Half Yearly Report

RNS Number : 0687I

Independent Resources PLC

28 June 2013

 



Independent Resources PLC
Interim report
Six months ended 31 March 2013
Highlights
-	Strategy Review - The Board is evaluating several potential acquisition opportunities as part of the new strategy focused on the acquisition of producing assets.
-	Ribolla Coal Bed Methane Project - Preliminary discussions are under way with several parties regarding a potential farm-out.  The project has been reshaped to focus on an initial pilot phase to establish commercial well production rates and early cash flow.
-	Ksar Hadada Tunisia - A new operator has acquired the 78.03% working interest with aggressive plans to evaluate the license.  Farm-out discussions are underway with several parties to finance IRG's share of the costs.
-	Rivara Gas Storage - The project is on hold pending the resolution of court proceedings to resolve whether development can proceed following the May 2012 earthquake.
-	Net cash at 31 March 2013: £1.53 million.
-	Interim loss before taxation: £2,096,000 (2012: £980,000).
Chairman's Statement
The first half of the current financial year has seen a reassessment of our strategy and a change in the focus of our efforts towards building an upstream appraisal, development and production portfolio in the Mediterranean basin, mostly outside of our current established areas.
The new strategy will focus initially on acquiring producing assets in the Mediterranean Basin and Black Sea countries, particularly in Turkey, Egypt, Italy, and Tunisia. In line with the stated strategy, the Board has been reviewing a number of potentially significant opportunities whilst also seeking partners to finance our existing assets.  The transactions we are assessing, albeit at a preliminary stage, are expected to be transformational which bring a number of challenges, not least in relation to management of time and available cash resources.  The Board will of course update shareholders on progress over the coming months.
Ribolla
This significant onshore unconventional coal bed methane resource that in April, 2011 DeGolyer and McNaughton confirmed contains original gas in place of 15.2 billion cubic meters (537 billion cubic feet) and gross mean prospective resources of 4.5 billion cubic meters (160 billion cubic feet) remains an attractive asset for the Company.  New seismic is scheduled to be acquired in late 2013 to improve the subsurface imaging.  A pilot programme has been developed to allow for a low cost early revenue generating phase to be progressed based on up to six wells that have already received environmental approval.  This phase is anticipated to generate revenue based on a gas to power concept with initial production anticipated in late 2014.  Farm-out discussions are progressing with several parties.  Community support is building at local and regional level due to the prospect of jobs and new sources of revenue, and with no need for controversial production techniques.

Independent Resources PLC
Interim report
Six months ended 31 March 2013
Ksar Hadada
IRG owns an 18.97% working interest in this onshore license in a prospective basin in southern Tunisia.  A new owner has acquired the previous operator's 78.03% interest and has ambitious plans to explore and develop the license.  The Cambro-Ordovician prospects within the license are our main interest; however, in the longer term there is an emerging play for the Silurian Hot Shale that has the potential to unlock significant new volumes of oil reserves.  New seismic and an exploration well are required by April 2014 in order to fulfil IRG's license commitments.  Farm-out discussions are under way with several parties to finance the Company's share of this activity.
Rivara Underground Gas Storage
After the Italian Environmental Ministry's positive EIA Decree for the appraisal phase of the project, and the regional Government denial of its approval, the project was halted, ostensibly due to resident concerns following the May 2012 Emilia earthquake.   Our project has had no operational activity conducted on the site. IRG is now contesting in administrative courts the position of the Emilia-Romagna Region and the consequent position of the Ministry for Economic Development, and hopes for a ruling during the next year. Furthermore, the Company remains convinced that the risk of Rivara actually causing a seismic event in the future is extremely low, based on analogy with other UGS sites safely active in the proximity of Rivara, the studies already conducted and the plans for appraisal and development being considered.
Business Development
The Company has two projects being progressed in Italy.  The first is the Sibilla carbon dioxide (CO2) storage project offshore in the Adriatic.  The project could potentially store up to 400 million tonnes of CO2 in a naturally fractured carbonate aquifer.  Once developed it could be one of the lowest cost CO2 storage projects in Europe.  However, during the past 6 months the price of EU CO2 credits under the EU Emissions Trading Scheme (ETS) has collapsed to under 4 Euros per tonne.  This has slowed most efforts to create CO2 credits in the EU.  IRG's efforts on this project have been reduced until a more vibrant market for CO2 ETS credits develops.
The Company is also expecting the award of the San Gervasio project in Northern Italy by the Ministry of Economic Development.  Following a competitive bidding process, in February 2013 the Company announced that it had received formal documentation from the Hydrocarbon and Mining Resources Commission (CIRM) for a favourable opinion to award the San Gervasio Production Concession application to IRG.  The project entails a gas to power concept to tie in the existing gas well with Original Gas in Place of 102 million m3 (3.6 billion cubic feet) with approximately 54.5 million m3 (1.9 BCF) of recoverable gas* over 14 years. The existing well was originally drilled by an ENI subsidiary in 1991 and production tested at 18.4 thousand m3 per day (ca. 650 mcf/d) in 1995.

Independent Resources PLC
Interim report
Six months ended 31 March 2013
Outlook
The Company is pursuing a transformational transaction in the strategic focus area of the Mediterranean Basin while at the same time seeking alternate sources of capital to advance and de-risk the current portfolio, with particular emphasis on Ribolla and Ksar Hadada; both have exciting potential, particularly for a company of our size. Whilst the political environment in Italy remains unpredictable, our focus is elsewhere.
We are being cautious in our assessment of potential new opportunities, particularly when considering the current relatively high oil and gas prices and the fact that the Mediterranean countries are all experiencing some form of civil unrest in the face of the continuing uncertain and slowing economic environment.  Whilst attractive opportunities are few, several are of the quality that we believe would make a good fit for IRG and we are assessing them realistically.
Chairman Grayson Nash stated, "Our new strategy is to move the balance of IRG towards a wider geographical spread, more focused on oil and gas production, within clearly stated technical and economic criteria, while making the best of the existing assets. We cannot rush the transformation but we are making progress on each strand of the new strategy and hope to be able to make announcements of progress in due course."
For further information, please visit www.ir-plc.com or contact:
Greg Coleman	Independent Resources plc	020 7583 8292
Phil Davies/Mark Taylor	Charles Stanley Securities	020 7149 6942
	(Nominated Adviser)
Allan Piper/Simon Hudson	Tavistock Communications	020 7920 3150
Roberto Bencini, Technical Director of Independent Resources, has reviewed this announcement for the purposes of the current Guidance Note for Mining, Oil and Gas Companies issued by the London Stock Exchange in June 2009. Mr. Bencini is a Chartered Petroleum Geologist. He is a member of the Society of Petroleum Engineers, the Geological Society of London and the American Association of Petroleum Geologists.
* The evaluation of the potential recoverable hydrocarbons mentioned in this announcement has been assessed in accordance with Petroleum Resources Management System prepared by the Oil and Gas Reserves Committee of the Society of Petroleum Engineers (SPE) November 2011 and reviewed and jointly sponsored by the World Petroleum Council (WPC), the American Association of Petroleum Geologists (AAPG) and the Society of Petroleum Evaluation Engineers (SPEE).

Independent Resources PLC
Consolidated statement of comprehensive income
Six months ended 31 March 2013
		Unaudited		Unaudited
	1 October 2012 to		1 October 2011 to
	Notes	31 March 2013		31 March 2012
Continuing operations		£		£
Revenue	2	-		-
Cost of sales		-		-
Gross profit		-		-
Administrative expenses		(584,383)		(666,618)
Operating loss before impairment		(584,383)		(666,618)
Reorganisation of Rivara Gas Storage srl	5	(1,511,722)		-
Operating loss		(2,096,105)		(666,618)
Financial income		461		2,456
Financial expense	6	(93)		(315,512)
Loss on ordinary activities before taxation		(2,095,737)		(979,674)
Taxation	3	-		-
Loss for the period		(2,095,737)		(979,674)
Other comprehensive income:
Exchange difference on translating foreign operations		813,665		(486,964)
Total comprehensive loss for the period		(1,282,072)		(1,466,638)
Loss attributable to:
Owners of the parent		(2,105,101)		(959,637)
Non-controlling interests		9,364		(20,037)
		(2,095,737)		(979,674)
Total comprehensive loss attributable to:
Owners of the parent		(1,309,480)		(1,399,953)
Non-controlling interests		27,408		(66,685)
		(1,282,072)		(1,466,638)
Loss per share (pence)	4
From continuing operations:
Basic		(4.6)		(2.1)
Diluted		(4.6)		(2.1)

Independent Resources PLC
Consolidated statement of financial position
As at 31 March 2013
		Unaudited	Audited	Unaudited
		31 March	30 September	31 March
	Notes	2013	2012	2012
		£	£	£
Non-current assets
Property, plant and equipment		16,809	21,133	37,222
Goodwill		450,766	450,766	450,766
Other intangible assets		10,165,418	9,466,113	9,490,201
		10,632,993	9,938,012	9,978,189
Current assets
Other receivables	7	667,263	3,634,449	3,887,388
Cash and cash equivalents		1,530,358	729,786	1,653,763
		2,197,621	4,364,235	5,541,151
Current liabilities
Trade and other payables		(673,059)	(960,671)	(828,578)
		(673,059)	(960,671)	(828,578)
Net current assets		1,524,562	3,403,564	4,712,573
Net assets		12,157,555	13,341,576	14,690,762
Equity attributable to equity holders of the parent
Share capital		458,369	458,369	458,369
Share premium		15,287,351	15,287,351	15,287,351
Share option reserve		362,768	264,717	187,239
Foreign currency translation reserve		720,777	(74,844)	455,674
Retained earnings		(4,671,710)	(3,766,319)	(2,944,177)
		12,157,555	12,169,274	13,444,456
Non-controlling interests		-	1,172,302	1,246,306
Total equity		12,157,555	13,341,576	14,690,762

Independent Resources PLC
Consolidated statement of changes in equity
Six months ended 31 March 2013
					Foreign
				Share	currency		Non-
	Retained	Share	Share	option	translation		controlling	Total
	earnings	capital	premium	reserve	reserve	Total	interests	equity
	£	£	£	£	£	£	£	£
1 October 2011	(1,984,540)	458,369	15,287,351	109,761	895,990	14,766,931	1,312,991	16,079,922
Loss for the period	(959,637)	-	-	-	-	(959,637)	(20,037)	(979,674)
Exchange differences	-	-	-	-	(440,316)	(440,316)	(46,648)	(486,964)
Total comprehensive loss
for the period	(959,637)	-	-	-	(440,316)	(1,399,953)	(66,685)	(1,466,638)
Share-based payments	-	-	-	77,478	-	77,478	-	77,478
31 March 2012	(2,944,177)	458,369	15,287,351	187,239	455,674	13,444,456	1,246,306	14,690,762
1 October 2012	(3,766,319)	458,369	15,287,351	264,717	(74,844)	12,169,274	1,172,302	13,341,576
Loss for the period	(2,105,101)	-	-	-	-	(2,105,101)	9,364	(2,095,737)
Exchange differences	-	-	-	-	795,621	795,621	18,044	813,665
Total comprehensive loss
for the period	(2,105,101)	-	-	-	795,621	(1,309,480)	27,408	(1,282,072)
Share-based payments	-	-	-	98,051	-	98,051	-	98,051
Non-controlling interest
acquired by group	1,199,710	-	-	-	-	1,199,710	(1,199,710)	-
31 March 2013	(4,671,710)	458,369	15,287,351	362,768	720,777	12,157,555	-	12,157,555

Independent Resources PLC
Consolidated statement of cash flows
Six months ended 31 March 2013
		Unaudited		Unaudited
1 October 2012 to			1 October 2011 to
		31 March 2013		31 March 2012
		£		£
Cash flows from operating activities
Loss before taxation		(2,095,737)		(979,674)
Adjustments for:
	Reorganisation of Rivara Gas Storage srl	1,511,722		-
	Depreciation of property, plant and equipment	4,601		12,175
	Loss on disposal of property, plant and equipment	179		-
	Financial income	(461)		(2,456)
	Financial expense	93		315,512
		(579,603)		(654,443)
Decrease in other receivables		1,153,921		327,338
Increase/(decrease) in trade and other payables		13,931		64,686
Share-based payments		98,051		77,478
Exchange rate difference on investments		242,100		(156,949)
Cash generated from/(used in) operations		928,400		(341,890)
Income taxes received		-		-
Net cash generated from/(used in) operating activities		928,400		(341,890)
Cash flows used in investing activities
Interest received		461		2,456
Interest paid		(93)		(5,512)
Purchase of intangible assets		(129,041)		(502,896)
Sale of property, plant and equipment		845		-
Purchase of property, plant and equipment		-		-
Net cash used in investing activities		(127,828)		(505,952)
Net increase/(decrease) in cash and cash equivalents		800,572		(847,842)
Cash and cash equivalents at beginning of the period		729,786		2,501,605
Cash and cash equivalents at end of the period		1,530,358		1,653,763

Independent Resources PLC
Notes to the interim financial information
Six months ended 31 March 2013
1.	Accounting policies
	General information
	The interim financial information is for Independent Resources plc ("the company") and subsidiary undertakings (together, the "Group"). The company is registered in England and Wales and incorporated under the Companies Act 2006. The consolidated financial information is presented in GBP ("£") unless otherwise stated.
	Basis of preparation
	The interim financial information, for the period from 1 October 2012 to 31 March 2013, has been prepared under the historical cost convention and in accordance with International Financial Reporting Standards and International Accounting Standards as adopted by the European Union, and on the going concern basis.  They are in accordance with the accounting policies set out in the statutory accounts for the year ended 30 September 2012.
	The Interim Report is unaudited and does not constitute statutory financial statements.  The financial information for the year ended 30 September 2012 does not constitute statutory accounts, as defined in section 435 of the Companies Act 2006 but is based on those statutory financial statements.  Those accounts, upon which the auditors issued an unqualified opinion, have been delivered to the Registrar of Companies.
	The interim consolidated financial statements for the six months ended 31 March 2013 have been prepared in accordance with IAS 34, Interim Financial Reporting.
	The operations of Independent Resources Plc are not affected by seasonal variations.
	The directors do not propose a dividend for the period (2012: nil).
	The Interim Report for the six months ended 31 March 2013 was approved by the Directors on 27 June 2013.
	Copies of the Interim Report are available from the Company's website www.ir-plc.com.
2.	Business segments
	The group has adopted IFRS 8 Operating segments from 1 October 2009. Per IFRS 8, operating segments are based on internal reports about components of the group, which are regularly reviewed and used by the Board of Directors being the Chief Operating Decision Maker ("CODM") for strategic decision making and resource allocation, in order to allocate resources to the segment and to assess its performance. The group's reportable operating segments are as follows:
	a.	Parent company
	b.	Rivara
	c.	Ribolla Basin CBM & Shale Gas Assets
	d.	Ksar Hadada
	The CODM monitors the operating results of each segment for the purpose of performance assessments and making decisions on resource allocation. Performance is based on assessing progress made on projects and the management of resources used. Segment assets and liabilities are presented inclusive of inter-segment balances.
	The group did not generate any revenue during the year to 30 September 2012 nor in the period to 31 March 2013.

Independent Resources PLC
Notes to the interim financial information
Six months ended 31 March 2013
2.	Business segments
				Ribolla Basin
		Parent		CBM & Shale
		company	Rivara	Gas Assets	Ksar Hadada	Consolidation	Total
		£	£	£	£	£	£
	Six months to 31 March 2013
	Interest revenue	409	46	6	-	-	461
	Interest expense	(93)	-	-	-	-	(93)
	Depreciation	-	624	3,977	-	-	4,601
	Impairment of
	intangible assets	-	-	-	-	-	-
	Income tax	-	-	-	-	-	-
	Loss for the period
	before taxation	118,405	(1,596,006)	(162,220)	(4,065)	(451,851)	(2,095,737)
	Assets	12,540,612	6,998,653	4,543,255	226,968	(11,478,874)	12,830,614
	Liabilities	(135,740)	(3,585,312)	(4,552,251)	(556,144)	8,156,388	(673,059)
	Six months to 31 March 2012
	Interest revenue	2,450	3	3	-	-	2,456
	Interest expense	-	(315,512)	-	-	-	(315,512)
	Depreciation	-	1,678	10,497	-	-	12,175
	Impairment of
	intangible assets	-	-	-	-	-	-
	Income tax	-	-	-	-	-	-
	Loss for the period
	before taxation	(486,229)	(446,558)	(288,053)	(17,784)	258,950	(979,674)
	Assets	12,736,211	9,284,889	4,407,735	191,641	(11,101,136)	15,519,340
	Liabilities	(46,056)	(4,064,598)	(3,982,124)	(514,452)	7,778,652	(828,578)

Independent Resources PLC
Notes to the interim financial information
Six months ended 31 March 2013
2.	Business segments
	The geographical split of non-current assets arises as follows:
		United
		Kingdom	Overseas	Total
		£	£	£
	31 March 2013
	Intangible assets	-	10,165,418	10,165,418
	Goodwill	-	450,766	450,766
	Property, plant and equipment	-	16,809	16,809
	31 March 2012
	Intangible assets	-	9,490,201	9,490,201
	Goodwill	-	450,766	450,766
	Property, plant and equipment	-	37,222	37,222
3.	Taxation
	The group has tax losses available to be carried forward in certain subsidiaries and the parent. With anticipated substantial lead times for the group's projects, and the possibility that these may therefore expire before their use, it is not considered appropriate to anticipate an asset value for them.
4.	Loss per share
	The calculation of basic and diluted loss per share at 31 March 2013 was based on the loss attributable to ordinary shareholders of £2,105,101. The weighted average number of ordinary shares outstanding during the period ending 31 March 2013 and the effect of dilutive ordinary shares to be issued are shown below.
	Contingently issuable shares such as included within the share option scheme have not been treated as dilutive as the market conditions have not been met at 31 March 2013.
		31 March 2013	31 March 2012
		£		£
	Net loss for the period	(2,105,101)		(959,637)
	Basic weighted average ordinary shares
	in issue during the period	45,836,867		45,836,867
	Diluted weighted average ordinary shares
	in issue during the period	45,836,867		45,836,867

Independent Resources PLC
Notes to the interim financial information
Six months ended 31 March 2013
5.	Reorganisation of Rivara Gas Storage srl (previously named ERG Rivara Storage srl)
	On 22 November 2012 the company completed negotiations with the third party which held a non-controlling interest in ERG Rivara Storage srl in order to bring back into full control of the group the valuable Rivara gas storage project. The following reorganisation took place:
		The non-controlling interest paid €1,400,000 (£1,182,432) for part settlement of the amount it owed in respect of share capital issued by ERG Rivara Storage srl;
	-
	-	The non-controlling interest waived amounts owed by ERG Rivara Storage srl totalling €357,027 (£301,543);
	-	ERG Rivara Storage srl cancelled the remaining amount due to it by the non-controlling interest of €3,531,001 (£2,982,265) in relation to unpaid share capital and cancelled shares to this value. This amount had previously been discounted by £1,169,000.
	-	The non-controlling interest transferred its entire shareholding in ERG Rivara Storage srl to Independent Gas Management srl for €1 (£1); and
	-	ERG Rivara Storage srl changed its name to Rivara Gas Storage srl.
	The amount recognised in the consolidated statement of comprehensive income for the period is calculated as follows:
					£
	Cancellation of amount due from non-controlling interest (pre discounting adjustment)				2,982,265
	Discounting adjustment reversed				(1,169,000)
	Amount due to non-controlling interest waived				(301,543)
					1,511,722
6.	Net financial expense
	Net financial expense includes £nil (Period to 31 March 2012 - £310,000) in relation to discounting adjustments. The previous year's charge related to the decrease in the net present value of receivables which were measured at amortised cost due to the unwinding of the effective interest implicit in the discounting calculations. The charge for that period, rather than the more normal credit, arose from the expected deferral of the Rivara appraisal programme. With the reorganisation of Rivara Gas Storage srl, this adjustment will no longer arise.
7.	Other receivables
			31 March	30 September	31 March
			2013	2012	2012
			£	£	£
	Deferred subscription payments
	due from non-controlling interest		-	2,781,677	3,088,501
	Other receivables		411,644	804,979	729,423
	Prepayments		255,619	47,793	69,464
			667,263	3,634,449	3,887,388
	Other receivables principally comprise recoverable Value Added Tax and expenditure recharged to project partners.
	The directors consider that the carrying amount of other receivables approximated their fair value.
	Deferred subscription payments due from non-controlling interest has been classified as current as the amounts receivable were anticipated to be realised within the asset's normal operating cycle. Please see note 5 with regards to the renegotiation and settlement of this amount during the period.

Independent Resources PLC
Notes to the interim financial information
Six months ended 31 March 2013
8.	Share-based payments
	The share option scheme, which was adopted by the company on 25 November 2005, was established to reward and incentivise the executive management team for delivering share price growth. The share option scheme is administered by the Remuneration Committee.
	On 4 March 2013 the company issued 200,000 share options to G Coleman upon his appointment to the board as chief executive officer.
	Details of this tranche of share options outstanding at the year end are as follows:
	Date of grant	01/10/2012	Issued in	31/03/2013	Date from which	Lapse date	Exercise
		Number of	period	Number of	options may be		price
		options		options	first exercised		per option
	04/03/2013	-	200,000	200,000	04/03/2013	03/03/2023	1p
	The fair value of these options was calculated using the Black-Scholes option pricing model. The inputs into the model were as follows:
	Weighted average share price					10.62p
	Weighted average exercise price					1p
	Expected volatility					92.00%
	Expected life					10 years
	Risk free rate					2.10%
	Expected dividend yield					Nil
	The group recognised total expenses of £98,051 in the period (2011: £77,478) related to equity-settled, share-based payment transactions. Of the amount recognised in the current period £77,478 related to options previously issued and £20,573 related to the options issued to G Coleman as detailed above the value of which has been recognised in full as they could be exercised immediately.
Registered office
Independent Resources plc
Tower Bridge House, St. Katharine's Way, London E1W 1DD
Email: [e-mail]
Commercial office
2nd Floor, 146 Fleet Street, London EC4A 2BU, United Kingdom
Telephone: [phone]
Fax: [phone]
Email: [e-mail]
Technical office
Viale Liegi 41,  00198 Rome, Italy
Telephone: [phone]
Fax: [phone]
Email: [e-mail]

 

END

 

 

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