Results for twelve months ended 30 September 2011

RNS Number : 5723S

Independent Resources PLC

23 November 2011

 



Independent Resources plc
("Independent Resources" or the "Company" or the "Group")
Results for the twelve months ended 30 September 2011
Highlights
·	Keystone Rivara Gas Storage Project: formal environmental approvals still pending
	Exhaustive consultation process continues to progress slowly, but with encouraging indications of a successful outcome.
·	Ribolla Shale Gas Project: 2-block farm-out process underway
	Third party evaluation confirms estimates of in-place and recoverable gas at 15.2 BCM (540 BCF) and 4.5 BCM (160 BCF) respectively. Discussions under way to realise the value of this significant asset.
·	Ksar Hadada Shale Oil Project: permit renewed, operations planned in 2012
	Carried interest maintained. Discussions under way to realise the value of this potentially significant asset.
·	Committed third-party funding for projects as at 30 September 2011: £4.5 million (2010: £5.2 million)
·	Net cash at 30 September 2011: £2.5 million (2010: £3.9 million)
Commenting, Grayson Nash, Executive Chairman of Independent Resources, said: "Given the status of our three main projects, we believe the time is right to start exploring value-adding options for separating our valuable but relatively riskier E&P interests from our more strategic gas storage assets. This will enable the company to focus its resources primarily on Rivara as we execute our plans to realise maximum value from this major asset. I look forward to providing further updates over the next few months."
Chairman's statement
Our progress this year - particularly with regard to the permitting of Rivara - was again not as swift as we would have liked it to be, but I believe it was ultimately encouraging. The core projects of Independent Resources are substantial and remain on the right track. As a result of the board's substantial equity stake in the company, the interests of the directors and of all our shareholders are wholly aligned. Conditions are now right to make important, forward-looking decisions about where we intend to monetise and where we intend to focus our investment in the future in order to maximise shareholder value.
During the reporting period, we further stepped up our efforts to secure the environmental permits and consequent mineral title that will allow the company to commence development of our keystone underground gas storage ("UGS") facility at Rivara in the Po Valley. These efforts continue to yield very gradual but tangible progress.
Discussions regarding the future of the Ribolla shale gas project near Grosseto also moved forward; our aim is to shape a future in which shareholders remain financially interested in the project's success, but are no longer exposed to the capital cost of its de-risking. The company's stake in the Ksar Hadada oil-prone block in Tunisia is another area where we are seeking to become less directly involved while maintaining our upside exposure.
In all these activities, we continue to maintain a cost-conscious and value-focused approach, and are confident that we will be in a position to announce significant developments in the first half of 2012.
This year I intend to keep my statement brief, because I do not want to pre-empt developments that may come to fruition very soon after it is written. It is not possible to predict exactly when these important developments may occur, or what they will entail, but I believe they  will be welcomed - and sooner rather than later - by everyone who has a stake in our future.
Rivara
I have written extensively to you in the past about what makes Rivara special and valuable. I have written even more about our permitting challenges and the shifting complexities through which projects of this nature must navigate.  The politics of infrastructural development are unpredictable and immensely time-consuming. Yet we continue - imperceptibly at times, but measurably over time - to move the ball forward.
If anything has helped to concentrate minds among our many stakeholders recently, it is the severe economic crisis we are living through. Even a wealthy region of Italy like Emilia Romagna now recognises that opposition to local development which is clearly in the national interest, and is subject to a very thorough and objective consultation process, has direct consequences for the region's growth, budgets, and prosperity. We have been gratified by the results of third-party econometric studies on the impact of our project that indicate significant and long-term employment, added-value, and fiscal benefits to the region and communities in which the project is located.
We and our local industrial partners continue to do everything we can to reassure these communities, by demonstrating how unobtrusive the surface facilities of the gas storage facility will be, and the comprehensive measures that will be put in place to ensure it is safe, clean and has minimal environmental impact.
That is as much as I am able to report on Rivara at this time, but I hope there may be more to say by the time of our Annual General Meeting next month.

Ribolla Basin Coal Bed Methane (CBM) & Shale Gas Assets

Again, we have reported extensively on this very substantial and valuable hydrocarbon resource, and why our intention is to involve a partner with specialised expertise in unconventional gas rather than continue these operations alone. As well as the technical issues, there is also a commercial consideration behind this strategic decision. Many of our shareholders and service providers in the City of London have expressed the opinion to us that the business of gas storage and the business of seeking to develop hydrocarbon plays appeal to two very different categories of investors. The two activities have very different business trajectories, different costs of capital, different regulatory regimes, and in general terms attract not only different investors but also different partners, customers, and bankers.

It is not yet possible to define exactly how these two distinct areas of activity within our current portfolio - gas storage and E & P - will be restructured, but it is safe to say that some form of corporate restructuring is the likely outcome of our strategy review, which is evaluating a range of workable and attractive scenarios. Needless to say, we are assessing all these options primarily as business owners, taking into consideration our shareholders' interests first.

The key point is that, having successfully established the commerciality of the Ribolla reserves, the board now believes that separating these two areas of activity will deliver greater value in the current market conditions than maintaining our existing integrated business model.

Ksar Hadada

Last year the company was carried during drilling operations on the Ksar Hadada exploration permit, our joint venture onshore Tunisia in which operator PetroAsia Energy (Tunisia) Ltd has a 78.03% working interest and Independent Resources an 18.97% working interest. Although those efforts were not successful, the JV partners are now  focusing on a newly identified  reservoir compartment within the Sidi-Toui Cambro-Ordovician reservoir, as well as the very significant volume of oil-bearing Silurian Hot Shale which effectively underlies the entire residual area of the permit at relatively shallow depth.

The permit was renewed this year by the Tunisian authorities for an additional three years after the JV relinquished 3,360 km2 of the previously-held 5,612 km2, and committed to a new well and 100km of new 2D seismic. Ksar Hadada is a non-core asset for the company, but one that we believe remains a very attractive opportunity. Much like Ribolla, our objective at Ksar Hadada is to seek a way to work with our partners towards monetising our active involvement.

Outlook

Our objectives in the months ahead are clear, achievable and value accretive for shareholders. The trigger for the execution of the strategy I have outlined to you is clearly the successful permitting of Rivara. We have often spoken about partnerships and the benefits of partial monetisation at Rivara, and this is all part of the overall plan which we hope to be in a position to announce in detail within the next few months.

In summary, the board remains absolutely committed to its vision for the company. We are confident that we have the assets and the resources to achieve our ambitious objectives, and we continue to be highly motivated through our own holdings of equity. I look forward to reporting on many more positive developments throughout the year ahead.

Grayson Nash

Executive Chairman

Independent Resources plc
Consolidated statement of comprehensive income
Year ended 30 September 2011
	Notes	2011		2010
Continuing operations		£		£
Revenue		-		-
Cost of sales		-		-
Gross profit		-		-
Administrative expenses		(1,174,737)		(1,164,280)
Operating loss before impairment		(1,174,737)		(1,164,280)
Impairment of Ksar Hadada		-		(1,390,588)
Operating loss		(1,174,737)		(2,554,868)
Financial income		35,310		355,041
Financial expense		(24,818)		(3,594)
Loss on ordinary activities before taxation		(1,164,245)		(2,203,421)
Taxation	3	-		44,365
Loss for the year		(1,164,245)		(2,159,056)
Other comprehensive income:
Exchange difference on translating foreign operations		69,384		(735,217)
Income tax relating to other comprehensive income		-		44,594
Total comprehensive loss for the year		(1,094,861)		(2,849,679)
Loss attributable to:
Owners of the parent		(1,133,327)		(2,135,505)
Non-controlling interests		(30,918)		(23,551)
		(1,164,245)		(2,159,056)
Total comprehensive loss attributable to:
Owners of the parent		(1,067,632)		(2,742,618)
Non-controlling interests		(27,229)		(107,061)
		(1,094,861)		(2,849,679)
Loss per share (pence)	4
From continuing operations
Basic		(2.5)		(5.0)
Diluted		(2.5)		(5.0)

Independent Resources plc
Consolidated statement of financial position
As at 30 September 2011
	Notes	2011		2010
			£		£
Non-current assets
Property, plant and equipment			51,232		75,716
Goodwill	5		450,766		450,766
Other intangible assets	6		9,315,485		7,990,178
			9,817,483		8,516,660
Current assets
Other receivables		4,524,726		5,457,781
Current taxation assets		-		88,588
Cash and cash equivalents		2,501,605		3,894,310
		7,026,331		9,440,679
Current liabilities
Trade and other payables		(763,892)		(582,558)
Provisions		-		(309,759)
		(763,892)		(892,317)
Net current assets			6,262,439		8,548,362
Net assets			16,079,922		17,065,022
Equity attributable to equity holders of the parent
Share capital	7		458,369		458,369
Share premium	8		15,287,351		15,287,351
Shares to be issued			-		-
Share option reserve			109,761		389,844
Foreign currency translation reserve			895,990		830,295
Retained earnings			(1,984,540)		(1,241,057)
			14,766,931		15,724,802
Non-controlling interests			1,312,991		1,340,220
Total equity			16,079,922		17,065,022

Independent Resources plc
Statement of changes in equity
Year ended 30 September 2011
						Foreign
				Shares	Share	currency		Non-
	Retained	Share	Share	to be	option	translation		controlling	Total
	earnings	capital	premium	issued	reserve	reserve	Total	interests	equity
	£	£	£	£	£	£	£	£	£
Consolidated
1 October 2009	894,448	415,739	12,881,702	4,802,904	389,844	1,437,408	20,822,045	1,447,281	22,269,326
Loss for the year	(2,135,505)	-	-	-	-	-	(2,135,505)	(23,551)	(2,159,056)
Exchange differences	-	-	-	-	-	(651,707)	(651,707)	(83,510)	(735,217)
Taxation on exchange differences	-	-	-	-	-	44,594	44,594	-	44,594
Total comprehensive loss for the
year	(2,135,505)	-	-	-	-	(607,113)	(2,742,618)	(107,061)	(2,849,679)
Fair value adjustments	-	-	-	(4,802,904)	-	-	(4,802,904)	-	(4,802,904)
New shares issued	-	42,630	2,515,170	-	-	-	2,557,800	-	2,557,800
Share issue costs	-	-	(109,521)	-	-	-	(109,521)	-	(109,521)
30 September 2010	(1,241,057)	458,369	15,287,351	-	389,844	830,295	15,724,802	1,340,220	17,065,022
1 October 2010	(1,241,057)	458,369	15,287,351	-	389,844	830,295	15,724,802	1,340,220	17,065,022
Loss for the year	(1,133,327)	-	-	-	-	-	(1,133,327)	(30,918)	(1,164,245)
Exchange differences	-	-	-	-	-	65,695	65,695	3,689	69,384
Total comprehensive loss for the
year	(1,133,327)	-	-	-	-	65,695	(1,067,632)	(27,229)	(1,094,861)
Share options lapsed	389,844	-	-	-	(389,844)	-	-	-	-
Share-based payments	-	-	-	-	109,761	-	109,761	-	109,761
30 September 2011	(1,984,540)	458,369	15,287,351	-	109,761	895,990	14,766,931	1,312,991	16,079,922

Independent Resources plc
Consolidated statement of cash flows
Year ended 30 September 2011
		2011		2010
Cash flows from operating activities		£		£
Loss before taxation		(1,164,245)		(2,203,421)
Adjustments for:
	Depreciation of property, plant and equipment	29,867		32,628
	Provision for well shut down costs	(309,759)		309,759
	Impairment of intangible assets	-		1,080,829
	Financial income	(35,310)		(355,041)
	Financial costs	24,818		3,594
		(1,454,629)		(1,131,652)
Decrease in other receivables		918,055		612,154
Increase/(decrease) in trade and other payables		181,334		(521,452)
Share-based payments		109,761		-
Exchange rate difference on investments		48,729		(384,322)
Cash used in operations		(196,750)		(1,425,272)
Income taxes received/(paid)		88,588		(73,129)
Net cash used in operating activities		(108,162)		(1,498,401)
Cash flows from investing activities
Interest received		35,310		38,041
Interest paid		(9,818)		(3,594)
Proceeds on disposal of property, plant and equipment		-		26,527
Purchase of intangible assets		(1,304,848)		(2,406,018)
Purchases of property, plant and equipment		(5,187)		(47,927)
Net cash used in investing activities		(1,284,543)		(2,392,971)
Cash flows from financing activities
Issue of share capital		-		2,557,800
Share issue costs		-		(109,521)
Net cash from financing activities		-		2,448,279
Net decrease in cash and cash equivalents		(1,392,705)		(1,443,093)
Cash and cash equivalents at 1 October 2010		3,894,310		5,337,403
Cash and cash equivalents at 30 September 2011		2,501,605		3,894,310

Independent Resources plc
Notes to the final results for the year ended 30 September 2011
1.	Basis of preparation
	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 year ending 30 September 2010.
	The financial information set out in this announcement, which does not constitute the statutory financial statements of the Group but was derived from those financial statements. The auditors have reported on the financial statements for the period ended 30 September 2011; this report was unqualified.
	The financial information for the year ending 30 September 2010 is derived from the financial statements for that year. The company's auditors have reported on the 2010 financial statements; their report was unqualified.
	The financial information set out in this announcement was approved by the board on 22 November 2011.
	The directors do not recommend the payment of a final dividend.
	The full statutory financial statements will be included in the Group's annual report, which will be e-mailed or posted to shareholders on 25 November 2011.  They will be available during normal business hours from the offices of Seymour Pierce Limited at 20 Old Bailey, London EC4M 7EN from that date.  In addition, the annual report and accounts will be available to be downloaded from the Company's website at www.ir-plc.com . Additional copies will be available at the Group's offices Tower Bridge House, St. Katharine's Way, London E1W 1DD after that date. The accounts will be delivered to the Registrar of Companies after the Company's Annual General Meeting, which is scheduled for 20 December 2011.

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 2011 nor in the year to 30 September 2010.
	Information regarding each of the operations of each reportable segments is included in the following table.
					Ribolla Basin
			Parent		CBM & Shale
			company	Rivara	Gas Assets	Ksar Hadada	Consolidation	Total
			£	£	£	£	£	£
	2011
	Interest revenue		285,134	46,450	11	-	(296,285)	35,310
	Interest expense		-	(173,905)	(147,198)	-	296,285	(24,818)
	Depreciation		-	4,120	25,747	-	-	29,867
	Impairment of intangible assets		-	-	-	-	-	-
	Income tax		-	-	-	-	-	-
	Loss for the year before taxation		(92,929)	(325,835)	(612,519)	(93,594)	(39,368)	(1,164,245)
	Assets		13,158,478	12,620,924	4,741,670	156,989	(13,834,247)	16,843,814
	Liabilities		(59,572)	(5,543,389)	(5,044,622)	(462,016)	10,345,707	(763,892)
	2010
	Interest revenue		246,674	318,097	369	-	(210,099)	355,041
	Interest expense		-	(90,153)	(123,540)	-	210,099	(3,594)
	Depreciation		1,726	2,218	28,684	-	-	32,628
	Impairment of intangible assets		-	-	-	1,080,829	-	1,080,829
	Income tax		88,959	-	-	-	(44,594)	44,365
	Profit/(loss) for the year before taxation		(1,706,957)	20,853	(673,046)	(206,006)	361,735	(2,203,421)
	Assets		13,142,757	11,580,315	4,544,026	104,876	(11,414,635)	17,957,339
	Liabilities		(60,683)	(4,198,340)	(5,214,482)	(316,309)	8,897,497	( 892,317)

		The geographical split of non-current assets arises as follows:
			United
			Kingdom		Overseas		Total
			£		£		£
		2011
		Intangible assets	-		9,315,485		9,315,485
		Goodwill	-		450,766		450,766
		Property, plant and equipment	-		51,232		51,232
		2010
		Intangible assets	-		7,990,178		7,990,178
		Goodwill	-		450,766		450,766
		Property, plant and equipment	-		75,716		75,716
3.	Taxation
			2011			2010
			£			£
	Tax on profit on ordinary activities
	Taxation charged based on profits for the year
	UK corporation tax based on the results for the year		-			(43,994)
	Over provided in prior year		-			(371)
	Total tax expense in income statement		-			(44,365)
	Reconciliation of the tax expense
	The tax assessed for the year is different from the standard rate of corporation tax in the UK (27%).  The differences are explained below:
			2011			2010
			£			£
	Loss on ordinary activities before taxation		(1,164,245)			(2,203,421)
	Loss on ordinary activities multiplied by standard rate of corporation tax in the UK of 27% (2010: 28%)		(314,346)			(616,958)
	Effects of:
	Expenses disallowed for tax purposes		29,679			-
	Untaxed expense/(income) on deemed disposal of interest in subsidiary		4,050			(88,354)
	Deferred tax not provided - tax losses carried forward		280,617			662,137
	Marginal tax relief		-			(819)
	Adjustments to tax charge in respect of previous years		-			(371)
	Total current tax		-			(44,365)
	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 30 September 2011 was based on the loss attributable to ordinary shareholders of £1,133,327. The weighted average number of ordinary shares outstanding during the year ending 30 September 2011 and the effect of the potentially 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 30 September 2011.
			2011		2010
			£		£
		Net loss for the year	(1,133,327)		(2,135,505)
		Basic weighted average ordinary shares in issue during the year	45,836,867		42,543,262
		Diluted weighted average ordinary shares in issue during the year	45,836,867		42,543,262
5.	Goodwill (group)
					Goodwill
					£
	2011
	Cost
	1 October 2010 and 30 September 2011				450,766
	Carrying amount
	30 September 2011				450,766
	30 September 2010				450,766
	2010
	Cost
	1 October 2009				5,253,670
	Fair value adjustment				(4,802,904)
	30 September 2010				450,766
	Carrying amount
	30 September 2010				450,766
	30 September 2009				5,253,670
	The goodwill arises as a result of the acquisition of Independent Energy Solutions srl and fair value adjustments to the shares to be issued relating to the acquisition of Independent Gas Management srl. The fair value adjustment relates to the directors' review of their estimate of the cost of the acquisition of Independent Gas Management srl based upon the market conditions at the year end and the probability of issuing shares, contingent upon market conditions subsequent to the year end. The directors assessed at the year end the likelihood of the market conditions relating to the final tranche and, on this basis, have assessed that no further shares to be issued are expected to occur on this transaction. The market conditions relating to the final tranche have not been met and confirmed that no further shares are currently expected to be issuable in connection with the acquisition. The goodwill arising as a result has therefore been reversed as a fair value adjustment against the shares to be issued.
	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. 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 project is 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 project.

	For the purpose of goodwill impairment testing, recoverable amounts have been determined based upon the value in use of the Ribolla project.
	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% (2010: 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% (2010: 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 6.
	Management's assessment of the technical viability of the projects 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.

6.	Other intangible assets (group)
	Development and exploration
		Rivara gas	Ribolla Basin	Ksar Hadada
		storage	CBM & Shale	exploration
		facility	Gas assets	acreage	Total
		£	£	£	£
	2011
	Cost
	1 October 2010	4,025,204	3,864,974	1,180,829		9,071,007
	Exchange differences	10,437	10,022	-		20,459
	Additions	856,969	390,890	56,989		1,304,848
	30 September 2011	4,892,610	4,265,886	1,237,818		10,396,314
	Amortisation
	1 October 2010	-	-	1,080,829		1,080,829
	Impairment charge for the year	-	-	-		-
	30 September 2011	-	-	1,080,829		1,080,829
	Carrying amount
	30 September 2011	4,892,610	4,265,886	156,989		9,315,485
	30 September 2010	4,025,204	3,864,974	100,000		7,990,178
	2010
	Cost
	1 October 2009	3,311,726	2,673,017	1,025,917		7,010,660
	Exchange differences	(191,281)	(154,390)	-		(345,671)
	Additions	904,759	1,346,347	154,912		2,406,018
	30 September 2010	4,025,204	3,864,974	1,180,829		9,071,007
	Amortisation
	1 October 2009	-	-	-		-
	Impairment charge for the year	-	-	1,080,829		1,080,829
	30 September 2010	-	-	1,080,829		1,080,829
	Carrying amount
	30 September 2010	4,025,204	3,864,974	100,000		7,990,178
	30 September 2009	3,311,726	2,673,017	1,025,917		7,010,660
	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.
	Ksar Hadada exploration acreage - impairment charge
	The results for the 2010 drilling campaign, which was completed shortly after the start of the current year, were unsuccessful, although a significant amount of new and valuable data has been produced and analysed. The vast majority of the company's expenditures to 30 September 2010 have therefore been written off as an impairment charge in the previous year.

	Rivara gas storage facility and Ribolla Basin CBM & Shale Gas assets
	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 & Shale Gas 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 associate 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 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%		-
		Discount rate		6.3%		+55%
		Capital expenditure		-		+35%
	Ribolla Basin CBM & Shale Gas assets:
		Growth rate		2.5%		-
		Discount rate		10.0%		+115%
		Gas price	€0.26 per cubic metre			-25%
		Capital expenditure		-		+36%
	The growth rates are considered to cover increases resulting from inflation and regulatory changes.
	The discount rate for the Rivara project reflects expected return levels and has been agreed with the project partner.
	* 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.

7.	Share capital
						2011			2010
						£			£
	Authorised
	80,000,000 ordinary shares of 1p					800,000			800,000
	Issued, called up and fully paid
	45,836,867 (2010: 45,836,867) ordinary shares of 1p					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.
8.	Share premium account
						2011			2010
						£			£
	1 October					15,287,351			12,881,702
	Premium arising on issue of equity shares					-			2,515,170
	Transaction costs					-			(109,521)
	30 September					15,287,351			15,287,351
9	Share-based payments
	The share option scheme, which was adopted by the company on 25 November 2005, has been established to reward and incentivise the executive management team for delivering share price growth. The share option scheme is  administered by the Remuneration Committee.
	It is intended that the options to be granted to any executive director of the company will be made subject to testing performance criteria. For the initial tranche of options granted to the executive directors, the performance criteria required the company's share price to increase by at least 30 per cent compound per annum over a three-year performance period to become exercisable in full (with the initial performance period being measured from the date of Admission). For the initial tranche of options, share price performance will be measured taking the Placing Price as the starting point. The performance criteria was not achieved and the initial tranche of options granted to the executive directors lapsed during the year. 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.
	A second tranche of share options was issued during the year. Details of the second tranche of share options outstanding at the year end are as follows:
	Date of grant	01/10/2010 Number of options	Issued in the year	30/09/2011 Number of options	Date from which options may be first exercised	Lapse date		Exercise price per option
	18/01/2011	-	2,175,000	2,175,000	5/01/2014	5/01/2016		43p
	The options outstanding at the end of the year have a weighted average remaining contractual life of 4.3 years. These fair values 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 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 £109,761 (2010: £nil) related to equity-settled, share-based payment transactions during the year.
10	Contingencies
	As a condition of the subscription for shares by the third party in ERG Rivara Storage srl, it has been agreed that should the Rivara gas storage project be cancelled and that company be liquidated, the third party would receive a return of capital in preference to Independent Gas Management srl.  Consequently, it is a possibility that a substantial amount of the profit arising to the group in 2008 of £3,684,229 would need to be reversed. The directors consider that this possibility is remote and therefore have made no provision for this and the profit arising on this transaction has been recognised in full. Upon acquiring certain participating interests in the Ksar Hadada permit by Independent Resources (Ksar Hadada) Limited from Derwent Resources (Ksar Hadada) Limited and GAIA srl, a company owned or controlled by  R Bencini, it was agreed that payments that could amount to $1 million (£641,875) to each company were to be dependent upon drilling and development milestones. The project continues to move forward, despite two dry wells having been drilled during the year. It is still possible therefore that some milestones will be reached and payments would fall due to paid. The milestones and consideration, for each company, are as follows: •               Drilling consideration due upon spudding the first well of $50,000 (£32,900) (paid during the previous year); •               Discovery consideration due upon first flowing hydrocarbons to the surface of $100,000 (£64,103); and •               Commerciality consideration due upon granting of an operating concession of $850,000 (£544,872).
11	Other
	This announcement can be viewed in full on the Company web-site www.ir-plc.com.
	For further information, please visit www.ir-plc.com or contact:
	Grayson Nash			Independent Resources plc		[phone]
	Allan Piper			Tavistock Communications		020 7920 3150
	Simon Hudson
	Jonathan Wright/Stewart Dickson			Seymore Pierce Limited		020 7107 8000
	(Corporate Finance)
	Richard Redmayne/David Banks
	(Corporate Broking)

 

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