Independent Resources PLC
30 May 2007
Independent Resources plc
Interim Results for the period to 31st March 2007
Highlights
O Continued progress with permitting applications at Rivara
O Positive early results from Fiume Bruna
O New prospect mapped at Ksar Hadada
O Interim loss before taxation: £296,984 (2006: £259,876)
O Liquid resources at 31st March 2007: £3.29 million
Chairman's statement
In reporting the progress made by Independent Resources Group in the six months
to March 31, 2007, I would like to begin by recalling the severe gas supply
problems that have in recent winters afflicted the Italian energy sector.
Shareholders are already well aware that with its planned underground storage
facility (UGS) at Rivara in the Po Valley, Independent Resources has positioned
itself to become a key player in Italy's gas storage market. The painful winter
disruptions to gas supplies experienced by Italian consumers have served to
underscore how crucial this role is set to become.
During the period, the Company continued to make steady advances towards the
planned development of Rivara, and also moved forward with its separate coal bed
methane work at Fiume Bruna near the town of Grosseto on the north-western
coast. We can also report good progress in Tunisia, where we are managing the
early stages of an exploration reappraisal for our licence partners at Ksar
Hadada - close to entry points on the Trans-Mediterranean and Greenstream gas
pipelines.
The work undertaken by your Board during the period was set in the twin context
of both the urgent demand for new gas storage facilities and supplies in Italy,
and the equal need to comply with Italy's stringent environmental and planning
regulations. The Company has spent a great deal of time and effort ensuring that
it acts to deliver its key Italian projects in a timely fashion. At the same
time, we are also paying full attention to the complexities of Italy's
regulatory and political systems, at all levels of government.
Italy's Ministry for Economic Development has identified the lack of sufficient
gas storage as one of the primary reasons for the dramatic supply problems of
recent winters. The system found itself under duress as a result of its
inability to respond to what are now becoming predictable surges in winter
demand. Past emergency measures put into effect by the Government to maintain
the generation of electric power have included the combustion of
highly-polluting heavy fuel-oil. Yet even then, the country consumed more than
20% of its vital strategic gas reserves - reserves that are intended to cope
with a catastrophic system failure rather than a cold winter.
The requirement for additional storage capacity is clear enough in that context
alone. The most recent gas survey from the International Energy Association,
Security in a Globalizing Market to 2015, also separately makes a very
compelling case for the rigidities that characterise Italy's gas market to
continue over the medium term at least. The country's traditionally high energy
prices reflect a scarcity of meaningful price competition, an
incompletely-liberalized market structure, and persistent infrastructural
bottlenecks all along the gas supply chain. Over 80% of Italy's gas travels
several thousand kilometers to reach markets that are now heavily dependent on
gas for heating and power. A healthily-balanced gas supply system, such as that
in the United States, provides gas storage capacity equivalent to around 20% of
consumption. Yet Italy's dominant gas storage operator Stogit, a division of
ENI, reported in early April that while demand for Italian storage capacity had
risen to 14.2 billion cubic metres (bcm), the amount actually available was only
around 8.4 bcm. Even with the planned development of IRG's Rivara project, which
is expected to provide working gas capacity of up to 3.2 bcm, the Italian system
will remain a long way from the ideal target of 20% coverage. The prospect of
prolonged and acute infrastructural stress is becoming increasingly real.
Against this backdrop, we are continuing to steer the Rivara UGS through the
complex 'VIA' permitting process, striving to ensure that the project meets the
requirements of all of the stakeholders involved, at local, regional and
national level. The VIA is similar in many ways to the UK's planning process and
is designed to create public exposure as a means of ensuring that planned
projects are compliant with environmental and regulatory requirements and viable
within those parameters. It is a process that is inevitably time consuming, but
one that is taken very seriously by the Directors as part of a procedure that we
believe is not only necessary, but good and just. As a result, there has been
some slippage in our planned timing. We remain confident, however, that our
progress towards gaining the permits remains on course. As the press reported in
February, Government representatives have indicated publicly that a decision
would be made this year. We will be providing an update on progress later in the
year.
We remain equally confident that Rivara is set to become a vital and reliable
centrepiece for Italy's security of supply. Not only does it sit at the central
point in the Italian gas system, it is also located at what is likely to become
the hub of the Southern European 'gas motorway'. The world-class turnkey
contractors we expect to engage to develop the project have indicated they will
probably need five years to develop a commercial operation from the end of the
permitting phase. While the Board would expect to reduce that time, we accept it
as a responsible estimate at this stage.
Throughout the half year, the Company also continued - as is still the case - to
receive approaches from major integrated and non-integrated gas majors keen to
become key participants in Rivara. We will continue to review such offers and
are not excluding the possibility of an early-stage strategic partnership. The
Company recognises that a strategic partner would enhance its own resources,
freeing it to allocate them more evenly across all of its projects.
It is also pleasing to report encouraging progress at the site of our other
current Italian project, the coal bed methane (CBM) prospect at Fiume Bruna near
the town of Grosseto. Following a successful stratigraphic drilling, coring and
sampling programme during 2006, the analysis of the samples obtained is nearly
complete. On the basis of the data collected and interpreted to date, we are
confident that the project may prove commercially attractive. The indications
are that in-place CBM resources are in the range of 107 to 215 billion cubic
feet. This is in line with our expectations at the time of bringing Independent
Resources to AIM.
Just as at Rivara, moreover, we have received approaches both from potential
trade partners and financial institutions interested in financing the
development of Fiume Bruna, and we continue to consider the options being
offered to us.
Also in line with our policy at Rivara, we are taking a careful approach to
local environmental and planning requirements, and have already filed an
environmental impact assessment under the appropriate environmental review
process. At this stage, this is a significantly lighter requirement than at
Rivara since the application covers only the first seismic and the next set of
wells. Even so, we remain fully aware of the need to meet the required
procedures at each step of the way, and we are hoping to win this important
initial approval very soon. With that in mind, we are now planning for the
acquisition of new seismic data and the drilling of the next well on the permit,
so that we can move ahead without delay as soon as the Exploration Permit is
signed. Our intention is to put the new well on a long-term flow test before
drilling any follow-on wells.
At Ksar Hadada, our 7,000 square kilometer exploration project in Tunisia, we
continue working on the re-mapping and re-interpretation of the hydrocarbon
potential on behalf of our licence partners. It is again pleasing to announce
that this has so far resulted in the identification of an additional major
prospect, bringing to four the number now delineated. We are hopeful that, with
work still underway, others may be added to this tally. We are particularly
encouraged by the fact that all of the prospects identified to date have
producing analogues both in Tunisia and in nearby areas of Libya.
We have also over the past few months carried out a successful seismic and well
data swap with Storm Ventures, the operator of the licence area to the south of
Ksar Hadada, and believe this has greatly enhanced our ability to map some of
our major prospects.
As with our Italian projects, we remain aware of the potential value of
partnerships, and are currently in discussions on a potential farm-in to our
interest. If it proceeds, a multi-well drilling campaign would be expected to
form part of the associated work programme and could commence toward the end of
this year.
In summary, despite the slippages created by our necessary involvement in the
Italian permitting process at Rivara, the Board believes the advances achieved
across our range of projects during the half-year represent important progress
towards the realisation of our commercial potential. We shall during the course
of the second half continue to raise our profile within the London investment
community as a company operating in the right sector in the right place at the
right time. We also look forward with confidence to presenting shareholders with
further positive news during the months ahead.
Grayson Nash
Executive Chairman
For further information
contact:
Independent Resources plc
Grayson Nash, Executive Chairman 00 39 02 3655 960
Steve Staley, Managing Director 01332 865 253
07771 838 753
First City Financial Public Relations
Allan Piper 07736 064 982
Deloitte Corporate Finance
Jonathan Hinton 020 7936 3000
David Smith 020 7936 3000
Independent Resources PLC
Consolidated income statement
Six months ended 31 March 2007
1 October 2006 16 June 2005 to
to
31 March 2007 31 March 2006
£ £
Continuing operations
Revenue 32,126 -
Cost of sales - -
Gross profit 32,126 -
Administrative expenses (411,492) (345,180)
Operating loss (379,366) (345,180)
Net financial income 82,382
85,304
Loss on ordinary activities before taxation (296,984) (259,876)
Taxation
- -
Loss for the period (296,984) (259,876)
Earnings per share
From continuing operations
Basic (0.01) (0.02)
Diluted (0.01) (0.02)
Consolidated statement of changes in equity
Loss for the period (296,984) (259,876)
New shares issued and to be issued 7,783,895
-
Transaction costs (1,088,309)
-
Share based payments 61,734 -
Exchange difference on investment (799) -
Total change in equity (236,049) 6,435,710
Independent Resources PLC
Consolidated balance sheet
As at 31 March 2007
31 March 30 Sept 30 June 31 March
2007 2006 2006 2006
£ £ £ £
Non-current assets
Property, plant and equipment 124,431 99,003 104,263 64,647
Goodwill 2,044,146 2,044,146 2,044,146 519,756
Other intangible 1,933,132 1,003,226 633,888 486,131
assets
4,101,709 3,146,375 2,782,297 1,070,534
Current assets
Trade and other receivables 334,343 127,731 110,184 81,763
Cash and cash equivalents 3,292,341 4,632,907 5,067,130 5,422,194
3,626,684 4,760,638 5,177,314 5,503,957
Current liabilities
Trade and other payables (212,478) (143,257) (103,998) (138,781)
Current taxation liabilities (1,541) (13,333) (15,823) -
(214,019) (156,590) (119,821) (138,781)
Net current assets 3,412,665 4,604,048 5,057,493 5,365,176
Net assets 7,514,374 7,750,423 7,839,790 6,435,710
Equity attributable to equity holders of the parent
Share capital 334,333 334,333 334,333 334,333
Share premium account 5,843,828 5,843,828 5,843,828 5,843,828
Shares to be issued 2,041,815 2,041,815 2,041,815 517,425
Share option reserve 170,023 108,289 75,802 -
Foreign currency translation reserve 37 836 - (1,297)
Losses (875,662) (578,678) (454,691) (259,876)
Total equity 7,514,374 7,750,423 7,839,790 6,435,710
Independent Resources PLC
Consolidated cash flow statement
Six months ended 31 March 2007
1 October 2006 16 June 2005 to
to
31 March 2007 31 March 2006
£ £
Cash flows from operating activities
Loss before taxation (296,984) (259,876)
Adjustments for:
Depreciation of property, plant and equipment 11,975 2,666
Financial income (82,382) (85,304)
(367,391) (342,514)
Increase in trade and other receivables (206,612) (66,329)
Increase in trade and other payables 57,429 127,253
Share based payment 61,734 -
Exchange rate difference on investments (799) -
Net cash used in operating activities (455,639) (281,590)
Cash flows from investing activities
Interest received 82,382 85,304
Purchase of intangible assets (929,906) (486,131)
Purchases of property, plant and equipment (37,403) (66,554)
Acquisition of subsidiary - (6,996)
Net cash used in investing activities (884,927) (474,377)
Cash flows from financing activities
Issue of share capital - 7,266,470
Share issue costs - (1,088,309)
Net cash from financing activities - 6,178,161
Net (decrease)/increase in cash and cash equivalents (1,340,566) 5,422,194
Cash and cash equivalents at beginning of the period 4,632,907 -
Cash and cash equivalents at end of the period 3,292,341 5,422,194
Independent Resources PLC
Notes to the interim financial information
Six months ended 31 March 2007
1. Accounting policies
General information
The interim financial information is for Independent Resources plc ('the company') and
subsidiary undertakings. The company is registered in England and Wales and incorporated
under the Companies Act 1985.
The principal accounting policies are summarised below:
a Basis of preparation
The interim financial information, for the period from 1 October 2006 to 31 March 2007, has
been prepared under the historical cost convention and in accordance with International
Financial Reporting Standards and International Accounting Standards, adopted for use 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 period ended 30 June 2006.
The company has changed its accounting period to 30 September 2007.
The Interim report is unaudited and does not constitute statutory financial statements.
The financial information for the period ended 30 September 2006 does not constitute
statutory accounts, as defined in section 240 of the Companies Act 1985, but is based on
the latest statutory accounts. Those accounts, upon which the auditors issued an
unqualified opinion, have been delivered to the Registrar of Companies.
The Interim Report for the six months ended 31 March 2007 was approved by the Directors on
29 May 2007.
The comparative period presented is that of 16 June 2005 to 31 March 2006 as previously
reported. The directors are of the opinion that due to the nature of the group's
activities and the events during that period these are the most appropriate comparatives
for the current period.
Copies of the Interim Report are available from the Company's website www.ir-plc.com.
2. Revenue and segmental information
The group's revenue during the period represents the charging for work carried out on its
Tunisian development project to its development partner.
The group's operations continue to be located in England, Italy and Tunisia.
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 assets are
located.
Carrying amount of segment assets
31 March 30 Sept. 30 June 31 March
2007 2006 2006 2006
£ £ £ £
United Kingdom 24,154 7,071 8,004 8,934
Italy 100,277 91,932 96,259 55,713
Tunisia - - - -
124,431 99,003 104,263 64,647
Independent Resources PLC
Notes to the interim financial information (continued)
Six months ended 31 March 2007
2. Revenue and segmental information (continued)
Additions to property, plant and
equipment in the period
1 October 16 June 2005
2006 to to
31 March 31 March 2006
2007
£ £
United Kingdom 20,666 11,176
Italy 16,737 55,378
Tunisia - -
37,403 66,554
The following is an analysis of the revenue and loss on ordinary activities before taxation
based upon the area in which the operations are carried out.
Revenue
1 October 16 June 2005
2006 to to
31 March 31 March 2006
2007
£ £
United Kingdom - -
Italy - -
Tunisia 32,126 -
32,126 -
Loss on ordinary activities before taxation
1 October 16 June 2005
2006 to to
31 March 31 March 2006
2007
£ £
United Kingdom (115,131) (165,000)
Italy (197,584) (94,876)
Tunisia 15,731 -
(296,984) (259,876)
3. Taxation
There is no current tax charge for the period. The accounts do not include a deferred tax
asset in respect of carry forward of unused tax losses as the directors are unable to
assess that there will be probable future taxable profits available against which the
unused tax losses can be utilised.
Independent Resources PLC
Notes to the interim financial information (continued)
Six months ended 31 March 2007
4. Earnings per share
The calculation of basic and diluted earnings per share at 31 March 2007 was based on the
loss attributable to ordinary shareholders of £296,984 and a weighted average number of
ordinary shares outstanding during the period ending 31 March 2007 of 33,433,333, as shown
below.
31 March 31 March 2006
2007
£ £
Net loss for the period (296,984) (259,876)
Basic and diluted weighted average ordinary shares
in issue during the period 33,433,333 15,409,203
In accordance with IAS 33 and as the group has reported a loss for the period, the share
options are not dilutive.
Registered office
Independent Resources plc
The Hollow, Penn Lane, Melbourne, Derbyshire DE73 8EP
Telephone: +44 (0)1332 865253
Fax: +44 (0)1332 865111
Email: mailbox@ir-plc.com
Commercial office
Via Nirone 8, 20123 Milan, Italy
Telephone: +39 (02) 3655 5960
Fax: +39 (02) 9998 8778
Email: mailbox@ir-plc.com
Technical office
Viale Liegi 10, Int. 4, 00198 Rome, Italy
Telephone: +39 (06) 4549 0720
Fax: +39 (06) 4549 0721
Email: mailbox@ir-plc.com
This information is provided by RNS
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