Preliminary Results

RNS Number : 5347F

Portland Gas plc

10 October 2008

 



Immediate Release

10 October 2008

Portland Gas plc

Preliminary results for the year ended 31 July 2008

Portland Gas plc (AIM: PTG) ('the Company' or 'Portland Gas') the independent gas storage company is pleased to announce preliminary results for the year ended 31 July 2008.

On 16 January 2008 the Company was introduced to AIM via a demerger from its former parent company Egdon Resources Plc. The Company presents consolidated results for the financial year on a merger accounting basis.

Operational and corporate highlights

• Demerger from Egdon Resources completed successfully

• Dorset County Council and the Department for Business, Enterprise and Regulatory Reform granted approvals for the Portland Project

• With advice from NM Rothschild & Sons Limited a process commenced to raise the Portland Project financing requirements through the introduction of joint venture partners 

• An exploration licence received and seismic data acquired for the Larne Lough Project 

• Northern Ireland Energy Holdings Limited became a strategic joint venture partner in the Larne Lough Project 

• Environmental Impact Assessment initiated for the Larne Project

• The Group has continued to evaluate international gas storage opportunities

Financial highlights

• Loss for period of £1,569,621 (2007; £208,515) inclusive of demerger costs of £430,610 

• Loss per share of 2.33p (2007; 0.33p)

• Net cash as at 31 July 2008 £9,276,964 (2007; £3,436,695)

• Capitalised expenditure on gas storage projects during the year of £7,360,442 (2007; £5,005,778)

• Completion of institutional placing on 11 July 2008 to raise £8,640,000 net of expenses

Chief Executive's Report 

On 16 January 2008 Portland Gas demerged from the oil and gas exploration business of Egdon Resources Plc to form an independent sub-surface gas storage company listed on AIM and has now entered an exciting phase of the Group's development. 

On 11 July 2008 the Company completed a placing of 2,535,211 new ordinary shares of 10p each at 355p per share to raise £9 million before expenses. The net proceeds of the placing are to be applied to support the advanced work on the Portland gas storage project, to provide the funds to drill a confirmation borehole for the Larne Lough project and to provide funds to develop further storage opportunities. In addition 47,676 shares were issued to certain Directors at 409p in lieu of cash bonuses on 27 May 2008. Following the placing, the number of issued and fully paid shares increased to 70,384,727.

Portland Project

In May 2008 the planning committee of Dorset County Council granted planning permission to Portland Gas Storage Limited to build a deep underground salt cavern facility at Portland, Dorset. In July 2008, approval was received from the Department for Business, Enterprise and Regulatory Reform (BERR) to construct a 37 kilometre gas pipeline to connect the underground salt cavern storage facility at Portland to the National Transmission System. Permission was also granted for a 16 kilometre brine pipeline between Stafford Farm, near Dorchester, and Portland. 

In August 2006 NM Rothschild & Sons Limited were appointed to advise upon the best means of raising the necessary finance to construct the Dorset project. The Group has embarked upon a process following the grant of planning permission to fund the development through the introduction of partners into a project joint venture structure. 

Full construction of the Dorset project is anticipated to take seven years with initial gas storage operations commencing in 2011. 

Larne Lough Project

In May 2008 the Company announced that it had entered into an agreement with Northern Ireland Energy Holdings Limited to become a joint venture partner in the Larne Lough project. 3D seismic data was acquired in the year and has indicated that the area should be suitable for the creation of a sub-surface gas storage facility under Larne Lough where Portland Gas NI Limited was granted an exploration licence in 2007. An Environmental Impact Assessment is currently being undertaken. 

Storage asset portfolio development

The Group has continued to evaluate international gas storage opportunities, particularly in the liberalised markets of Europe. 

Outlook

The 2008/9 financial year will again be an active time for the business. 

The Group looks forward to the introduction of joint venture partners to the Portland Project and to continuing the development and construction of the Upper Osprey site. 

Portland Gas NI Limited plans to drill a borehole at Larne Lough in order to confirm the suitability of the salt sequence for the creation of caverns for gas storage and to complete the Environmental Impact Assessment. It is anticipated this will result in an application being made for planning permission during 2009. 

In addition the Group will continue in its stated objective of developing an international gas storage business.

Portland Gas plc

Consolidated income statement 

For the year ended 31 July 2008

_________________________________________________________________________

	Notes		2008		2007
			£		£
Continuing operations
Revenue			-		-
Cost of sales			-		-
Gross profit/(loss)			-		-
Administrative expenses			(1,767,017)		(351,708)
Operating loss			(1,767,017)		(351,708)
Investment revenues			197,396		143,193
Loss before taxation			(1,569,621)		(208,515)
Taxation			-		-
Loss for the period			(1,569,621)		(208,515)
Basic and diluted loss per share	1		2.33p		0.33p

Portland Gas plc

Consolidated balance sheet

As at 31 July 2008

___________________________________________________________________________

			2008		2007
			£		£
Non-current assets
Plant and equipment			15,195,167		4,400
Intangible assets			1,263,659		9,049,439
Total non-current assets			16,458,826		9,053,839
Current assets
Trade and other receivables			305,520		328,336
Available for sale financial assets			12,500		-
Cash and cash equivalents			9,276,964		3,436,695
Total current assets			9,594,984		3,765,031
Current liabilities
Trade and other payables			(1,408,848)		(1,441,298)
Net current assets			8,186,136		2,323,733
Non-current liabilities
Obligations under contractual and lease agreements due after one year			(1,963,519)		-
Net assets			22,681,443		11,377,572
Shareholders' funds
Share capital			7,038,473		117,782
Share premium			8,576,705		-
Merger reserve			8,988,112		11,650,514
Share based payment reserve			38,498		-
Retained earnings			(1,960,345)		(390,724)
			22,681,443		11,377,572

Portland Gas plc 

Consolidated statement of changes in equity

For the year ended 31 July 2008

_____________________________________________________________________________

	Share Capital	Share premium	Merger reserve	Share based payment reserve	Retained earnings	Total equity
	£	£	£	£	£	£
Balance at 31 July 2006	100	-	-	-	(182,209)	(182,109)
Loss for the period	-	-	-	-	(208,515)	(208,515)
Total recognised income and expenses for the period	-	-	-	-	(208,515)	(208,515)
Issue of equity share capital	117,682	-	11,650,514	-	-	11,768,196
Balance at 31 July 2007	117,782	-	11,650,514	-	(390,724)	11,377,572
Loss for the period	-	-	-	-	(1,569,621)	(1,569,621)
Total recognised income and expenses for the period	-	-	-	-	(1,569,621)	(1,569,621)
Issue of equity share capital (pre- demerger)	40,000	-	3,960,000	-	-	4,000,000
Portland Gas plc capitalization	6,622,402	-	(6,622,402)	-	-	-
Issue of equity share capital (post-demerger)	258,289	8,576,705	-	-	-	8,834,994
Share based payments	-	-	-	38,498	-	38,498
Balance at 31 July 2008	7,038,473	8,576,705	8,988,112	38,498	(1,960,345)	22,681,443

Portland Gas plc 

Consolidated cash flow statement 

For the year ended 31 July 2008

___________________________________________________________________________

		Notes		2008		2007
				£		£
Net cash (used in) operating activities		2		(1,275,246)		(4,682,415)
Investing activities
Interest received				197,396		143,193
Purchase of intangible assets				(5,645,493)		(3,748,890)
Purchase of plant and equipment				(63,887)		(4,843)
Purchase of financial assets				(12,500)		-
Net cash (used in) investing activities				(5,524,484)		(3,610,540)
Financing activities
Proceeds on issue of ordinary shares				12,639,999		11,768,196
Net cash generated from financing activities				12,639,999		11,768,196
Net increase in cash and cash equivalents				5,840,269		3,475,241
Cash and cash equivalents at beginning of year				3,436,695		(38,546)
Cash and cash equivalents at end of year				9,276,964		3,436,695
Cash and cash equivalents consist of:
Cash in hand and at bank				9,276,964		117,319
Short term bank deposits				-		3,319,376
				£9,276,964		£3,436,695

Portland Gas plc 

Notes to the financial statements  

As at 31 July 2008

_____________________________________________________________________________

1.	Loss per share		2008	2007
			p	p
	Basic loss per share		2.33	0.33
	The calculation of basic loss per share is based upon a loss of £1,569,621 (2007; £208,515) divided by the weighted average number of ordinary shares in issue of 67,381,698 (2007; 63,392,512 being the Egdon Resources Plc weighted average number of shares in issue).  In accordance with IAS 33, diluted earnings per share calculations are not presented as assumed conversion of outstanding share options would be anti-dilutive; as such the diluted earnings per share is equal to the basic loss per share.

2.	Cash (used in) operations				2008	2007
	Group				£	£
	Operating loss for the year				(1,767,017)	(351,708)
	Depreciation				19,342	443
	(Increase)/Decrease in trade and other receivables				22,816	5,666
	(Decrease) in trade and other payables				216,121	(4,336,816)
	Share option expense				38,498	-
	Shares issued in lieu of bonus				194,994	-
	Cash (used in) operations				(1,275,246)	(4,682,415)

3.	Basis of preparation
	The financial information set out in this announcement, which does not constitute the statutory accounts of the Group, is extracted from the consolidated audited statutory accounts for the year ended 31 July 2008, which were approved by the Board on 9 October 2008. The auditors have reported on these accounts in accordance with section 235 of the Companies Act 1985. Their report was unqualified and did not contain a statement under section 237(2) or 237(3) of the Companies Act 1985. The statutory accounts for 2008 will be delivered to the Registrar of Companies after the Annual General Meeting. These results have been prepared on the basis of the accounting policies adopted in the interim accounts for the interim period ended 31 January 2008.

4.	Approval
	The preliminary announcement was approved by the Board on 9 October 2008.

For further information please contact:

Portland Gas plc

Andrew Hindle, Chief Executive Officer                                               020 8332 1200

Craig Gouws, Chief Financial Officer

PR - Watershed

Sara Hudston                                                                                  01308 420785

Investor Relations - Buchanan Communications 

Ben Willey                                                                                      020 7466 5000

Nominated Advisor and Broker - Seymour Pierce 

Jonathan Wright                                                                               020 7107 8000

Sarah Jacobs

Richard Redmayne

Notes to Editors:

Background on Portland Gas 

Portland Gas' business focuses on the development of gas storage projects and associated infrastructure in the United Kingdom and internationally. It currently has two projects in its portfolio, the first on Portland, for which planning permission was granted by Dorset County Council in May 2008 and Pipeline Construction Authorisation was granted by the Department of Business Enterprise and Regulatory Reform in July 2008. The second project is at Larne Lough in Northern Ireland and the Company is progressing further new venture projects in Europe. Further information is available on the Company's website www.portland-gas.com. The company is one of only a few in Europe focused specifically on gas storage development, a sector with significant growth potential given the projected significant increase in demand for gas in Europe over the coming decades.

 

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