Echo Energy Regulatory News (ECHO)

Independent Resources plc

("Independent Resources" or the "Company" or the "Group)

Audited results for the year ended 31 December 2014

Highlights

• Formalisation of appointment as operator of Ksar Hadada licence

• Ksar Hadada farm-out process commenced

• Rationalisation of Italian portfolio and cost base

• Positive Italian legislative developments ahead of Rivara court processes

• Equity fundraising of £1.75 million of new capital during the year with further capital of £0.80 million raised since year end

• Progress continuing on portfolio of potential investments in producing assets

Key financials

• Operating loss on continuing activities of £1.57 million (2013: £3.04 million)

• Loss from discontinued Ribolla coal bed methane operations of £4.91 million (2013: £ Nil)

• Loss for the year of £6.48 million (2013: £3.34 million)

• Cash at year end of £0.42 million (2013: £0.66 million)

• Cash at 24 June 2015 of £0.46 million

Chairman's statement

Introduction

The year ended 31 December 2014 saw Independent Resources continue to progress its operational and

geographical transformation into a mainstream E&P company focused on North Africa.

Formal approval of Independent Resources' appointment as operator of the Ksar Hadada licence was eventually

obtained in August 2014 and since then we have conducted an extensive technical review of the licence

prospectivity in preparation for the farm-out process which began in the fourth quarter.

We have continued to rationalise our Italian operations. Our conscious decision not to pursue coal bed methane

opportunities in Tuscany led to an impairment charge in relation to our historical investment. Since the year end,

arrangements have been completed for the closure of the Group's technical office in Rome and the termination of all

Italian contracts of employment.

During 2014, our objective of acquiring an interest in a producing asset in North Africa on reasonable terms was

frustrated, not least by the volatility of underlying oil prices since the Autumn of 2014 which increased the potential

risk of entering into a transaction which may not have been in the best long-term interests of shareholders.

We believe that following the fall in oil prices, the environment is now more attractive for IRG as a potential acquirer

and we continue to examine a number of opportunities and to progress discussions with potential financial partners.

Ksar Hadada

In August 2014, we received formal confirmation from the Consultative Committee on Hydrocarbons ("CCH") in

Tunisia that our application for an extension to the Ksar Hadada permit ("KH") and to become the operator had

been approved.

Our increased operating interest of 86.345 per cent. has provided the potential to attract an investment partner to

fund the work programme and still allow IRG to retain a meaningful future working interest in the permit.

During 2014, we commissioned a revised competent person report on the licence from Blackwatch Petroleum

Services which estimated prospective resources of 108 million BOE at Ksar Hadada.

The Tunisian approvals process was unfortunately very slow during 2014 and no CCH meetings were held from late

2013 until August 2014 causing major delays with many oil and gas projects in Tunisia. In recognition of the

original delay in approval in 2014, the licence period for Ksar Hadada was extended by the CCH from 16 April 2016

to 7 August 2016. The extension period represents the second renewal of the licence and therefore Independent

Resources (Ksar Hadada) Limited may still, if necessary, seek an additional one-year extension of the licence until

7 August 2017.

Since CCH approval was granted, IRG has agreed and executed a new joint operating agreement with its partners;

agreed a work plan and budget to fulfil the minimum work programme obligations with ETAP and completed

preparation for the 3D seismic survey.

In the last quarter of 2014 we entered into a process to farm out part of our stake in Ksar Hadada to a third party

and that process is still ongoing. While the speed of this process has understandably been influenced by the

volatility of oil prices and the changing political and security situation in Tunisia and across North Africa, the

licence remains economically viable at prices substantially below today's prices and we remain in discussions with

a number of parties regarding investment.

Rivara

We continue to await the commencement of Administrative court proceedings in relation to Rivara as we contest

the positions taken in 2012 by the Emilia-Romagna region and the Ministry of Economic Development.

If the future court process can be navigated successfully, despite its protracted nature, the general environment in

Italy now appears to be becoming more positive for a project of this kind. Legislative change proposed by the

Renzi administration as part of its 'Unlock Italy' agenda specifically identifies new gas storage capacity as

strategically important and also seeks to amend the permit approval process to lessen the involvement of regional

governments.

Fiume Bruna and Casoni (Ribolla Basin CBM assets)

In light of significant uncertainty over the potential to develop the Ribolla basin coal bed methane opportunities and

the availability of capital to do so we took the decision at the time of preparation of the interim accounts to impair

the value of the historical investment in Fiume Bruna and Casoni and the goodwill associated with the historical

acquisition of Independent Energy Solutions srl.

All attempts to farm-out these assets have ultimately not been successful and therefore as licence commitments

could not be met, the licences were not renewed and have now been formally relinquished.

The combined impairment events resulted in a charge to the statement of comprehensive income in this financial

year of £4.55m.

Board changes

Since the publication of our last accounts, our commercial director Owain Franks has joined the board as an

executive director. In January 2015 we welcomed Martin Miller to the board as a non-executive director. Martin

brings with him a wealth of technical expertise and we will value his input tremendously.

I would like to take this opportunity to thank Roberto Bencini, who resigned as a director in January 2015, for his

considerable efforts on the Company's behalf and wish him well for the future.

Having served on the board as a non-executive director since the admission of the Company to AIM in 2005, Alan

Thomas our non-executive director has indicated a desire to step down from the board following the forthcoming

Annual General Meeting and we expect to announce his replacement imminently. On behalf of my fellow directors,

I would like to thank Alan for his invaluable contribution over the last ten years.

Financial review

The Group made a loss of £6.48 million during 2014 (2013: £3.34 million).

After excluding the impairment charge in respect of Ribolla of £4.55 million, the residual loss was comprised of

£1.74 million in operational and administrative costs, including discontinued operations, (2013: £1.34 million) and

£0.23 million in professional fees and diligence costs related to potential acquisitions (2013: £0.27 million). The

increased administrative costs this year reflect the effect of a full year's UK head office costs and increased costs

arising from operatorship of the Ksar Hadada licence. Following the reduction in scale of the group's administrative

presence in Italy, the charge for the group for 2015 is expected to be significantly lower.

The results for 2013 also included a £1.51 million charge related to the restructuring of the Group's interest in

Rivara Gas Storage.

Consolidated net assets at 31 December 2014 were £5.41 million (2013: £10.92 million). The book value of past

investment in relation to Fiume Bruna and Casoni of approximately £4.10 million was impaired in full during 2014.

At 31 December 2014, the consolidated balance sheet included approximately £5.24 million of past investment

in relation to group's Italian gas storage project at Rivara. Pending resolution of the legal proceedings the carrying

value of Rivara has not been impaired.

Cash used in continuing operations totalled £1.63 million (2013: £0.37 million generated) after adjustments for non-cash

items with capital expenditures incurred during the year limited to £0.22 million (2013: £0.22 million).

There was £0.42 million of available cash at 31 December 2014 (2013: £0.66 million). Gross equity capital of £0.8m was raised

since year end through a placing of ordinary shares. Group cash balances at 24 June 2015 were £0.46 million.

Going concern

The financial information for the year to 31 December 2014 has been prepared assuming the group will continue as a going

concern. Under the going concern assumption, an entity is ordinarily viewed as continuing in business for the foreseeable

future with neither the intention nor the necessity of liquidation, ceasing trading or seeking protection from creditors pursuant to

laws or regulations.

The assessment has been made based on the group's anticipated activities which have been included in the financial forecast

for the years 2015 and 2016. Included in these forecasts is the result of the recent placing which provided approximately £800,000

before expenses. As a result of this additional fund raising the group can continue with its proposed activities.

Whilst the directors remain acutely cost conscious and value focused the group will still need to attract additional funding in forthcoming

months to continue in operation and to cover its share of work programme costs in relation to Ksar Hadada. Accordingly, the directors

continue to explore all forms of potential fundraising at both a corporate and asset level. We continue to keep operating costs

to a minimum and to use in-house resource and expertise to assess new opportunities and minimise professional

fees payable to third parties.

Cash is tightly managed and the closure of the Italian office will result in a significant reduction in the Group's overheads

to a currently anticipated level of approximately £1.30 million per annum. In addition, in recent months the board

as a demonstration of commitment to the future success of the Company have foregone receipt of salaries and fees

in cash in favour of share based remuneration. In relation to Ksar Hadada, management's intention remains to secure a

farm-in or investment partner to cover programme costs.

Based on the above, the directors have formed a judgment that the going concern basis should be adopted in preparing the

financial statements.

Should the group be unable to continue trading, adjustments would have to be made to reduce the value of the assets

to their recoverable amounts, to provide for further liabilities which might arise and to classify fixed assets as current.

Business development

A number of possible transactions are actively being pursued and we expect to report further in due course. We

have submitted formal offers on two opportunities and await developments.

The investment environment in our industry has been altered by the drop in oil prices over the last nine months.

This decline has ultimately led to a decrease in the costs of services and asset values and heightened the need for

companies to prioritise the use of capital. Many projects will by necessity become non-core for the current owners

and will be made available for sale. IRG continues to see this as an attractive time to acquire and exploit

development and appraisal assets.

Egypt remains our primary country of focus. It represents an established oil province with good commercial terms

and our management team has significant in country operational experience. We believe that the application of a

western approach to production management and proper technical and commercial analysis can make a real

difference to asset performance.

We thank shareholders for their patience and hope to make further announcements about Ksar Hadada and our

investment pipeline in due course.

Grayson Nash

Non-executive Chairman

For more 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 & Joint Broker)

Oliver Stansfield

Brandon Hill Capital

020 3463 5000

Alex Walker

(Joint Broker)

Jonathan Evans

Simon Hudson

Tavistock Communications

020 7920 3150

Independent Resources plc

Consolidated statement of comprehensive income

Year ended 31 December 2014

Notes

Year to 31 December 2014

Period to 31 December 2013

Continuing operations

£

£

Revenue

-

-

Cost of sales

-

-

Gross profit

-

-

Administrative expenses

(1,613,026)

(1,531,735)

Other operating income

42,509

-

Reorganisation of Rivara Gas Storage srl

3

-

(1,511,722)

Operating loss

(1,570,517)

(3,043,457)

Financial income

2,183

2,455

Financial expense

(4,394)

(2,998)

Loss before tax from continuing operations

(1,572,728)

(3,044,000)

Taxation

5

-

-

Loss for the year from continuing operations

(1,572,728)

(3,044,000)

Discontinued operations

Loss after taxation for the year from

discontinued operations

4

(4,907,737)

(297,338)

Loss for the year

(6,480,465)

(3,341,338)

Other comprehensive income:

Items that will or may be reclassified to profit

or loss in subsequent periods (net of tax)

Exchange difference on translating foreign operations

(650,799)

704,123

Total comprehensive loss for the year

(7,131,264)

(2,637,215)

Loss attributable to:

Owners of the parent

(6,480,465)

(3,350,702)

Non-controlling interests

-

9,364

(6,480,465)

(3,341,338)

Total comprehensive loss attributable to:

Owners of the parent

(7,131,264)

(2,664,623)

Non-controlling interests

-

27,408

(7,131,264)

(2,637,215)

Loss per share (pence)

6

Basic

(8.3)

(7.3)

Diluted

(8.3)

(7.3)

Loss per share (pence) for continuing operations

Basic

(2.0)

(6.6)

Diluted

(2.0)

(6.6)

Independent Resources plc

Consolidated statement of financial position

As at 31 December 2014

Notes

31 December 2014

31 December 2013

£

£

Non-current assets

Property, plant and equipment

13,016

19,883

Goodwill

7

-

450,766

Other intangible assets

8

5,603,152

10,128,364

5,616,168

10,599,013

Current assets

Other receivables

206,027

464,850

Cash and cash equivalents

425,909

663,117

631,936

1,127,967

Assets held for distribution

4

47,683

-

679,619

1,127,967

Current liabilities

Trade and other payables

(609,010)

(807,505)

Liabilities directly associated with the

assets held for distribution

4

(279,989)

-

(888,999)

(807,505)

Net current assets

(209,380)

320,462

Net assets

5,406,788

10,919,475

Equity attributable to equity holders of the parent

Share capital

9

1,051,434

458,369

Share premium

10

16,302,050

15,287,351

Share option reserve

25,776

418,919

Foreign currency translation reserve

(39,564)

611,235

Retained earnings

(11,932,908)

(5,856,399)

Total equity

5,406,788

10,919,475

Independent Resources plc

Statement of changes in equity

Year ended 31 December 2014

Retained

Share

Share

Share

Foreign

Total

Non-

Total

earnings

capital

premium

option

currency

controlling

equity

reserve

translation

interests

reserve

£

£

£

£

£

£

£

£

Consolidated

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

1 January 2014

(5,856,399)

458,369

15,287,351

418,919

611,235

10,919,475

-

10,919,475

Loss for the year

 (6,480,465)

-

-

-

-

(6,480,465)

-

(6,480,465)

Exchange differences

-

-

-

-

(650,799)

(650,799)

-

(650,799)

Total comprehensive loss for the year

(6,480,465)

-

-

-

(650,799)

(7,131,264)

-

(7,131,264)

New shares issued

-

593,065

 1,186,129

-

-

1,779,194

-

1,779,194

Share issue costs

-

-

(171,430)

-

-

 (171,430)

-

 (171,430)

Share options lapsed

403,956

-

-

(403,956)

-

-

-

-

Share-based payments

-

-

-

10,813

-

10,813

-

10,813

Non-controlling interest acquired by group

-

-

-

-

-

-

-

-

31 December 2014

(11,932,908)

1,051,434

16,302,050

25,776

(39,564)

5,406,788

-

5,406,788

Independent Resources plc

Consolidated statement of cash flows

Year ended 31 December 2014

Year to 31 December 2014

Period to 31 December 2013

£

£

Cash flows from operating activities

Loss before taxation from continuing operations

(1,572,728)

(3,044,000)

Loss before taxation from discontinued operations

(4,907,737)

(297,338)

(6,480,465)

(3,341,338)

Adjustments for:

Depreciation of property, plant and equipment

10,724

10,818

Impairment of intangible assets and goodwill

4,547,705

-

Share-based payments

10,813

215,114

Financial income

(2,183)

(2,455)

Financial expense

4,394

2,998

(1,909,012)

(3,114,863)

Decrease in other receivables

218,331

3,433,381

Increase/(decrease) in trade and other payables

81,494

(153,166)

Cash (used in)/from operations

(1,609,187)

165,352

Income taxes received

-

-

Net cash (used in)/from operating activities

(1,609,187)

165,352

Cash flows from investing activities

Interest received

2,183

2,455

Interest paid

(4,394)

(2,998)

Proceeds on disposal of property, plant and equipment

-

1,495

Purchase of intangible assets

(219,512)

(222,913)

Purchases of property, plant and equipment

(14,062)

(10,060)

Net cash used in investing activities

(235,785)

(232,021)

Cash flows from financing activities

Issue of share capital

1,779,194

-

Share issue costs

(171,430)

-

Net cash from financing activities

1,607,764

-

Net decrease in cash and cash equivalents

(237,208)

(66,669)

Cash and cash equivalents at 1 January 2014

663,117

729,786

Cash and cash equivalents at 31 December 2014

425,909

663,117

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 period ended 31 December 2013 and have not

changed for the year ended 31 December 2014.

The financial information set out in this announcement does not constitute audited financial statements for the year

ended 31 December 2014. The financial information for the period ended 31 December 2013 is derived from the

statutory accounts for that period 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 year ended 31 December 2014 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 year ended 31 December 2014 and their report is unqualified, but, with the following emphases of

matter:

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.

Ksar Hadada

The previously reported segment of Ribolla Basin CBM assets has been classified as a discontinued operation and has been

excluded from the analysis below.

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 31 December 2014 nor in the period to 31 December 2013.

Information regarding each of the operations of each reportable segment within continuing operations is included in

the following table.

Parent

Rivara

 Ksar Hadada

 Consolidation

 Total

company

£

£

 £

 £

 £

Year to 31 December 2014

Interest revenue

139,184

12,633

-

(149,634)

2,183

Interest expense

-

(68,168)

-

63,774

(4,394)

Depreciation

2,816

40

-

-

2,856

Impairment of

intangible assets

-

-

-

-

-

Income tax

-

-

-

-

-

Loss for the year

before taxation

(9,398,072)

(198,236)

(129,676)

8,153,256

(1,572,728)

Assets

4,378,459

6,955,152

374,451

(5,459,958)

6,248,104

Liabilities

(544,028)

(3,003,712)

(890,749)

3,829,479

(609,010)

Period to 31 December 2013

Interest revenue

155,807

40,133

-

(193,485)

2,455

Interest expense

(121)

(111,370)

-

108,493

(2,998)

Depreciation

-

1,241

-

-

1,241

Impairment of

intangible assets

-

-

-

-

-

Income tax

-

-

-

-

-

Loss for the

period before taxation

(789,605)

(1,744,075)

(61,511)

(448,809)

(3,044,000)

Assets

12,128,214

8,242,367

235,604

(8,879,205)

11,726,980

Liabilities

(514,288)

(3,810,637)

(622,226)

4,139,646

(807,505)

The geographical split of non-current assets arises as follows:

 United

 Overseas

 Total

 Kingdom

 £

 £

 £

31 December 2014

Intangible assets

-

5,603,152

5,603,152

Goodwill

-

-

-

Property, plant and equipment

12,968

48

13,016

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

3.

Exceptional items

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 year is calculated as follows:

Year to 31 December 2014

Period to 31 December 2013

£

£

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.

Discontinued operations

The group was unable to find an investment partner for the coal bed methane opportunities at Fiume Bruna and Casoni,

in Italy, therefore, these opportunities will no longer be pursued. As a result the directors decided, prior to the year end, to

significantly reduce its activities in Italy and to discontinue the activities within Independent Energy Solutions srl which

dealt solely with these opportunities. With Independent Energy Solutions srl classified as discontinued operations, the

Ribolla Basin CBM assets segment is no longer presented in the segment note. The results of Independent Energy

Solutions srl, incorporating consolidation adjustments, are presented below:

Year to 31 December 2014

Period to 31 December 2013

£

£

Revenue

-

-

Administrative expenses

(360,916)

(300,214)

Operating loss before impairment

(360,916)

(300,214)

Impairment of the historic cost and carrying value of intangible

assets

(4,096,939)

-

Impairment of goodwill arising on acquisition of Independent Energy

Solutions srl - consolidation adjustment

(450,766)

-

Operating loss after impairment

(4,908,621)

(300,214)

Financial income

884

2,876

Financial expense

-

-

Loss on ordinary activities before taxation

(4,907,737)

(297,338)

Taxation

-

-

Loss for the year from discontinued operations

(4,907,737)

(297,338)

The major classes of assets and liabilities of Independent Energy Solutions srl classified as held for distribution to equity

holders of the parent as at 31 December 2014 are as follows:

31 December 2014

31 December 2013

£

£

Assets

Intangible assets - fully impaired

-

-

Property, plant and equipment

9,026

-

Other receivables

22,008

-

Cash and cash equivalents

16,649

-

Assets held for distribution

47,683

-

Liabilities

Trade and other payables

(279,989)

-

Liabilities directly associated with the assets held for distribution

(279,989)

-

Net assets directly associated with disposal group

(232,306)

-

The net cash flows incurred by Independent Energy Solutions srl are as follows:

Year to 31 December 2014

Period to 31 December 2013

£

£

Operating

25,297

128,568

Investing

(61,737)

(118,329)

Financing

-

-

Net cash (outflow)/inflow

(36,440)

10,239

Loss per share (pence)

Year to 31 December 2014

Period to 31 December 2013

Basic, loss for the year from discontinued operations

(6.3)

(0.7)

Diluted, loss for the year from discontinued operations

(6.3)

(0.7)

Immediately before the classification of Independent Energy Solutions srl as discontinued operations, the recoverable

amount was estimated for certain items of property, plant and equipment and no impairment was identified. No adjustment

has been made to reduce the carrying amount of the assets in the disposal group to their fair value less costs to distribute.

Immediately before the classification of Independent Energy Solutions srl as discontinued operations, the recoverable

amount was estimated for the company's intangible assets and these were impaired in full.

5.

Taxation

Year to 31 December 2014

Period to 31 December 2013

£

£

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 year is different from the standard rate of corporation tax in the UK (21.5%). The

differences are explained below:

Year to 31 December 2014

Period to 31 December 2013

£

£

Loss on ordinary activities before taxation

(1,572,728)

(3,044,000)

Loss on ordinary activities multiplied by standard rate

of corporation tax in the UK of 21.5% (2013: 23.4%)

(338,136)

(712,296)

Effects of:

Expenses disallowed for tax purposes

2,540

50,337

Deferred tax not provided - tax losses carried forward

335,596

661,959

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 2014 was based on the loss attributable

to ordinary shareholders of £6,480,465. The weighted average number of ordinary shares outstanding during

the year ending 31 December 2014 and the effect of the potentially dilutive ordinary shares to be issued are

shown below.

Year to 31 December 2014

Period to 31 December 2013

 £

 £

Net loss for the year

(6,480,465)

(3,350,702)

Basic weighted average ordinary shares

in issue during the year

77,683,625

45,836,867

Diluted weighted average ordinary shares

in issue during the year

77,683,625

45,836,867

Loss per share (pence)

Basic

(8.3)

(7.3)

Diluted

(8.3)

(7.3)

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 year ending 31 December 2014.

7.

Goodwill (group)

Goodwill

£

31 December 2014

Cost

1 January 2014 and 31 December 2014

450,766

Impairment

1 January 2014

-

Impairment charge for the year

450,766

31 December 2014

450,766

Carrying amount

31 December 2014

-

31 December 2013

450,766

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

The goodwill arises as a result of the acquisition of Independent Energy Solutions srl which contains the Ribolla project.

The group was unable to find an investment partner for the coal bed methane opportunities at Fiume Bruna and Casoni,

in Italy, therefore, these opportunities will no longer be pursued. As a result the directors have decided that the carrying

value of the goodwill is not recoverable and have fully provided against this in the current year.

8.

Other intangible assets (group)

Development and exploration

Rivara gas

Ribolla Basin

Ksar Hadada

Total

storage

CBM assets

exploration

facility

acreage

£

£

£

£

31 December 2014

Cost

1 January 2014

5,584,997

4,316,859

1,307,337

11,209,193

Exchange differences

(365,374)

(282,411)

-

(647,785)

Additions

19,730

62,491

137,291

219,512

31 December 2014

5,239,353

4,096,939

1,444,628

10,780,920

Impairment

1 January 2014

-

-

1,080,829

1,080,829

Impairment charge for the year

-

4,096,939

-

4,096,939

31 December 2014

-

4,096,939

1,080,829

5,177,768

Carrying amount

31 December 2014

5,239,353

-

363,799

5,603,152

31 December 2013

5,584,997

4,316,859

226,508

10,128,364

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

Impairment

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

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.

Ribolla Basin CBM assets

The group was unable to find an investment partner for the coal bed methane opportunities at Fiume Bruna and Casoni,

in Italy, therefore, these opportunities will no longer be pursued. As a result the directors have decided that the carrying

value of the intangible asset is not recoverable and have fully provided against this in the current year.

Ksar Hadada exploration permit

Through a wholly owned subsidiary, the Group owns a 86.345% working interest in the Ksar Hadada exploration

permit onshore Tunisia. The Group and its partners in the licence expect drilling activity in the licence to commence in 2016.

The Group is actively searching for a farm-in partner to fund seismic appraisal and drilling. If a commercial discovery is made

through drilling then a production licence with a 30 year duration can be obtained. Management's evaluation of the commercial

terms of the related production sharing contract confirm that the project remains economic at current oil prices and at a substantial

discount thereto and indicate a net present value significantly in excess of the value of the related intangible assets.

Rivara gas storage facility

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 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 projects.

Value in use

Value in use has been calculated separately for the group's Rivara gas storage facility. 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 associated 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.

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, 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 project is supported by the evaluation work

undertaken by appropriately qualified persons.

Management has assessed the project's 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%

+568.29%

Discount rate

8.0%

+78.23%

Capital expenditure

-

185.89%

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 £5,239,000 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 Romagna Administrative Court

and this appeal is due to be heard in the second half of 2015.

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.

Share capital

31 December 2014

31 December 2013

Group

Company

Group

Company

£

£

£

£

Issued, called up and fully paid

105,143,330 (2013: 45,836,867)

ordinary shares of 1p

1 January 2014

458,369

458,369

458,369

458,369

Equity shares issued

593,065

593,065

-

-

31 December 2014

1,051,434

1,051,434

458,369

458,369

Since the enactment of the Companies Act 2006 and the resulting changes to the articles of association of the company, the

company is no longer required to maintain an authorised share capital.

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.

On 19 June 2014, a further 59,306,463 ordinary shares of 1p were issued at a placing price of 3p each giving rise to a

share premium of £1,186,129.

10.

Share premium account

31 December 2014

31 December 2013

Group

Company

Group

Company

£

£

£

£

1 January 2014

15,287,351

15,287,351

15,287,351

15,287,351