TIDMIRG
RNS Number : 5723S
Independent Resources PLC
23 November 2011
Independent Resources plc
("Independent Resources" or the "Company" or the "Group")
Results for the twelve months ended 30 September 2011
Highlights
Keystone Rivara Gas Storage Project: formal environmental approvals still
-- pending
Exhaustive consultation process continues to progress slowly, but with
encouraging indications of a successful outcome.
-- Ribolla Shale Gas Project: 2-block farm-out process underway
Third party evaluation confirms estimates of in-place and recoverable
gas at 15.2 BCM (540 BCF) and 4.5 BCM (160 BCF) respectively. Discussions
under way to realise the value of this significant asset.
Ksar Hadada Shale Oil Project: permit renewed, operations planned in
-- 2012
Carried interest maintained. Discussions under way to realise the value
of this potentially significant asset.
-- Committed third-party funding for projects as at 30 September 2011: GBP4.5
million (2010: GBP5.2 million)
-- Net cash at 30 September 2011: GBP2.5 million (2010: GBP3.9 million)
Commenting, Grayson Nash, Executive Chairman of Independent Resources, said:
"Given the status of our three main projects, we believe the time is right
to start exploring value-adding options for separating our valuable but relatively
riskier E&P interests from our more strategic gas storage assets. This will
enable the company to focus its resources primarily on Rivara as we execute
our plans to realise maximum value from this major asset. I look forward
to providing further updates over the next few months."
Chairman's statement
Our progress this year - particularly with regard to the permitting of Rivara
- was again not as swift as we would have liked it to be, but I believe it
was ultimately encouraging. The core projects of Independent Resources are
substantial and remain on the right track. As a result of the board's substantial
equity stake in the company, the interests of the directors and of all our
shareholders are wholly aligned. Conditions are now right to make important,
forward-looking decisions about where we intend to monetise and where we
intend to focus our investment in the future in order to maximise shareholder
value.
During the reporting period, we further stepped up our efforts to secure
the environmental permits and consequent mineral title that will allow the
company to commence development of our keystone underground gas storage ("UGS")
facility at Rivara in the Po Valley. These efforts continue to yield very
gradual but tangible progress.
Discussions regarding the future of the Ribolla shale gas project near Grosseto
also moved forward; our aim is to shape a future in which shareholders remain
financially interested in the project's success, but are no longer exposed
to the capital cost of its de-risking. The company's stake in the Ksar Hadada
oil-prone block in Tunisia is another area where we are seeking to become
less directly involved while maintaining our upside exposure.
In all these activities, we continue to maintain a cost-conscious and value-focused
approach, and are confident that we will be in a position to announce significant
developments in the first half of 2012.
This year I intend to keep my statement brief, because I do not want to pre-empt
developments that may come to fruition very soon after it is written. It
is not possible to predict exactly when these important developments may
occur, or what they will entail, but I believe they will be welcomed - and
sooner rather than later - by everyone who has a stake in our future.
Rivara
I have written extensively to you in the past about what makes Rivara special
and valuable. I have written even more about our permitting challenges and
the shifting complexities through which projects of this nature must navigate.
The politics of infrastructural development are unpredictable and immensely
time-consuming. Yet we continue - imperceptibly at times, but measurably
over time - to move the ball forward.
If anything has helped to concentrate minds among our many stakeholders recently,
it is the severe economic crisis we are living through. Even a wealthy region
of Italy like Emilia Romagna now recognises that opposition to local development
which is clearly in the national interest, and is subject to a very thorough
and objective consultation process, has direct consequences for the region's
growth, budgets, and prosperity. We have been gratified by the results of
third-party econometric studies on the impact of our project that indicate
significant and long-term employment, added-value, and fiscal benefits to
the region and communities in which the project is located.
We and our local industrial partners continue to do everything we can to
reassure these communities, by demonstrating how unobtrusive the surface
facilities of the gas storage facility will be, and the comprehensive measures
that will be put in place to ensure it is safe, clean and has minimal environmental
impact.
That is as much as I am able to report on Rivara at this time, but I hope
there may be more to say by the time of our Annual General Meeting next month.
Ribolla Basin Coal Bed Methane (CBM) & Shale Gas Assets
Again, we have reported extensively on this very substantial and valuable
hydrocarbon resource, and why our intention is to involve a partner with
specialised expertise in unconventional gas rather than continue these operations
alone. As well as the technical issues, there is also a commercial consideration
behind this strategic decision. Many of our shareholders and service providers
in the City of London have expressed the opinion to us that the business
of gas storage and the business of seeking to develop hydrocarbon plays appeal
to two very different categories of investors. The two activities have very
different business trajectories, different costs of capital, different regulatory
regimes, and in general terms attract not only different investors but also
different partners, customers, and bankers.
It is not yet possible to define exactly how these two distinct areas of
activity within our current portfolio - gas storage and E & P - will be restructured,
but it is safe to say that some form of corporate restructuring is the likely
outcome of our strategy review, which is evaluating a range of workable and
attractive scenarios. Needless to say, we are assessing all these options
primarily as business owners, taking into consideration our shareholders'
interests first.
The key point is that, having successfully established the commerciality
of the Ribolla reserves, the board now believes that separating these two
areas of activity will deliver greater value in the current market conditions
than maintaining our existing integrated business model.
Ksar Hadada
Last year the company was carried during drilling operations on the Ksar
Hadada exploration permit, our joint venture onshore Tunisia in which operator
PetroAsia Energy (Tunisia) Ltd has a 78.03% working interest and Independent
Resources an 18.97% working interest. Although those efforts were not successful,
the JV partners are now focusing on a newly identified reservoir compartment
within the Sidi-Toui Cambro-Ordovician reservoir, as well as the very significant
volume of oil-bearing Silurian Hot Shale which effectively underlies the
entire residual area of the permit at relatively shallow depth.
The permit was renewed this year by the Tunisian authorities for an additional
three years after the JV relinquished 3,360 km(2) of the previously-held
5,612 km(2) , and committed to a new well and 100km of new 2D seismic. Ksar
Hadada is a non-core asset for the company, but one that we believe remains
a very attractive opportunity. Much like Ribolla, our objective at Ksar Hadada
is to seek a way to work with our partners towards monetising our active
involvement.
Outlook
Our objectives in the months ahead are clear, achievable and value accretive
for shareholders. The trigger for the execution of the strategy I have outlined
to you is clearly the successful permitting of Rivara. We have often spoken
about partnerships and the benefits of partial monetisation at Rivara, and
this is all part of the overall plan which we hope to be in a position to
announce in detail within the next few months.
In summary, the board remains absolutely committed to its vision for the
company. We are confident that we have the assets and the resources to achieve
our ambitious objectives, and we continue to be highly motivated through
our own holdings of equity. I look forward to reporting on many more positive
developments throughout the year ahead.
Grayson Nash
Executive Chairman
Independent Resources plc
Consolidated statement of comprehensive income
Year ended 30 September 2011
Notes 2011 2010
Continuing operations GBP GBP
Revenue - -
Cost of sales - -
Gross profit - -
Administrative expenses (1,174,737) (1,164,280)
Operating loss before
impairment (1,174,737) (1,164,280)
Impairment of Ksar
Hadada - (1,390,588)
Operating loss (1,174,737) (2,554,868)
Financial income 35,310 355,041
Financial expense (24,818) (3,594)
Loss on ordinary activities before taxation (1,164,245) (2,203,421)
Taxation 3 - 44,365
Loss for the year (1,164,245) (2,159,056)
Other comprehensive income:
Exchange difference on translating foreign
operations 69,384 (735,217)
Income tax relating to other comprehensive
income - 44,594
Total comprehensive
loss for the year (1,094,861) (2,849,679)
Loss attributable to:
Owners of the parent (1,133,327) (2,135,505)
Non-controlling interests (30,918) (23,551)
(1,164,245) (2,159,056)
Total comprehensive loss attributable to:
Owners of the parent (1,067,632) (2,742,618)
Non-controlling interests (27,229) (107,061)
(1,094,861) (2,849,679)
Loss per share (pence) 4
From continuing operations
Basic (2.5) (5.0)
Diluted (2.5) (5.0)
Independent Resources plc
Consolidated statement of financial position
As at 30 September 2011
----------------------------------------------------------------------------------------------------------------------
Notes 2011 2010
GBP GBP
Non-current assets
Property, plant and
equipment 51,232 75,716
Goodwill 5 450,766 450,766
Other intangible assets 6 9,315,485 7,990,178
9,817,483 8,516,660
Current assets
Other receivables 4,524,726 5,457,781
Current taxation assets - 88,588
Cash and cash equivalents 2,501,605 3,894,310
7,026,331 9,440,679
Current liabilities
Trade and other payables (763,892) (582,558)
Provisions - (309,759)
(763,892) (892,317)
Net current assets 6,262,439 8,548,362
Net assets 16,079,922 17,065,022
Equity attributable to equity holders of the parent
Share capital 7 458,369 458,369
Share premium 8 15,287,351 15,287,351
Shares to be issued - -
Share option reserve 109,761 389,844
Foreign currency translation reserve 895,990 830,295
Retained earnings (1,984,540) (1,241,057)
14,766,931 15,724,802
Non-controlling interests 1,312,991 1,340,220
Total equity 16,079,922 17,065,022
Independent Resources plc
Statement of changes in equity
Year ended 30 September 2011
Foreign
Shares Share currency Non-
Retained Share Share to be option translation controlling Total
earnings capital premium issued reserve reserve Total interests equity
GBP GBP GBP GBP GBP GBP GBP GBP GBP
Consolidated
1 October 2009 894,448 415,739 12,881,702 4,802,904 389,844 1,437,408 20,822,045 1,447,281 22,269,326
Loss for the
year (2,135,505) - - - - - (2,135,505) (23,551) (2,159,056)
Exchange
differences - - - - - (651,707) (651,707) (83,510) (735,217)
Taxation on
exchange
differences - - - - - 44,594 44,594 - 44,594
Total
comprehensive
loss for the
year (2,135,505) - - - - (607,113) (2,742,618) (107,061) (2,849,679)
Fair value
adjustments - - - (4,802,904) - - (4,802,904) - (4,802,904)
New shares
issued - 42,630 2,515,170 - - - 2,557,800 - 2,557,800
Share issue
costs - - (109,521) - - - (109,521) - (109,521)
30 September
2010 (1,241,057) 458,369 15,287,351 - 389,844 830,295 15,724,802 1,340,220 17,065,022
1 October 2010 (1,241,057) 458,369 15,287,351 - 389,844 830,295 15,724,802 1,340,220 17,065,022
Loss for the
year (1,133,327) - - - - - (1,133,327) (30,918) (1,164,245)
Exchange
differences - - - - - 65,695 65,695 3,689 69,384
Total
comprehensive
loss for the
year (1,133,327) - - - - 65,695 (1,067,632) (27,229) (1,094,861)
Share options
lapsed 389,844 - - - (389,844) - - - -
Share-based
payments - - - - 109,761 - 109,761 - 109,761
30 September
2011 (1,984,540) 458,369 15,287,351 - 109,761 895,990 14,766,931 1,312,991 16,079,922
Independent Resources plc
Consolidated statement of cash flows
Year ended 30 September 2011
2011 2010
Cash flows from operating activities GBP GBP
Loss before taxation (1,164,245) (2,203,421)
Adjustments for:
Depreciation of property, plant and equipment 29,867 32,628
Provision for well shut down costs (309,759) 309,759
Impairment of intangible assets - 1,080,829
Financial income (35,310) (355,041)
Financial costs 24,818 3,594
(1,454,629) (1,131,652)
Decrease in other receivables 918,055 612,154
Increase/(decrease) in trade and other payables 181,334 (521,452)
Share-based payments 109,761 -
Exchange rate difference on investments 48,729 (384,322)
Cash used in operations (196,750) (1,425,272)
Income taxes received/(paid) 88,588 (73,129)
Net cash used in operating activities (108,162) (1,498,401)
Cash flows from investing activities
Interest received 35,310 38,041
Interest paid (9,818) (3,594)
Proceeds on disposal of property, plant
and equipment - 26,527
Purchase of intangible assets (1,304,848) (2,406,018)
Purchases of property, plant and equipment (5,187) (47,927)
Net cash used in investing activities (1,284,543) (2,392,971)
Cash flows from financing activities
Issue of share capital - 2,557,800
Share issue costs - (109,521)
Net cash from financing activities - 2,448,279
Net decrease in cash and cash equivalents (1,392,705) (1,443,093)
Cash and cash equivalents at 1 October 2010 3,894,310 5,337,403
Cash and cash equivalents at 30 September
2011 2,501,605 3,894,310
Independent Resources plc
Notes to the final results for the year ended 30 September 2011
1. Basis of preparation
The financial statements have been prepared in accordance with International
Financial Reporting Standards as adopted by the European Union and using
accounting policies which are consistent with those applied in the financial
statements for the year ending 30 September 2010.
The financial information set out in this announcement, which does not
constitute the statutory financial statements of the Group but was derived
from those financial statements. The auditors have reported on the financial
statements for the period ended 30 September 2011; this report was unqualified.
The financial information for the year ending 30 September 2010 is derived
from the financial statements for that year. The company's auditors have
reported on the 2010 financial statements; their report was unqualified.
The financial information set out in this announcement was approved by
the board on 22 November 2011.
The directors do not recommend the payment of a final dividend.
The full statutory financial statements will be included in the Group's
annual report, which will be e-mailed or posted to shareholders on 25
November 2011. They will be available during normal business hours from
the offices of Seymour Pierce Limited at 20 Old Bailey, London EC4M 7EN
from that date. In addition, the annual report and accounts will be available
to be downloaded from the Company's website at www.ir-plc.com . Additional
copies will be available at the Group's offices Tower Bridge House, St.
Katharine's Way, London E1W 1DD after that date. The accounts will be
delivered to the Registrar of Companies after the Company's Annual General
Meeting, which is scheduled for 20 December 2011.
2. Business segments
The group has adopted IFRS 8 Operating segments from 1 October 2009. Per
IFRS 8, operating segments are based on internal reports about components
of the group, which are regularly reviewed and used by the Board of Directors
being the Chief Operating Decision Maker ("CODM") for strategic decision
making and resource allocation, in order to allocate resources to the segment
and to assess its performance. The group's reportable operating segments
are as follows:
a. Parent company
b. Rivara
c. Ribolla Basin CBM & Shale Gas Assets
d. Ksar Hadada
The CODM monitors the operating results of each segment for the purpose
of performance assessments and making decisions on resource allocation.
Performance is based on assessing progress made on projects and the management
of resources used. Segment assets and liabilities are presented inclusive
of inter-segment balances.
The group did not generate any revenue during the year to 30 September
2011 nor in the year to 30 September 2010.
Information regarding each of the operations of each reportable segments
is included in the following table.
Ribolla
Basin
Parent CBM & Shale
company Rivara Gas Assets Ksar Hadada Consolidation Total
GBP GBP GBP GBP GBP GBP
2011
Interest revenue 285,134 46,450 11 - (296,285) 35,310
Interest expense - (173,905) (147,198) - 296,285 (24,818)
Depreciation - 4,120 25,747 - - 29,867
Impairment of intangible
assets - - - - - -
Income tax - - - - - -
Loss for the year before
taxation (92,929) (325,835) (612,519) (93,594) (39,368) (1,164,245)
Assets 13,158,478 12,620,924 4,741,670 156,989 (13,834,247) 16,843,814
Liabilities (59,572) (5,543,389) (5,044,622) (462,016) 10,345,707 (763,892)
2010
Interest revenue 246,674 318,097 369 - (210,099) 355,041
Interest expense - (90,153) (123,540) - 210,099 (3,594)
Depreciation 1,726 2,218 28,684 - - 32,628
Impairment of intangible
assets - - - 1,080,829 - 1,080,829
Income tax 88,959 - - - (44,594) 44,365
Profit/(loss) for the
year
before taxation (1,706,957) 20,853 (673,046) (206,006) 361,735 (2,203,421)
Assets 13,142,757 11,580,315 4,544,026 104,876 (11,414,635) 17,957,339
Liabilities (60,683) (4,198,340) (5,214,482) (316,309) 8,897,497 ( 892,317)
The geographical split of non-current assets arises as follows:
United
Kingdom Overseas Total
GBP GBP GBP
2011
Intangible assets - 9,315,485 9,315,485
Goodwill - 450,766 450,766
Property, plant and equipment - 51,232 51,232
2010
Intangible assets - 7,990,178 7,990,178
Goodwill - 450,766 450,766
Property, plant and equipment - 75,716 75,716
3. Taxation
2011 2010
GBP GBP
Tax on profit on ordinary activities
Taxation charged based on profits for the year
UK corporation tax based on the results for the
year - (43,994)
Over provided in prior year - (371)
Total tax expense in income statement - (44,365)
Reconciliation of the tax expense
The tax assessed for the year is different from the standard rate of corporation
tax in the UK (27%). The differences are explained below:
2011 2010
GBP GBP
Loss on ordinary activities before taxation (1,164,245) (2,203,421)
Loss on ordinary activities multiplied by standard
rate of corporation tax in the UK of 27% (2010:
28%) (314,346) (616,958)
Effects of:
Expenses disallowed for tax purposes 29,679 -
Untaxed expense/(income) on deemed disposal of
interest
in subsidiary 4,050 (88,354)
Deferred tax not provided - tax losses carried
forward 280,617 662,137
Marginal tax relief - (819)
Adjustments to tax charge in respect of previous
years - (371)
Total current tax - (44,365)
The group has tax losses available to be carried forward in certain subsidiaries
and the parent. With anticipated substantial lead times for the group's
projects, and the possibility that these may therefore expire before their
use, it is not considered appropriate to anticipate an asset value for
them.
4. Loss per share
The calculation of basic and diluted loss per share at 30 September 2011
was based on the loss attributable to ordinary shareholders of GBP1,133,327.
The weighted average number of ordinary shares outstanding during the
year ending 30 September 2011 and the effect of the potentially dilutive
ordinary shares to be issued are shown below.
Contingently issuable shares such as included within the share option
scheme have not been treated as dilutive as the market conditions have
not been met at 30 September 2011.
2011 2010
GBP GBP
Net loss for the year (1,133,327) (2,135,505)
Basic weighted average ordinary shares in issue
during the year 45,836,867 42,543,262
Diluted weighted average ordinary shares in issue
during the year 45,836,867 42,543,262
5. Goodwill (group)
Goodwill
GBP
2011
Cost
1 October 2010 and 30 September 2011 450,766
Carrying amount
30 September 2011 450,766
30 September 2010 450,766
2010
Cost
1 October 2009 5,253,670
Fair value adjustment (4,802,904)
30 September 2010 450,766
Carrying amount
30 September 2010 450,766
30 September 2009 5,253,670
The goodwill arises as a result of the acquisition of Independent Energy
Solutions srl and fair value adjustments to the shares to be issued relating
to the acquisition of Independent Gas Management srl. The fair value adjustment
relates to the directors' review of their estimate of the cost of the
acquisition of Independent Gas Management srl based upon the market conditions
at the year end and the probability of issuing shares, contingent upon
market conditions subsequent to the year end. The directors assessed at
the year end the likelihood of the market conditions relating to the final
tranche and, on this basis, have assessed that no further shares to be
issued are expected to occur on this transaction. The market conditions
relating to the final tranche have not been met and confirmed that no
further shares are currently expected to be issuable in connection with
the acquisition. The goodwill arising as a result has therefore been reversed
as a fair value adjustment against the shares to be issued.
A review of the latest management information and projections shows a
net present value significantly in excess of assets and liabilities relating
to this project. The main assumptions indicate that no significant change
has arisen on these calculations which would materially impact on the
group.
The continuing analysis and testing of technical data continues to indicate
that the project is feasible.
The group continues to work towards, and is confident of, obtaining all
the necessary approvals from regulatory authorities.
The group anticipates being able to raise the necessary finance to continue
to develop the project.
For the purpose of goodwill impairment testing, recoverable amounts have
been determined based upon the value in use of the Ribolla project.
Value in use
Cash flows are projected for the periods up to the date that the project
is expected to become commercially operational and from then until operations
are expected to cease, based upon management's expectations. These dates
depend on a number of variables, including the project's technical feasibility,
regulatory approval, forecast revenue prices and the associate development
and operational costs.
The project is expected to generate revenue after five to nine years and
to continue doing so for a further 35 years. The directors consider that
projections calculated for a period greater than five years are justified
as the project is still in a development stage. The directors have used
a constant rate of growth of 2.5% (2010: 2.5%) to extrapolate the cash
flow projections beyond the period in which the projects will commence
to generate revenue. This growth rate is considered to cover increases
resulting from inflation and regulatory changes. The discount rate used
is 10.0% (2010: 10.0%).
Key assumptions used in value in use calculations
The key assumptions used in the value in use calculations for the goodwill
asset are the anticipated quantity of resource available for extraction,
costs of plant and infrastructure, expected revenue prices, expected operational
costs, appropriate discount rates and foreign exchange rates. For further
details please see note 6.
Management's assessment of the technical viability of the projects is
supported by the evaluation work undertaken by appropriately qualified
persons.
Management have assessed the project's individual net present value and
thereby impairment on a variety of bases and assumptions using, where
appropriate, a number of discount rates. The impairment tests are particularly
sensitive to changes in the key assumptions and changes to these assumptions
could result in impairment; however, all of the varying bases indicate
a net present value significantly in excess of the value of goodwill.
Foreign exchange rates have been based on external market forecasts, after
considering long-term market expectations and the countries in which the
group operates.
6. Other intangible assets (group)
Development and exploration
Rivara Ribolla Ksar
gas Basin Hadada
CBM &
storage Shale exploration
facility Gas assets acreage Total
GBP GBP GBP GBP
2011
Cost
1 October 2010 4,025,204 3,864,974 1,180,829 9,071,007
Exchange differences 10,437 10,022 - 20,459
Additions 856,969 390,890 56,989 1,304,848
30 September 2011 4,892,610 4,265,886 1,237,818 10,396,314
Amortisation
1 October 2010 - - 1,080,829 1,080,829
Impairment charge for the year - - - -
30 September 2011 - - 1,080,829 1,080,829
Carrying amount
30 September 2011 4,892,610 4,265,886 156,989 9,315,485
30 September 2010 4,025,204 3,864,974 100,000 7,990,178
2010
Cost
1 October 2009 3,311,726 2,673,017 1,025,917 7,010,660
Exchange differences (191,281) (154,390) - (345,671)
Additions 904,759 1,346,347 154,912 2,406,018
30 September 2010 4,025,204 3,864,974 1,180,829 9,071,007
Amortisation
1 October 2009 - - - -
Impairment charge for the year - - 1,080,829 1,080,829
30 September 2010 - - 1,080,829 1,080,829
Carrying amount
30 September 2010 4,025,204 3,864,974 100,000 7,990,178
30 September 2009 3,311,726 2,673,017 1,025,917 7,010,660
The primary intangible assets are all internally generated.
For the purpose of impairment testing of intangible assets, recoverable
amounts have been determined based upon the value in use of the group's
three projects.
Ksar Hadada exploration acreage - impairment charge
The results for the 2010 drilling campaign, which was completed shortly
after the start of the current year, were unsuccessful, although a significant
amount of new and valuable data has been produced and analysed. The vast
majority of the company's expenditures to 30 September 2010 have therefore
been written off as an impairment charge in the previous year.
Rivara gas storage facility and Ribolla Basin CBM & Shale Gas assets
A review of the latest management information and projections shows a net
present value significantly in excess of assets and liabilities relating
to the projects. The main assumptions indicate that no significant change
has arisen on these calculations which would materially impact on the group.
The continuing analysis and testing of technical data continues to indicate
that the projects are feasible.
The group continues to work towards, and is confident of, obtaining all
the necessary approvals from regulatory authorities.
The group anticipates being able to raise the necessary finance to continue
to develop the projects.
Value in use
Value in use has been calculated separately for the group's Rivara gas
storage facility and Ribolla Basin CBM & Shale Gas assets. Cash flows are
projected for the periods up to the date that the projects are expected
to become commercially operational and from then until operations are expected
to cease, based upon management's expectations. These dates depend on a
number of variables, including the project's technical feasibility, regulatory
approval, forecast revenue prices and the associate development and operational
costs.
The projects are expected to generate revenue after five to nine years
and to continue doing so for a further 35 years. The directors consider
that projections calculated for a period greater than five years are justified
as the projects are still in a development stage.
Key assumptions used in value in use calculations
The key assumptions used in the value in use calculations for the intangible
assets are the expected storage and useable capacity of the Rivara project,
the anticipated quantity of resource available for extraction for the Ribolla
Basin project, costs of plant and infrastructure, expected revenue prices
(specifically gas prices), expected operational costs, appropriate discount
rates and foreign exchange rates.
Management's assessment of the technical viability of the projects is supported
by the evaluation work undertaken by appropriately qualified persons.
Management has assessed the projects' individual net present values and
thereby impairment on a variety of bases and assumptions using, where appropriate,
a number of discount rates. The impairment tests are particularly sensitive
to changes in the key assumptions and changes to these assumptions could
result in impairment; however, all of the varying bases indicate a net
present value significantly in excess of the value of the intangible assets.
Foreign exchange rates have been based on external market forecasts, after
considering long-term market expectations and the countries in which the
group operates.
The key assumptions used in the value in use calculations are as follows:
Assumption Sensitivity
factor
*
Rivara gas storage facility:
Growth rate 2.0% -
Discount rate 6.3% +55%
Capital expenditure - +35%
Ribolla Basin CBM & Shale Gas assets:
Growth rate 2.5% -
Discount rate 10.0% +115%
EUR0.26 per cubic
Gas price metre -25%
Capital expenditure - +36%
The growth rates are considered to cover increases resulting from inflation
and regulatory changes.
The discount rate for the Rivara project reflects expected return levels
and has been agreed with the project partner.
* The sensitivity factor is the percentage change in each specific assumption
which would, on its own, result in the net present value equal to the carrying
value of the intangible asset in the accounts.
7. Share capital
2011 2010
GBP GBP
Authorised
80,000,000 ordinary shares of 1p 800,000 800,000
Issued, called up and fully paid
45,836,867 (2010: 45,836,867) ordinary shares of
1p 458,369 458,369
The holders of ordinary shares are entitled to receive dividends from
time to time and are entitled to one vote per share at meetings of the
company.
8. Share premium account
2011 2010
GBP GBP
1 October 15,287,351 12,881,702
Premium arising on issue of equity shares - 2,515,170
Transaction costs - (109,521)
30 September 15,287,351 15,287,351
9 Share-based payments
The share option scheme, which was adopted by the company on 25 November
2005, has been established to reward and incentivise the executive management
team for delivering share price growth. The share option scheme is administered
by the Remuneration Committee.
It is intended that the options to be granted to any executive director
of the company will be made subject to testing performance criteria. For
the initial tranche of options granted to the executive directors, the
performance criteria required the company's share price to increase by
at least 30 per cent compound per annum over a three-year performance
period to become exercisable in full (with the initial performance period
being measured from the date of Admission). For the initial tranche of
options, share price performance will be measured taking the Placing Price
as the starting point. The performance criteria was not achieved and the
initial tranche of options granted to the executive directors lapsed during
the year. One-off options of 16,667 granted to A R H Thomas in recognition
of his contribution at the time of the Company's AIM admission remain
exercisable.
A second tranche of share options was issued during the year.
Details of the second tranche of share options outstanding at the year
end are as follows:
Date from
01/10/2010 30/09/2011 which options Exercise
Date of Number of Issued in Number of may be first price per
grant options the year options exercised Lapse date option
18/01/2011 - 2,175,000 2,175,000 5/01/2014 5/01/2016 43p
The options outstanding at the end of the year have a weighted average
remaining contractual life of 4.3 years.
These fair values were calculated using the binomial option pricing model.
The inputs into the model were as follows:
Stock price 43p
Exercise
price 43p
Interest
rate 3.51%
Volatility 65%
Time to
maturity 5 years
Number of
steps 60
Exercise
factor 66.289
The expected volatility was determined with reference to the company's
share price since it was admitted for trading on AIM in December 2005.
The expected life used in the model has been adjusted, based on management's
best estimate, for the effects of non-transferability, exercise restrictions
and behavioural considerations.
The group recognised total expenses of GBP109,761 (2010: GBPnil) related
to equity-settled, share-based payment transactions during the year.
10 Contingencies
As a condition of the subscription for shares by the third party in ERG
Rivara Storage srl, it has been agreed that should the Rivara gas storage
project be cancelled and that company be liquidated, the third party would
receive a return of capital in preference to Independent Gas Management
srl. Consequently, it is a possibility that a substantial amount of the
profit arising to the group in 2008 of GBP3,684,229 would need to be reversed.
The directors consider that this possibility is remote and therefore have
made no provision for this and the profit arising on this transaction
has been recognised in full.
Upon acquiring certain participating interests in the Ksar Hadada permit
by Independent Resources (Ksar Hadada) Limited from Derwent Resources
(Ksar Hadada) Limited and GAIA srl, a company owned or controlled by R
Bencini, it was agreed that payments that could amount to $1 million (GBP641,875)
to each company were to be dependent upon drilling and development milestones.
The project continues to move forward, despite two dry wells having been
drilled during the year. It is still possible therefore that some milestones
will be reached and payments would fall due to paid.
The milestones and consideration, for each company, are as follows:
-- Drilling consideration due upon spudding the first well of $50,000
(GBP32,900) (paid during the previous year);
-- Discovery consideration due upon first flowing hydrocarbons to the
surface of $100,000 (GBP64,103); and
-- Commerciality consideration due upon granting of an operating concession
of $850,000 (GBP544,872).
11 Other
This announcement can be viewed in full on the Company web-site www.ir-plc.com.
For further information, please visit www.ir-plc.com or contact:
Independent Resources
Grayson Nash plc +39 06 4549 0720
Allan Piper Tavistock Communications 020 7920 3150
Simon Hudson
Jonathan Wright/Stewart Dickson Seymore Pierce Limited 020 7107 8000
(Corporate Finance)
Richard Redmayne/David Banks
(Corporate Broking)
This information is provided by RNS
The company news service from the London Stock Exchange
END
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