Echo Energy Regulatory News (ECHO)

30 May 2007 07:00

Independent Resources PLC30 May 2007 Independent Resources plc Interim Results for the period to 31st March 2007 Highlights O Continued progress with permitting applications at Rivara O Positive early results from Fiume Bruna O New prospect mapped at Ksar Hadada O Interim loss before taxation: £296,984 (2006: £259,876) O Liquid resources at 31st March 2007: £3.29 million Chairman's statement In reporting the progress made by Independent Resources Group in the six monthsto March 31, 2007, I would like to begin by recalling the severe gas supplyproblems that have in recent winters afflicted the Italian energy sector.Shareholders are already well aware that with its planned underground storagefacility (UGS) at Rivara in the Po Valley, Independent Resources has positioneditself to become a key player in Italy's gas storage market. The painful winterdisruptions to gas supplies experienced by Italian consumers have served tounderscore how crucial this role is set to become. During the period, the Company continued to make steady advances towards theplanned development of Rivara, and also moved forward with its separate coal bedmethane work at Fiume Bruna near the town of Grosseto on the north-westerncoast. We can also report good progress in Tunisia, where we are managing theearly stages of an exploration reappraisal for our licence partners at KsarHadada - close to entry points on the Trans-Mediterranean and Greenstream gaspipelines. The work undertaken by your Board during the period was set in the twin contextof both the urgent demand for new gas storage facilities and supplies in Italy,and the equal need to comply with Italy's stringent environmental and planningregulations. The Company has spent a great deal of time and effort ensuring thatit acts to deliver its key Italian projects in a timely fashion. At the sametime, we are also paying full attention to the complexities of Italy'sregulatory and political systems, at all levels of government. Italy's Ministry for Economic Development has identified the lack of sufficientgas storage as one of the primary reasons for the dramatic supply problems ofrecent winters. The system found itself under duress as a result of itsinability to respond to what are now becoming predictable surges in winterdemand. Past emergency measures put into effect by the Government to maintainthe generation of electric power have included the combustion ofhighly-polluting heavy fuel-oil. Yet even then, the country consumed more than20% of its vital strategic gas reserves - reserves that are intended to copewith a catastrophic system failure rather than a cold winter. The requirement for additional storage capacity is clear enough in that contextalone. The most recent gas survey from the International Energy Association,Security in a Globalizing Market to 2015, also separately makes a verycompelling case for the rigidities that characterise Italy's gas market tocontinue over the medium term at least. The country's traditionally high energyprices reflect a scarcity of meaningful price competition, anincompletely-liberalized market structure, and persistent infrastructuralbottlenecks all along the gas supply chain. Over 80% of Italy's gas travelsseveral thousand kilometers to reach markets that are now heavily dependent ongas for heating and power. A healthily-balanced gas supply system, such as thatin the United States, provides gas storage capacity equivalent to around 20% ofconsumption. Yet Italy's dominant gas storage operator Stogit, a division ofENI, reported in early April that while demand for Italian storage capacity hadrisen to 14.2 billion cubic metres (bcm), the amount actually available was onlyaround 8.4 bcm. Even with the planned development of IRG's Rivara project, whichis expected to provide working gas capacity of up to 3.2 bcm, the Italian systemwill remain a long way from the ideal target of 20% coverage. The prospect ofprolonged and acute infrastructural stress is becoming increasingly real. Against this backdrop, we are continuing to steer the Rivara UGS through thecomplex "VIA" permitting process, striving to ensure that the project meets therequirements of all of the stakeholders involved, at local, regional andnational level. The VIA is similar in many ways to the UK's planning process andis designed to create public exposure as a means of ensuring that plannedprojects are compliant with environmental and regulatory requirements and viablewithin those parameters. It is a process that is inevitably time consuming, butone that is taken very seriously by the Directors as part of a procedure that webelieve is not only necessary, but good and just. As a result, there has beensome slippage in our planned timing. We remain confident, however, that ourprogress towards gaining the permits remains on course. As the press reported inFebruary, Government representatives have indicated publicly that a decisionwould be made this year. We will be providing an update on progress later in theyear. We remain equally confident that Rivara is set to become a vital and reliablecentrepiece for Italy's security of supply. Not only does it sit at the centralpoint in the Italian gas system, it is also located at what is likely to becomethe hub of the Southern European "gas motorway". The world-class turnkeycontractors we expect to engage to develop the project have indicated they willprobably need five years to develop a commercial operation from the end of thepermitting phase. While the Board would expect to reduce that time, we accept itas a responsible estimate at this stage. Throughout the half year, the Company also continued - as is still the case - toreceive approaches from major integrated and non-integrated gas majors keen tobecome key participants in Rivara. We will continue to review such offers andare not excluding the possibility of an early-stage strategic partnership. TheCompany recognises that a strategic partner would enhance its own resources,freeing it to allocate them more evenly across all of its projects. It is also pleasing to report encouraging progress at the site of our othercurrent Italian project, the coal bed methane (CBM) prospect at Fiume Bruna nearthe town of Grosseto. Following a successful stratigraphic drilling, coring andsampling programme during 2006, the analysis of the samples obtained is nearlycomplete. On the basis of the data collected and interpreted to date, we areconfident that the project may prove commercially attractive. The indicationsare that in-place CBM resources are in the range of 107 to 215 billion cubicfeet. This is in line with our expectations at the time of bringing IndependentResources to AIM. Just as at Rivara, moreover, we have received approaches both from potentialtrade partners and financial institutions interested in financing thedevelopment of Fiume Bruna, and we continue to consider the options beingoffered to us. Also in line with our policy at Rivara, we are taking a careful approach tolocal environmental and planning requirements, and have already filed anenvironmental impact assessment under the appropriate environmental reviewprocess. At this stage, this is a significantly lighter requirement than atRivara since the application covers only the first seismic and the next set ofwells. Even so, we remain fully aware of the need to meet the requiredprocedures at each step of the way, and we are hoping to win this importantinitial approval very soon. With that in mind, we are now planning for theacquisition of new seismic data and the drilling of the next well on the permit,so that we can move ahead without delay as soon as the Exploration Permit issigned. Our intention is to put the new well on a long-term flow test beforedrilling any follow-on wells. At Ksar Hadada, our 7,000 square kilometer exploration project in Tunisia, wecontinue working on the re-mapping and re-interpretation of the hydrocarbonpotential on behalf of our licence partners. It is again pleasing to announcethat this has so far resulted in the identification of an additional majorprospect, bringing to four the number now delineated. We are hopeful that, withwork still underway, others may be added to this tally. We are particularlyencouraged by the fact that all of the prospects identified to date haveproducing analogues both in Tunisia and in nearby areas of Libya. We have also over the past few months carried out a successful seismic and welldata swap with Storm Ventures, the operator of the licence area to the south ofKsar Hadada, and believe this has greatly enhanced our ability to map some ofour major prospects. As with our Italian projects, we remain aware of the potential value ofpartnerships, and are currently in discussions on a potential farm-in to ourinterest. If it proceeds, a multi-well drilling campaign would be expected toform part of the associated work programme and could commence toward the end ofthis year. In summary, despite the slippages created by our necessary involvement in theItalian permitting process at Rivara, the Board believes the advances achievedacross our range of projects during the half-year represent important progresstowards the realisation of our commercial potential. We shall during the courseof the second half continue to raise our profile within the London investmentcommunity as a company operating in the right sector in the right place at theright time. We also look forward with confidence to presenting shareholders withfurther positive news during the months ahead. Grayson NashExecutive Chairman For further informationcontact: Independent Resources plc Grayson Nash, Executive Chairman 00 39 02 3655 960Steve Staley, Managing Director 01332 865 253 07771 838 753 First City Financial Public RelationsAllan Piper 07736 064 982 Deloitte Corporate FinanceJonathan Hinton 020 7936 3000David Smith 020 7936 3000 Independent Resources PLC Consolidated income statement Six months ended 31 March 2007 1 October 2006 16 June 2005 to to 31 March 2007 31 March 2006 £ £Continuing operationsRevenue 32,126 - Cost of sales - - Gross profit 32,126 - Administrative expenses (411,492) (345,180) Operating loss (379,366) (345,180) Net financial income 82,382 85,304 Loss on ordinary activities before taxation (296,984) (259,876) Taxation - - Loss for the period (296,984) (259,876) Earnings per shareFrom continuing operations Basic (0.01) (0.02) Diluted (0.01) (0.02) Consolidated statement of changes in equity Loss for the period (296,984) (259,876)New shares issued and to be issued 7,783,895 -Transaction costs (1,088,309) -Share based payments 61,734 -Exchange difference on investment (799) - Total change in equity (236,049) 6,435,710 Independent Resources PLC Consolidated balance sheet As at 31 March 2007 31 March 30 Sept 30 June 31 March 2007 2006 2006 2006 £ £ £ £Non-current assets Property, plant and equipment 124,431 99,003 104,263 64,647 Goodwill 2,044,146 2,044,146 2,044,146 519,756 Other intangible 1,933,132 1,003,226 633,888 486,131 assets 4,101,709 3,146,375 2,782,297 1,070,534Current assets Trade and other receivables 334,343 127,731 110,184 81,763 Cash and cash equivalents 3,292,341 4,632,907 5,067,130 5,422,194 3,626,684 4,760,638 5,177,314 5,503,957Current liabilities Trade and other payables (212,478) (143,257) (103,998) (138,781) Current taxation liabilities (1,541) (13,333) (15,823) - (214,019) (156,590) (119,821) (138,781) Net current assets 3,412,665 4,604,048 5,057,493 5,365,176 Net assets 7,514,374 7,750,423 7,839,790 6,435,710 Equity attributable to equity holders of the parent Share capital 334,333 334,333 334,333 334,333 Share premium account 5,843,828 5,843,828 5,843,828 5,843,828 Shares to be issued 2,041,815 2,041,815 2,041,815 517,425 Share option reserve 170,023 108,289 75,802 - Foreign currency translation reserve 37 836 - (1,297) Losses (875,662) (578,678) (454,691) (259,876)Total equity 7,514,374 7,750,423 7,839,790 6,435,710 Independent Resources PLC Consolidated cash flow statement Six months ended 31 March 2007 1 October 2006 16 June 2005 to to 31 March 2007 31 March 2006 £ £Cash flows from operating activities Loss before taxation (296,984) (259,876)Adjustments for: Depreciation of property, plant and equipment 11,975 2,666 Financial income (82,382) (85,304) (367,391) (342,514)Increase in trade and other receivables (206,612) (66,329)Increase in trade and other payables 57,429 127,253 Share based payment 61,734 -Exchange rate difference on investments (799) - Net cash used in operating activities (455,639) (281,590) Cash flows from investing activities Interest received 82,382 85,304Purchase of intangible assets (929,906) (486,131)Purchases of property, plant and equipment (37,403) (66,554)Acquisition of subsidiary - (6,996) Net cash used in investing activities (884,927) (474,377) Cash flows from financing activitiesIssue of share capital - 7,266,470Share issue costs - (1,088,309)Net cash from financing activities - 6,178,161 Net (decrease)/increase in cash and cash equivalents (1,340,566) 5,422,194 Cash and cash equivalents at beginning of the period 4,632,907 - Cash and cash equivalents at end of the period 3,292,341 5,422,194 Independent Resources PLC Notes to the interim financial information Six months ended 31 March 2007 1. Accounting policies General information The interim financial information is for Independent Resources plc ("the company") and subsidiary undertakings. The company is registered in England and Wales and incorporated under the Companies Act 1985. The principal accounting policies are summarised below: a Basis of preparation The interim financial information, for the period from 1 October 2006 to 31 March 2007, has been prepared under the historical cost convention and in accordance with International Financial Reporting Standards and International Accounting Standards, adopted for use 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 period ended 30 June 2006. The company has changed its accounting period to 30 September 2007. The Interim report is unaudited and does not constitute statutory financial statements. The financial information for the period ended 30 September 2006 does not constitute statutory accounts, as defined in section 240 of the Companies Act 1985, but is based on the latest statutory accounts. 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 2007 was approved by the Directors on 29 May 2007. The comparative period presented is that of 16 June 2005 to 31 March 2006 as previously reported. The directors are of the opinion that due to the nature of the group's activities and the events during that period these are the most appropriate comparatives for the current period. 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 work carried out on its Tunisian development project to its development partner. 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 Sept. 30 June 31 March 2007 2006 2006 2006 £ £ £ £ United Kingdom 24,154 7,071 8,004 8,934 Italy 100,277 91,932 96,259 55,713 Tunisia - - - - 124,431 99,003 104,263 64,647 Independent Resources PLC Notes to the interim financial information (continued) Six months ended 31 March 2007 2. Revenue and segmental information (continued) Additions to property, plant and equipment in the period 1 October 16 June 2005 2006 to to 31 March 31 March 2006 2007 £ £ United Kingdom 20,666 11,176 Italy 16,737 55,378 Tunisia - - 37,403 66,554 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 16 June 2005 2006 to to 31 March 31 March 2006 2007 £ £ United Kingdom - - Italy - - Tunisia 32,126 - 32,126 - Loss on ordinary activities before taxation 1 October 16 June 2005 2006 to to 31 March 31 March 2006 2007 £ £ United Kingdom (115,131) (165,000) Italy (197,584) (94,876) Tunisia 15,731 - (296,984) (259,876) 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. Independent Resources PLC Notes to the interim financial information (continued) Six months ended 31 March 2007 4. Earnings per share The calculation of basic and diluted earnings per share at 31 March 2007 was based on the loss attributable to ordinary shareholders of £296,984 and a weighted average number of ordinary shares outstanding during the period ending 31 March 2007 of 33,433,333, as shown below. 31 March 31 March 2006 2007 £ £ Net loss for the period (296,984) (259,876) Basic and diluted weighted average ordinary shares in issue during the period 33,433,333 15,409,203 In accordance with IAS 33 and as the group has reported a loss for the period, the share options are not dilutive. Registered office Independent Resources plcThe Hollow, Penn Lane, Melbourne, Derbyshire DE73 8EPTelephone: +44 (0)1332 865253Fax: +44 (0)1332 865111Email: mailbox@ir-plc.com Commercial office Via Nirone 8, 20123 Milan, ItalyTelephone: +39 (02) 3655 5960Fax: +39 (02) 9998 8778Email: mailbox@ir-plc.com Technical office Viale Liegi 10, Int. 4, 00198 Rome, ItalyTelephone: +39 (06) 4549 0720Fax: +39 (06) 4549 0721Email: mailbox@ir-plc.com This information is provided by RNS The company news service from the London Stock Exchange