Final Results

Independent Resources plc Final Results for the year to 30th September 2008 Highlights * Successful £6.91 million fundraising * Final profit before taxation of £2,665,438 (2007 (15 months): £656,359 loss) * Liquid resources at 30 September of £8.46 million * Additional €7.12 million (£5.7 million) of committed cash available for Rivara subsidiary * Agreement to sell 15% of Rivara for €9.5 million * Clearance for Fiume Bruna production testing Chairman's statement Against a background of steadily increasing turmoil in world financial markets, it is at least pleasing to report a milestone year for Independent Resources during the 12 month period to 30 September. The Company achieved significant progress with its planned underground gas storage ("UGS") project at Rivara in Italy's Po Valley, bringing in a major Italian partner and securing a politically significant, long-term anchor customer. It also made strong advances with its plans for the development of the proposed coal bed methane ("CBM") project at Fiume Bruna in Grosseto Province, Italy's first CBM project. In August, we successfully raised £6.91 million from institutional investors. With these solid achievements behind us, and liquid resources of £8.46 million, the Board has every confidence that the Company is now strongly positioned to move forward steadily through what threatens to continue as a period of difficult global economic conditions. Our confidence is further underpinned by the knowledge that our cash resources do not take account of the remaining €7.12 million (£5.7 million) to be invested by our new Italian partner at Rivara in line with the investment agreement. Rivara underground gas storage project As in the past, Independent Resources continued to work carefully through the year within the complex framework laid down by the regulatory and environmental processes in Italy, where Rivara remains its key project. The Board characterises Rivara as a much-needed infrastructural investment in an extremely under-supplied market, and as a project that is relatively insensitive to short-term fluctuations in market conditions. This deeply-buried, highly- fractured limestone structure has inherent geological characteristics that make it ideal for summer gas storage and rapid winter withdrawal, using the benefit of a natural water drive. It is also located right at the hub of Italy's gas transmission system, along the main trunkline corridor from North Africa into Southern Europe. The signing in June of a €9.5 million agreement to sell 15% of Rivara to the major Italian energy group ERG ranked as a crucial step forward for Independent Resources - not only because it marked the arrival of a heavyweight Italian energy partner, but also because it brought additional expertise to the Company's delicate negotiations with the relevant Italian authorities and other stakeholders. Aided by ERG, the Company continues at a deliberately measured pace in its discussions with Italy's Ministry of the Environment and other interested parties. Rivara's planning approval process involves an Environmental Impact Study ("VIA") reviewed by national and regional governments. As we reported to shareholders at the time of our August fundraising, the recently-elected Italian government has declared a relatively pro-business and pro-development platform which we expect to improve efficiency within certain ministries key to Rivara. The Ministry of Environment itself has inherited a new VIA process from the outgoing government that is proclaimed to be more transparent and purely technical than previously, as well as more efficient in its interaction with the public. We are of course encouraged by this stated approach, but continue to remain aware of the need for the careful involvement of all the parties affected by the planned development of Rivara, at all levels of government. For the Italian gas system, disrupted during recent winters by severe supply shortages, the importance of Rivara can be judged from the fact that the project will provide an expected nameplate working gas capacity of 3.2 billion cubic metres (113 billion cubic feet) and the ability to deliver in excess of 32 million cubic metres (1.13 billion cubic feet) of gas per day. For Independent Resources, the arrival of ERG as an operating partner just a few months ago valued our 85% share in the project at €53.83 million (£43.07 million), equivalent to 106p per share. That important transaction was followed during July by an announcement that we had reached formal agreement with Confindustria Ceramica to provide it with up to 4% of Rivara's working gas capacity for gas storage. Confindustria Ceramica is not only one of Northern Italy's biggest gas consumers, but is also a federation of vitally-important industrial employers and producers in the region around Rivara. Moreover, we are continuing preliminary discussions with a small group of major energy companies with a view to welcoming a second strategic development partner into the Rivara project alongside ERG at the appropriate time. During the year, the Company also appointed Schlumberger, the oilfield services group, to advise on and manage the Rivara subsurface development programme. The Board believes that the appointment of Schlumberger reflects the need to bring world-class project management skills and technology to the planned development of Rivara. We have begun work to construct an integrated project model ahead of eventual drilling operations and data acquisition to provide information that will allow us to optimise the project's development using best available technology. It remains our intention to develop the safest, least invasive, most reliable, and highest performance storage facility in Europe. Based on an estimated development cost of €400 million, this onshore project provides potentially significant scale savings and obvious comparative value, with an estimated capital cost of €0.13 per cubic metre (£0.0028 per cubic foot) of storage capacity or €12.50 per cubic metre (£0.28 per cubic foot) per day of deliverability. Fiume Bruna coal bed methane project Our other ongoing project in Italy, the planned CBM development at Fiume Bruna (owned 100% by Independent Resources) also moved forward steadily during the year. Shortly before the financial year-end, the Italian government approved plans for production testing, following earlier approval during April from the Tuscan regional government for the Company's environmental submission. We will conduct 2D seismic acquisition work over the coming weeks, following which we intend to drill one well and conduct long-term tests to prove flow rates of gas and water. As at Rivara, we intend at Fiume Bruna to operate to the highest standards, and are working alongside Norwest Questa Engineering, a leading US consultancy group with specialist CBM expertise. We also plan to drill the balance of wells in the first pod, producing gas into local markets. Fiume Bruna has an estimated 4.8 billion cubic metres (167 billion cubic feet) of in-place resource, and results from initial testing, announced in July 2007, indicated an estimated recoverable resource of 2.6 billion cubic metres (91.4 billion cubic feet). Drilling work to date has identified a single seam of gas-active coal approximately 7 metres thick. The main purpose of the planned production test is to determine gas production and any water flow rates from the coal in place. Longer-term, Fiume Bruna also has potential for carbon sequestration, permanently disposing of carbon dioxide ("CO2") from nearby sources. At the same time, an estimated additional 1.8 billion cubic metres (63.6 billion cubic feet) of methane would be produced as a result of this injection of CO2. The Board estimates that the net present value of the project would be increased significantly as a result. Independent Resources intends to apply for a full development concession when commercial production rates have been proven, and may seek a development partner to bring the project on stream following a declaration and subsequent permitting of commercial operations. A new extension to the south of Fiume Bruna has obtained its initial award, and the Company is now turning to its environmental impact assessment. Against the overall background of falling regional gas production and robust growth in demand, Fiume Bruna and its extension remain very attractive elements within our project portfolio. Ksar Hadada permit Our third active project, the onshore exploration acreage at Ksar Hadada in south-east Tunisia, lies on a permit that was renewed by the Tunisian government for a period of three years from April 2008. The permit is operated by Petroceltic, with Independent Resources holding a 40% interest. The Board believes the concession holds a potential recoverable resource in excess of 150 million barrels of oil equivalent (mmboe) net to the Company, before applying production sharing contract terms. Remapping of this 5,600 sq km permit area during the year under review not only confirmed the existing prospects, but also defined several new structures and identified a new hydrocarbon play in the block - the Acacus Sandstone - to add to the previously known Cambro-Ordovician play. Encouragingly, third parties have announced a Cambro-Ordovician discovery adjacent to the block to the south and this has now highlighted the potential of the Ksar Hadada structures. Discussions to farm-out part of the Company's interest in this concession continue with several potential partners. New business opportunities With these advances during the year, the Board is now also looking forward to new business development opportunities, drawing on our experience to date and the expertise we have developed over the past six years. We reported at the time of our fundraising during August that Independent Resources has filed an application for the award of an exploration permit covering an area onshore Italy as part of our continued business development plan. We are also studying opportunities to become involved in the development of another underground gas storage facility elsewhere in Europe, which would dovetail well with our existing operational and corporate structure. These new initiatives are at an early stage but we look forward to updating our shareholders as we make progress. Because it is a natural extension of the specialist expertise we have developed in-house, another area where we feel it is time to consider practical solutions is in the field of geological carbon sequestration of "greenhouse" CO2 emissions. Many large power producers are investigating carbon capture and storage ("CCS"), a process that captures CO2 from power stations, so that it is prevented from entering the Earth's atmosphere. It is a technology that is developing all the time and could well make fossil-fuelled generation a viable low-carbon option for the future. The Company can offer power producers practical solutions to permanently store (sequester) their CO2 in suitable underground reservoirs, and is seeking joint ventures to generate economic as well as environmental benefits from this technology in the form of carbon tax allowances and emission credits. These potential new developments are highly promising in terms of our future growth, but our first priority is to deliver maximum shareholder value from our existing projects. Moreover, our focus will remain limited to supplying and operating in our current markets. We are aware that many of our peers have adopted an opportunistic strategy, some more successfully than others, but we believe that focusing on the markets where we have a real presence will yield more value to shareholders. We will not walk away from opportunities arising from consolidation in this market and nor will we compromise with the objective of maximising returns to invested capital. Looking forward In such trying times for the world economy, the Board of course remains cautious about the outlook for the coming 12 months. However, we are bolstered by the recognition received during our drive towards the end of the financial year to raise our profile among institutional investors, which culminated in our successful fundraising. Since then, widely reported setbacks for two planned gas storage projects in the UK, while unfortunate for the companies involved, have served to underscore the long-term value of our key project at Rivara. Our strong cash position means we are well positioned to move forward in line with our planned cautious approach. With a strengthened institutional shareholder base, we have also reported to shareholders that the Company's directors, including myself, increased their own shareholdings in the Company before the year end. This is a clear expression of our own confidence in the business moving forward, and we shall continue to work in the best interest of all of our shareholders during the months ahead. Grayson Nash Executive Chairman 19 November 2008 Independent Resources plc Consolidated income statement Year ended 30 September 2008 15 month period 2008 2007 Continuing operations £ £ Revenue 16,737 2,220 Cost of sales - - ---------------- --------------- Gross profit 16,737 2,220 Administrative expenses (1,147,259) (882,746) ---------------- --------------- Operating loss (1,130,522) (880,526) Profit on dilution to minority interest 3,684,229 - ---------------- --------------- 2,553,707 (880,526) Net financial income 111,731 224,167 ---------------- --------------- Profit/(loss) on ordinary activities before taxation 2,665,438 (656,359) Taxation (30,000) - ---------------- --------------- Profit/(loss) for the period 2,635,438 (656,359) Attributable to: Minority interests (23,230) - Shareholders' equity 2,658,668 (656,359) ---------------- --------------- ---------------- --------------- Earnings per share (pence) From continuing operations Basic 7.8 (2.0) ---------------- --------------- ---------------- --------------- Diluted 7.3 (2.0) ---------------- --------------- ---------------- --------------- Independent Resources plc Consolidated balance sheet As at 30 September 2008 2008 2007 £ £ Non-current assets Property, plant and equipment 62,516 122,497 Goodwill 4,604,965 2,044,146 Other intangible assets 3,715,788 2,444,320 ----------------- --------------- 8,383,269 4,610,963 Current assets Trade and other receivables 4,869,125 338,590 Cash and cash equivalents 8,455,204 2,557,212 ----------------- --------------- 13,324,329 2,895,802 Current liabilities Trade and other payables (711,741) (142,959) Current taxation liabilities (65,386) (22,752) ----------------- --------------- (777,127) (165,711) Net current assets 12,547,202 2,730,091 ----------------- --------------- Net assets 20,930,471 7,341,054 ----------------- --------------- ----------------- --------------- Equity attributable to equity holders of the parent Share capital 407,115 334,333 Share premium account 12,444,974 5,843,828 Shares to be issued 4,602,634 2,041,815 Share option reserve 368,185 238,237 Foreign currency translation reserve 290,596 (6,109) Profit and loss reserve 1,547,618 (1,111,050) ----------------- --------------- Total equity 19,661,122 7,341,054 Minority interests 1,269,349 - ----------------- --------------- 20,930,471 7,341,054 ----------------- --------------- ----------------- --------------- Independent Resources plc Consolidated statement of changes in equity Year ended 30 September 2008 Exchange Profit Shares Share difference and loss Share Share to be option on reserve capital premium issued reserve investment Total £ £ £ £ £ £ £ Group 1 July 2006 (454,691) 334,333 5,843,828 2,041,815 75,802 (1,297) 7,839,790 Loss for the period (656,359) - - - - - (656,359) Share-based payments- - - - - 162,435 - 162,435 Exchange difference on investment - - - - - (4,812) (4,812) ---------- -------- --------- --------- -------- ----------- ----------- 30 September 2007 (1,111,050) 334,333 5,843,828 2,041,815 238,237 (6,109) 7,341,054 1 October 2007 (1,111,050) 334,333 5,843,828 2,041,815 238,237 (6,109) 7,341,054 Profit for the year 2,658,668 - - - - - 2,658,668 Revision of estimate of cost of acquisition - - - 2,560,819 - - 2,560,819 New shares issued - 72,782 6,841,468 - - - 6,914,250 Transaction costs - - (240,322) - - - (240,322) Share-based payments - - - - 129,948 - 129,948 Exchange difference on investment - - - - - 296,705 296,705 30 September 2008 1,547,618 407,115 12,444,974 4,602,634 368,185 290,596 19,661,122 ---------- -------- --------- --------- -------- ---------- ----------- ---------- -------- --------- --------- -------- ---------- ----------- Independent Resources plc Consolidated cash flow statement Year ended 30 September 2008 15 month period 2008 2007 £ £ Cash flows from operating activities Profit/(loss) before taxation 2,665,438 (656,359) Adjustments for: Depreciation of property, plant and equipment 24,385 24,981 Loss on disposal of property, plant and equipment 30,604 - Financial income (111,731) (224,324) Financial costs - 157 ---------------- --------------- 2,608,696 (855,545) Increase in trade and other receivables (4,530,535) (228,406) Increase in trade and other payables 581,416 45,890 Share based payments 129,948 162,435 Exchange rate difference on investments 52,765 (7,631) ---------------- --------------- Cash used in operations (1,157,710) (883,257) Interest paid - (157) ---------------- --------------- Net cash used in operating activities (1,157,710) (883,414) Cash flows from investing activities Interest received 111,731 224,324 Proceeds on disposal of property, plant and equipment 15,421 - Purchase of intangible assets (1,035,278) (1,808,398) Purchases of property, plant and equipment (2,679) (42,430) Issue of share capital to minority 1,292,579 - ---------------- --------------- Net cash from/(used in) investing activities 381,774 (1,626,504) Cash flows from financing activities Issue of share capital 6,914,250 - Share issue costs (240,322) - ---------------- --------------- Net cash from financing activities 6,673,928 - ---------------- --------------- Net increase/(decrease) in cash and cash equivalents 5,897,992 (2,509,918) Cash and cash equivalents at 1 October 2007 2,557,212 5,067,130 ---------------- --------------- Cash and cash equivalents at 30 September 2008 8,455,204 2,557,212 ---------------- --------------- ---------------- --------------- Year ended 30 September 2008 Year ended 30 September 2008 Notes: 1. The Directors submit their Report and Accounts for the year to 30 September 2008. The comparative period is from 1 July 2006 to 30 September 2007. 2. Basis of Presentation The financial statements have been prepared in accordance with International Financial Reporting Standards as adopted by the European Union and using accounting policies which are consistent with those applied in the financial statements for the period ending 30 September 2007. The financial information set out in this announcement, which does not constitute the statutory accounts of the Group, is extracted from the Group's statutory accounts for the period ended 30th September 2008, which were approved by the Board on 19 November 2008. The auditors have reported on those accounts and their report was unqualified. The financial information for the period ending 30 September 2007 is derived from the financial statements for that period. The company's auditors have reported on the 2007 financial statements; the report was unqualified. The financial information set out in this announcement was approved by the board on 19 November 2008. The directors do not recommend the payment of a final dividend. The full statutory accounts will be included in the Group's annual report, which will be mailed to shareholders on 25 November 2008. Additional copies will be available at the Group's offices The Hollow, Penn Lane, Melbourne, Derbyshire DE73 8EP after that date. The accounts will be delivered to the Registrar of Companies after the Company's Annual General Meeting, which is scheduled for 18 December 2008. 3. Revenue and Segmental information The Group's operations are located in England, Italy and Tunisia. The Group has generated £2,200 (2007: £2,220) of revenue during the period in its Tunisian operations and £14,537 (2007: nil) in its Italian operations. The following is an analysis of the carrying amount of segment assets, and additions to property, plant and equipment, analysed by the geographical area in which the assets are located. United Kingdom Italy Tunisia Total £ £ £ £ 2008 Carrying amount of segment assets 8,233 54,283 - 62,516 Additions to property, plant and equipment in the year - 2,679 - 2,679 Depreciation charges 10,614 13,771 - 24,385 Carrying amount of liabilities 563,705 100,720 112,702 777,127 Results for the year (371,548) 3,008,623 (1,637) 2,635,438 2007 Carrying amount of segment assets 18,847 103,650 - 122,497 Additions to property, plant and equipment in the period 20,666 21,764 - 42,430 Depreciation charges 9,823 15,158 - 24,981 Carrying amount of liabilities 103,688 32,836 29,187 165,711 Results for the period (337,602) (316,444) (2,313) (656,359) 4. Earnings per share The calculation of basic and diluted earnings per share at 30 September 2008 was based on the profit attributable to ordinary shareholders of £2,658,668. The weighted average number of ordinary shares outstanding during the year ending 30 September 2008 and the effect of the potentially dilutive ordinary shares to be issued, without market conditions, in connection with the previous purchase of Independent Gas Management srl, are shown below. Share options have also been added to the diluted weighted average ordinary shares for the purpose of calculating diluted earnings per share in accordance with IAS 33. In accordance with IAS 33 and as the Group reported a loss for the period to 30 September 2007, the shares to be issued in relation to the purchase of Independent Gas Management srl were not treated as dilutive. Contingently issuable shares such as included within the share option scheme or in connection with the acquisition of Independent Gas Management srl have not been treated as dilutive as the market conditions have not been met at 30 September 2008. 2008 2007 £ £ Net profit/(loss) for the period 2,658,668 (656,359) -------------- --------------- -------------- --------------- Basic weighted average ordinary shares in issue during the period 34,149,217 33,433,333 -------------- --------------- -------------- --------------- Diluted weighted average ordinary shares in issue during the period 36,401,828 33,433,333 -------------- --------------- -------------- --------------- 5. Non-cash transactions Exceptional item On 24 June 2008, the Group reorganised its interests in the Rivara gas management project as follows: ERG Rivara Storage srl was formed as a 100% subsidiary of Independent Gas Management srl with €1 share capital; Independent Gas Management srl transferred its interest in the Rivara gas management project to ERG Rivara Storage srl at an independently valued amount of €53,833,339 in exchange for shares in ERG Rivara Storage srl; ERG Rivara Storage srl issued further ordinary shares of €9,500,000 to a third party such as to reduce the Group's interest to 85%. The third party paid up 25% (€2,375,000) upon the issue of the shares. The balance outstanding is legally payable and is therefore included within amounts receivable in note 15 (Trade and other receivables). The balance is to be payable when called upon by the board of ERG Rivara Storage srl. The amount due to be received has been discounted by £1,468,000 to reflect the directors' estimates of the timing and amounts of those calls. As a result of the above, the Group has recognised an exceptional profit on the deemed disposal of a 15% interest in ERG Rivara Storage srl of £3,684,229 after deducting related costs of brokerage and commission of £1,071,015 paid by the Group. 6. Share capital 2008 2007 Group Company Group Company £ £ £ £ Authorised 80,000,000 ordinary shares of 1p 800,000 800,000 800,000 800,000 -------- -------- -------- -------- -------- -------- -------- -------- Issued, called up and fully paid 40,711,491 ordinary shares of 1p 407,115 407,115 334,333 334,333 -------- -------- -------- -------- The holders of ordinary shares are entitled to receive dividends from time to time and are entitled to one vote per share at meetings of the company. On 26 August 2008, a further 7,278,158 ordinary shares of 1p were issued at a placing price of 95p each giving rise to a share premium of £6,841,468. 7. Share premium account 2008 2007 Group Company Group Company £ £ £ £ 1 October 2007 5,843,828 5,843,828 5,843,828 5,843,828 Premium arising on issue of equity shares 6,841,468 6,841,468 - - Transaction costs (240,322) (240,322) - - ----------- ----------- --------- --------- 30 September 2008 12,444,974 12,444,974 5,843,828 5,843,828 ----------- ----------- --------- --------- ----------- ----------- --------- --------- 8. Other This announcement can be viewed in full on the Company web-site www.ir-plc.com. Grayson Nash, Executive Chairman, Independent Resources plc: +39 339 635 8634 Stephen Staley, Managing Director UK, Independent Resources plc: +44 1332 865 253 Jonathan Wright, Seymour Pierce +44 207 107 8000 David Smith, Deloitte Corporate Finance +44 207 936 3000 Allan Piper, Tavistock Communications Ltd +44 207242 2666 Independent Resources plc

Companies

Echo Energy (ECHO)
UK 100
FTSE quotes by TradingView

Latest directors dealings

All directors dealings today