Last checked at 23 Jun 2009 07:00
Independent Resources plc
("Independent Resources or the "Company")
Interim results for the six months ended 31 March 2009
Highlights
Net cash at 31 March 2009: £7.0 million
Committed 3rd-party funding at subsidiaries as at 31 March 2009: £6.6 million
Rivara - sustained efforts now yielding political consensus
Fiume Bruna - commenced appraisal drilling & testing operations
Ksar Hadada - executed farm-out post period end with committed funding in place (subject to statutory approval)
Interim loss before taxation: £127,836 (2008: £396,793)
Loss per share for the interim period: 0.3p (2008: 1.2p)
Chairman's Statement
I am pleased to report some significant business successes over the past six months - during one of the most difficult economic periods since the Great Depression. Despite the economic backdrop, in my opinion, Independent Resources's business has never been more exciting, and our potential for significant returns is strong.
In reporting on another six months of steady progress, I am once again grateful to our shareholders for the confidence they have shown in Independent Resources as we continue working towards the realisation of our planned development projects in Italy and Tunisia. During the period, we moved forward cautiously in our discussions over the planned development of our keystone underground gas storage ("UGS") facility at Rivara in the Po Valley, and also worked patiently on our coalbed methane prospect in industrial Tuscany and our oil and gas prospects in Ksar Hadada in Tunisia.
Rivara
Recent Ministerial and regulatory authority statements leave little doubt that - once all the necessary stakeholder issues have properly been taken into account - the Rivara UGS facility should be positioned to become a crucial element in Italy's future gas planning. Earlier this month, Italy's antitrust authority and energy markets regulator AEEG said its recent investigations into gas storage markets found the country was vulnerable under the current system to extraordinary events such as very cold snaps or the recent row between Russia and Ukraine which led to a cut in gas supplies from Russia. The AEEG said the system needs "a significant reinforcement of storage capacity, essential for improving security levels," that the Rivara project is of "elevated interest to the Italian system" and that the current situation requires "the elimination of barriers and distortions to the development of new capacity and the evolution of balancing rules and access rights."
Following this on 4 June, Carlo Giovanardi, Undersecretary of State at the Italian Prime Minister's office, reiterated in comments reported by the Italian press that: "The gas regulator's investigation which also mentions the Rivara gas storage site is confirmation that this project, which is being studied to ensure that it has all the safety characteristics for our citizens, represents the fundamental response to what the government expects in terms of energy savings. This will allow Italy to confront foreign competition, stabilise energy prices and provide benefits to the territory, and allow our businesses to work at lower costs".
Also on 4 June, Stefano Saglia, Undersecretary of State at the Ministry of Economic Development, stated in a press release "the conclusions drawn by the antitrust authorities and the gas regulator merit a careful review by the government. The Ministry of Economic Development, under the impulse of Minister Scajola, has accelerated the authorisation process for new storage facilities. The ambitious objective is to add some 14 BCM of gas storage within five years. The Ministry of Economic Development intends to reduce the permitting time in close cooperation with the Ministry Environment, per standards in the rest of the OECD countries. If Italy wants to become a gas hub, it cannot but bet on storage sites favouring a plurality of private ownership".
Most recently, on 13 June, the Italian Environment Ministry became the third Government agency to acknowledge the significance of Rivara when Environment Minister Stefania Prestigiacomo confirmed in an answer to a Parliamentary Question "The necessity to significantly augment the storage capacity of Italian reservoirs so as to improve the security of supply and the flexibility of the national gas system". The Minister added that, "all gas storage projects that can demonstrate to be of elevated interest for the Italian system, including the Rivara project, appear to merit attention. Subject to, and only if the outcome of [this Ministry's] VIA process is positive, the Ministry of Economic Development will commence the [process] of conferring the concession, with the approval of the relevant work programme."
The process of permitting Rivara is clearly coming to a head, but it is important to note that Independent Resources fully appreciates the significance of Minister Prestigiacomo's closing remark on the need to fulfill the necessary VIA requirements. We realise that it is very difficult to predict the practical consequences of the public debate in Italy. The Company is happy to reiterate its position that, whilst we remain confident that Rivara is set to become an important asset in respect of Italy's security of energy supply, we continue to be aware of the need for the careful involvement of all the parties affected by the planned development of Rivara, at all levels of government. Independent Resources is currently seeking environmental approvals ahead of the planned development of Rivara, while also currently working to ensure full compliance with Italy's stringent environmental and planning regulations.
Fiume Bruna
It is equally pleasing to report that we are also making steady progress on our other ongoing project in Italy, the planned coal bed methane development at Fiume Bruna in industrial Tuscany, which is 100%-owned by Independent Resources. During the period under review we successfully completed the acquisition of 10.6 km of 2D seismic data, clearing the way for appraisal drilling and production testing. We have already selected a well site and identified a clear target, but site preparations had been held up by the slow release of necessary permits. Thankfully, these have now been obtained and our wholly-owned subsidiary Independent Energy Solutions ("IES") has begun civil works for the preparation of the well site, which was the official start of the Fiume Bruna 1 drilling operations.
A drilling rig has been contracted and will be executing the multi-well plan we have developed with our advisers, the US consultancy group Norwest Questa Engineering, on the best technical approach towards drilling and testing this CBM resource. The first well, Fiume Bruna 1 is targeted to reach a depth of 800 meters, significantly deeper than our earlier stratigraphic well at Fiume Bruna, which successfully identified a single seam of gas-active coal approximately 7 metres thick. The main purpose of the new well is to evaluate the best means to undertake production testing so as to determine gas and any water flow rates from the coal in place. Drilling operations are expected to last for three to four weeks and we will keep the market abreast of developments there.
The second phase of seismic acquisition on the Fiume Bruna Block, 46 km in total, has been assigned to Osservatorio Geofisico Sperimentale di Trieste ("OGS") and acquisition is expected to start towards the end of August 2009, to avoid interference with drilling operations. The survey will last approximately two months. Following this we will resume drilling at selected sites so as to gain as representative a view as possible of gas and any water flow rates from the coal. At that point we would plan to mobilize a well-stimulation crew to optimise the production potential of each of these wells, basing the techniques on the variety of data we will have acquired during the drilling and logging campaign. Ultimately this appraisal campaign must be viewed as a steady process of gaining insight into the underlying factors that yield commercially-viable gas flows and the means to make them as profitable as possible.
We have reported to shareholders that Fiume Bruna has an estimated 4.8 billion cubic metres (167 billion cubic feet) of in-place resource, and results from initial testing, announced in July 2007, indicated an estimated recoverable resource of 2.6 billion cubic metres (91.4 billion cubic feet). Longer-term, it also has potential for carbon sequestration, permanently disposing of carbon dioxide (CO2) from nearby sources. At the same time, an estimated additional 1.8 billion cubic metres (63.6 billion cubic feet) of methane would be produced as a result of this injection of CO2. The Board estimates that the net present value of the project would be increased significantly as a result. Independent Resources intends to apply for a full development concession when commercial production rates have been proven, and may seek a development partner to bring the project on stream following a declaration and subsequent permitting of commercial operations.
A new and large extension to the south of Fiume Bruna named "Casoni" has obtained its preliminary award, as always subject to environmental clearance, and the Company is now putting the finishing touches to its environmental impact assessment study which we are targeting to submit towards the end of July 2009. Against the overall background of falling domestic gas production and robust demand, I believe that Fiume Bruna and Casoni remain very attractive elements within our project portfolio.
Ksar Hadada
At our third active project, we announced the successful conclusion of a farm-out deal on the Ksar Hadada oil and gas exploration permit covering 5,600 square km onshore Tunisia. This follows last year's renewal of the permit for three years from 20 April 2008. The farm-out will finance all of the Company's work commitments for the duration of this phase of the permit. This marks the fulfillment of another promise we made to shareholders - that Independent Resources will focus its resources on its core assets - as this deal allows us to retain exposure to potentially significant shareholder value upside, whilst minimising downside risks.
As part of a joint farm-out with Petroceltic Ksar Hadada Ltd, Independent Resources (Ksar Hadada) Limited, has farmed out a 21.03% interest in the permit to PetroAsian Energy (Tunisia) Limited ("PetroAsian"), a subsidiary of PetroAsian Energy Holdings, a Hong Kong Stock Exchange listed company. Independent Resources (Ksar Hadada) Limited will retain an 18.97% interest in the block. In return, PetroAsian will pay all costs of drilling and testing two new exploration wells and acquiring and processing 100 km of new 2D seismic data. It is planned to commence this work as soon as is practicable allowing for availability of rigs and other equipment and services.
The primary targets on the block are Cambro-Ordovician quartzites and the Silurian Acacus Sandstone. Several large oil-prone prospects have been mapped; these are sourced by the Silurian Tanezzuft Shale, which is the main source rock for North Africa. Recent light oil discoveries in the Cambro-Ordovician just to the south of the block have now validated the potential of the Ksar Hadada targets. Across the border in Libya very high flow rates have been achieved from multiple Acacus wells, providing added attraction to the Acacus play.
We are delighted to have reached this agreement with PetroAsian. We share a common vision for the block and welcome PetroAsian's investment alongside us to unlock its potential. The transaction remains subject to the receipt of the statutory approval of the Tunisian government and the notification requirements of the Hong Kong Stock Exchange.
Outlook
Our cash and callable funding position remains strong, and our project portfolio continues to look attractive which means we are well positioned to maintain and hopefully accelerate our plans.
In what remains a very difficult environment for quoted companies, we continue to focus on our long-term objectives and I believe that our efforts will be rewarded in the future. We remain committed, as we have been for many years, to the success of Independent Resources. I would like to thank our shareholders for their continued commitment, and look forward to what I believe will turn out to be a significant 2009 for the Company.
| For further information contact: | ||
| Grayson Nash | Independent Resources plc | +3906 4549 0720 |
| Allan Piper | Tavistock Communications | 07771 838 753 |
| 020 7920 3150 | ||
| Duncan McCormick | Tavistock Communications | 020 7920 3150 |
| Jonathan Hinton/David Smith | Deloitte Corporate Finance | 020 7936 3000 |
| David Banks | Seymour Pierce Limited | 020 7107 8011 |
| Independent Resources PLC | |||||||
| Consolidated income statement | |||||||
| Six months ended 31 March 2009 |
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| Unaudited | Unaudited | ||||||
| 1 October 2008 to | 1 October 2007 to | ||||||
| 31 March 2009 | 31 March 2008 | ||||||
| Continuing operations | £ | £ | |||||
| Revenue | 16,408 | 2,200 | |||||
| Cost of sales | - | - | |||||
| Gross profit | 16,408 | 2,200 | |||||
| Administrative expenses | (614,951) | (457,564) | |||||
| Operating loss | (598,543) | (455,364) | |||||
| Net financial income | 464,944 | 58,571 | |||||
| Loss on ordinary activities before taxation | (133,599) | (396,793) | |||||
| Taxation | - | - | |||||
| Loss for the period | (133,599) | (396,793) | |||||
| Attributable to: | |||||||
| Minority interests | (5,763) | - | |||||
| Shareholders' equity | (127,836) | (396,793) | |||||
| Earnings per share | |||||||
| From continuing operations | |||||||
| Basic | (0.003) | (0.012) | |||||
| Diluted | (0.003) | (0.012) | |||||
| Consolidated statement of changes in equity | |||||||
| Loss for the period attributable to shareholders' equity | (127,836) | (396,793) | |||||
| Share based payments | 21,659 | 64,974 | |||||
| Exchange difference on investment | 1,232,369 | 325,076 | |||||
| Total change in equity | 1,126,192 | (6,743) | |||||
| Independent Resources PLC | ||||||||
| Consolidated balance sheet | ||||||||
| As at 31 March 2009 |
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| Unaudited | Audited | Unaudited | ||||||
| 31 March | 30 September | 31 March | ||||||
| 2009 | 2008 | 2008 | ||||||
| £ | £ | £ | ||||||
| Non-current assets | ||||||||
| Property, plant and equipment | 68,513 | 62,516 | 93,509 | |||||
| Goodwill | 4,604,965 | 4,604,965 | 2,044,146 | |||||
| Other intangible assets | 5,007,197 | 3,715,788 | 3,228,982 | |||||
| 9,680,675 | 8,383,269 | 5,366,637 | ||||||
| Current assets | ||||||||
| Trade and other receivables | 6,031,247 | 4,869,125 | 490,474 | |||||
| Cash and cash equivalents | 7,000,148 | 8,455,204 | 1,712,324 | |||||
| 13,031,395 | 13,324,329 | 2,202,798 | ||||||
| Current liabilities | ||||||||
| Trade and other payables | (380,510) | (711,741) | (228,465) | |||||
| Current taxation liabilities | (63,446) | (65,386) | (6,659) | |||||
| (443,956) | (777,127) | (235,124) | ||||||
| Net current assets | 12,587,439 | 12,547,202 | 1,967,674 | |||||
| Net assets | 22,268,114 | 20,930,471 | 7,334,311 | |||||
| Equity attributable to equity holders of the parent | ||||||||
| Share capital | 415,739 | 407,115 | 334,333 | |||||
| Share premium account | 13,036,564 | 12,444,974 | 5,843,828 | |||||
| Shares to be issued | 4,002,420 | 4,602,634 | 2,041,815 | |||||
| Share option reserve | 389,844 | 368,185 | 303,211 | |||||
| Foreign currency translation reserve | 1,522,965 | 290,596 | 318,967 | |||||
| Profit and loss reserve | 1,419,782 | 1,547,618 | (1,507,843) | |||||
| Total equity | 20,787,314 | 19,661,122 | 7,334,311 | |||||
| Minority interests | 1,480,800 | 1,269,349 | - | |||||
| 22,268,114 | 20,930,471 | 7,334,311 | ||||||
| Independent Resources PLC | |||||||
| Consolidated cash flow statement | |||||||
| Six months ended 31 March 2009 |
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| Unaudited | Unaudited | ||||||
| 1 October 2008 to | 1 October 2007 to | ||||||
| 31 March 2009 | 31 March 2008 | ||||||
| £ | £ | ||||||
| Cash flows from operating activities | |||||||
| Loss before taxation | (133,599) | (396,793) | |||||
| Adjustments for: | |||||||
| Depreciation of property, plant and equipment | 11,689 | 43,620 | |||||
| Financial income | (464,944) | (58,571) | |||||
| (586,854) | (411,744) | ||||||
| Increase in trade and other receivables | (835,122) | (151,884) | |||||
| Decrease in trade and other payables | (333,171) | 69,413 | |||||
| Share based payment | 21,659 | 64,974 | |||||
| Exchange rate differences | 941,298 | 62,523 | |||||
| Net cash used in operating activities | (792,190) | (366,718) | |||||
| Cash flows used in investing activities | |||||||
| Interest received | 137,944 | 58,571 | |||||
| Purchase of intangible assets | (792,430) | (536,741) | |||||
| Purchase of property, plant and equipment | (8,380) | - | |||||
| Net cash used in investing activities | (662,866) | (478,170) | |||||
| Net (decrease) in cash and cash equivalents | (1,455,056) | (844,888) | |||||
| Cash and cash equivalents at beginning of the period | 8,455,204 | 2,557,212 | |||||
| Cash and cash equivalents at end of the period | 7,000,148 | 1,712,324 | |||||
| Independent Resources PLC | ||||||||
| Notes to the interim financial information | ||||||||
| Six months ended 31 March 2009 |
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| 1. | Accounting policies | |||||||
| General information | ||||||||
| The interim financial information is for Independent Resources plc ("the company") and subsidiary undertakings (together, the "Group"). The company is registered in England and Wales and incorporated under the Companies Act 1985. | ||||||||
| Basis of preparation | ||||||||
| The interim financial information, for the period from 1 October 2008 to 31 March 2009, has been prepared under the historical cost convention and in accordance with International Financial Reporting Standards and International Accounting Standards as adopted by the European Union, and on the going concern basis. They are in accordance with the accounting policies set out in the statutory accounts for the year ended 30 September 2008. | ||||||||
| The Interim Report is unaudited and does not constitute statutory financial statements. The financial information for the year ended 30 September 2008 does not constitute statutory accounts, as defined in section 240 of the Companies Act 1985 but is based on those statutory financial statements. Those accounts, upon which the auditors issued an unqualified opinion, have been delivered to the Registrar of Companies. | ||||||||
| The Interim Report for the six months ended 31 March 2009 was approved by the Directors on 22 June 2009. | ||||||||
| Copies of the Interim Report are available from the Company's website www.ir-plc.com. | ||||||||
| 2. | Revenue and segmental information | |||||||
| The Group's revenue during the period represents the charging for consultancy services carried out in Italy. | ||||||||
| The Group's operations continue to be located in England, Italy and Tunisia. | ||||||||
| The following is an analysis of the carrying amount of segment assets, and additions to property, plant and equipment, analysed by the geographical area in which assets are located. | ||||||||
| Carrying amount of segment assets | ||||||||
| 31 March | 30 September | 31 March | ||||||
| 2009 | 2008 | 2008 | ||||||
| £ | £ | £ | ||||||
| United Kingdom | 5,169 | 8,233 | 13,540 | |||||
| Italy | 63,344 | 54,283 | 79,969 | |||||
| Tunisia | - | - | - | |||||
| 68,513 | 62,516 | 93,509 | ||||||
| Additions to property, plant and equipment | |||||||||||||||
| in the period | |||||||||||||||
| 1 October 2008 to | 1 October 2007 to | ||||||||||||||
| 31 March 2009 | 31 March 2008 | ||||||||||||||
| £ | £ | ||||||||||||||
| United Kingdom | - | - | |||||||||||||
| Italy | 8,380 | - | |||||||||||||
| Tunisia | - | - | |||||||||||||
| 8,380 | - | ||||||||||||||
| The following is an analysis of the revenue and loss on ordinary activities before taxation based upon the area in which the operations are carried out. | |||||||||||||||
| Revenue | |||||||||||||||
| 1 October 2008 to | 1 October 2007 to | ||||||||||||||
| 31 March 2009 | 31 March 2008 | ||||||||||||||
| £ | £ | ||||||||||||||
| United Kingdom | - | 2,200 | |||||||||||||
| Italy | 16,408 | - | |||||||||||||
| Tunisia | - | - | |||||||||||||
| 16,408 | 2,200 | ||||||||||||||
| Loss on ordinary activities before taxation | |||||||||||||||
| 1 October 2008 to | 1 October 2007 to | ||||||||||||||
| 31 March 2009 | 31 March 2008 | ||||||||||||||
| £ | £ | ||||||||||||||
| United Kingdom | (241,399) | (167,536) | |||||||||||||
| Italy | 110,214 | (229,151) | |||||||||||||
| Tunisia | (2,414) | (106) | |||||||||||||
| (133,599) | (396,793) | ||||||||||||||
| 3. | Taxation | ||||||||||||||
| There is no current tax charge for the period. The accounts do not include a deferred tax asset in respect of carry forward of unused tax losses as the directors are unable to assess that there will be probable future taxable profits available against which the unused tax losses can be utilised. | |||||||||||||||
| 4. | Earnings per share | ||||||||||||||
| The calculation of basic and diluted earnings per share at 31 March 2009 was based on the loss attributable to ordinary shareholders of £127,836 and a weighted average number of ordinary shares outstanding during the period ending 31 March 2009 of 41,237,446, as shown below. | |||||||||||||||
| 31 March 2009 | 31 March 2008 | ||||||||||||||
| £ | £ | ||||||||||||||
| Net loss for the period | (127,836) | (396,793) | |||||||||||||
| Basic and diluted weighted average ordinary shares | |||||||||||||||
| in issue during the period | 41,237,446 | 33,433,333 | |||||||||||||
| In accordance with IAS 33 and as the Group has reported a loss for the period, the share options are not dilutive. | |||||||||||||||
| 5. | Foreign currency translation reserve | ||||||||||||||
| The increase in the foreign currency translation reserve is due to the decrease in the value of sterling against the euro. The majority of the Group's activities take place in Italy through subsidiary companies that carry a significant amount of assets valued in euros. | |||||||||||||||
| 6. | Net financial income | ||||||||||||||
| Net financial income includes £327,000 relating to the increase 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. | |||||||||||||||
| 7. | Shares issued during the period | ||||||||||||||
| On 11 December 2008 the company issued 862,376 ordinary shares of 1p each pursuant to an agreement dated 19 July 2005 in relation to the acquisition of Independent Gas Management srl. The value of these shares was included in Shares to be issued within Equity at 30 September 2008 at £600,214. Consequently this amount has now been allocated between equity shares issued of £8,624 and share premium of £591,590. | |||||||||||||||
| Registered office | ||||||||
| Independent Resources plc | ||||||||
| The Hollow, Penn Lane, Melbourne, Derbyshire DE73 8EP | ||||||||
| Telephone: +44 (0)1332 865253 | ||||||||
| Fax: +44 (0)1332 865111 | ||||||||
| Email: mailbox@ir-plc.com | ||||||||
| Commercial office | ||||||||
| Piazza Mondadori 3, 20122 Milano, Italy | ||||||||
| Telephone: +39 (02) 3655 5960 | ||||||||
| Fax: +39 (02) 9998 8778 | ||||||||
| Email: mailbox@ir-plc.com | ||||||||
| Technical office | ||||||||
| Viale Liegi 10, Int. 4, 00198 Rome, Italy | ||||||||
| Telephone: +39 (06) 4549 0720 | ||||||||
| Fax: +39 (06) 4549 0721 | ||||||||
| Email: mailbox@ir-plc.com | ||||||||