Group throughout the year was the development of sub-surface gas storage facility together with that of shipbuilding, heavy engineering, ship repair and maintenance of production and drilling vessels for the offshore oil and gas industry.

 
Accounting policies 
 

Statement of compliance

The group financial statements have been prepared in accordance with International Financial Reporting Standards and its interpretations adopted by the EU ("adopted IFRS's") and the Companies Act 2006 applicable to companies reporting under IFRS.

Summary of significant accounting policies and key accounting estimates

The principal accounting policies applied in the preparation of these financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated.

Basis of preparation

The financial statements have been prepared in accordance with adopted International Financial Reporting Standards (IFRS) as adopted by the European Union and under historical cost accounting, modified, where applicable, by the measurement at fair value.

The financial statements are presented in Sterling which is the functional currency of the Group and all values are rounded to the nearest Pound Sterling (GBP) unless otherwise stated.

Changes to accounting policies, disclosures, standards and interpretations

(a) New and amended standards adopted by the Group

IFRS 16 Leases became applicable to the current reporting period, replacing IAS 17 Leases. The key change under IFRS 16 is that most leases designated as "operating leases" under IAS 17 now qualify for balance sheet recognition, subject to certain exceptions. Following the acquisition of Harland & Wolff, the directors reviewed contracts to identify any additional lease arrangements that would need to be recognised under IFRS 16 in the current financial year and identified a couple of contracts and an associated right-of-use asset was recognised for each lease.

Lease liabilities were measured at the present value of the remaining lease payments, discounted using the lessee's incremental borrowing rate, which averaged 10% across the Group.

In applying IFRS 16 for the first time, the Group has used the following practical expedients permitted by the standard:

-- Use of a single discount rate to a portfolio of leases with reasonably similar characteristics; and

-- The accounting for operating leases with a remaining lease term of less than 12 months as at 4 October 2019 as short term leases.

 
 
  On 4 October 2019, the Group recognised 
  the following lease liabilities which arose 
  following the H & W asset acquisition:               GBP 
Current                                                  - 
Non-current                                     14,021,132 
                                                ---------- 
                                                14,021,132 
                                                ========== 
 

The associated right-of-use assets for property leases were measured on a retrospective basis as if the new rules had always been applied. There were no onerous lease contracts that would have required an adjustment to the right-of-use assets at the date of initial application.

Right-of-use assets recognised on 4 October 2019 were:

 
                                    GBP 
Leasehold land & buildings   14,021,132 
                             ---------- 
 
 
 

(b) New standards not yet adopted

There are no new International Financial Reporting Standards and Interpretations issued but not effective for the reporting period ending 31 July 2020 that will materially impact the Group.

Basis of consolidation

Subsidiaries are all entities (including structured entities) over which the Group has control. The Group controls an entity when the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are deconsolidated from the date that control ceases.

Inter-company transactions, balances and unrealised gains on transactions between group companies are eliminated. Unrealised losses are also eliminated. When necessary, amounts reported by subsidiaries have been adjusted to conform to the group's accounting policies.

 
  Accounting policies (continued) 
 

Going concern

The financial statements have been prepared on a going concern basis. The Group's assets are now generating revenue following the acquisition of Harland & Wolff. Operating cash outflows have been incurred in the year and an operating loss has been recorded in the profit and loss account for the year. The Group has raised GBP16.40 million through 2020, of which GBP7.40 million has been raised in January 2021. There is a baseload level of work flowing through the shipyard and a current pipeline of opportunities for which the Group is bidding. However, given the uncertainty surrounding bid success and the lack of bid to success history, management have prepared a worst case scenario for a period of 12 months from the date of the signing of these financial statements in respect of their going concern assumptions. This assumes no bid contract wins and that the sole revenue generated by the Group will arise from ship repairs. The scenario includes all expected costs associated with such works as well as the repayment of all liabilities that fall due within this twelve month period and takes into account all cost savings and process efficiencies considered achievable as well as any COVID-19 related impacts.

Based on this worst case forecast scenario the Directors have a reasonable expectation that the Group has access to adequate resources to continue in operational existence for the foreseeable future. Thus, they continue to adopt the going concern basis of accounting in preparing the annual financial statements for the year ended 31 July 2020.

Should the Group be unable to continue trading, adjustments would have to be made to reduce the value of the assets to their recoverable amounts, to provide for further liabilities which might arise and to classify fixed assets as current.

Revenue recognition

Revenue represents income derived from contracts for the provision of goods and services, over time or at a point in time, by the Group to customers in exchange for consideration in the ordinary course of the Group's activities.

Performance Obligations

Upon approval by the parties to a contract, the contract is assessed to identify each promise to transfer either a distinct good or service or a series of distinct goods or services that are substantially the same and have the same pattern of transfer to the customer. Goods and services are distinct and accounted for as separate performance obligations in the contract if the customer can benefit from them either on their own or together with other resources that are readily available to the customer and they are separately identifiable in the contract.

The Group provides warranties to its customers to give them assurance that its products and services will function in line with agreed-upon specifications. Warranties are not provided separately and, therefore, do not represent performance obligations.

Transaction price

At the start of the contract, the total transaction price is estimated as the amount of consideration to which the Group expects to be entitled in exchange for transferring the promised goods and services to the customer, excluding sales taxes. Variable consideration, such as price escalation, is included based on the expected value or most likely amount only to the extent that it is highly probable that there will not be a reversal in the amount of the cumulative revenue recognised. The transaction price does not include estimates of consideration resulting from contract modifications, such as change orders, until they have been approved by parties to the contract. The total transaction price is allocated to the performance obligations identified in the contract in proportion to their relative stand-alone selling prices. Given the nature of many of the Group's products and services, which are designed and/or manufactured under contract to customers' individual specifications, there are typically no observable stand-alone selling prices. Instead, stand-alone selling prices are typically estimated based on expected costs plus contract margin consistent with the Group's pricing principles.

Whilst payment terms vary from contract to contract, an element of the transaction price may be received in advance of delivery. The Group may therefore have contract liabilities depending on the contracts in existence at a period end. The Group's contracts are not considered to include significant financing components on the basis that there is no difference between the consideration and the cash selling price.

Revenue recognition

Revenue is recognised as performance obligations are satisfied as control of the goods and services is transferred to the customer.

For each performance obligations within a contract the Group determines whether it is satisfied over time or at a point in time. Performance obligations are satisfied over time if one of the following criteria is satisfied:

-- The customer simultaneously receives and consumes the benefits provided by the Group's performance as it performs;

-- The Group's performance creates or enhances an asset that the customer controls as the asset is created or enhanced; or

-- The Group's performance does not create an asset with an alternative use to the Group and it has an enforceable right to payment for performance completed to date.

The Group has determined that most of its contacts satisfy the overtime criteria, either because the customer simultaneously receives and consumes the benefits provided by the Group's performance as it performs or the Group's performance does not create an asset with an alternative use to the Group and it has an enforceable right to payment for performance completed to date.

For each performance obligation recognised over time, the Group recognises revenue using an input method, based on costs incurred in the period. Revenue and attributable margin are calculated by reference to reliable estimates of transaction price and total expected costs, after making suitable allowances or technical and other risks. Revenue and associated margin are therefore recognised progressively as costs are incurred, and as risks have been mitigated or retired. The Group has determined that this method appropriately depicts the Group's performance in transferring control of the goods and services to the customer.

If the overtime criteria for revenue recognition is not met, revenue is recognised at the point in time that control is transferred to the customer which is usually when legal title passes to the customer and the business has the right to payment.

When it is expected that total contract costs will exceed total contract revenue, the expected loss is recognised immediately as an expense.

Segment reporting

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker ("CODM") as required by IFRS 8 "Operating Segments". The chief operating decision-maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the executive board of Directors.

Government grants

Government grants are recognised only when there is reasonable assurance that the Group will comply with the conditions attaching to the grant and that the grants will be received. Capital grants are recognised to match the related development expenditure and are deducted in arriving at the carrying value of the related assets. Any grants that are received in advance of recognition are deferred.

 
2  Accounting policies (continued) 
 

Foreign currency transactions and balances

In preparing the Financial Statements, transactions in currencies other than the entity's functional currency (foreign currencies) are recorded at the rates of exchange prevailing on the dates of the transactions. At each reporting date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the reporting date. Non-monetary items carried at fair value that are denominated in foreign currencies are translated at the rates prevailing at the date when the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated. Exchange differences arising, if any, are recognised in profit or loss.

Translation from functional currency to presentational currency

When the functional currency of a Group entity is different from the Group's presentational currency (US dollars), its results and financial position are translated into the presentational currency as follows:

(i) Assets and liabilities are translated using exchange rates prevailing at the balance sheet date.

(ii) Income and expense items are translated at average exchange rates for the year, except where the use of such average rates does not approximate the exchange rate at the date of a specific transaction, in which case the transaction rate is used.

(iii) All resulting exchange differences are recognised in other comprehensive income and presented in the translation reserve in equity and are reclassified to profit or loss in the period in which the foreign operation is disposed of.

Tax

Tax expense represents the sum of the tax currently payable and any deferred tax. The taxable result differs from the net result as reported in the statement of comprehensive income because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Group's liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the statement of financial position date. Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit and is accounted for using the liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary difference arises from goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit. Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries, except where the Group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future.

The carrying amount of deferred tax assets is reviewed at each statement of financial position date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled, or the asset realised.

Deferred tax is charged or credited to the statement of comprehensive income, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the Group intends to settle its current assets and liabilities on a net basis.

Capitalisation and impairment of intangible gas storage assets

Costs of development of gas storage facilities are capitalised as intangible assets once it is probable that future economic benefits that are attributable to the assets will flow to the Group and until consent to construct has been awarded, at which time the capitalised costs are transferred to plant and equipment provided there being reasonable certainty of construction proceeding. The nature of these costs includes all direct costs incurred in project development, including any directly attributable finance costs. No amortisation or depreciation is provided until the storage facility is available for use.

An impairment test is performed annually and whenever events or circumstances arising during the development phase indicate that the carrying value of a development asset may exceed its recoverable amount. The aggregate carrying value is compared against the expected recoverable amount of the cash generating unit, generally by reference to the present value of the future net cash flows expected to be derived from storage revenue. The present value of future cash flows is calculated on the basis of future storage prices and cost levels as forecast at the statement of financial position date.

The cash generating unit applied for impairment test purposes is generally an individual gas storage facility. Where the carrying value of the facility is greater than the present value of its future cash flows a provision is made. Any such provisions are charged to cost of sales.

Amortisation

Amortisation is provided on intangible assets so as to write off the cost, less any estimated residual value, over their useful economic lives as follows:

 
                  Amortisation method and 
Asset class        rate 
Storage facility  None until facility available 
                   for use. 
 

Harland Heritage Project

Project costs related to Harland Heritage are capitalised as incurred.

Amortisation

Amortisation is provided on intangible assets so as to write off the cost, less any estimated residual value, over their expected useful economic life as follows:

 
                                         Amortisation method and 
Asset class                               rate 
Artefacts                                Over 20 years - Straight 
                                          line basis 
Trade marks                              Over 20 years - Straight 
                                          line basis 
Gas storage facility                     None until facility available 
                                          for use. 
Development costs                        Over 20 years - Straight 
                                          line basis 
Harland Heritage Project                 None until facility available 
                                          for use. 
Floating Storage Regasification Project  None until facility available 
                                          for use. 
 

Tangible assets

Property, plant and equipment

Property, plant and equipment is stated in the statement of financial position at cost, less any subsequent accumulated depreciation and subsequent accumulated impairment losses.

The cost of property, plant and equipment includes directly attributable incremental costs incurred in their acquisition and installation.

Depreciation

Depreciation is charged so as to write off the cost of assets, other than land and properties under construction over their estimated useful lives, as follows:

 
                              Depreciation method and 
Asset class                    rate 
Freehold land                 Not depreciated 
Leasehold land and buildings  Over 50 years Straight 
                               line basis 
Modular buildings             Over 20 years Straight 
                               line basis 
Right of use                  Over 50 years Straight 
                               line basis 
Plant and machinery           Over 10 years Straight 
                               line basis 
Motor vehicles                Over 5 years Straight 
                               line basis 
Office equipment              Over 5 years Straight 
                               line basis 
 

Investments

Investments in subsidiaries are stated at cost less provision for impairments.

Financial Instruments

Financial assets and liabilities are recognised in the Company's statement of financial position when the Company becomes a party to the contractual provisions of the instrument. The Company currently does not use derivative financial instruments to manage or hedge financial exposures or liabilities.

Financial Assets

The financial assets currently held by the Group and Company are classified as financial assets held at amortised cost. These assets are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are initially recognised at fair value plus transaction costs that are directly attributable to their acquisition or issue, and are subsequently carried at amortised cost using the effective interest rate method, less provision for impairment under the expected credit loss model.

The expected credit loss is calculated as a function of the probability of default (PD), the exposure at default (EAD) and the loss given default (LGD).

The amount of the expected credit loss is measured as the difference between all contractual cash flows that are due in accordance with the contract and all the cash flows that are expected to be received (i.e. all cash shortfalls), discounted at the original effective interest rate (EIR).

The carrying amount of the asset is reduced through use of allowance account and recognition of the loss in the Statement of Comprehensive Income. Allowances for credit losses on financial assets are assessed collectively. Collectively assessed impairment allowances cover credit losses inherent in portfolios of financial assets with similar credit risk characteristics when there is objective evidence to suggest that they contain impaired financial assets, but the individual impaired items cannot yet be identified.

In assessing collective impairment, the Group uses information including historical trends in the probability of default (although this is limited given the relatively short trading history of the Group), timing of recoveries and the amount of expected loss, adjusted for management's judgement as to whether current economic and credit conditions are such that the actual losses are likely to be greater or less than suggested by historical evidence. Default rates, loss rates and the expected timing of future recoveries are regularly benchmarked against actual outcomes to ensure that they remain appropriate.

IFRS 9 suggests the use of reasonable forward-looking information to enhance ECL models. The Group incorporates relevant forward-looking information into the loss provisioning model.

Financial assets at amortised cost comprise trade and other receivables and cash and cash equivalents in the statement of financial position

Cash and cash equivalents include cash in hand and amounts held on short term deposit. Any interest earned is accrued monthly and classified as finance income. Short term deposits comprise deposits made for varying periods of between one day and three months.

For the purposes of the statement of cash flows, cash and cash equivalents consist of cash and cash equivalents as defined above.

Derecognition of Financial Assets

The Group and Company derecognise a financial asset when the contractual rights to the cash flows from the asset expire, or it transfers the asset and substantially all the risk and rewards of ownership of the asset to another entity.

Financial Liabilities

The Group and Company classify their financial liabilities into one category, being other financial liabilities measured at amortised cost.

The Group's accounting policy for the other financial liabilities category is as follows:

Trade payables and other short-term monetary liabilities are initially recognised at fair value and subsequently carried at amortised cost using the effective interest method. All interest and other borrowing costs incurred in connection with the above are expensed as incurred and reported as part of financing costs in profit or loss. The Group and Company derecognise financial liabilities when, and only when, the obligations are discharged, cancelled or they expire.

Cash and cash equivalents

Cash and cash equivalents comprise cash on hand and call deposits, and other short-term highly liquid investments that are readily convertible to a known amount of cash and are subject to an insignificant risk of changes in value.

Trade receivables

Trade receivables are amounts due from customers for merchandise sold or services performed in the ordinary course of business. If collection is expected in one year or less (or in the normal operating cycle of the business if longer), they are classified as current assets. If not, they are presented as non-current assets.

Trade receivables are recognised initially at the transaction price. They are subsequently measured at amortised cost using the effective interest method, less provision for impairment. A provision for the impairment of trade receivables is established when there is objective evidence that the group will not be able to collect all amounts due according to the original terms of the receivables.

Inventories

Inventories are stated at the lower of cost and net realisable value. Cost is determined using the first-in, first-out (FIFO) method.

The cost of finished goods and work in progress comprises direct materials and, where applicable, direct labour costs and those overheads that have been incurred in bringing the inventories to their present location and condition. At each reporting date, inventories are assessed for impairment. If inventory is impaired, the carrying amount is reduced to its selling price less costs to complete and sell; the impairment loss is recognised immediately in profit or loss.

Trade payables

Trade payables are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Accounts payable are classified as current liabilities if payment is due within one year or less (or in the normal operating cycle of the business if longer). If not, they are presented as non-current liabilities.

Trade payables are recognised initially at the transaction price and subsequently measured at amortised cost using the effective interest method.

Borrowings

All borrowings are initially recorded at the amount of proceeds received, net of transaction costs. Borrowings are subsequently carried at amortised cost, with the difference between the proceeds, net of transaction costs, and the amount due on redemption being recognised as a charge to the income statement over the period of the relevant borrowing.

Interest expense is recognised on the basis of the effective interest method and is included in finance costs.

Borrowings are classified as current liabilities unless the group has an unconditional right to defer settlement of the liability for at least 12 months after the reporting date.

Leases

Definition

A lease is a contract, or a part of a contract, that conveys the right to use an asset or a physically distinct part of an asset ("the underlying asset") for a period of time in exchange for consideration. Further, the contract must convey the right to the group to control the asset or a physically distinct portion thereof. A contract is deemed to convey the right to control the underlying asset if, throughout the period of use, the group has the right to:

   --    Obtain substantially all the economic benefits from the use of the underlying asset, and; 

-- Direct the use of the underlying asset (e.g. direct how and for what purpose the asset is used)

Where contracts contain a lease coupled with an agreement to purchase or sell other goods or services (i.e., non-lease components), the group has made an accounting policy election, by class of underlying asset, to account for both components as a single lease component.

Initial recognition and measurement

The group initially recognises a lease liability for the obligation to make lease payments and a right-of-use asset for the right to use the underlying asset for the lease term.

The lease liability is measured at the present value of the lease payments to be made over the lease term. The lease payments include fixed payments, purchase options at exercise price (where payment is reasonably certain), expected amount of residual value guarantees, termination option penalties (where payment is considered reasonably certain) and variable lease payments that depend on an index or rate.

The right-of-use asset is initially measured at the amount of the lease liability, adjusted for lease prepayments, lease incentives received, the group's initial direct costs (e.g., commissions) and an estimate of restoration, removal and dismantling costs.

Subsequent measurement

After the commencement date, the group measures the lease liability by:

(a) Increasing the carrying amount to reflect interest on the lease liability;

(b) Reducing the carrying amount to reflect the lease payments made; and

(c) Re-measuring the carrying amount to reflect any reassessment or lease modifications or to reflect revised in substance fixed lease payments or on the occurrence of other specific events.

Interest on the lease liability in each period during the lease term is the amount that produces a constant periodic rate of interest on the remaining balance of the lease liability. Interest charges are [presented separately as non-operating /included in finance cost] in the income statement, unless the costs are included in the carrying amount of another asset applying other applicable standards. Variable lease payments not included in the measurement of the lease liability, are included in operating expenses in the period in which the event or condition that triggers them arises.

The related right-of-use asset is accounted for using the Cost model in IAS 16 and depreciated and charged in accordance with the depreciation requirements of IAS 16 Property, Plant and Equipment as disclosed in the accounting policy for Property, Plant and Equipment. Adjustments are made to the carrying value of the right of use asset where the lease liability is re-measured in accordance with the above. Right of use assets are tested for impairment in accordance with IAS 36 Impairment of assets as disclosed in the accounting policy in impairment.

Lease modifications

If a lease is modified, the modified contract is evaluated to determine whether it is or contains a lease. If a lease continues to exist, the lease modification will result in either a separate lease or a change in the accounting for the existing lease.

The modification is accounted for as a separate lease if both:

(a) The modification increases the scope of the lease by adding the right to use one or more underlying assets; and

(b) The consideration for the lease increases by an amount commensurate with the stand-alone price for the increase in scope and any appropriate adjustments to that stand-alone price to reflect the circumstances of the particular contract.

If both of these conditions are met, the lease modification results in two separate leases, the unmodified original lease and a separate lease. The group then accounts for these in line with the accounting policy for new leases.

If either of the conditions are not met, the modified lease is not accounted for as a separate lease and the consideration is allocated to the contract and the lease liability is re-measured using the lease term of the modified lease and the discount rate as determined at the effective date of the modification.

For a modification that fully or partially decreases the scope of the lease (e.g., reduces the square footage of leased space), IFRS 16 requires a lessee to decrease the carrying amount of the right-of-use asset to reflect partial or full termination of the lease. Any difference between those adjustments is recognised in profit or loss at the effective date of the modification.

For all other lease modifications which are not accounted for as a separate lease, IFRS 16 requires the lessee to recognise the amount of the re-measurement of the lease liability as an adjustment to the corresponding right-of-use asset without affecting profit or loss.

Short term and low value leases

The group has made an accounting policy election, by class of underlying asset, not to recognise lease assets and lease liabilities for leases with a lease term of 12 months or less (i.e., short-term leases).

The group has made an accounting policy election on a lease-by-lease basis, not to recognise lease assets on leases for which the underlying asset is of low value.

Lease payments on short term and low value leases are accounted for on a straight line basis over the term of the lease or other systematic basis if considered more appropriate. Short term and low value lease payments are included in operating expenses in the income statements.

Leases are recognised as a right-of-use asset and a corresponding lease liability at the date at which the leased asset is available for use by the Group.

Assets and liabilities arising from a lease are initially measured on a present value basis. Lease liabilities include the net present value of the following lease payments:

-- Fixed payments (including in-substance fixed payments), less any lease incentives receivable;

-- Variable lease payment that are based on an index or a rate, initially measured using the index or rate as at the

   --     commencement date; 
   --     Amounts expected to be payable by the Group under residual value guarantees; 

-- The exercise price of a purchase option if the Group is reasonably certain to exercise that option; and

-- Payments of penalties for terminating the lease, if the lease term reflects the Group exercising that option.

Lease payments to be made under reasonably certain extension options are also included in the measurement of the liability.

The lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be readily

determined, which is generally the case for leases in the Group, the lessee's incremental borrowing rate is used, being the rate that the individual lessee would have to pay to borrow the funds necessary to obtain an asset of similar value to the right-of-use asset in a similar economic environment with similar terms, security and conditions.

Lease payments are allocated between principal and finance cost. The finance cost is charged to profit or loss over the lease period.

Right-of-use assets are measured at cost which comprises the following:

   --     The amount of the initial measurement of the lease liability; 

-- Any lease payments made at or before the commencement date less any lease incentives received;

   --     Any initial direct costs; and 
   --     Restoration costs. 

Right-of-use assets are generally depreciated over the shorter of the asset's useful life and the lease term on a straight-line basis. If the Group is reasonably certain to exercise a purchase option, the right-of-use asset is depreciated over the underlying asset's useful life.

Share based payment transactions

Employees (including senior executives) of the Group receive part of their remuneration in the form of share-based payment transactions, whereby employees render services as consideration for equity instruments (equity settled transactions).

The cost of equity settled transactions is recognised, together with a corresponding increase in equity, over the period in which the performance and or service conditions are fulfilled, ending on the date on which the relevant employees become fully entitled to the award (the vesting date). The cumulative expense recognised for equity settled transactions at each reporting date until the vesting date reflects the extent to which the vesting period has expired and the Group's best estimate of the number of equity instruments that will ultimately vest. The statement of comprehensive income charge or credit for a period represents the movement in cumulative expense recognised as at the beginning and end of that period. No expense is recognised for awards that do not ultimately vest, except for awards where vesting is conditional upon a market condition, which are treated as vesting irrespective of whether or not the market condition is satisfied, provided that all other performance conditions are satisfied.

Where an equity settled award is cancelled, it is treated as if it had vested on the date of cancellation, and any expense not yet recognised for the award is recognised immediately. However, if a new award is substituted for the cancelled award, and designated as a replacement award on the date that is granted, the cancelled and new awards are treated as if they were a modification of the original award, as described in the previous paragraph.

Defined contribution pension obligation

The Company has a defined contribution plan which requires contributions to be made into an independently administered fund. The amount charged to the statement of comprehensive income in respect of pension costs reflects the contributions payable in the year. Differences between contributions payable during the year and contributions actually paid are shown as either accrued liabilities or prepaid assets in the statement of financial position.

 
  Critical accounting judgements and key sources of estimation 
   uncertainty 
 

Judgements in applying accounting policies and key sources of estimation uncertainty

Amounts included in the financial statements involve the use of judgement and/or estimation. These estimates and judgements are based on management's best knowledge of the relevant facts and circumstances, having regard to previous experience, but actual results may differ from the amounts included in the financial statements. Information about such judgements and estimation is contained in the accounting policies and/or the notes to the financial statements, and the key areas are summarised below.

Judgements

Capitalisation of gas storage costs.

The assessment of whether costs incurred on gas storage development should be capitalised or expensed involves judgement. Any expenditure where it is not probable that future economic benefits will flow to the Group are expensed. Management considers the nature of the costs incurred and the stage of project development and concludes whether it is appropriate to capitalise the costs. The key assumptions depend on whether it is probable that the expenditure will result future economic benefits that are attributable to the assets.

Estimates

Carrying value of gas storage project asset.

The assessment of capitalised project costs for any indications of impairment involves judgement. When facts or circumstances suggest that impairment exists, a formal estimate of recoverable amount is performed, and an impairment loss recognised to the extent that the carrying amount exceeds recoverable amount. Recoverable amount is determined to be the higher of fair value less costs to sell and value in use. The key assumptions are the net income expected to be generated from the facilities, the cost of construction and the date from which the facilities become operational. Management assigns values and dates to these inputs after taking into account market information, engineering design costing and the project programme. A discount rate of 8% (2019: 8%) is applied in determining gas storage project net present values. Salt cavern gas storage projects are long term investments and cash flows are therefore projected over periods greater than 5 years. Engineering design provides for a project life of 40 years (2019: 40 years). It is assumed that 100% (2019: 100%) of a project's capacity will be sold from the date that the capacity becomes operational.

Valuation of assets

Management make judgements in respect of the valuation and carrying value of assets used in operations. A revaluation exercise was undertaken at the time of acquiring certain assets of Harland & Wolff Heavy Industries Limited from the administrators. This revaluation was undertaken based on valuations provided by third party independent valuation experts. At the year-end management made a judgement that the basis for revaluations remained and that on the basis on future expected work there were no indications of impairment. Key estimates and assumptions considered were in respect of expected contract wins and gross margins (25%).

 
Segmental analysis 
 

As at 31 July 2020, the Group was organised into 3 segments: H & W, Gas storage and other being head office related. As the Group expands and seeks to meet the goals laid out in the front end of these financial statements these segments are likely to change. The operating segments are organised, managed and reported to the Chief Operating Decision Maker (the Board of Directors) on their current business type being H & W relating to ship repair related activities, Gas storage and Other which relates to Head office activities.

All operations are continuing and all inter-segment transactions are priced and carried out at arm's length.

The segmental results for the year ended 31 July 2020 are as follows:

 
                                           Ship Repair        Gas Storage                 Head Office            Group 
 Total Revenue                               1,482,081                  -                           -        1,482,081 
 
 Cost of sales                             (1,168,334)           (10,200)                          --      (1,178,534) 
----------------------------------  ------------------  -----------------  --------------------------  --------------- 
 Gross profit                                  313,747           (10,200)                           -          303,547 
 Selling, marketing and 
  administration expenses                  (4,322,185)           (79,159)                 (3,856,239)      (8,257,583) 
 
 Trading EBITDA*                           (4,008,438)           (89,359)                 (3,856,239)      (7,954,036) 
----------------------------------  ------------------  -----------------  --------------------------  --------------- 
 Depreciation, amortisation and 
  impairment                               (1,090,938)              (724)                   (133,003)      (1,224,665) 
 Share based compensation                            -                  -                           -                - 
 Finance income                                      -                  -                           5                5 
 Finance expense                             (941,301)           (97,663)                   (192,213)      (1,231,177) 
----------------------------------  ------------------  -----------------  --------------------------  --------------- 
 Loss before tax                           (6,040,677)          (187,746)                 (4,181,450)     (10,409,873) 
 Taxation 
 Loss after tax                            (6,040,677)          (187,746)                 (4,181,450)     (10,409,873) 
==================================  ==================  =================  ==========================  =============== 
 

No single customer accounted for more than 10% of revenue.

The CODM considered, that for the financial period ending 31 July 2019, there was only one operating segment being the development of gas storage facilities within the United Kingdom. As such no operating segment note is shown for the comparatives as it would be same as that shown in the primary statements.

Other income

The analysis of the group's other gains and losses for the year is as follows:

 
                                               31 July  31 July 
                                                  2020     2019 
                                                   GBP      GBP 
Gain on disposal of intangible assets                -  100,000 
Gain from reversal of deferred consideration         -  200,000 
                                               -------  ------- 
                                                     -  300,000 
                                               =======  ======= 
 

The Company announced in October 2018 the disposal of its net profit interests in three offshore UK oil and gas licences to Westmount Energy Limited for GBP100,000.

Following repayment and cancellation of a loan with Baron Oil dated 5 January 2017 loan, Baron was entitled to receive an additional GBP200,000 in the event of a sale or disposal by InfraStrata or its subsidiaries, IMEL and InfraStrata UK, of substantially all of their assets, which comprise interests in the Islandmagee gas storage project, and/or a change in control of InfraStrata, IMEL or InfraStrata UK, within two years from the date of the loan agreement. This potential liability expired on 05 January 2019 as none of the conditions that could trigger payment to Baron Oil were met. Therefore, the liability of GBP200,000 to Baron Oil has been written off in full.

Expenses by nature

Arrived at after charging/(crediting)

 
                                            31 July  31 July 
                                               2020     2019 
                                                GBP      GBP 
Wages and salaries                        4,307,672  477,098 
Social security costs                       581,624   47,906 
Other short-term employee benefits           19,634        - 
Pension contributions                       102,841    9,403 
Share-based payment expenses                 12,453  106,373 
Other employee expense                      260,026    8,030 
Depreciation expense                      1,222,400      892 
Amortisation expense                          2,256        - 
Light, heat and power                       234,518        - 
Insurance                                   334,150    9,214 
Computer software and maintenance costs     237,641   29,073 
Advertising                                 252,706   77,742 
Legal and professional fees                 606,337  131,523 
Other expenses                            1,365,097  486,040 
 
 
 
Taxation 
                                                                                                    31 July    31 July 
                                                                                                     2020       2019 
                                                                                                     GBP        GBP 
Deferred tax                                                                                           -    - 
Current tax                                                                                            -    - 
                                                                                                    ----  --- 
Total tax charge/(credit)                                                                              -    - 
                                                                                                    ====  === 
 
 

The tax on profit before tax for the year is the same as the standard rate of corporation tax in the UK (2019: the same as the standard rate of corporation tax in the UK) of 19% (2019: 19%).

The differences are reconciled below:

 
                                                       31 July      31 July 
                                                          2020         2019 
                                                           GBP          GBP 
Loss before tax                                   (10,409,873)  (1,182,712) 
                                                  ============  =========== 
Corporation tax at standard rate                   (1,977,876)    (224,715) 
Increase from effect of capital allowances 
 depreciation                                          364,974            - 
Increase from effect of expenses not deductible 
 in determining taxable profit (tax loss)               32,111            - 
Increase from effect of unrelieved tax 
 losses carried forward                              1,580,791      224,715 
                                                  ------------  ----------- 
Total current tax charge/(credit)                            -            - 
                                                  ============  =========== 
 

No tax charge/ credit arises in 2020 or in 2019 due to expenses not permitted for tax purposes and losses carried forward.

Factors that may affect the future tax charge

The Group has trading losses of GBP7,778,041 (2019: GBP7,704,980) which may reduce future tax charges. Future tax charges may also be reduced by capital allowances on cumulative capital expenditure.

No deferred tax asset has been recognised due to uncertainty as to when profits will be generated against which to relieve said asset.

Earnings per Share

 
                                                        2019            2019 
                                                         GBP             GBP 
 
 The loss for the purposes of basic and 
  diluted earnings per share being the net 
  loss attributable to equity shareholders 
 Continuing operations                          (10,409,875)     (1,182,712) 
 
   Number of shares 
 Weighted average number of ordinary shares 
  for the purpose of: 
 Basic earnings per share                      3,066,492,177   1,336,479,710 
 Basic and diluted earnings per share 
 Continuing Operations                               (0.34)p         (0.09)p 
 

Given the Group made a loss during the current financial year no diluted EPS is shown. Details of those potential shares that would be diluted can be found in notes under Share based payments.

 
Intangible assets 
 

Group

 
                                                   Development  Gas storage 
                            Artefacts  Trademarks        costs   development  Project costs        Total 
                                  GBP         GBP          GBP       GBP           GBP               GBP 
Cost 
At 1 August 2018                    -           -            -     7,479,690         26,361    7,506,051 
Grant accrual during year           -           -            -     (950,622)              -    (950,622) 
Additions                           -           -            -     3,639,537              -    3,639,537 
Disposals                           -           -            -             -       (26,361)     (26,361) 
                            ---------  ----------  -----------  ------------  -------------  ----------- 
At 31 July 2019                     -           -            -    10,168,605              -   10,168,605 
                            ---------  ----------  -----------  ------------  -------------  ----------- 
At 1 August 2019                    -           -            -    10,168,605              -   10,168,605 
Grant accrual during year           -           -            -   (1,130,149)              -  (1,130,149) 
Additions                     200,000     170,000       55,000       583,311         21,732    1,030,043 
Revaluation                   447,395     693,192            -             -              -    1,140,587 
                            ---------  ----------  -----------  ------------  -------------  ----------- 
At 31 July 2020               647,395     863,192       55,000     9,621,767         21,732   11,209,086 
                            ---------  ----------  -----------  ------------  -------------  ----------- 
Amortisation 
At 1 August 2018                    -           -            -             -              -            - 
                            ---------  ----------  -----------  ------------  -------------  ----------- 
At 31 July 2019                     -           -            -             -              -            - 
                            ---------  ----------  -----------  ------------  -------------  ----------- 
Amortisation charge                 -           -        2,255             -              -        2,255 
                            ---------  ----------  -----------  ------------  -------------  ----------- 
At 31 July 2020                     -           -        2,255             -              -        2,255 
                            ---------  ----------  -----------  ------------  -------------  ----------- 
Net book value 
 
 
Intangible assets (continued) 
                                          Development  Gas storage 
                   Artefacts  Trademarks        costs   development  Project costs       Total 
                         GBP         GBP          GBP       GBP           GBP              GBP 
At 31 July 2020      647,395     863,192       52,745     9,621,767         21,732  11,206,831 
                   =========  ==========  ===========  ============  =============  ========== 
At 31 July 2019            -           -            -    10,168,605              -  10,168,605 
                   =========  ==========  ===========  ============  =============  ========== 
 
 
 

Intangible assets carried at revalued amounts

The fair value of the company's Artefacts was revalued on 30 June 2019 by Hilco Valuation services.

Had this class of asset been measured on a historical cost basis, their carrying amount would have been GBP200,000.

The revaluation surplus (gross of tax) recognised in profit and loss amounted to GBP447,395.

The revaluation surplus (gross of tax) recognised in other comprehensive income amounted to GBP447,395.

The fair value of the company's Trademarks was revalued on 30 June 2019 by Hilco Valuation Services.

--

Had this class of asset been measured on a historical cost basis, their carrying amount would have been GBP170,000.

The revaluation surplus (gross of tax) recognised in profit and loss amounted to GBP693,192.

The revaluation surplus (gross of tax) recognised in other comprehensive income amounted to GBP693,192.

 
Property, plant and equipment 
 

Group

 
                                                                           Right of use 
                     Land and buildings  Office equipment  Motor vehicles         asset  Plant & machinery       Total 
                                    GBP               GBP             GBP           GBP                GBP         GBP 
Cost or valuation 
At 1 August 2018                440,100                 -               -             -                  -     440,100 
Additions                       290,699             8,918               -             -                  -     299,617 
                     ------------------  ----------------  --------------  ------------  -----------------  ---------- 
At 31 July 2019                 730,799             8,918               -             -                  -     739,717 
                     ------------------  ----------------  --------------  ------------  -----------------  ---------- 
At 1 August 2019                730,799             8,918               -             -                  -     739,717 
Revaluation 
 recognised in 
 other 
 comprehensive 

 income                       3,066,738            25,972         373,464             -          2,346,331   5,812,505 
Additions                     2,806,171           203,574         297,056    14,302,133          2,469,908  20,078,842 
                     ------------------  ----------------  --------------  ------------  -----------------  ---------- 
At 31 July 2020               6,603,708           238,464         670,520    14,302,133          4,816,239  26,631,064 
                     ------------------  ----------------  --------------  ------------  -----------------  ---------- 
Depreciation 
At 1 August 2018                      -                 -               -             -                  -           - 
                     ------------------  ----------------  --------------  ------------  -----------------  ---------- 
Charge for year                       -               892               -             -                  -         892 
                     ------------------  ----------------  --------------  ------------  -----------------  ---------- 
At 31 July 2019                       -               892               -             -                  -         892 
                     ------------------  ----------------  --------------  ------------  -----------------  ---------- 
At 1 August 2019                      -               892               -             -                  -         892 
Charge for the year             276,050            62,974          55,478       283,616            544,283   1,222,401 
                     ------------------  ----------------  --------------  ------------  -----------------  ---------- 
At 31 July 2020                 276,050            63,866          55,478       283,616            544,283   1,223,293 
                     ------------------  ----------------  --------------  ------------  -----------------  ---------- 
 
 
 
Property, plant and equipment (continued) 
 Carrying amount 
                                                                        Right of use 
                  Land and buildings  Office equipment  Motor vehicles         asset  Plant & machinery       Total 
                                 GBP               GBP             GBP           GBP                GBP         GBP 
At 31 July 2020            6,327,658           174,598         615,042    14,018,517          4,271,956  25,407,771 
                  ==================  ================  ==============  ============  =================  ========== 
At 31 July 2019              730,799             8,026               -             -                  -     738,825 
                  ==================  ================  ==============  ============  =================  ========== 
 

Included within the net book value of land and buildings above is GBP1,096,982 (2019: GBP730,799) in respect of freehold land and buildings and GBP5,230,676 (2019: GBPNil) in respect of short leasehold land and buildings.

Revaluation

The fair value of the company's Land and buildings was revalued on 30 June 2019 by Hilco. Had this class of asset been measured on a historical cost basis, their carrying amount would have been GBP5,506,046. The revaluation surplus (gross of tax) amounted to GBP3,066,738.

The fair value of the company's Furniture, fittings and equipment was revalued on 30 June 2019 by Hilco Valuation Services. Had this class of asset been measured on a historical cost basis, their carrying amount would have been GBP61,726. The revaluation surplus (gross of tax) amounted to GBP25,972.

The fair value of the company's Motor vehicles was revalued on 30 June 2019 by Hilco Valuation Services. Had this class of asset been measured on a historical cost basis, their carrying amount would have been GBP670,520. The revaluation surplus (gross of tax) amounted to GBP373,464.

The fair value of the company's Plant and machinery was revalued on 30 June 2019 by Hilco Valuation Services. Had this class of asset been measured on a historical cost basis, their carrying amount would have been GBP4,212,621. The revaluation surplus (gross of tax) amounted to 2,346,331.

 
 Company Property, plant and equipment 
                               Furniture, 
                               fittings and  Right of use 
                                equipment        asset       Total 
                                   GBP            GBP         GBP 
Cost 
At 1 August 2019                      8,918             -      8,918 
Additions                            22,857     2,770,305  2,793,162 
                              -------------  ------------  --------- 
At 31 July 2020                      31,775     2,770,305  2,802,080 
                              -------------  ------------  --------- 
Depreciation 
At 1 August 2019                        892             -        892 
Charge for the period year            3,145       129,858    133,003 
                              -------------  ------------  --------- 
At 31 July 2020                       4,037       129,858    133,895 
                              -------------  ------------  --------- 
Carrying amount 
At 31 July 2020                      27,738     2,640,447  2,668,185 
                              =============  ============  ========= 
At 31 July 2019                       8,026             -      8,026 
                              =============  ============  ========= 
 
 
 
Investments (continued) 
                                                                 Proportion 
                                                                  of ownership 
                                                                  interest 
                                                                  and voting 
                                                                  rights held 
Name of subsidiary    Principal activity   Registered office      2020          2019 
                                           C/o Donaldson Legal 
                                            Consulting Llp 
                                            Shore Studios 
Harland and Wolff                           18c Shore Road 
 Technical Services                         Holywood, BT18 9HX 
 Limited              Dormant               Northern Ireland     100%           0% 
 

* indicates direct investment of the company

Summary of the company investments

 
                                                          31 July 
                                                             2020 
                                                              GBP 
Subsidiaries                                                  GBP 
Cost 
At 1 August 2018                                       15,247,011 
Impairment                                           (15,247,011) 
                                                     ------------ 
At 31 July 2019                                                 - 
                                                     ------------ 
At 1 August 2019                                       15,247,011 
Revaluation                                          (15,247,011) 
                                                     ------------ 
At 31 July 2020                                                 - 
                                                     ------------ 
Net book value 
At 31 July 2020                                                 - 
                                                     ============ 
At 31 July 2019                                                 - 
                                                     ============ 
 
 
 
 
 
  Inventories 
 
                           Group                 Company 
                       31 July  31 July     31 July       31 July 
                          2020     2019        2020          2019 
                           GBP      GBP         GBP           GBP 
Work in progress        20,872        -           -             - 
Other inventories      310,593        -           -             - 
                     ---------  -------  ----------  ------------ 
                       331,465        -           -             - 
                     =========  =======  ==========  ============ 
Trade and other receivables 
                           Group                 Company 
                       31 July  31 July     31 July       31 July 
                          2020     2019        2020          2019 
                           GBP      GBP         GBP           GBP 
Trade receivables      225,276        -           -             3 
Receivables from 
 related parties             -        -  17,158,325    10,351,634 
Other receivables    1,397,183  177,985     158,539        73,257 
Prepayments            310,795   24,081      61,647        24,081 
                     ---------  -------  ----------  ------------ 
                     1,933,254  202,066  17,378,511    10,448,975 
                     =========  =======  ==========  ============ 
 
 

The trade and other receivables classified as financial instruments are disclosed below. The group's exposure to credit and market risks, including maturity analysis, relating to trade and other receivables is disclosed in "Financial risk review".

 
 
  Cash and cash equivalents 
                                   Group               Company 
                              31 July    31 July    31 July  31 July 
                                 2020       2019       2020     2019 
                                  GBP        GBP        GBP      GBP 
Cash on hand                      109        646          -      647 
Cash at bank                6,723,127     10,594  6,686,057    8,137 
                            ---------  ---------  ---------  ------- 
                            6,723,236     11,240  6,686,057    8,784 
Bank overdrafts                     -      (988)          -    (988) 
                            ---------  ---------  ---------  ------- 
Cash and cash equivalents 
 in statement of cash 

 flows                      6,723,236     10,252  6,686,057    7,796 
                            =========  =========  =========  ======= 
 
 
  Trade and other payables 
                                   Group               Company 
                              31 July    31 July    31 July  31 July 
                                 2020       2019       2020     2019 
                                  GBP        GBP        GBP      GBP 
Trade payables              2,127,487    999,392    202,039   59,051 
Social security and 
 other taxes                1,786,782     43,758  1,028,267   43,758 
Outstanding defined 
 contribution pension 
 costs                         50,352      4,708      2,626    4,708 
Other payables                278,347     24,855     12,321   12,321 
Accrued expenses            1,860,015     38,629     69,455   19,504 
                            ---------  ---------  ---------  ------- 
                            6,102,983  1,111,342  1,314,708  139,342 
                            =========  =========  =========  ======= 
 

The group's exposure to market and liquidity risks, including maturity analysis, related to trade and other payables is disclosed in "Financial risk review".

 
Loans and borrowings 
                              Group             Company 
                          31 July  31 July  31 July  31 July 
                             2020     2019     2020     2019 
                              GBP      GBP      GBP      GBP 
Current loans and borrowings 
Bank overdrafts                 -      988        -      988 
Short-term borrowings     863,655  785,095        -        - 
Lease liabilities- 
 right of use           1,087,885        -  513,000        - 
Other borrowings          830,000        -  300,000        - 
                        ---------  -------  -------  ------- 
                        2,781,540  786,083  813,000      988 
                        =========  =======  =======  ======= 
 
 
                             Group              Company 
                         31 July  31 July    31 July  31 July 
                            2020     2019       2020     2019 
                             GBP      GBP        GBP      GBP 
Non-current loans and borrowings 
Lease liabilities- 
 right of use         13,699,579        -  2,287,378        - 
Other borrowings       2,090,000        -          -        - 
Financial liability      200,000  200,000    200,000  200,000 
                      ----------  -------  ---------  ------- 
                      15,989,579  200,000  2,487,378  200,000 
                      ==========  =======  =========  ======= 
 
 
Loans and borrowings (continued) 
 

Group

Other borrowings

Riverfort Global Opportunities PCC Limited Loan

Harland & Wolff (Belfast) Ltd ("H & W") obtained an unsecured short term loan amounting to GBP530,000 as at 31 July 2020 and this amount is repayable by February 2021. The loan has been provided by Riverfort Global Opportunities PCC Limited and a guarantee has been provided by InfraStrata Plc.

The Riverfort Global Opportunities PCC Limited loan is repayable in full by February 2021. The loan has an interest rate of 1.5% per month.

YA & Riverfort loan

On 10 February 2020, InfraStrata Plc (the "Company") announced the restructuring of the sum of GBP555,555.58 that was outstanding, and was drawn down as the second tranche, of the GBP2.2 million loan facility with Riverfort Global Opportunities PCC Limited and YA II PN Limited (the "Investors") (the "Loan"). Details of this second drawdown under the Loan were announced on 14 November 2019. Under the restructuring, the Company was no longer required to make a bullet repayment of GBP555,555.58 on 14 February 2020. Instead, a sum of GBP55,555.58 of the principal plus fees and accrued interest in aggregate, GBP110,624.98 was paid to the Investors immediately and the remaining GBP500,000 of principal ("Remaining Loan") has been amortised over a period of 10 months commencing 31 March 2020 and ending on 31 December 2020. The amortised payment schedule carries an interest rate of 12% per annum from 14 February 2020, payable monthly in arrears. The Remaining Loan is not convertible into shares, save in the event of default. At 31 July 2020 the outstanding loan amounts to GBP300,000. This sum has been paid in full as at 31 December 2020.

Portnum Capitis Ltd Loan

H & W obtained a term loan amounting to GBP2,090,000 and has been secured by Portnum Capitis Ltd by way of a debenture over the assets of H & W and a guarantee has been provided by InfraStrata Plc.

The Portnum Capitis Ltd loan is an interest only loan and is repayable in full by February 2022. The loan has a fixed interest rate of 13.2% per annum.

Moyle Investments

In December 2017, The Company's wholly-owned subsidiary, InfraStrata UK Limited increased its ownership in IMEL from 90% to 100% by acquiring the remaining interest from Moyle Energy Investments Limited ("Moyle") at par value. In recognition of the support by Moyle of the gas storage project at Islandmagee, InfraStrata plc will pay Moyle GBP200,000 on first gas being injected into storage.

The loans and borrowings classified as financial instruments are disclosed in the financial instruments note.

The group's exposure to market and liquidity risk; including maturity analysis, in respect of loans and borrowings is disclosed in the financial risk management and impairment note.

Financial instruments

Financial assets at amortised cost

 
                                          Group      Group     Company     Company 
=================================== 
                                           2020       2019        2020        2019 
=================================== 
                                            GBP        GBP         GBP         GBP 
===================================  ==========  =========  ==========  ========== 
Trade and other receivables           1,933,254    202,066      84,838      84,838 
Due from subsidiary undertakings              -          -  17,583,325  10,351,634 
Cash and Cash Equivalents             6,723,236     11,240   6,686,057       7,799 
===================================  ==========  =========  ==========  ========== 
Financial liabilities at amortised 
 cost 
                                          Group      Group     Company     Company 
                                           2020       2019        2020        2019 
                                            GBP        GBP         GBP         GBP 
===================================  ==========  =========  ==========  ========== 
Current liabilities 
Trade and other payables              6,102,983  1,111,342   1,314,708     139,342 
Other borrowings                        830,000          -     300,000           - 
Costain loan                            785,095    785,095           -           - 
===================================  ==========  =========  ==========  ========== 
                                      8,805,963  1,896,437   2,127,708     139,342 
===================================  ==========  =========  ==========  ========== 
 
  Non-current liabilities 
Lease liabilities - right of 
 use                                 13,699,579          -   2,287,378           - 
Moyle investments                       200,000    200,000     200,000     200,000 
===================================  ==========  =========  ==========  ========== 
 
                                                                                                           13,899,579   200,000 200,000 200,000 
 
Financial risk review 
 

Group

This note presents information about the group's exposure to financial risks and the group's management of capital.

Credit risk

The credit risk on liquid funds is limited because the Group and Company policy is to only deal with counter parties with high credit ratings. The Group has held all funds in Bank of Scotland during the last three years. In the directors' view there is a low risk of the bank holding the Group's funds at year end failing in the foreseeable future. The carrying amount of financial assets represents the maximum credit exposure.

The reconciling items between the trade and other receivables presented above and that presented in notes under Loans and Borrowings are VAT receivable and prepayments. No receivables are past due but not impaired.

Liquidity risk

The total carrying value of Group and Company financial liabilities is disclosed in notes under financial liability and in trade and other payable. The Company seeks to issue share capital, gain loan funding and/or dispose of assets when external funds are required. The reconciling items between the contractual maturities presented below and that presented in notes under financial liability and Financial Instruments are taxes and accruals.

The following table shows the contractual maturities of the Group's and Company's financial liabilities, all of which are measured at amortised cost.

 
                                 Group     Group     Company     Company 
                                  2020      2019    2020 GBP    2019 GBP 
                                   GBP       GBP 
--------------------------  ----------  --------  ----------  ---------- 
 Trade and other payables 
 Within one month            2,185,362   999,392     247,380      59,051 
 More than one month 
  less than one year                 -         -           -           - 
 Financial liability 
 Within one month                    -         -           -           - 
 More than one month 
  less than one year         1,693,655   785,095     300,000           - 
 More than one year          2,290,000   200,000     200,000     200,000 
--------------------------  ----------  --------  ----------  ---------- 
 
 
 
 
 
 
 
 
 
 
 
   Financial risk review (continued) 
 
   The Group's trade receivables are all denominated in UK Sterling 
   and the ageing of gross trade 
 receivables is as follows: 
 

                                Group               Group          Company          Company 
                                 2020                2019             2020             2019 
                                  GBP                 GBP              GBP              GBP 
 0-2 months                             225,276 
 2-3 months                                             -                -                -                - 
 Over 3 months                                          -                -                -                - 
                                               225,276                   -                -                - 
-------------------------------------  ------------------  ---------------  ---------------  --------------- 
 
 

Capital management

The Group's objectives when managing capital are to safeguard the Group's ability to continue as a going concern in order to achieve its operational objectives.

The Group defines capital as being share capital plus reserves. The Board of Directors monitors the level of capital as compared to the Group's forecast cash flows and long-term commitments and when necessary issues new shares. Dilution of existing shareholder value is considered during all processes which may result in an alteration of share capital in issue.

Ordinary share capital in issue is managed as capital and the redeemable preference shares in issue are managed as current liabilities. The Group is not subject to any externally imposed capital requirements and there are no restrictions in place over the different types of shares.

 
Related party transactions 
 

During the course of the year, the Company utilised the services of Arrow Marine Management Limited ("AMM"), in which John Wood is sole director, for the various survey works and studies required to the undertaken in order to update the necessary environmental information required for the marine licence in relation to the Islandmagee gas storage project. The total fees paid for utilisation of the survey boat and personnel by the Company was GBP258,930 (2019:GBPNil) and the balance outstanding at 31 July 2020 was GBPNil.

The executive services of Graham Lyon are provided through Soncer Limited, a private oil and gas leadership consulting firm, in which Graham is sole director. The executive fees paid during the period were GBPNil (2019: GBP20,000) and the balance outstanding at 31 July 2020 was GBPNil.

Prior to his employment in April 2019, the non-executive services of Arun Raman were provided through Mira Energy Group Limited, a private consulting company in which Arun is a sole director. The executive fees paid during the period were GBPNil (2019: GBP35,600) and the balance outstanding at 31 July 2020 was GBPNil.

 
Post Balance Sheet Events 
 

Acquisition of Harland & Wolff (Appledore)

On 25 August 2020, the Company announced the acquisition of substantially all the assets of Appledore Shipyard located in Bideford, North Devon, to be renamed H&W (Appledore), (the "Acquisition").

Key highlights:

   --    Highly strategic asset with a rich shipbuilding heritage 
   --    Significant opportunity to build a prominent presence in mainland UK 

-- Ship and block building, ship repair and fabrication activities for the renewable industry and commercial market, with particular focus on vessels <119m and, therefore, complementary to H&W (Belfast)

   --    Significant synergies between Appledore and Harland & Wolff Belfast (H&W) 
   --    29 acres of freehold land 
   --    322,975 square feet of undercover fabrication halls 
   --    119 metre length of undercover dry-dock 
   --    500 metre quayside at the Newquay yard for ship repairs 

-- Total consideration payable of GBP7million, of which GBP5.60million in cash and GBP1.40million in Ordinary Shares

   --    Consideration payable in 5 tranches over 30 months 

Rationale for the Acquisition

Since the Company acquired H&W (Belfast) in December 2019 and announced its maiden revenues, H&W (Belfast) has welcomed a number of vessels, including but not limited to, ferries, cruise vessels and offshore support vessels. H&W (Belfast's) core competence lies in vessels that require a dock length in excess of 300 metres. With two dry docks at 356 metres and 556 metres in length respectively, H&W (Belfast) has the largest drydock capability in the UK, the second largest in Europe and, therefore, puts it in a unique position in relation to larger vessels.

The Company considers the mid-sector space of shipyards having dock lengths between 120 metres and 300 metres to be busy, crowded and highly competitive. The Company believes that entering the market of mid-sized shipyards would not lead to any significant competitive advantage, vis-à-vis other established players and this will not be an area of focus for the Company at this time. H&W (Appledore), on the other hand, will focus on the smaller end of the market, with a dock length of 119 metres. There are very few shipyards in the UK that can offer this type of undercover building dock and repair facility and, given the number of sovereign vessels required in this category over the next ten years, the Company believes that this is a market segment that cannot be ignored. Having studied several smaller facilities, the Directors believe that H&W (Appledore) is, by far, the most suitable, from a locational, strategic and operational point of view and is well positioned to win contracts in this sector.

With this Acquisition, the Company believes that it can achieve a dominant position at two distinct ends of the shipyard market; the lower end of the market at less than 119 metres of dock length (with H&W (Appledore)) and the upper end of the market, requiring dock lengths of 300+ metres (with H&W (Belfast)). With less competition at both ends of the market, the Company believes that it is now in a unique situation to attract, win and retain business specifically targeting both ends of the size spectrum.

 
 
    Post Balance Sheet Events (continued) 
 

H&W (Appledore) is strategically situated in North Devon and the Company believes that it is ideally placed to win and service contracts across the five key markets that the Company has laid out as its strategy for the future: ferry, defence, commercial fabrication, oil & gas and renewables. As with H&W (Belfast), H&W (Appledore) will offer the Company's six core services to each of these markets that include technical services, fabrication & construction, repairs & maintenance, in-service support, conversions and decommissioning. Given H&W (Appledore's) size and capabilities, the Company believes that it will be the "go-to" yard in the region for small vessel requirements across these five markets and six sectors.

Just like H&W (Belfast), H&W (Appledore) enjoys the advantage of an existing and robust supply chain and a skilled workforce in the area. Whilst the yard has been dormant in recent months and the Acquisition therefore only comes with one employee (who is the current site manager), the Company believes that the workforce can be very quickly ramped up upon execution of contracts, discussions for which are already being undertaken with both Government and private vessel owners. There was no turnover attributable to the assets over the last 12 months.

H&W (Belfast) has been involved in the bidding process for a number of large contracts and, should they come to fruition, the facilities would have limited room for incremental business. H&W (Appledore) would be ideally placed to handle any spill-over of work from H&W (Belfast) in addition to tendering and bidding for its own set of contracts. Whilst the two yards are completely distinct in terms of their respective sizes, both have a number of common capabilities that are expected to create operating synergies and economies of scale.

The Company envisages each yard to be a standalone business unit in its own right, i.e., each yard will have its own profit and loss account, balance sheet, business contracts and lines of financing. H&W (Belfast's) contracts will tend to be large and spread over a number of months and years, given the scale of the business that it is currently negotiating. H&W (Appledore's) contractual profile, on the other hand, is expected to consist of smaller contracts and will tend to be fast-moving in addition to larger new build contracts that will be spread over several years.

The Government's policy in relation to levelling up, "build, build, build" and, most importantly, the rolling out of its national shipbuilding policy, are further drivers to the success of Appledore in due course. The Company has always taken a position that it will not be reliant on Ministry of Defence (MoD) contracts for the long-term sustainability of its business. However, with Appledore's strategic presence in mainland UK, it offers the MoD and other government departments such as the Home Office and Department for Transport an exciting and cost-effective domestic option for a number of smaller vessel builds that are in the pipeline in the months to come. In addition, a number of wind farm projects in the surrounding areas are planned in the near future and they will require UK fabrication with load-out capacity. Whilst Government policy stipulates the requirement for a substantial proportion of locally fabricated content, the availability of such fabrication capability across the UK is highly limited. As such, the Company believes that H&W (Appledore) is ideally positioned to fill that gap and bid for these fabrication contracts. Discussions have already commenced with wind farm developers and the Company hopes to make tangible progress in due course.

Consideration

The Company has agreed to pay a total Consideration of GBP7million for the Acquisition of substantially all the assets of Appledore. The Consideration will be payable in the following tranches:

Tranche 1 on Completion:

A total of GBP1.50million consisting of cash of GBP1.20million and 784,404 ordinary shares of 1 penny each in the capital of the Company ("Ordinary Shares") equivalent to GBP300,000

Tranche 2 on the first anniversary of Completion of GBP1.50million:

A total of GBP1.50million consisting of cash of GBP1.20million and Ordinary Shares in the Company equivalent to GBP300,000

Tranche 3 on the second anniversary of Completion:

A total of GBP2million consisting of cash of GBP1.60million and Ordinary Shares in the Company equivalent to GBP400,000

Tranche 4 on the 30th month anniversary of Completion:

A total of GBP2million consisting of cash of GBP1.60million and Ordinary Shares in the Company equivalent to GBP400,000

The number of Ordinary Shares that are issued on each respective tranche date will be calculated using the Volume Weighted Average Price ("VWAP") of InfraStrata's Ordinary Shares for the 14 trading days prior to the third business day before the respective tranche date (or before completion in respect of the first tranche).

Accordingly, an application has been made for 784,404 new Ordinary Shares to be admitted to trading on AIM, which is expected to occur on 28 August 2020. Upon admission, the Company's issued share capital will consist of 64,944,486 Ordinary Shares with one voting right each. The Company does not hold any Ordinary Shares in treasury. Therefore, the total number of Ordinary Shares and voting rights in the Company will be 64,944,486. This figure may be used by shareholders in the Company as the denominator for the calculations by which they will determine if they are required to notify their interest in, or a change to their interest in, the share capital of the Company under the FCA's Disclosure Guidance and Transparency Rules.

Acquisition Assets:

The Acquisition will include, amongst other things, the following key assets:

   --    29 acres of freehold land situated on waterfront 
   --    322,975 square feet of undercover fabrication halls 
   --    118 metre length of undercover dry-dock 
   --    500 metre quayside at the Newquay yard for ship repairs 
   --    Panel hall and bar preparation area 
   --    Burning hall and design offices 
   --    Minor assembly and cold frame bending shop 
   --    Steel stockyard and shot blast plant 
   --    Pipeline fabrication equipment 
   --    Fitting and machining equipment 

-- Other assets including but not limited to stock, main stores, electrical substation and back-up generators, office and training centre buildings

Placing of new shares

On 23 December 2020, the Company announced that it had conditionally raised, in aggregate, up to GBP7.4 million (before expenses) by way of a placing of new 14,222,225 Ordinary Shares at a price of 45 pence per share to existing and new investors (the "Placing"), as well as an Open Offer of up to 2,239,465 new Ordinary Shares to be issued to Qualifying Shareholders at a price of 45 pence per share. The Placing is being conducted in two tranches.

The First Placing will utilise the Company's existing authorities to allot shares and disapply pre-emption rights granted at its most recent general meeting, whilst the Second Placing and Open Offer will be subject to the approval of Shareholders to allot the Second Placing Shares and the Open Offer Shares at a General Meeting. A circular (the "Circular") containing further details of the General Meeting to be held on 13 January 2021 was posted to Shareholders and was available to view on the Company's website.

Transaction Highlights:

-- Placing to raise GBP6.4 million (before expenses) in two tranches, the First Placing of approximately GBP4.0 million and the Second Placing of approximately GBP2.4 million.

-- The net proceeds from the Placing will strengthen the Company's balance sheet and continue to enable it to tender for and win larger contracts, as well as to:

-- provide capital expenditure for inter alia, the acquisition of a robotic welding panel line and other yard refurbishment programmes in preparation for the potential award and subsequent execution of fabrication contracts; and

-- provide sufficient working capital to improve negotiating position on new contract opportunities by removing the potential for an emphasis of matter statement within upcoming full year results.

On 13 January 2021, the Company announced that all resolutions put to Shareholders at the General Meeting held on that day in connection with the Placing and Open Offer to raise up to GBP7.4 million (before expenses), were duly passed.

The Company further announced that it has raised the maximum amount possible under the Open Offer of GBP1.0 million (before expenses), having received valid applications for 5,173,144 Open Offer Shares in aggregate, including 4,025,457 Open Offer Shares applied for under the Excess Application Facility. Accordingly, the Company has issued the maximum of 2,239,465 Open Offer Shares to be admitted to trading on AIM.

As the Open Offer was oversubscribed, the Directors of the Company undertook a scaling back process, on a pro-rata basis, with the same scaling methodology to be applied to each shareholder who applied for excess applications.

Application has been made for the Second Placing Shares and Open Offer Shares, totalling 7,622,082 new Ordinary Shares, to be admitted to trading on AIM ("Admission"). It is anticipated that Admission will become effective and that dealings in the Second Placing Shares and Open Offer will commence at 8.00 a.m. on 14 January 2021. Following Admission, the Company will have 81,406,176 Ordinary Shares in issue, admitted to trading on AIM. This figure (81,406,176) may be used as the denominator for the calculation by which Shareholders will determine if they are required to notify their interest in, or a change to their interest in, the Company under the FCA's Disclosure Guidance and Transparency Rules.

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END

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January 26, 2021 02:00 ET (07:00 GMT)