Final Results

RNS Number : 6485J

Independent Resources PLC

16 June 2014

 

16 June 2014
Independent Resources plc
("Independent Resources" or the "Company" or the "Group)
Results for the fifteen months ended 31 December 2013
Highlights
●             Strategic repositioning to focus on conventional exploration and production opportunities
●             New experienced executive management team led by Greg Coleman
●             Significant progress made with ETAP and DGE re Ksar Hadada licence
●             Rivara project remains stalled pending resolution of court processes
●             Equity fundraising announced post period end to introduce new capital
Chairman's statement
Challenging times - getting back in control of our destiny
The 15 month period covered by these accounts from 1 October 2012 to 31 December 2013 has been a real challenge for the
company. Shareholders will remember that, in my statement in the accounts to 30 September 2012, I said that we were overwhelmed
by events we could not control. It has taken the period since then to reduce the Italian problems to scale, get a grip on the Tunisian
issues, strengthen the management of the company and refocus our strategy. As part of this strategic re-positioning  we have been
working on a number of attractive opportunities that would provide the company with increasing exposure over time to
hydrocarbon production in our area of interest. We look forward to sharing our progress on these potentially transformational
initiatives as they mature.
New Management team
Greg Coleman joined as CEO in March 2013.  Greg was a very senior executive within the BP Group and after leaving BP he
founded and was CEO of Canamens Limited. His background and experience is exactly what we need to refocus our strategy away
from reliance on Italy and into a range of more geographically diverse producing assets.
I am delighted that Greg has assembled an extremely capable team with a wide range of experience. Brian Hepp, as chief
operations officer brings a wealth of experience of managing field operations, while Owain Franks, a former senior
PricewaterhouseCoopers Partner has joined us as Commercial Director to work with Greg and the team in transforming the
company.
Tim James retired as CFO during the year and we are grateful to him for his stewardship of the company's finances.  Feilim McCole
has been appointed to replace Tim as Finance Director. Feilim has a strong big firm (Deloitte), interim management and corporate
finance background.
Ksar Hadada
During 2013 we have devoted considerable time and effort to protecting our interests in Tunisia and trying to achieve some
momentum. As I said in our last interim results announcement , the previous operator of the license, PetroAsian
(Tunisia) Limited owned by the Hoifu Energy Group (which is listed in Hong Kong) had conspicuously failed in its obligations
as operator putting the renewal of the licence in March 2014 at risk.
Following extensive discussions and negotiations, on 19 February 2014, ETAP, the Tunisian State Oil Company applied for an
exceptional extension of the license for two years to the relevant Ministry, the DGE. The DGE had previously signalled that they
wished this application to be made, that the company should become the operator and the other two minority parties should
remain in the license with the company moving to an 86.345% working interest.
We, in common with a number of other companies operating in Tunisia, are waiting on the final steps of the approval process. This
will take place at a meeting of the Consultative Committee on Hydrocarbons. This meeting has been somewhat delayed and we
are hopeful, following discussions with the DGE, that a meeting will take place in the near future allowing us, assuming approval
is given, to progress our plans.
Rivara
We continue to be impacted by the ripples from the earthquake in April 2012 which halted progress on the Rivara Gas Storage
project.  In November 2012, we announced the exit of our former joint venture partner ERG S.p.A.  While the commercial
arrangements agreed with ERG did result in a cash payment to the group, they also triggered a need to reverse part of the deemed
gain that accounting standards had required us to recognise in our 2008 accounts. The impact - a non-cash loss of £1.51 million -  is
reflected in this set of results.
We expect Administrative court proceedings to begin later this year in which we are contesting the position of the Emilia-Romagna
Region and the consequent position of the Ministry of Economic Development. This will not be a speedy process but is an
important step forwards.
We also feel vindicated by the recent findings of an international commission that there could not have been any link between our
activities at Rivara and the tragic earthquake in Emilia Romagna.
Fiume Bruna and Casoni (Ribolla Basin CBM assets)
I have signalled before that we are looking at our strategic options in relation to Italy. After the period covered by these accounts,
we have entered into discussions with the Ministry of Economic Development on the way forward. We continue to work with local
parties, partners and authorities to reduce project timelines to allow us to develop this potentially significant resource or to farm
out some part of it to a third party.
The prospective resources at Fiume Bruna and Casoni do represent a significant source of gas for local industry and the local
economy and we are keen to maximise shareholder value out of it. We also welcome that the new Italian Federal government
appears supportive of energy regime change, including a delayering of the approval regime in Italy but we do not expect this to
happen in the near term.
Financial review
The results for the year reflect the cost of our significant efforts to deliver a transformational deal.
The group made a loss of £3.34 million during 2013 (2012: £1.82 million) of which £1.51 million related to restructuring of Rivara
Gas Storage (2012: £Nil), £1.34 million comprised ongoing administrative costs (2012: £1.24 million), £0.27 million comprised
professional fees and diligence costs related to potential acquisitions (2012: £Nil), and £0.22 million comprised non-cash
provisions for the issue of share options (2012: £0.15 million).
Consolidated net assets at 31 December 2013 were £10.92 million (2012: £13.34 million).   At this juncture, it has not been deemed
necessary to impair the carrying value of the group's Italian gas storage project at Rivara or that of our coal bed methane project
at Fiume Bruna and Casoni.  The board will continue to monitor this situation carefully, particularly in light of forthcoming legal
proceedings in relation to the Rivara Gas Storage project.
At 31 December 2013, the consolidated balance sheet included approximately £5.58 million of past investment in relation to Rivara.
While we continue to be confident in relation to our legal position, a material prolongation of or an adverse result from the
Court processes may result in the need for an impairment. The book value of past investment in relation to Fiume Bruna and
Casoni was approximately £4.32 million at 31 December 2013.
Cash generated from operations totalled £0.16 million (2012: £0.89 million used) after adjustments for non-cash items with capital
expenditures incurred during the year limited to £0.22 million (2012: £0.88 million).
There was £0.66 million of available cash at 31 December 2013.
To strengthen the group's financial position further the group recently announced a placing and open offer to raise up to a
maximum of £2.75 million of additional funds.
Going concern
The group had cash reserves of £0.21 million at 31 May 2014.
On 30 May 2014, the company announced a placing and open offer, which if the open offer is fully subscribed will provide total
gross proceeds of £2.75 million.
The directors anticipate that the cash available on the basis of a fully subscribed open offer this will be sufficient to cover non-
discretionary expenses for the next twelve months and the preparatory work in Ksar Hadada described in my letter accompanying
the placing and open offer documentation also available on our website.
In the event that the placing and open offer is not fully subscribed, the group will need additional funding to meet future costs.
Accordingly the directors intend to continue to explore all forms of potential fundraising at both a corporate and asset level. If
the group is unable to raise sufficient funds then the group is unlikely to be able to continue as a going concern.
In order to meet all of the group's licence commitments, the group needs to raise further funds and is likely to require additional
sources of funding, including securing farm out partners for its projects.
Business development
A number of possible transactions are actively being pursued and we expect to report further in due course.
After the end of this reporting period we announced a fundraising by way of placing and open offer and at the time of writing we
expect it to be completed in mid June 2014. As a result of the placing and open offer the directors are satisfied that the company will
be in a financial position to meet its short-term obligations but will need further funds to allow it to bring its plans to fruition in full.
We remain acutely cost conscious and value focused. We are keen to be able to make further announcements about the
opportunities on which Greg and the team are working on and I trust that we will be able to do so shortly.
Grayson Nash
Non-executive Chairman
For further information, please visit www.ir-plc.com or contact:
Greg Coleman													Independent Resources plc												020 3367 1134
Phil Davies													Charles Stanley Securities												020 7149 6942
													(Nominated Adviser)
Simon Hudson													Tavistock Communications												020 7920 3150
Independent Resources plc
Consolidated statement of comprehensive income
Period ended 31 December 2013
														Notes								Period to 31 December 2013										Year to 30 September 2012
Continuing operations																						£										£
Revenue																						-										-
Cost of sales																						-										-
Gross profit																						-										-
Administrative expenses																						(1,831,949)										(1,387,942)
Reorganisation of Rivara Gas Storage srl																						(1,511,722)										-
Operating loss																						(3,343,671)										(1,387,942)
Financial income																						2,455										5,784
Financial expense														4								(122)										(437,077)
Loss on ordinary activities
before taxation																						(3,341,338)										(1,819,235)
Taxation														5								-										-
Loss for the year																						(3,341,338)										(1,819,235)
Other comprehensive income:
Exchange difference on translating foreign operations
- recycled through profit and loss																						704,123										(1,074,067)
Income tax relating to other comprehensive income																						-										-
Total comprehensive loss for the year																						(2,637,215)										(2,893,302)
Loss attributable to:
Owners of the parent																						(3,350,702)										(1,781,779)
Non-controlling interests																						9,364										(37,456)
																						(3,341,338)										(1,819,235)
Total comprehensive loss attributable to:
Owners of the parent																						(2,664,623)										(2,752,613)
Non-controlling interests																						27,408										(140,689)
																						(2,637,215)										(2,893,302)
Loss per share (pence)														6
From continuing operations
Basic																						(7.3)										(3.9)
Diluted																						(7.3)										(3.9)
Independent Resources plc
Consolidated statement of financial position
As at 31 December 2013
														Notes				31 December 2013														30 September 2012
																						£										£
Non-current assets
Property, plant and equipment																						19,883										21,133
Goodwill														7								450,766										450,766
Other intangible assets														8								10,128,364										9,466,113
																						10,599,013										9,938,012
Current assets
Other receivables														9		464,850										3,634,449
Cash and cash equivalents																663,117										729,786
																1,127,967										4,364,235
Current liabilities
Trade and other payables																(807,505)										(960,671)
																(807,505)										(960,671)
Net current assets																						320,462										3,403,564
Net assets																						10,919,475										13,341,576
Equity attributable to equity holders of the parent
Share capital														10								458,369										458,369
Share premium														11								15,287,351										15,287,351
Share option reserve																						418,919										264,717
Foreign currency translation reserve																						611,235										(74,844)
Retained earnings																						(5,856,399)										(3,766,319)
																						10,919,475										12,169,274
Non-controlling interests																						-										1,172,302
Total equity																						10,919,475										13,341,576
Independent Resources plc
Statement of changes in equity
Period ended 31 December 2013
							Retained				Share		Share					Share		Foreign				Total						Non-				Total
							earnings				capital		premium					option		currency										controlling				equity
																		reserve		translation										interests
																				reserve
							£				£		£					£		£				£						£				£
Consolidated
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 year							(1,781,779)				-		-					-		-				(1,781,779)						(37,456)				(1,819,235)
Exchange differences							-				-		-					-		(970,834)				(970,834)						(103,233)				(1,074,067)
Total comprehensive loss for the year							(1,781,779)				-		-					-		(970,834)				(2,752,613)						(140,689)				(2,893,302)
Share-based payments							-				-		-					154,956		-				154,956						-				154,956
30 September 2012							(3,766,319)				458,369		15,287,351					264,717		(74,844)				12,169,274						1,172,302				13,341,576
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							(3,350,702)				-		-					-		-				(3,350,702)						9,364				(3,341,338)
Exchange differences							-				-		-					-		686,079				686,079						18,044				704,123
Total comprehensive loss for the period							(3,350,702)				-		-					-		686,079				(2,664,623)						27,408				(2,637,215)
Share options lapsed							60,912				-		-					(60,912)		-				-						-				-
Share-based payments							-				-		-					215,114		-				215,114						-				215,114
Non-controlling interest acquired by group							1,199,710				-		-					-		-				1,199,710						(1,199,710)				-
31 December 2013							(5,856,399)				458,369		15,287,351					418,919		611,235				10,919,475						-				10,919,475
Independent Resources plc
Consolidated statement of cash flows
Period ended 31 December 2013
																						Period to 31 December 2013											Year to 30 September 2012
																						£											£
Cash flows from operating activities
Loss before taxation																						(3,341,338)											(1,819,235)
Adjustments for:
	Depreciation of property, plant and equipment																					10,818											21,385
	Financial income																					(2,455)											(5,784)
	Financial expense																					122											437,077
																						(3,332,853)											(1,366,557)
Decrease in other receivables																						3,433,381											228,481
Increase in trade and other payables																						(153,166)											96,779
Share-based payments																						215,114											154,956
Cash from/(used) in operations																						162,476											(886,341)
Income taxes received																						-											-
Net cash from/(used) in operating activities																						162,476											(886,341)
Cash flows from investing activities
Interest received																						2,455											5,784
Interest paid																						(122)											(17,077)
Proceeds on disposal of property, plant and equipment																						1,495											5,042
Purchase of intangible assets																						(222,913)											(879,227)
Purchases of property, plant and equipment																						(10,060)											-
Net cash used in investing activities																						(229,145)											(885,478)
Net decrease in cash and cash equivalents																						(66,669)											(1,771,819)
Cash and cash equivalents at 1 October 2012																						729,786											2,501,605
Cash and cash equivalents at 31 December 2013																						663,117											729,786
Independent Resources plc
Notes to the final results for the fifteen month period ended 31 December 2013
1				Basis of preparation
				The company's functional currency is the Euro, and presentational currency is Great British Pounds Sterling.
				The financial information has been prepared in accordance with International Financial Reporting Standards
				("IFRS"), IFRIC interpretations and with those parts of the Companies Act 2006 applicable to companies preparing
				their accounts under IFRS, as adopted by the European Union, and the Companies Act 2006. The financial
				information has been prepared under the historical cost convention, as modified by revaluations of financial assets
				and financial liabilities at fair value through the statement of comprehensive income. Details of the accounting
				policies applied are set out in the financial statements for the 12 months ended 30 September 2012 and have not
				changed for the 15 month period ended 31 December 2013.
				The financial information set out in this announcement does not constitute audited financial statements for the period
				ended 31 December 2013. The financial information for the year ended 30 September 2012 is derived from the
				statutory accounts for that year which have been delivered to the Registrar of Companies. The auditors reported on
				those accounts: their report was unqualified but did include an emphasis of matter regarding the ongoing status of
				the Rivara project.
				The financial information for the period ended 31 December 2013 is derived from the financial statements, but does not
				constitute the group's financial statements. The company's auditors have reported on the statutory financial
				statements for the period ended 31 December 2013 and their report is unqualified, but, with the following emphases of
				Matter:
				"Development and exploration intangible asset
				In forming our opinion on the financial statements, which is not qualified, we have considered the adequacy of the
				disclosures made in the financial statements concerning the process of the appeal before the Emilia Romagna
				Bologna Administrative Court in respect of the approval of the development of the Rivara project. In the event
				that the group is not successful in its appeal, the expenditure capitalised in respect of this project will be subject
				to impairment testing. No adjustment has been made in relation to the carrying value of this capitalised
				expenditure in the financial statements of the group or the carrying value of the company's investment in subsidiary
				undertakings.
				Going concern
				In forming our opinion on the financial statements, which is not qualified, we have considered the adequacy of the
				disclosure made in the financial statements concerning the company's ability to continue as a going concern. The
				financial statements have been prepared on the going concern basis, which depends on the ability of the company
				to raise funds. These conditions, along with the other matters explained in the financial statements, indicate
				the existence of a material uncertainty which may cast significant doubt about the company's ability to continue
				as a going concern. The financial statements do not include the adjustments that would result if the company was
				unable to continue as a going concern."
				The financial information set out in this announcement was approved by the board on 13 June 2014.
				The directors do not recommend the payment of a final dividend (2012: Nil).
2.				Business segments
				The group has adopted IFRS 8 Operating segments. 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 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 period to 31 December 2013 nor in the year to 30 September
				2012.
				Information regarding each of the operations of each reportable segments is included in the following table.
												Parent			Rivara			Ribolla Basin					Ksar						Consolidation				Total
												company						CBM assets					Hadada
												£			£			£					£						£				£
				Period to 31 December 2013
				Interest revenue								155,807			40,133			2,876					-						(196,361)				2,455
				Interest expense								(121)			(111,370)			(84,992)					-						196,361				(122)
				Depreciation								-			1,241			9,577					-						-				10,818
				Impairment of intangible assets								-			-			-					-						-				-
				Income tax								-			-			-					-						-				-
				Loss for the period before taxation								(789,605)			(1,744,075)			(382,330)					(61,511)						(363,817)				(3,341,338)
				Assets								12,128,214			8,242,367			4,456,656					235,604						(13,335,861)				11,726,980
				Liabilities								(514,288)			(3,810,637)			(4,285,358)					(622,226)						8,425,004				(807,505)
				Year to 30 September 2012
				Interest revenue								140,285			2,147			6					-						(136,654)				5,784
				Interest expense								-			(510,055)			(63,676)					-						136,654				(437,077)
				Depreciation								-			1,344			20,041					-						-				21,385
				Impairment of intangible assets								-			-			-					-						-				-
				Income tax								-			-			-					-						-				-
				Loss for the year before taxation								(1,065,445)			(758,419)			(567,201)					(20,084)						591,914				(1,819,235)
				Assets								12,339,855			11,375,970			4,128,810					217,340						(13,759,728)				14,302,247
				Liabilities								(151,438)			(5,594,817)			(4,001,708)					(542,451)						9,329,743				(960,671)
				The geographical split of non-current assets arises as follows:
																					United					Overseas							Total
																					Kingdom
																					£					£							£
				31 December 2013
				Intangible assets																	-					10,128,364							10,128,364
				Goodwill																	-					450,766							450,766
				Property, plant and equipment																	1,852					18,031							19,883
				30 September 2012
				Intangible assets																	-					9,466,113							9,466,113
				Goodwill																	-					450,766							450,766
				Property, plant and equipment																	-					21,133							21,133
3.					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:
																					Period to 31 December 2013												Year to 30 September 2012
																					£												£
					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)												-
					Loss on reorganisation																1,511,722												-
4.					Net financial expense
					Net financial expense includes £Nil (Year to 30 September 2012: £420,000) relating to the decrease in the net present
					value of receivables which are measured at amortised cost due to the unwinding of the effective interest implicit in
					the discounting calculations. The charge for that year, rather than the more normal credit, arises from the expected
					deferral of the Rivara appraisal programme.
5.					Taxation
																					Period to 31 December 2013												Year to 30 September 2012
																					£												£
					Tax on profit on ordinary activities
					Taxation charged based on profits for the period
					UK corporation tax based on the results for the period																-												-
					Total tax expense in income statement																-												-
					Reconciliation of the tax expense
					The tax assessed for the period is different from the standard rate of corporation tax in the UK (23.4%).  The
					differences are explained below:
																					Period to 31 December 2013												Year to 30 September 2012
																					£												£
					Loss on ordinary activities before taxation																(3,341,338)												(1,819,235)
					Loss on ordinary activities multiplied by standard rate
					of corporation tax in the UK of 23.4% (2012: 25%)																(781,874)												(454,808)
					Effects of:
					Expenses disallowed for tax purposes																50,337												38,739
					Deferred tax not provided - tax losses carried forward																731,537												416,069
					Total current tax																-												-
					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.
6.					Loss per share
					The calculation of basic and diluted loss per share at 31 December 2013 was based on the loss attributable to
					ordinary shareholders of £3,350,702. The weighted average number of ordinary shares outstanding during the
					period ending 31 December 2013 and the effect of the potentially dilutive ordinary shares to be issued are  shown
					below.
																					Period to 31 December 2013												Year to 30 September 2012
																					£												£
					Net loss for the year																(3,350,702)												(1,781,779)
					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
					In accordance with IAS 33 and as the average share price in the year is lower than the exercise price, the share
					options do not have a dilutive impact on earnings per share for the period ending 31 December 2013.
7.		Goodwill (group)
																																	Goodwill
																																	£
		31 December 2013
		Cost
		1 October 2012 and 31 December 2013																															450,766
		Carrying amount
		31 December 2013																															450,766
		30 September 2012																															450,766
		30 September 2012
		Cost
		1 October 2011 and 30 September 2012																															450,766
		Carrying amount
		30 September 2012																															450,766
		30 September 2011																															450,766
		The goodwill arises as a result of the acquisition of Independent Energy Solutions srl which contains the Ribolla
		project.
		A review of the latest management information and projections shows a net present value significantly in excess of
		assets and liabilities relating to this project. No changes have been identified as being required to the main
		assumptions which would have a corresponding material impact on the group.
		The continuing analysis and testing of technical data continues to indicate that the project is feasible.
		The group continues to work towards, and is confident of, obtaining all the necessary approvals from regulatory
		authorities.
		For the purpose of goodwill impairment testing, recoverable amounts have been determined based upon the
		value in use of the Ribolla project and is considered further as part of intangible assets in note 8.
		Value in use
		Cash flows are projected for the periods up to the date that the project is expected to become commercially
		operational and from then until operations are expected to cease, based upon management's expectations. These
		dates depend on a number of variables, including the project's technical feasibility, regulatory approval, forecast
		revenue prices and the associate development and operational costs.
		The project is expected to generate revenue after five to nine years and to continue doing so for a further 35
		years. The directors consider that projections calculated for a period greater than five years are justified as the
		project is still in a development stage. The directors have used a constant rate of growth of 2.5% (2012: 2.5%)
		to extrapolate the cash flow projections beyond the period in which the projects will commence to generate
		revenue. This growth rate is considered to cover increases resulting from inflation and regulatory changes. The
		discount rate used is 10.0% (2012: 10.0%).
		Key assumptions used in value in use calculations
		The key assumptions used in the value in use calculations for the goodwill asset are the anticipated quantity of
		resource available for extraction, costs of plant and infrastructure, expected revenue prices, expected operational
		costs, appropriate discount rates and foreign exchange rates. For further details please see note 9.
		Management's assessment of the technical and commercial viability of the project is supported by the evaluation work
		undertaken by appropriately qualified persons.
		Management have assessed the project's individual net present value and thereby impairment on a variety of
		bases and assumptions using, where appropriate, a number of discount rates.  The impairment tests are particularly
		sensitive to changes in the key assumptions and changes to these assumptions could result in impairment;
		however, all of the varying bases indicate a net present value significantly in excess of the value of goodwill.
		Foreign exchange rates have been based on external market forecasts, after considering long-term market
		expectations and the countries in which the group operates.
8.		Other intangible assets (group)
		Development and exploration
																	Rivara gas					Ribolla Basin				Ksar Hadada							Total
																	storage					CBM assets				exploration
																	facility									acreage
																	£					£				£							£
		31 December 2013
		Cost
		1 October 2012															5,236,000					4,013,233				1,297,709							10,546,942
		Exchange differences															248,709					190,629				-							439,338
		Additions															100,288					112,997				9,628							222,913
		31 December 2013															5,584,997					4,316,859				1,307,337							11,209,193
		Amortisation
		1 October 2012															-					-				1,080,829							1,080,829
		Impairment charge for the period															-					-				-							-
		31 December 2013															-					-				1,080,829							1,080,829
		Carrying amount
		31 December 2013															5,584,997					4,316,859				226,508							10,128,364
		30 September 2012															5,236,000					4,013,233				216,880							9,466,113
		30 September 2012
		Cost
		1 October 2011															4,892,610					4,265,886				1,237,818							10,396,314
		Exchange differences															(389,229)					(339,370)				-							(728,599)
		Additions															732,619					86,717				59,891							879,227
		30 September 2012															5,236,000					4,013,233				1,297,709							10,546,942
		Amortisation
		1 October 2011															-					-				1,080,829							1,080,829
		Impairment charge for the year															-					-				-							-
		30 September 2012															-					-				1,080,829							1,080,829
		Carrying amount
		30 September 2012															5,236,000					4,013,233				216,880							9,466,113
		30 September 2011															4,892,610					4,265,886				156,989							9,315,485
		The primary intangible assets are all internally generated.
		For the purpose of impairment testing of intangible assets, recoverable amounts have been determined based
		upon the value in use of the group's three projects.
		Rivara gas storage facility and Ribolla Basin CBM assets
		Despite the expected delay, a review of the latest management information and projections shows a net present
		value significantly in excess of assets and liabilities relating to the projects. The main assumptions indicate that no
		significant change has arisen on these calculations which would materially impact on the group.
		The continuing analysis and testing of technical data continues to indicate that the projects are feasible.
		The group continues to work towards, and is confident of, obtaining all the necessary approvals from regulatory
		authorities. The group anticipates being able to raise the necessary finance to continue to develop the projects.
		Value in use
		Value in use has been calculated separately for the group's Rivara gas storage facility and Ribolla Basin CBM
		assets. Cash flows are projected for the periods up to the date that the projects are expected to
		become commercially operational and from then until operations are expected to cease, based upon management's
		expectations. These dates depend on a number of variables, including the project's technical feasibility, regulatory
		approval, forecast revenue prices and the associated development and operational costs.
		The projects are expected to generate revenue after five to nine years and to continue doing so for a further 35
		years. The directors consider that projections calculated for a period greater than five years are justified as the
		projects are still in a development stage.
		Key assumptions used in value in use calculations
		The key assumptions used in the value in use calculations for the intangible assets are the expected storage and
		useable capacity of the Rivara project, the anticipated quantity of resource available for extraction for the Ribolla
		Basin project, costs of plant and infrastructure, expected revenue prices (specifically gas prices), expected
		operational costs, appropriate discount rates and foreign exchange rates.
		Management's assessment of the technical and commercial viability of the projects is supported by the evaluation
		work undertaken by appropriately qualified persons.
		Management has assessed the projects' individual net present values and thereby impairment on a variety of
		bases and assumptions using, where appropriate, a number of discount rates.  The impairment tests are
		particularly sensitive to changes in the key assumptions, and changes to these assumptions could result in
		impairment; however, all of the varying bases indicate a net present value significantly in excess of the value of
		the intangible assets.
		Foreign exchange rates have been based on external market forecasts, after considering long-term market
		expectations and the countries in which the group operates.
		The key assumptions used in the value in use calculations are as follows:
			Assumption																													Sensitivity
																																factor *
		Rivara gas storage facility:
			Growth rate																2.0%													+278.4%
			Discount rate																7.0%													+32.1%
			Capital expenditure																-													+26.0%
		Ribolla Basin CBM assets:
			Growth rate																2.5%													+127.2%
			Discount rate																10.0%													+53.3%
			Gas price																€0.27 per cubic metre													-19.3%
			Capital expenditure																-													+29.5%
		The growth rates are considered to cover increases resulting from inflation and regulatory changes.
		* The sensitivity factor is the percentage change in each specific assumption which would, on its own, result in the
		net present value equal to the carrying value of the intangible asset in the accounts.
		The discount rates used vary depending on the nature of the projects and the anticipated stability and longevity of
		expected cash flows.
		Potential impairment of the Rivara project
		The Group holds a 100% interest in Rivara Gas Storage srl Intangible assets include an amount of £5,576,000 with
		respect to project expenditure. The regional council, Regione Emilia Romagna, where the project is located is
		currently denying authorisation for project development. However authorisation has been granted by the national
		government. As a result Rivara Gas Storage srl has appealed against this decision to the Emilia Romogna Bologna
		Administrative Court and this appeal is due to be heard in thesecond half of 2014
		In the event that Rivara Gas Storage srl's appeal was to be unsuccessful, there may be an indication of impairment
		of the capitalised expenditure which could significantly reduce the carrying value of this asset.
9.			Other receivables
																	31 December 2013											30 September 2012
																						£											£
			Deferred subscription payments due from non-controlling interest																			-											2,781,677
			Other receivables																			401,180											804,979
			Prepayments																			63,670											47,793
																						464,850											3,634,449
			Other receivables in the group and the company principally comprise recoverable Value Added Tax and expenditure
			recharged to project partners.
			The directors consider that the carrying amount of trade and other receivables approximated their fair value.
			Deferred subscription payments due from non-controlling interest had been classified as current as the amounts
			receivable were anticipated to be realised within the asset's normal operating cycle. See note 3 with regards to
			the renegotiation and settlement of this amount during the period to 31 December 2013.
10.			Share capital
																	31 December 2013										30 September 2012
																	Group					Company					Group						Company
																	£					£					£						£
			Issued, called up and fully paid
			45,836,867 (2012: 45,836,867)
			ordinary shares of 1p														458,369					458,369					458,369						458,369
			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.
11.			Share premium account
																	31 December 2013										30 September 2012
																	Group					Company					Group						Company
																	£					£					£						£
			1 October and 31 December														15,287,351					15,287,351					15,287,351						15,287,351
12.		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.
		One-off options of 16,667 granted to A R H Thomas in recognition of his contribution at the time of the company's
		AIM admission remain exercisable.
		On 4 March 2013 the company issued 200,000 share options to W 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/					31/12/2013					Date from which								Lapse			Exercise
									Number of				lapsed in					Number of					options may be								date			Price per
									options				the period					options					first exercised											option
		18/01/2011							2,175,000				(285,000)					1,890,000					5/01/2014								5/01/2016			43p
		4/03/2013							-				200,000					200,000					4/03/2013								3/03/2023			1p
		The options outstanding at the end of the year have a weighted average remaining contractual life of 2 years.
		The fair values of the options granted on 18 January 2011 were calculated using the binomial option pricing model.
		The inputs into the model were as follows:
		Stock price																											43p
		Exercise price																											43p
		Interest rate																											3.51%
		Volatility																											65%
		Time to maturity																											5 years
		Number of steps																											60
		Exercise factor																											66.289
		The fair values of the options granted on 4 March 2013 were 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 expected volatility was determined with reference to the company's share price since it was admitted for trading
		on AIM in December 2005. The expected life used in the model has been adjusted, based on management's best
		estimate, for the effects of non-transferability, exercise restrictions and behavioural considerations.
		The group recognised total expenses of £215,114 (2012: £154,956) related to equity-settled, share-based payment
		transactions during the period.  Of the amount recognised in the current period £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
1st Floor, 12 Melcombe Place, London, NW1 6JJ, 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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