TIDMGAS
RNS Number : 9440K
Gasol plc
29 August 2012
Gasol plc
('Gasol' or the 'Company')
Preliminary results for the year ending 31 March 2012
Gasol (AIM: GAS) the West African energy development company,
today announces its preliminary results for the year ending 31
March 2012.
Financial highlights
-- Losses reduced to GBP1.99 million (2011: GBP2.38 million)
-- Cash expenditure on operating activities reduced to GBP1.48
million (2011: GBP1.73 million) as a result of cost cutting and
careful management of expenditure
-- GBP2.66 million of financing successfully secured during the
year to 31 March 2012, which deployed to refinance GBP0.66 million
of existing debt and interest and to provide new working
capital.
Operational highlights
-- New Chairman and management team in place to strengthen the
Board and operational activities
-- The Company's refocused strategy aims to make Gasol the
leading supplier of gas for power generation in West Africa. It
aims to:
-- develop its own gas reserves in the Gulf of Guinea and to
supply this gas to power projects in West Africa; and
-- until natural gas reserves become available, Gasol is working
on plans that will secure availability of regasified LNG as an
interim fuel supply to support current power generation
requirements in the West African region
-- Gasol's strategy encompasses the entire value chain and has
four main components:
-- Source gas reserves
-- Supply gas and LNG
-- Develop gas infrastructure
-- Generate power
Commenting on today's results statement, the Company's Chairman,
Cornelia Meyer, said:
"I believe we have established a solid foundation that has all
of the elements needed to become the gas champion for West Africa.
The Company is now focused on bringing its projects to fruition to
generate independent income streams that will fund its future
plans."
- Ends -
Enquiries
Gasol plc
Alan Buxton, Chief Operating Officer +44 (0) 20 7290 3300
Panmure Gordon (UK) Limited
Dominic Morley (Corporate Finance)
Callum Stewart (Corporate Finance)
Adam Pollock (Corporate Broking) +44 (0) 20 7459 3600
Pelham Bell Pottinger
Olly Scott +44 (0) 20 7861 3891
Chairman's statement
In this, my first Chairman's statement, I first want to say how
pleased I am to join Gasol at such a pivotal time in its
development. The Company has many exciting opportunities ahead of
it and I believe the hard work put into developing these
opportunities is now set to bear fruit.
Economic environment
Looking past the short-term outlook, I see several positive
fundamental factors underpinning gas markets. The first is the
security of national energy supplies. In the wake of the Arab
Spring, threat of energy supply disruptions and power shortages
became very real for many governments and they are now taking steps
to secure back-up supplies of natural gas. The second factor is a
move by many governments to balance their energy portfolios to
avoid overdependence on a single source of energy. Finally, many
countries have begun to replace oil fired power generation with gas
fired capacity in order to reduce exposure to high priced liquid
fuels and to reduce adverse impacts on the local environment as
well as to comply with emissions targets. These factors will
combine to create a strong demand for gas in the medium term.
At the other end of the Gasol strategy, the demand for new
generating capacity in Africa is also strong and will remain so for
the foreseeable future. With less than 25% of the population of
many African countries being able to access electricity, the
region's future generation needs, particularly in Sub-Saharan
Africa, offer Gasol substantial opportunities to invest in the
power generation sector and to secure gas supply agreements for the
supply of gas to those power projects. In Africa too the need for
environmentally friendly forms of power generation is well served
by gas fired power stations.
Perhaps the most difficult economic factor to assess is the
price of LNG in the medium term. Last year's earthquake in Japan
has increased spot LNG prices particularly in Asia to historic
highs. A downward pressure on LNG prices can be expected from the
negative world economic outlook and the shale gas production and
related potential LNG exports in the United States. In addition,
there are new LNG export projects in Australia due to come on
stream shortly. All of these changes will impact the spot market
for LNG and long-term LNG
supply agreements.
Target markets
In Gasol's target markets in West Africa, we see many of these
factors at work, which is why many West African governments are
considering LNG import projects. These projects are not long-term
solutions, but they allow regasified LNG to be supplied on an
interim basis until natural gas (which is lower cost gas) can be
supplied via pipeline.
Gasol's focus on floating regasification and storage technology
provides an ideal platform for meeting the needs of many of these
governments and the Company is actively building relationships with
a number of West African stakeholders in order to help them
understand the advantages of the LNG infrastructure proposed
by the Company. Building trustworthy relationships is an
essential element of Gasol's business plan and is an area in which
the Company is particularly strong.
Year of transition
Last year was a year of transition for Gasol. A new management
team led by Alan Buxton came on board and the Company began to
develop and submit proposals under its new gas to power business
plan. The Company also began work to secure new sources of gas and
LNG. At the same time, other ongoing projects reached their
conclusion. For example, the Company's proposals to Moni Pulo to
purchase and develop gas in the Nigerian offshore licence area OML
114 field reached no satisfactory conclusion. The Company continues
to look at various other opportunities to secure gas reserves and
is hopeful that it will be able to conclude a transaction which
provides value for shareholders in the near future.
As part of the Company's transition, it has been working closely
with African Power Generation Limited ("AfGen"), a wholly owned
subsidary of African Gas Development Corporation ("AGDC"). AfGen
has been undertaking development work for gas and LNG to power
projects in Africa for the past two years. Gasol intends to
cooperate with AfGen in the development of its projects.
Challenges and funding
Many of the projects that Gasol is considering are capital
intensive with long lead times until revenue generation and, in
uncertain financial markets, finding funding for these projects is
challenging. The Company has also spent some time cultivating
relationships with business partners and financing institutions
specialising in African oil and gas projects, and is hopeful that
this work will make it more likely that it can secure funding for
its projects in due course.
Annual General Meeting
The Board considers that a reorganisation of the Company's
capital structure is desirable in order to make the Company's
capital structure more manageable and to enable the Company to
raise funds through the issue of new shares. The Company's current
share price is at or around par value and the Company is prohibited
from issuing new shares at below par value. Shareholders are being
sent separately a Circular and Notice of Annual General Meeting
which gives further details on the proposed reorganisation.
At the Annual General Meeting, we also propose to seek authority
to allot shares in the Company on a non-pre-emptive basis. The
Board believes that such authority is required in order to raise
new funds for our projects in the coming year.
Outlook
I am convinced that Gasol's gas to power strategy will meet the
requirements of governments in West Africa, and with a new
management team in place we will start to see results. I look
forward to working with the new management team, helping them to
bring their projects to fruition.
Financial results
Gasol's financial statements reflect the fact that it remains a
development company and that for the financial year ended 31 March
2012 had no material source of income. The loss after tax for the
financial year is GBP1,991,582 (2011: loss of GBP2,379,494),
equating to a loss per share of 0.16 pence (2011: loss per share of
0.22 pence), which principally represents the administrative costs
of undertaking project development.
Net cash expenditure on operating activities during the year was
GBP1,481,661 (2011: GBP1,726,363). Whilst management continues to
monitor all costs closely, we are now investing in resources to
move our projects forward and these increased costs will be
reflected in the 2013 financial accounts.
Finally, I would like to pay tribute to my predecessor Haresh
Kanabar, who was Chairman of Gasol from 2009 until this year. I am
very pleased that Haresh will remain as a Non-Executive Director of
Gasol and that we will be able to draw on his experience and
counsel going forward. I hope that I can build on what Haresh has
already achieved and make Gasol an African gas champion providing
gas for the next generation of Africans.
Cornelia Meyer
Non-Executive Chairman
29 August 2012
Chief Operating Officer's report
Having joined Gasol in February of this year, I believe the
Company has established a solid foundation upon which we can
deliver our new strategy.
Overview
There are a number of reasons why I am optimistic about Gasol's
future. We have supportive shareholders in AGDC and Afren plc and a
Deed of Cooperation with Afren that gives Gasol first priority
rights over Afren's gas supplies from projects in Africa. A
fundamental part of Gasol's strategy is to secure its own gas
reserves in the Gulf of Guinea, as we believe that, long term, the
supply of natural gas from those reserves to power projects and
other industrial users in the region is the most economic
solution.
Given the timeframe to develop those gas reserves in the Gulf of
Guinea, Gasol's major shareholder, AGDC and AGDC's subsidiary,
Afgen have spent some considerable time developing an interim gas
supply solution. This involves the provision of regasified LNG from
a FSRU to West African countries that have little or no pipeline
gas supply. The interim supply will facilitate the conversion of
existing power stations from liquid fuel to natural gas supply,
whilst also stimulating other gas projects (principally power) and
hence overall gas demand.
The FSRU LNG solution can be brought into operation in a
relatively short period of time, creating both the demand for the
gas and cash flow into the Company ahead of any gas field
development, which has a longer timescale. This will also allow
Gasol to position itself as the preferred regional gas supplier
with its first-mover status.
Gas infrastructure
Gasol's strategy encompasses the entire value chain from
sourcing gas, supplying gas and LNG, developing gas infrastructure
and investment in power projects.
I see a number of opportunities for Gasol to partner with
national gas companies in the West Africa region to develop their
gas infrastructure. There is a chronic shortage of gas in the
region for power plants and major commercial and industrial users,
who currently are using liquid fuels. This shortage will be
exacerbated as power demand grows, particularly from the mining
sector. There is a huge opportunity therefore for Gasol to develop
gas networks, to arrange for the laying of pipelines, and to supply
gas to these customers in subsitution of expensive diesel or heavy
fuel oil.
Funding
During the year, the Company has raised approximately GBP2.66
million of new funds through debt instruments. In each of April and
November, 2011 Gasol entered into convertible loan facilities of
GBP1 million from our major shareholder, AGDC. From the available
facilities of GBP2.0 million, a total of GBP1.52 million was drawn
down at year end. See note 15 for more details. It also entered
into a new convertible loan facility in January 2012 with Banque
Benedict Hentsch & Cie SA for approximately GBP661,000 to roll
over a maturing facility.
Management and staff
Gasol has recruited during 2012 to put its senior management
team in place. David Shipway has joined as Head of Upstream Gas
projects and Michael Kunz as Head of Power. In addition, we are
recruiting to bring further staff on board to deliver on our
projects, in particular those projects involving:
-- the sourcing of gas reserves in the Gulf of Guinea;
-- LNG Import Projects in West Africa; and
-- the development of gas infrastructure and distribution
networks in West Africa.
Although this investment in people increases our development
costs and fixed cost base, it is absolutely essential that Gasol
invests in talented people in order for us to bring these projects
to fruition and I am confident that we will do this.
Alan Buxton
Chief Operating Officer
29 August 2012
CONSOLIDATED INCOME STATEMENT
FOR THE YEAR ENDED 31 MARCH 2012
Note Year ended Year ended
31 March 31 March
2012 2011
GBP GBP
--------------------------------- ---- -------------- --------------
Other operating income 68,000 68,000
Administrative expenses (1,778,784) (1,798,055)
-------------- --------------
(1,710,784) (1,730,055)
Intangible asset impairment - (285,488)
Loss from operations (1,710,784) (2,015,543)
Finance income 1,889 35
Finance costs (282,687) (363,986)
Loss before tax (1,991,582) (2,379,494)
Income tax expense - -
Loss for the year (1,991,582) (2,379,494)
============== ==============
Other comprehensive income:
Currency translation differences - (890)
Total comprehensive income
for the year (1,991,582) (2,380,384)
============== ==============
Loss per ordinary share
Basic and diluted loss
per share 4 (0.16p) (0.22p)
============== ==============
All results relate to continuing activities.
All losses and other comprehensive income for the year are
attributable to equity shareholders of the parent
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
AS AT 31 MARCH 2012
Share Share Reverse Convertible Capital Translation Warrant Retained Total
capital premium acquisition loan contribution reserve and losses equity
reserve reserve reserve options
reserve
GBP GBP GBP GBP GBP GBP GBP GBP GBP
--------------- ---------- ----------- ------------- ------------ ------------- ------------ ---------- ------------- ------------
At 1 April
2011 5,524,445 72,574,560 (63,104,556) 260,870 83,787 12,267 1,625,805 (16,840,467) 136,711
Comprehensive
income
Loss for the
year - - - - - - - (1,991,582) (1,991,582)
Other
comprehensive
income
Currency - - - - - - - - -
translation
differences
---------- ----------- ------------- ------------ ------------- ------------ ---------- -------------
Total
comprehensive
income for
the
year ended 31
March
2012 - - - - - - - (1,991,582) (1,991,582)
Loan
conversion 2,074,018 414,803 - (260,870) - - - - 2,227,951
Warrants
issued
on lines of
funding
and share
options - - - - - - 149,005 - 149,005
Credit to
equity
due to the
convertible
loan - - - 187,286 - - - - 187,286
At 31 March
2012 7,598,463 72,989,363 (63,104,556) 187,286 83,787 12,267 1,774,810 (18,832,049) 709,371
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
AS AT 31 MARCH 2011
Share Share Reverse Convertible Capital Translation Warrant Retained Total
capital premium acquisition loan contribution reserve and earnings equity
reserve reserve reserve options
reserve
GBP GBP GBP GBP GBP GBP GBP GBP GBP
--------------- ---------- ----------- ------------- ------------ ------------- ------------ ----------- ------------- ------------
At 1 April
2010 5,524,445 72,574,560 (63,104,556) - 83,787 13,157 1,473,719 (14,460,973) 2,104,139
Comprehensive
income
Loss for the
year - - - - - - - (2,379,494) (2,379,494)
Other
comprehensive
income
Currency
translation
differences - - - - - (890) - - (890)
---------- ----------- ------------- ------------ ------------- ------------ ----------- ------------- ------------
Total
comprehensive
income for
the year
ended 31
March 2011 - - - - - (890) - (2,379,494) (2,380,384)
Warrants
issued on
lines
of funding
and share
options - - - - - - 152,086 - 152,086
Credit to
equity due
to the
convertible
loan - - - 260,870 - - - - 260,870
------------ -----------
- - - 260,870 - - 152,086 - 412,956
At 31 March
2011 5,524,445 72,574,560 (63,104,556) 260,870 83,787 12,267 1,625,805 (16,840,467) 136,711
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
FOR THE YEAR ENDED 31 MARCH 2012
31 March 31 March
2012 2011
GBP GBP
Assets
Non-current assets
Goodwill 3,000,000 3,000,000
Property, plant and equipment 2,929 7,595
Total non-current assets 3,002,929 3,007,595
------------ ------------
Current assets
Trade and other receivables 176,602 143,929
Cash and cash equivalents 206,243 174,795
------------ ------------
Total current assets 382,845 318,724
Total assets 3,385,774 3,326,319
------------ ------------
Liabilities
Current liabilities
Trade and other payables 560,963 426,425
Borrowings 2,115,440 2,763,183
Total current liabilities 2,676,403 3,189,608
------------ ------------
Net assets 709,371 136,711
============ ============
Equity
Share capital 7,598,463 5,524,445
Share premium 72,989,363 72,574,560
Reverse acquisition reserve (63,104,556) (63,104,556)
------------ ------------
Total issued equity 17,483,270 14,994,449
Convertible loan reserve 187,286 260,870
Capital contribution reserve 83,787 83,787
Translation reserve 12,267 12,267
Warrant reserve 1,774,810 1,625,805
Retained losses (18,832,049) (16,840,467)
Total equity attributable to
equity holders of the parent 709,371 136,711
============ ============
CONSOLIDATED CASH FLOW STATEMENT
FOR THE YEAR ENDED 31 MARCH 2012
Year ended Year ended
31 March 31 March
2012 2011
GBP GBP
Loss before taxation (1,991,582) (2,379,494)
Adjustments for:
Finance income (1,889) (35)
Finance costs 282,687 363,986
Depreciation charges 7,723 84,360
Impairment of goodwill - 285,488
Loss on disposal of property, plant
and equipment - 427
Share-based payment charge 119,533 -
Operating cash flows before movements
in working capital (1,583,528) (1,645,268)
(Increase)/decrease in receivables (32,673) 98,170
Increase/(decrease) in payables 134,540 (179,265)
Net cash used in operating activities (1,481,661) (1,726,363)
----------- -----------
Cash flows from investing activities
Proceeds from sale of property, plant
and equipment - 42,347
Interest received 1,889 35
Purchase of tangible fixed assets (3,057) -
Net cash (used in)/received from
investing activities (1,168) 42,382
----------- -----------
Cash flows from financing activities
Interest paid (5,723) (19,701)
Repayment of loan - (100,807)
Proceeds from issue of convertible
loan notes 1,520,000 1,734,985
Net cash generated from financing
activities 1,514,277 1,614,477
----------- -----------
Net increase/(decrease) in cash and
cash equivalents 31,448 (69,504)
Cash and cash equivalents at beginning
of year 174,795 245,189
Effect of foreign exchange rates - (890)
Cash and cash equivalents at end
of year 206,243 174,795
=========== ===========
NOTES TO THE PRELIMINARY RESULTS
YEAR ENDED 31 MARCH 2012
1. Status of financial information
On 28 August 2012, the Directors approved the preliminary
results for publication. While the audited consolidated financial
statements for the year ended 31 March 2012, from which the
preliminary results have been extracted, are prepared in accordance
with International Financial Reporting Standards (IFRSs) as adopted
by the European Union, these preliminary results do not contain
sufficient information to comply with IFRSs. Statutory accounts for
31 March 2011 have been delivered to the Registrar of Companies.
The Directors expect to publish the full financial statements for
the year ended 31 March 2012 that comply with IFRS as adopted by
the European Union in September 2012.
The auditors have reported on those accounts; their report was
unqualified but did include reference to matters which the auditors
drew attention by way of emphasis without qualifying their report
and did not contain statements under section 498 (2) or (3) of the
Companies Act 2006 in respect of the accounts for 2011.
2. Going concern
The Directors have prepared cash flow forecasts which indicate
that Gasol will require additional funding within the next 6 to 12
months in order to meet its commitments as they fall due and to
fund the expenditure required to progress the gas projects to cash
generation.
Gasol is currently involved in discussions with external
investors and advisors to secure future financing arrangements. The
Directors believe that based on the preliminary discussions the
outcome will be positive. The Board is also confident that it
retains the continuing support from its major shareholders to
provide additional funding should other sources not be forthcoming.
However, the Directors appreciate that this lack of formal
agreements mean there can be no certainty that the additional
funding will be secured within the necessary timescale.
Nevertheless, with the expectation of Gasol formally agreeing new
funding from its major shareholders and other financial investors,
the Directors have a reasonable expectation that the Group has
adequate resources to continue trading for the foreseeable future
and have therefore concluded that it is appropriate to prepare the
financial statements on a going concern basis.
These conditions indicate the existence of a material
uncertainty which may cast significant doubt about the Group's
ability to continue as a going concern. The financial statements do
not include the adjustments that would result if the Group was
unable to continue as a going concern.
3. Critical accounting judgements and key sources of estimation uncertainty
The preparation of the financial statements requires management
to make estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosure of contingent assets and
liabilities at the end of the reporting period. Actual results may
vary from the estimates used to produce these financial
statements.
Estimates and judgements are continually evaluated and are based
on historical experience and other factors, including expectations
of future events that are believed to be reasonable under the
circumstances.
Significant items subject to such estimates and assumptions
include, but are not limited to:
Impairment of goodwill
Determining whether goodwill is impaired requires an estimation
of the value in use of the cash-generating units to which goodwill
has been allocated. The value in use calculation requires the
entity to estimate the future cash flows expected to arise from the
cash-generating unit and a suitable discount rate in order to
calculate present value.
The goodwill represents the potential value of the current
portfolio of projects and the value is underpinned by the economic
benefit of future cash flows generated from the project
portfolio.
The main risks and sensitivities impacting the valuation of the
goodwill relate to the following:
-- ability of upstream partners to secure the gas assets;
-- obtaining government approvals;
-- reaching binding joint venture agreements between the parties;
-- securing sufficient funding to meet expected project development costs; and
-- delivering gas within the projected timeframe.
The Directors' economic assessment of the project portfolio at
31 March 2012 is GBP3,000,000. In addition and in determining the
supporting net present value of the project portfolio future cash
flows, the relevant probabilities of success at each stage of the
individual projects have been assessed and the risk factored in to
the valuation.
The Directors acknowledge that the use of estimates is
inherently judgemental but believe they have been relatively
prudent in forming their views and utilised the significant
experience of the Board and Management in determining the values
used. Whilst there is the possibility that the projects will yield
a lower than expected value, there remains significant up-side
potential.
The Directors will continue to monitor the valuation of the cash
generating units that support the goodwill.
Other areas
Other estimates include but are not limited to the allowance for
doubtful accounts; future cash flows associated with assets; useful
lives for depreciation, depletion and amortisation and fair value
of financial instruments.
4. Loss per ordinary share
The calculation of a basic loss per share of 0.16 pence for the
year (2011: 0.22 pence) is based on the loss for the period
attributable to equity holders of Gasol Plc of GBP1,991,582 (2011:
GBP2,379,494) and on the weighted average number of shares in issue
during the period of 1,248,823,708 (2011: 1,104,889,234).
The options are considered anti-dilutive as inclusion would
reduce the loss per share. As such, no diluted loss per share is
reported.
At 31 March 2012, there were 91,766,667 potentially dilutive
shares (2011: 131,866,667) as part of a share-based payment scheme
and outstanding warrants.
5. Segmental information
The Group complies with IFRS 8 Operating Segments, which
requires operating segments to be identified on the basis of
internal reports about components of the Group that are regularly
reviewed by the Chief Operating Officer to allocate resources to
the segments and to assess their performance.
In the opinion of the Directors, the operations of the Group
comprise one class of business, being the development of the
Group's own sources of gas and its gas to power projects in West
Africa.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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