ECHO.L Regulatory News (ECHO)

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