Independent Resources plc

November 24, 2008 02:00 ET

Final Results

Independent Resources plc

Final Results for the year to 30th September 2008


*       Successful £6.91 million fundraising
*       Final profit before taxation of £2,665,438 (2007 (15 months): £656,359 loss)
*       Liquid resources at 30 September of £8.46 million
*       Additional €7.12 million (£5.7 million) of committed cash available for Rivara subsidiary
*       Agreement to sell 15% of Rivara for €9.5 million
*       Clearance for Fiume Bruna production testing

Chairman's statement

Against a background of steadily increasing turmoil in world financial markets, it is at least pleasing to report a
milestone  year  for  Independent  Resources during the 12 month period  to  30  September.  The  Company  achieved
significant  progress  with its planned underground gas storage ("UGS") project at Rivara  in  Italy's  Po  Valley,
bringing in a major Italian partner and securing a politically significant, long-term anchor customer. It also made
strong advances with its plans for the development of the proposed coal bed methane ("CBM") project at Fiume  Bruna
in Grosseto Province, Italy's first CBM project. In August, we successfully raised £6.91 million from institutional
investors.  With  these solid achievements behind us, and liquid resources of £8.46 million, the  Board  has  every
confidence that the Company is now strongly positioned to move forward steadily through what threatens to  continue
as  a  period of difficult global economic conditions. Our confidence is further underpinned by the knowledge  that
our  cash  resources do not take account of the remaining €7.12 million (£5.7 million) to be invested  by  our  new
Italian partner at Rivara in line with the investment agreement.

Rivara underground gas storage project

As  in  the  past, Independent Resources continued to work carefully through the year within the complex  framework
laid  down by the regulatory and environmental processes in Italy, where Rivara remains its key project. The  Board
characterises Rivara as a much-needed infrastructural investment in an extremely under-supplied market,  and  as  a
project that is relatively insensitive to short-term fluctuations in market conditions. This deeply-buried, highly-
fractured limestone structure has inherent geological characteristics that make it ideal for summer gas storage and
rapid winter withdrawal, using the benefit of a natural water drive. It is also located right at the hub of Italy's
gas transmission system, along the main trunkline corridor from North Africa into Southern Europe.

The  signing in June of a €9.5 million agreement to sell 15% of Rivara to the major Italian energy group ERG ranked
as  a  crucial  step forward for Independent Resources - not only because it marked the arrival  of  a  heavyweight
Italian  energy  partner, but also because it brought additional expertise to the Company's  delicate  negotiations
with the relevant Italian authorities and other stakeholders. Aided by ERG, the Company continues at a deliberately
measured  pace  in its discussions with Italy's Ministry of the Environment and other interested parties.  Rivara's
planning  approval  process  involves  an Environmental Impact Study ("VIA")  reviewed  by  national  and  regional

As  we reported to shareholders at the time of our August fundraising, the recently-elected Italian government  has
declared  a  relatively  pro-business and pro-development platform which we expect  to  improve  efficiency  within
certain  ministries  key to Rivara. The Ministry of Environment itself has inherited a new  VIA  process  from  the
outgoing government that is proclaimed to be more transparent and purely technical than previously, as well as more
efficient in its interaction with the public. We are of course encouraged by this stated approach, but continue  to
remain  aware  of  the need for the careful involvement of all the parties affected by the planned  development  of
Rivara, at all levels of government.

For  the  Italian gas system, disrupted during recent winters by severe supply shortages, the importance of  Rivara
can be judged from the fact that the project will provide an expected nameplate working gas capacity of 3.2 billion
cubic metres (113 billion cubic feet) and the ability to deliver in excess of 32 million cubic metres (1.13 billion
cubic feet) of gas per day. For Independent Resources, the arrival of ERG as an operating partner just a few months
ago  valued  our  85% share in the project at €53.83 million (£43.07 million), equivalent to 106p per  share.  That
important transaction was followed during July by an announcement that we had reached formal agreement with
Confindustria Ceramica  to  provide it with up to 4% of Rivara's working gas capacity for gas storage. Confindustria
Ceramica  is not  only  one of Northern Italy's biggest gas consumers, but is also a federation of
vitally-important  industrial employers  and  producers in the region around Rivara. Moreover, we are continuing
preliminary discussions  with  a small  group  of  major energy companies with a view to welcoming a second strategic
development partner  into  the Rivara project alongside ERG at the appropriate time.

During the year, the Company also appointed Schlumberger, the oilfield services group, to advise on and manage  the
Rivara subsurface development programme. The Board believes that the appointment of Schlumberger reflects the  need
to  bring world-class project management skills and technology to the planned development of Rivara. We have  begun
work to construct an integrated project model ahead of eventual drilling operations and data acquisition to provide
information  that will allow us to optimise the project's development using best available technology.  It  remains
our  intention  to develop the safest, least invasive, most reliable, and highest performance storage  facility  in
Europe.  Based  on  an  estimated  development  cost of €400 million, this  onshore  project  provides  potentially
significant  scale savings and obvious comparative value, with an estimated capital cost of €0.13 per  cubic  metre
(£0.0028  per  cubic  foot)  of  storage capacity or €12.50 per cubic metre (£0.28  per  cubic  foot)  per  day  of

Fiume Bruna coal bed methane project

Our  other  ongoing  project  in  Italy, the planned CBM development at Fiume  Bruna  (owned  100%  by  Independent
Resources)  also  moved  forward  steadily during the year. Shortly before  the  financial  year-end,  the  Italian
government approved plans for production testing, following earlier approval during April from the Tuscan  regional
government for the Company's environmental submission. We will conduct 2D seismic acquisition work over the  coming
weeks,  following  which we intend to drill one well and conduct long-term tests to prove flow  rates  of  gas  and
water.  As  at  Rivara,  we intend at Fiume Bruna to operate to the highest standards, and  are  working  alongside
Norwest Questa Engineering, a leading US consultancy group with specialist CBM expertise. We also plan to drill the
balance of wells in the first pod, producing gas into local markets.

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).  Drilling  work to date has identified  a  single  seam  of  gas-active  coal
approximately  7 metres thick. The main purpose of the planned production test is to determine gas  production  and
any  water flow rates from the coal in place. Longer-term, Fiume Bruna 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 extension to the south of Fiume Bruna has obtained its initial  award,
and  the  Company is now turning to its environmental impact assessment. Against the overall background of  falling
regional  gas production and robust growth in demand, Fiume Bruna and its extension remain very attractive elements
within our project portfolio.

Ksar Hadada permit

Our  third active project, the onshore exploration acreage at Ksar Hadada in south-east Tunisia, lies on  a  permit
that was renewed by the Tunisian government for a period of three years from April 2008. The permit is operated  by
Petroceltic, with Independent Resources holding a 40% interest. The Board believes the concession holds a potential
recoverable resource in excess of 150 million barrels of oil equivalent (mmboe) net to the Company, before applying
production sharing contract terms. Remapping of this 5,600 sq km permit area during the year under review not  only
confirmed the existing prospects, but also defined several new structures and identified a new hydrocarbon play  in
the  block  -  the  Acacus Sandstone - to add to the previously known Cambro-Ordovician play. Encouragingly,  third
parties  have  announced  a  Cambro-Ordovician discovery adjacent to the block  to  the  south  and  this  has  now
highlighted the potential of the Ksar Hadada structures. Discussions to farm-out part of the Company's interest  in
this concession continue with several potential partners.

New business opportunities

With  these  advances  during  the  year,  the  Board is now also  looking  forward  to  new  business  development
opportunities, drawing on our experience to date and the expertise we have developed over the past  six  years.  We
reported at the time of our fundraising during August that Independent Resources has filed an application  for  the
award  of an exploration permit covering an area onshore Italy as part of our continued business development  plan.
We  are  also  studying  opportunities to become involved in the development of  another  underground  gas  storage
facility  elsewhere  in  Europe, which would dovetail well with our existing operational and  corporate  structure.
These new initiatives are at an early stage but we look forward to updating our shareholders as we make progress.

Because  it  is a natural extension of the specialist expertise we have developed in-house, another area  where  we
feel  it is time to consider practical solutions is in the field of geological carbon sequestration of "greenhouse"
CO2  emissions.  Many large power producers are investigating carbon capture and storage ("CCS"),  a  process  that
captures  CO2 from power stations, so that it is prevented from entering the Earth's atmosphere. It is a technology
that  is  developing all the time and could well make fossil-fuelled generation a viable low-carbon option for  the
future.  The  Company can offer power producers practical solutions to permanently store (sequester) their  CO2  in
suitable  underground  reservoirs,  and is seeking joint ventures to generate economic  as  well  as  environmental
benefits from this technology in the form of carbon tax allowances and emission credits.

These  potential new developments are highly promising in terms of our future growth, but our first priority is  to
deliver  maximum shareholder value from our existing projects. Moreover, our focus will remain limited to supplying
and  operating in our current markets. We are aware that many of our peers have adopted an opportunistic  strategy,
some  more successfully than others, but we believe that focusing on the markets where we have a real presence will
yield  more  value  to  shareholders. We will not walk away from opportunities arising from consolidation  in  this
market and nor will we compromise with the objective of maximising returns to invested capital.

Looking forward

In  such trying times for the world economy, the Board of course remains cautious about the outlook for the  coming
12  months. However, we are bolstered by the recognition received during our drive towards the end of the financial
year  to  raise  our  profile among institutional investors, which culminated in our successful fundraising.  Since
then,  widely reported setbacks for two planned gas storage projects in the UK, while unfortunate for the companies
involved,  have  served to underscore the long-term value of our key project at Rivara. Our  strong  cash  position
means  we  are  well  positioned to move forward in line with our planned cautious approach.  With  a  strengthened
institutional  shareholder  base,  we have also reported to shareholders that the  Company's  directors,  including
myself, increased their own shareholdings in the Company before the year end. This is a clear expression of our own
confidence  in  the  business moving forward, and we shall continue to work in the best  interest  of  all  of  our
shareholders during the months ahead.

Grayson Nash
Executive Chairman

19 November 2008

Independent Resources plc

Consolidated income statement

Year ended 30 September 2008

                                                          15 month period
                                                    2008             2007
 Continuing operations                                 £                £

 Revenue                                          16,737            2,220

 Cost of sales                                         -                -
                                         ----------------  ---------------

 Gross profit                                     16,737            2,220

 Administrative expenses                      (1,147,259)        (882,746)
                                         ----------------  ---------------

 Operating loss                               (1,130,522)        (880,526)

 Profit on dilution to minority interest       3,684,229                -
                                         ----------------  ---------------

                                               2,553,707         (880,526)

 Net financial income                            111,731          224,167
                                         ----------------  ---------------

 Profit/(loss) on ordinary activities
 before taxation                               2,665,438         (656,359)

 Taxation                                        (30,000)               -
                                         ----------------  ---------------

 Profit/(loss) for the period                  2,635,438         (656,359)

 Attributable to:

 Minority interests                              (23,230)               -

 Shareholders' equity                          2,658,668         (656,359)
                                         ----------------  ---------------
                                         ----------------  ---------------
 Earnings per share (pence)
 From continuing operations
 Basic                                               7.8             (2.0)
                                         ----------------  ---------------
                                         ----------------  ---------------

 Diluted                                             7.3             (2.0)
                                         ----------------  ---------------
                                         ----------------  ---------------

Independent Resources plc

Consolidated balance sheet

As at 30 September 2008

                                                      2008            2007
                                                         £               £

 Non-current assets
  Property, plant and equipment                     62,516         122,497
  Goodwill                                       4,604,965       2,044,146
  Other intangible assets                        3,715,788       2,444,320
                                         -----------------  ---------------

                                                 8,383,269       4,610,963

Current assets
 Trade and other receivables                     4,869,125         338,590
 Cash and cash equivalents                       8,455,204       2,557,212
                                         -----------------  ---------------

                                                13,324,329       2,895,802

Current liabilities
 Trade and other payables                         (711,741)       (142,959)
 Current taxation liabilities                      (65,386)        (22,752)
                                         -----------------  ---------------

                                                  (777,127)       (165,711)

Net current assets                              12,547,202       2,730,091
                                         -----------------  ---------------

Net assets                                      20,930,471       7,341,054
                                         -----------------  ---------------
                                         -----------------  ---------------

Equity attributable to equity holders
 of the parent
 Share capital                                     407,115         334,333
 Share premium account                          12,444,974       5,843,828
 Shares to be issued                             4,602,634       2,041,815
 Share option reserve                              368,185         238,237
 Foreign currency translation reserve              290,596          (6,109)
 Profit and loss reserve                         1,547,618      (1,111,050)
                                         -----------------  ---------------

Total equity                                    19,661,122       7,341,054

Minority interests                               1,269,349               -
                                         -----------------  ---------------

                                                20,930,471       7,341,054
                                         -----------------  ---------------
                                         -----------------  ---------------

Independent Resources plc
Consolidated statement of changes in equity
Year ended 30 September 2008
                                    Profit                              Shares    Share  difference  
                                  and loss       Share      Share        to be    option         on
                                   reserve     capital    premium       issued   reserve investment        Total
                                         £           £          £            £         £          £            £
       1 July 2006                (454,691)    334,333  5,843,828    2,041,815    75,802     (1,297)   7,839,790
       Loss for the period        (656,359)          -          -            -         -          -     (656,359)
       Share-based payments-             -           -          -            -   162,435          -      162,435
       Exchange difference on
        investment                       -           -          -            -         -     (4,812)      (4,812)
                                ----------    --------   ---------    ---------  -------- -----------  -----------

       30 September 2007        (1,111,050)    334,333   5,843,828    2,041,815   238,237    (6,109)   7,341,054
      1 October 2007            (1,111,050)    334,333   5,843,828    2,041,815   238,237    (6,109)   7,341,054
      Profit for the year        2,658,668           -           -            -         -         -    2,658,668
      Revision of estimate of
       cost of acquisition               -          -           -     2,560,819         -         -    2,560,819
      New shares issued                  -     72,782   6,841,468             -         -         -    6,914,250
      Transaction costs                  -          -    (240,322)            -         -         -     (240,322)
      Share-based payments               -          -           -             -   129,948         -      129,948
      Exchange difference on
       investment                        -          -           -             -         -   296,705      296,705
      30 September 2008          1,547,618    407,115  12,444,974     4,602,634   368,185   290,596   19,661,122
                                ----------    --------   ---------    ---------  -------- ----------  -----------
                                ----------    --------   ---------    ---------  -------- ----------  -----------

Independent Resources plc

Consolidated cash flow statement

Year ended 30 September 2008

                                                          15 month period
                                                    2008             2007
                                                       £                £

 Cash flows from operating activities

 Profit/(loss) before taxation

                                               2,665,438         (656,359)
 Adjustments for:
  Depreciation of property, plant and
   equipment                                      24,385           24,981
  Loss on disposal of property, plant and
   equipment                                      30,604                -
  Financial income                              (111,731)        (224,324)
  Financial costs                                      -              157
                                         ----------------  ---------------

                                               2,608,696         (855,545)
 Increase in trade and other receivables      (4,530,535)        (228,406)
 Increase in trade and other payables            581,416           45,890
 Share based payments                            129,948          162,435
 Exchange rate difference on investments          52,765           (7,631)
                                         ----------------  ---------------

 Cash used in operations                      (1,157,710)        (883,257)

 Interest paid                                         -             (157)
                                         ----------------  ---------------

 Net cash used in operating activities        (1,157,710)        (883,414)

 Cash flows from investing activities

 Interest received                               111,731          224,324
 Proceeds on disposal of property, plant
  and equipment                                   15,421                -
 Purchase of intangible assets                (1,035,278)      (1,808,398)
 Purchases of property, plant and
  equipment                                       (2,679)         (42,430)
 Issue of share capital to minority            1,292,579                -
                                         ----------------  ---------------

 Net cash from/(used in) investing
 activities                                      381,774       (1,626,504)

 Cash flows from financing activities

 Issue of share capital                        6,914,250                -
 Share issue costs                              (240,322)               -
                                         ----------------  ---------------

 Net cash from financing activities            6,673,928                -
                                         ----------------  ---------------

 Net increase/(decrease) in cash and
  cash equivalents                             5,897,992       (2,509,918)

 Cash and cash equivalents at 1 October
  2007                                         2,557,212        5,067,130
                                         ----------------  ---------------

 Cash and cash equivalents at 30
  September 2008                               8,455,204        2,557,212
                                         ----------------  ---------------
                                         ----------------  ---------------
Year ended 30 September 2008

Year ended 30 September 2008


1.   The  Directors submit their Report and Accounts for the year to 30 September 2008. The comparative  period  is
from 1 July 2006 to 30 September 2007.

2.  Basis of Presentation

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 period ending 30 September 2007.

The  financial  information set out in this announcement, which does not constitute the statutory accounts  of  the
Group,  is  extracted  from  the Group's statutory accounts for the period ended 30th September  2008,  which  were
approved  by  the  Board on 19 November 2008. The auditors have reported on those accounts  and  their  report  was

The financial information for the period ending 30 September 2007 is derived from the financial statements for that
period. The company's auditors have reported on the 2007 financial statements; the report was unqualified.

The financial information set out in this announcement was approved by the board on 19 November 2008.

The directors do not recommend the payment of a final dividend.

The full statutory accounts will be included in the Group's annual report, which will be mailed to shareholders  on
25  November  2008.  Additional copies will be available at the Group's offices The Hollow, Penn  Lane,  Melbourne,
Derbyshire  DE73  8EP  after  that date. The accounts will be delivered to the Registrar  of  Companies  after  the
Company's Annual General Meeting, which is scheduled for 18 December 2008.

3.  Revenue and Segmental information

The Group's operations are located in England, Italy and Tunisia.
The Group has generated £2,200 (2007: £2,220) of revenue during the period in its Tunisian operations and £14,537
(2007: nil) in its Italian operations.
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 the assets are located.
                              Kingdom       Italy      Tunisia       Total
                                    £           £            £           £

Carrying amount of
 segment assets                 8,233      54,283            -      62,516
Additions to
 property, plant and
 equipment in the
 year                               -       2,679            -       2,679
Depreciation charges           10,614      13,771            -      24,385
Carrying amount of
 liabilities                  563,705     100,720      112,702     777,127
Results for the year         (371,548)  3,008,623       (1,637)  2,635,438


Carrying amount of
 segment assets                18,847     103,650            -     122,497
Additions to
 property, plant and
 equipment in the
 period                        20,666      21,764            -      42,430
Depreciation charges            9,823      15,158            -      24,981
Carrying amount of
 liabilities                  103,688      32,836       29,187     165,711
Results for the
 period                      (337,602)   (316,444)      (2,313)   (656,359)

4.  Earnings per share

The calculation of basic and diluted earnings per share at 30 September 2008 was based on the profit attributable
to  ordinary shareholders of £2,658,668. The weighted average number of ordinary shares outstanding during the year
ending  30  September 2008 and the effect of the potentially dilutive ordinary shares to be issued, without  market
conditions, in connection with the previous purchase of Independent Gas Management srl, are shown below.
Share  options have also been added to the diluted weighted average ordinary shares for the purpose of  calculating
diluted earnings per share in accordance with IAS 33.
In accordance with IAS 33 and as the Group reported a loss for the period to 30 September 2007, the shares to be
issued  in  relation  to the purchase of Independent Gas Management srl were not treated as dilutive.  Contingently
issuable  shares  such  as  included  within the share option scheme or  in  connection  with  the  acquisition  of
Independent Gas Management srl have not been treated as dilutive as the market conditions have not been met  at  30
September 2008.
                                                    2008            2007
                                                       £               £

Net profit/(loss) for the period               2,658,668        (656,359)
                                          --------------  ---------------
                                          --------------  ---------------
Basic weighted average ordinary shares
 in issue during the period                   34,149,217      33,433,333
                                          --------------  ---------------
                                          --------------  ---------------
Diluted weighted average ordinary shares
 in issue during the period                   36,401,828      33,433,333
                                          --------------  ---------------
                                          --------------  ---------------
 5.   Non-cash transactions
Exceptional item
On 24 June 2008, the Group reorganised its interests in the Rivara gas management project as follows:

ERG Rivara Storage srl was formed as a 100% subsidiary of Independent Gas Management srl with €1 share capital;

Independent Gas Management srl transferred its interest in the Rivara gas management project to ERG Rivara Storage srl
at an independently valued amount of €53,833,339 in exchange for shares in ERG Rivara Storage srl;

ERG Rivara Storage srl issued further ordinary shares of €9,500,000 to a third party such as to reduce the Group's interest to 85%.

The third party paid up 25% (€2,375,000) upon the issue of the shares. The balance outstanding is legally payable
and is therefore included within amounts receivable in note 15 (Trade and other receivables). The balance is to be
payable when called upon by the board of ERG Rivara Storage srl. The amount due to be received has been discounted
by £1,468,000 to reflect the directors' estimates of the timing and amounts of those calls.

As a result of the above, the Group has recognised an exceptional profit on the deemed disposal of a 15% interest
in ERG Rivara Storage srl of £3,684,229 after deducting related costs of brokerage and commission of £1,071,015
paid by the Group.
6. Share capital
                                   2008                        2007
                             Group     Company        Group        Company
                                 £           £            £              £
80,000,000 ordinary
 shares of 1p              800,000     800,000      800,000        800,000
                          --------    --------     --------       --------
                          --------    --------     --------       --------
Issued, called up
 and fully paid
 40,711,491 ordinary
 shares of 1p              407,115     407,115      334,333        334,333
                          --------    --------     --------       --------

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 26 August 2008, a further 7,278,158 ordinary shares of 1p were issued at a placing price of 95p each giving
rise to a share premium of £6,841,468.
7. Share premium account
                                   2008                       2007
                            Group       Company         Group      Company
                                £             £             £            £

1 October 2007          5,843,828     5,843,828     5,843,828    5,843,828
Premium arising on
 issue of equity
 shares                 6,841,468     6,841,468             -            -
Transaction costs        (240,322)     (240,322)            -            -
                       -----------   -----------    ---------    ---------

30 September 2008      12,444,974    12,444,974     5,843,828    5,843,828
                       -----------   -----------    ---------    ---------
                       -----------   -----------    ---------    ---------

8. Other

This announcement can be viewed in full on the Company web-site

Grayson Nash, Executive Chairman, Independent Resources plc:                  +39 339 635 8634

Stephen Staley, Managing Director UK, Independent Resources plc:              +44 1332 865 253

Jonathan Wright, Seymour Pierce +44 207 107 8000

David Smith, Deloitte Corporate Finance +44 207 936 3000

Allan Piper, Tavistock Communications Ltd +44 207242 2666

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