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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Indep. Res. | LSE:IRG | London | Ordinary Share | GB00B0RNX796 | ORD 0.01P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 0.395 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
TIDMIRG
RNS Number : 3983L
Independent Resources PLC
30 September 2016
Hot Features
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Independent Resources PLC
("Independent Resources" or the "Company")
Interim report
Six months ended 30 June 2016
-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Highlights
* Continued to progress registration of Independent
Resources Egypt Limited ("IRE"), the Company's joint
venture with Nostra Terra Oil and Gas Company plc
("Nostra Terra"), with the relevant Egyptian
authorities to enable IRE to become eligible to
invoice for outstanding revenues from the East
Ghazalat concession ("East Ghazalat") which have been
accruing since 1 July 2015
* Commenced discussions with the Egyptian General
Petroleum Company Limited ("EGPC") to attempt to
progress a resolution of the Company's dispute with
North Petroleum International Company SA ("North
Petroleum"), the operator of East Ghazalat
* Extended licence to August 2017, increased contractor
interest to 100 per cent. and continued discussions
over a potential farm-in for Ksar Hadada
* Completed a cash equity and convertible loan
fundraising of GBP0.29 million
* Repaid GBP0.47 million of trade creditors through the
issue of equity at an average price of 0.12p per
share
* Completed a cost review and have commenced the
implementation phase targeted at achieving an annual
cash expenditure of approximately GBP700,000 by
year-end
* IRE reached an agreement in September 2016 with
TransGlobe Petroleum International Inc.
("TransGlobe") to pay $200,000 as settlement for the
early repayment of the loan note issued to TransGlobe
in October 2015
* Loan agreement entered with Brandon Hill Capital for
GBP160,000 entered post interim period end
Chairman's Statement
Introduction
The industry continues to implement aggressive cost
reduction measures globally reflecting the view that
oil prices will continue around current levels for
some time to come. Independent Resources continues
to focus on North Africa where low cost assets with
opportunities to increase reserves and production levels
are still to be found. These opportunities are mainly
onshore in areas where there is existing infrastructure
and markets.
In the first half of 2016, we have taken extensive
steps to reduce our creditor balances and reduce our
ongoing cash expenditure. We are well on the way to
achieving our cost reduction plans whilst continuing
to progress discussions with EGPC and North Petroleum
to resolve our outstanding issues relating to the East
Ghazalat concession and pursuing new Egyptian investment
opportunities similar in scale to East Ghazalat.
Egypt
As announced on 15 October 2015, through IRE, a joint
venture with Nostra Terra, Independent Resources made
its first investment in Egypt via the acquisition of
TransGlobe's 50 per cent. interest in the East Ghazalat
licence located in the Western Desert of Egypt. The
transaction was structured as a corporate acquisition
of a single asset subsidiary of TransGlobe for a total
consideration of $3.5 million of which $2.5 million
was deferred as a vendor loan note ("Loan Note"), payable
in September 2017. At the time of the acquisition,
East Ghazalat was generating approximately 880 barrels
per day of gross production in which we have a 25 per
cent. interest.
We recognise that this is a relatively small acquisition
and is intended to be an initial entry investment in
Egypt allowing the Company to follow with further,
more material and interesting, acquisitions in order
to build a cash flow generative business based on solid
revenues with compelling investment characteristics.
We have subsequently received approval from EGPC as
a new entrant in Egypt. This was one of the preconditions
to allow us to follow through on our commercial registration
and receive the revenues due to us since completion.
We are also progressing the other requisite regulatory
and security clearances which include relevant commercial
and taxation registrations from the General Authority
for Investment and Free Zones ("GAFI").
As announced on 21 June 2016, we currently expect the
registration process to be completed shortly although
this not something that we can control. New entrant
approval also facilitates potential further investments
in this well-established hydrocarbon province where
interests in producing and near production assets remain
available for acquisition and where our management
team has extensive experience.
Our due diligence on East Ghazalat made us aware that
significant restructuring of the licence cost base
was necessary to ensure that it would contribute to
group cash flows in a low oil price environment but
that holding a combined 50 per cent. interest in the
licence through the joint venture with Nostra Terra
would provide a position to ensure that the management
of the licence is in accordance with our best interests
and plans. We envisaged that there would be difficult
discussions with North Petroleum, the Chinese state-owned
operator of East Ghazalat as we attempted to restructure
the cost base of the licence to ensure that activities
on East Ghazalat would be prudently managed and ensure
costs are appropriate for the scale of activity on
the licence and this has certainly proved to be the
case.
As announced on 25 January 2016 we received notice
of default in relation to cash calls raised by North
Petroleum. We believe those cash calls to be fundamentally
erroneous and unjustifiable in the context of the licence,
in comparison with other interests that North Petroleum
has in Egypt and within the current business environment
and we have therefore declined to pay them. We have
formally rebutted the claims from North Petroleum for
payment and in relation to the alleged default.
North Petroleum's continuing and consistent refusal
to furnish financial information to allow a proper
understanding of past costs has contributed substantially
to the current breakdown in relations. The patchwork
of billing estimates provided to date have been issued
out with the procedures in the Joint Operating Agreement,
and in our view are unjustifiable and fundamentally
unreasonable given the level of production, drilling
and exploration activity on East Ghazalat. We have
been unable to agree a budget with North Petroleum
for 2016 which has constrained activity, although given
low oil prices we believe this is actually an appropriate
posture.
There are also unrecovered amounts due to IRE from
North Petroleum in relation to outstanding historical
joint operating agreement audit claims. We have served
notice to North Petroleum of our intention to conduct
an audit of the East Ghazalat licence costs for 2013
and 2014. We also reserve the right to conduct an audit
in relation to 2015. We have not reflected any estimate
of the amounts that could be recovered by the joint
venture in respect of audits at this year-end.
We do believe it is in the interests of the Arab Republic
of Egypt and the owners of East Ghazalat to agree on
the way forward and we continue to work with EGPC to
resolve these differences while protecting the interests
of our shareholders.
As announced on 15 August 2016 the Company received
a notice of default from TransGlobe claiming that,
inter alia, the Company was in default of its obligations
under the Loan Note. The Company rebutted TransGlobe's
claim and announced that it intended to meet with TransGlobe
to resolve the issue.
On 28 September 2016 the Company announced that its
joint venture with Nostra Terra, IRE, reached an agreement
with TransGlobe concerning the early repayment of the
Loan Note. Under the terms of the agreement, the Company,
IRE and Nostra Terra will collectively pay $200,000
to TransGlobe in full and final settlement of the Loan
Note and all interest accruing on the Loan Note. This
removes the outstanding liability net to the Company
of approximately $1.38 million (including accrued interest),
leaving no further debt on the asset or payments owed
to TransGlobe.
The impact of the settlement arrangements will be reflected
in the results of IRE and the Company for the second
half of the financial year ending 31 December 2016
and is more fully described in note 9 to the interim
financial statements.
In light of the lack of any access to robust financial
information for these interim statements, we have continued
to adopt the approach used in 2015 and accounted for
our investment in the East Ghazalat licence at historical
cost and not consolidated any share of profits or losses.
This approach was used since 1 July 2015, the effective
date of the transaction in respect of that investment.
The directors remain confident that our joint venture
interest in East Ghazalat will create value for shareholders.
Tunisia
We continue to seek a farm-in partner for our licence
interest in Ksar Hadada to provide finance and technological
innovation. There can be no doubt that the difficulty
of achieving this was increased by the drop in oil
prices and increased concerns over the security situation
in Tunisia after the terrorist events during 2015.
We have continued to carry out significant additional
technical analysis of the prospectivity of the licence
during the first half of 2016, increased our contractor
interest to 100 per cent. by facilitating the withdrawal
of our minority licence partners and have now obtained
an additional one-year extension until 7 August 2017
from the Tunisian Government to complete the work programme.
We are optimistic that the multi-horizon prospectivity
in both the Ordovician and the Acacus should be attractive
to potential farminees. We have identified prospects
of well over 100 million barrels of recoverable hydrocarbons.
We remain in discussions with parties regarding investment
where the Company would expect to continue to be the
operator but with a reduced working interest in the
range of 50 per cent. The potential economic returns
from the licence remain highly attractive even at lower
oil prices.
Italy
We have successfully relinquished our coal bed methane
assets in Ribolla and Casoni with no further obligations.
We have successfully restricted our cost base in Italy
in the light of uncertainty over the timing of legal
appeals in relation to the Rivara Gas Storage project.
This restructuring involves liquidating legal entities
which have no further commercial value. This has ensured
we now only incur a small cost for our Italian activities
pending clarity on the outcome of the Rivara proceedings.
We are still looking to ensure that the administrative
tribunal hears our court case in relation to Rivara
as soon as possible, where the positions taken in 2012
by the Emilia-Romagna region and the Ministry of Economic
Development will be contested. Through our Italian
legal counsel, we continue to seek a date for commencement
of the court proceedings. No impairment provision has
been taken until the outcome of such a process becomes
known.
Overhead costs
We have continued to focus as a management team to
minimise expenditure and group cash expenditure. We
welcome the continued support from all our business
partners during a difficult time for the industry.
As a sign of their commitment to ensuring the successful
future of the Company, all the directors and key management
have agreed to defer or use net salary and consultancy
payments in full or in part to subscribe for additional
equity in the company. Cash salaries have not been
paid to board members since January 2015 and will only
resume once the board is satisfied that it has become
appropriate to do so.
Included in creditors and accruals as at 30 June 2016
are GBP400,468 of directors' and senior management's
remuneration. After the period end, we announced that
the directors and COO had agreed to subscribe for GBP400,468
worth of new ordinary shares in the Company to settle
outstanding salaries and fees due up to 30 June 2016
at an average price of 0.224 pence per ordinary share
representing a 244 per cent. premium to the closing
price on 13 July 2016 and helping to preserve the Company's
cash resources.
The financial effect of these arrangements as they
were entered after the period end will be reflected
in the second half of this financial year.
These arrangements were announced on 14 July 2016 along
with the creation of a new share scheme whereby restricted
shares would be issued in arrears to satisfy the directors'
and COO's quarterly remuneration at share prices of
0.45p for Q3 2016, 0.6p for Q4 2016 and Q1 2017. There
will be no additional cash payments to the directors
until such time as the Company's financial position
merits resumption of such payments.
Creditors include GBP110,332 ($147,613) owed by Nostra
Terra to the Company comprising Nostra Terra's 50 per
cent. share of third party professional fees incurred
by the Company on behalf of IRE its joint venture with
Nostra Terra in respect of IRG's formation and the
acquisition of the East Ghazalat concession. The Company
which has paid its 50 per cent. share of these professional
costs to the third parties concerned, continues to
press NTOG for payment of this liability.
The Company has, since IRE's formation, managed and
run IRE on behalf of not only itself but also Nostra
Terra. This has resulted in the Company incurring substantial
costs in providing management services to IRE which
are reflected in a gross debt of GBP284,746 being the
amount owed by IRE to the Company for these services,
as at 30 June 2016. The Company considers that Nostra
Terra, given its 50 per cent. ownership of IRE, is
liable to the Company for 50 per cent. of these costs
and accordingly Nostra Terra owes the Company GBP142,373.
The Company continues to press Nostra Terra to pay
this debt.
Going forward, the Company is on track to implement
a reduced overhead cash spend commensurate with our
current asset base to c. GBP700,000 per annum.
Results for the Period
The group reported a consolidated loss of GBP0.45 million
for the six months to 30 June 2016 (2015 1H: GBP0.89
million).
The reported loss for the period includes the group's
share of losses of its joint venture with Nostra Terra
Oil and Gas Company plc of GBP0.14 million (2015 1H:
GBPnil), where due to limitations on financial information
available from the licence operator it was not possible
to consolidate the group's share of revenues and costs
attributable to its licence interest in East Ghazalat.
The cash spend during 1H 2016 was GBP0.32 million (2015:
GBP0.8 million).
Group cash balances at 30 June 2016 were GBP0.07 million.
Fundraising
In February of this year the Company placed 77,981,175
new shares raising gross proceeds of GBP93,500. In
May the Company raised a further GBP200,000 through
the issue of convertible debt. The convertible debt
was subsequently converted to equity at 0.048 pence
per share. Total fees of approximately GBP15,000 were
incurred in relation to the fundraising and have been
expensed in the period.
As shareholders ourselves, management are acutely aware
of the effect of dilution on all shareholders and we
will seek ways to minimise this through use of debt
and development finance in the future where possible.
Going concern
In order to execute our strategy, the directors acknowledge
that further funding will be required within the next
12 months in order for the Company to continue operating.
Our acquisition strategy remains focused on acquiring
producing assets to create a group which is self-sustaining
from production cash flows.
We remain confident that additional external funding
should be available, if and when required, and we continue
to actively progress opportunities in this regard.
We continue to attract the financial support of our
major shareholders as demonstrated by the recently
arranged loan facility for GBP160,000 from Brandon
Hill Capital.
The directors have considered the Company's current
trading activities, its current funding position and
the projected funding requirements for a period of
at least twelve months from the date of approval of
these interim financial statements. Taking this into
account, the board consider it appropriate to adopt
the Going Concern basis in preparing results for the
six months ended 30 June 2016.
Business development
We have continued to work hard to secure investment.
The collapse of oil prices and the resultant challenge
in forecasting future oil prices for investment appraisal
purposes has necessitated a degree of caution on our
part as we consider new opportunities.
We continue to adopt a rigorous approach to diligence
and valuation, leveraging the operational and transactional
experience of the management team to ensure we are
content that value can be delivered for shareholders.
We continue to evaluate a number of low cost onshore
opportunities in Egypt and Tunisia. Typically, we are
looking at opportunities to acquire a meaningful interest
in a field where there is gross production of 300 to
2,000 barrels per day and where the acquisition price
is likely to be less than $1 million.
Our priority is on assets that continue to be near
or cash flow positive even at current pricing levels
whilst offering opportunity for low cost organic production
growth. Such opportunities will provide scope to increase
production significantly through low-cost drilling
including horizontal wells and the application of international
practices to field management, well workovers, technical
evaluation, procurement and cost management.
Outlook
We continue to be optimistic that despite generally
difficult and uncertain industry conditions, we can
successfully execute a production led strategy and
that there are attractive opportunities to be pursued
in North Africa. Management remain committed to growing
the company and thank our shareholders for their continued
patience and support.
This announcement contains inside information for the
purposes of Article 7 of EU Regulation 596/2014.
For more information, please visit www.ir-plc.com or
contact:
Independent Resources
Greg Coleman plc 020 3367 1134
Panmure Gordon (UK)
Adam James Limited 020 7886 2500
(Nominated Adviser &
Joint Broker)
Brandon Hill 020 3463
Oliver Stansfield Capital 5000
(Joint
Jonathan Evans Broker)
Simon Hudson Tavistock Communications 020 7920 3150
Independent Resources PLC
Consolidated statement of comprehensive income
Six months ended 30 June 2016
-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Unaudited Unaudited Audited
1 January 1 January 1 January
2016 2015 2015
to 30 June to 30 June to 31 December
2016 2015 2015
GBP GBP GBP
Notes
Continuing operations
Revenue 2 - - -
Cost of sales - - -
Gross profit - - -
Administrative expenses (295,318) (741,558) (1,652,631)
Other operating income - - -
Operating loss (295,318) (741,558) (1,652,631)
Financial income 114 198 351
Financial expense (17,143) - (3,533)
Share of post-tax losses
of equity
accounted joint ventures (137,906) - (156,985)
Loss before tax (450,253) (741,360) (1,812,798)
Taxation 3 - - -
Loss from continuing operations (450,253) (741,360) (1,812,798)
Discontinued operations
Profit/(loss) after taxation
for the period from
discontinued operations 1,560 (148,915) (96,269)
Loss for the period (448,693) (890,275) (1,909,067)
Other comprehensive income:
Other comprehensive
income to be reclassified
to profit
or loss in subsequent
periods (net of tax)
Exchange difference on
translating foreign operations 624,689 (467,588) (296,126)
Total comprehensive profit/(loss)
for the period 175,996 (1,357,863) (2,205,193)
Loss attributable to:
Owners of the parent (448,693) (890,275) (1,909,067)
Total comprehensive profit/(loss) attributable to:
Owners of the parent 175,996 (1,357,863) (2,205,193)
Loss per share (pence) 4
Basic (0.1) (0.7) (1.1)
Diluted (0.1) (0.7) (1.1)
Loss per share (pence)
from continuing operations
Basic (0.1) (0.6) (1.0)
Diluted (0.1) (0.6) (1.0)
Independent Resources PLC
Consolidated statement of financial position
As at 30 June 2016
-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Unaudited Unaudited Audited
30 June 30 June 31 December
2016 2015 2015
GBP GBP GBP
Notes
Non-current assets
Property, plant and equipment 8,312 10,822 11,127
Other intangible
assets 5 6,006,861 5,167,240 5,387,018
Investments in
equity-accounted
joint ventures 6 - - 137,906
6,015,173 5,178,062 5,536,051
Current assets
Other receivables 747,221 183,634 488,877
Cash and cash equivalents 66,167 370,640 101,300
813,388 554,274 590,177
Assets held for
distribution 40,978 112,434 43,179
854,366 666,708 633,356
Current liabilities
Trade and other payables (904,416) (830,291) (1,164,063)
Liabilities directly
associated with the
assets held for
distribution (4,678) (127,224) (20,968)
(909,094) (957,515) (1,185,031)
Net current assets (54,728) (290,807) (551,675)
Net assets 5,960,445 4,887,255 4,984,376
Equity attributable
to equity holders
of the parent
Share capital 7 2,327,488 1,851,434 2,159,247
Share premium 8 17,247,816 16,302,050 16,628,623
Share option reserve 84,357 50,568 71,718
Share warrant reserve 302,453 13,538 302,453
Foreign currency translation
reserve 288,999 (507,152) (335,690)
Retained earnings (14,290,668) (12,823,183) (13,841,975)
Total equity 5,960,445 4,887,255 4,984,376
Independent Resources PLC
Consolidated statement of cash flows
Six months ended 30 June 2016
-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Unaudited Unaudited Audited
1 January 1 January 1 January
2016 2015 2015
to 30 June to 30 June to 31 December
2016 2015 2015
GBP GBP GBP
Cash flows from operating activities
Loss from continuing operations (450,253) (741,360) (1,812,798)
Loss from discontinued
operations 1,560 (148,915) (96,269)
Adjustments for:
Depreciation of property,
plant and equipment 3,212 2,630 5,372
Share of post-tax
loss of equity accounted
joint ventures 137,906 - 156,985
Placing costs expensed - 71,765 69,244
Share-based payments 12,639 24,792 45,942
Warrants issued - 13,538 302,453
Financial income (114) (198) (351)
Financial expense 17,143 - 3,533
(277,907) (777,748) (1,325,889)
(Increase)/decrease in
other receivables (257,825) 12,834 (289,826)
Increase in assets held
for distribution (14,089) (217,516) (254,517)
Increase in trade and
other payables 231,282 201,616 555,053
Cash used in operations (318,539) (780,814) (1,315,179)
Income taxes received - - -
Net cash used in operating
activities (318,539) (780,814) (1,315,179)
Cash flows used in investing activities
Interest received 114 198 351
Interest paid - - (3,533)
Proceeds on disposal
of property, plant and
equipment - - -
Acquisition of equity
accounted joint venture - - (294,891)
Purchase of intangible
assets - (22,113) (73,013)
Purchase of property,
plant and equipment (396) (440) (3,486)
Net cash used in investing
activities (282) (22,355) (374,572)
Cash flows from financing activities
Receipt of convertible
loan 200,000 - -
Issue of share capital 93,577 800,000 1,513,147
Share issue costs (9,889) (52,100) (148,005)
Net cash from financing
activities 283,688 747,900 1,365,142
Net increase/(decrease)
in cash and cash equivalents (35,133) (55,269) (324,609)
Cash and cash equivalents
at beginning of the period 101,300 425,909 425,909
Cash and cash equivalents
at end of the period 66,167 370,640 101,300
Independent Resources PLC
Consolidated statement of changes in equity
Six months ended 30 June 2016
-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Foreign
Share Share currency
Retained Share Share option warrant translation
earnings capital premium reserve reserve reserve Total
GBP GBP GBP GBP GBP GBP GBP
Six months to 30 June 2016
1 January
2016 (13,841,975) 2,159,247 16,628,623 71,718 302,453 (335,690) 4,984,376
Loss for
the period (448,693) - - - - - (448,693)
Exchange
differences - - - - - 624,689 624,689
Total comprehensive loss
for the period (448,693) - - - - 624,689 175,996
New shares
issued - 168,241 629,082 - - - 797,323
Share issue
costs - - (9,889) - - - (9,889)
New share
warrants
issued - - - - - - -
Share options lapsed
in the period - - - - - - -
Share-based
payments - - - 12,639 - - 12,639
30 June 2016 (14,290,668) 2,327,488 17,247,816 84,357 302,453 288,999 5,960,445
Six months to 30 June 2015
1 January
2015 (11,932,908) 1,051,434 16,302,050 25,776 - (39,564) 5,406,788
Loss for
the period (890,275) - - - - - (890,275)
Exchange
differences - - - - - (467,588) (467,588)
Total comprehensive loss
for the period (890,275) - - - - (467,588) (1,357,863)
New shares
issued - 800,000 - - - - 800,000
Share issue
costs - - - - - - -
New share
warrants
issued - - - - 13,538 - 13,538
Share options lapsed
in the period - - - - - - -
Share-based
payments - - - 24,792 - - 24,792
30 June 2015 (12,823,183) 1,851,434 16,302,050 50,568 13,538 (507,152) 4,887,255
Year to 31 December 2015
1 January
2015 (11,932,908) 1,051,434 16,302,050 25,776 - (39,564) 5,406,788
Loss for
the period (1,909,067) - - - - - (1,909,067)
Exchange
differences - - - - - (296,126) (296,126)
Total comprehensive loss
for the period (1,909,067) - - - - (296,126) (2,205,193)
New shares
issued - 1,107,813 405,334 - - - 1,513,147
New share
warrants
issued - - - - 302,453 - 302,453
Share issue
costs - - (78,761) - - - (78,761)
Share options lapsed
in the period - - - - - - -
Share-based
payments - - - 45,942 - - 45,942
31 December
2015 (13,841,975) 2,159,247 16,628,623 71,718 302,453 (335,690) 4,984,376
Independent Resources PLC
Notes to the interim financial information
Six months ended 30 June 2016
-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
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 2006. The consolidated financial information
is presented in GBP ("GBP") unless otherwise stated.
Basis of preparation
The interim financial information, for the period
from 1 January 2016 to 30 June 2016, 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
31 December 2015.
The Interim Report is unaudited and does not constitute
statutory financial statements. The financial information
for the period ended 30 June 2015 does not constitute
statutory accounts, as defined in section 435 of
the Companies Act 2006 but is based on the statutory
financial statements for the year ended 31 December
2015. Those accounts, upon which the auditors issued
a qualified opinion in relation to the operation
of the joint venture arrangements relating to the
group's 25 per cent. working interest in the East
Ghazalat production licence, have been delivered
to the Registrar of Companies.
The interim consolidated financial statements for
the six months ended 30 June 2016 have been prepared
in accordance with IAS 34, Interim Financial Reporting.
The operations of Independent Resources Plc are not
affected by seasonal variations.
The directors do not propose a dividend for the period
(2015: nil).
The Interim Report for the six months ended 30 June
2016 was approved by the Directors on 30 September
2016.
Copies of the Interim Report are available from the
Company's website www.ir-plc.com.
Going concern
The financial information has been prepared assuming
the Group will continue as a going concern. Under
the going concern assumption, an entity is ordinarily
viewed as continuing in business for the foreseeable
future with neither the intention nor the necessity
of liquidation, ceasing trading or seeking protection
from creditors pursuant to laws or regulations.
The Directors acknowledge that further funding will
be required within the next 12 months in order for
the Group to continue operating. The Directors are
confident that additional external funding should
be available if and when required and they have considered
the Group's current trading activities, its current
funding position and the projected funding requirements
for a period at least twelve months from the date
of approval of these interim financial statements.
Taking all of that into account, they consider it
appropriate to adopt the going concern basis in preparing
results for the six months ended 30 June 2016. However,
the need to raise new funds represents a material
uncertainty that may cast significant doubt on the
Group's ability to continue as a going concern. The
assessment has been made based on the Group's anticipated
activities which have been included in the financial
forecast for the years 2016-2017.
Based on the above, the Directors have formed a judgment
that the going concern basis should be adopted in
preparing the interim financial information. The
interim financial information does not include any
adjustments that may be required should the Group
be unable to continue as a going concern. If the
Group were unable to continue as a going concern,
then adjustments would be necessary to write assets
down to their recoverable amounts, non-current assets
and liabilities would be reclassified as current
assets and liabilities and provisions would be required
for any costs associated with closure.
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. Ksar Hadada
The previously reported segment of Ribolla Basin
CBM assets has been classified as a discontinued
operation and has been excluded form the analysis
below.
The CODM monitors the operating results of each segment
for the purpose of performance assessments and making
decisions on resource allocation. Performance is
based on assessing progress made on projects and
the management of resources used. Segment assets
and liabilities are presented inclusive of inter-segment
balances.
The Group did not generate any revenue during the
six month period to 30 June 2016, or in the six month
period to 30 June 2015, or the year to 31 December
2015.
Parent
Ksar
company Rivara Hadada Consolidation Total
GBP GBP GBP GBP GBP
Six months to 30 June 2016
Interest
revenue 114 - - - 114
Interest
expense (17,143) - - - (17,143)
Depreciation 3,212 - - - 3,212
Impairment
of
intangible
assets - - - - -
Income tax - - - - -
Loss for
the period
before taxation (5,929) (13,646) (1,195) (429,483) (450,253)
Assets 5,331,790 5,639,883 435,810 (4,578,922) 6,828,561
Liabilities (858,715) (2,685,941) (1,048,715) 3,688,955 (904,416)
Six months to 30 June 2015
Interest
revenue 197 1 - - 198
Interest
expense - - - - -
Depreciation 2,630 - - - 2,630
Impairment
of
intangible
assets - - - - -
Income tax - - - - -
Loss for
the period
before taxation (1,251,035) (14,366) (38,735) 562,776 (741,360)
Assets 4,204,937 4,879,872 405,838 (3,758,311) 5,732,336
Liabilities (783,211) (2,249,442) (960,871) 3,163,233 (830,291)
Year to 31 December 2015
Interest
revenue 92,800 7,107 - (99,556) 351
Interest
expense (5,142) (59,780) - 61,389 (3,533)
Depreciation 5,335 37 - - 5,372
Impairment
of
intangible
assets - - - - -
Income tax - - - - -
Loss for
the period
before taxation (1,938,281) (96,672) (95,412) 317,567 (1,812,798)
Assets 4,763,050 6,352,843 442,739 (5,432,404) 6,126,228
Liabilities (1,084,119) (2,717,707) (1,054,449) 3,692,212 (1,164,063)
2. Business segments
The geographical split of non-current assets arises
as follows:
United
Kingdom Overseas Total
GBP GBP GBP
30 June 2016
Intangible assets - 6,006,861 6,006,861
Property, plant and equipment 8,303 9 8,312
30 June 2015
Intangible assets - 5,167,240 5,167,240
Property, plant and equipment 10,778 44 10,822
31 December 2015
Intangible assets - 5,387,018 5,387,018
Property, plant and
equipment 11,119 8 11,127
3. Taxation
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.
No tax charge has arisen during the six month period
to 30 June 2016, or in the six month period to 30
June 2015, or the year to 31 December 2015.
4. Loss per share
The calculation of basic and diluted loss per share
at 30 June 2016 was based on the loss attributable
to ordinary shareholders of GBP448,693 (six month
period to 30 June 2015: GBP890,275, year to 31 December
2015: GBP1,909,067). The weighted average number of
ordinary shares outstanding during the period ending
30 June 2016 and the effect of dilutive ordinary shares
to be issued are shown below.
30 June 30 June 31 December
2016 2015 2015
GBP GBP GBP
Net loss for the period (448,693) (890,275) (1,909,067)
Basic weighted average ordinary shares
in issue during the period 541,105,879 122,544,435 178,744,458
Diluted weighted average ordinary shares
in issue during the period 541,105,879 122,544,435 178,744,458
Loss per share (pence)
Basic (0.1) (0.7) (1.1)
Diluted (0.1) (0.7) (1.1)
In accordance with IAS 33 and as the average share
price in the year is lower than the exercise price,
the share options do not have a dilutive impact on
earnings per share for the period ending 30 June 2016.
Deferred shares have been excluded from the calculation
of loss per share due to their nature. Please see
note 7 for details of their rights.
5. Other intangible assets
Development and exploration
Rivara
gas Ksar Hadada
Ribolla
storage Basin exploration
facility CBM assets acreage Total
GBP GBP GBP GBP
Six month period 30 June 2016
Cost
1 January 2016 4,950,206 3,870,839 1,517,641 10,338,686
Exchange differences 624,169 488,072 - 1,112,241
Additions (net of credits
received) - - (4,326) (4,326)
30 June 2016 5,574,375 4,358,911 1,513,315 11,446,601
Amortisation
1 January 2016 - 3,870,839 1,080,829 4,951,668
Exchange differences - 488,072 - 488,072
30 June 2016 - 4,358,911 1,080,829 5,439,740
Carrying value
30 June 2016 5,574,375 - 432,486 6,006,861
31 December 2015 4,950,206 - 436,812 5,387,018
Six month period to 30 June 2015
Cost
1 January 2015 5,239,353 4,096,939 1,444,628 10,780,920
Exchange differences (458,025) (358,156) - (816,181)
Additions - - 22,113 22,113
30 June 2015 4,781,328 3,738,783 1,466,741 9,986,852
Amortisation
1 January 2015 - 4,096,939 1,080,829 5,177,768
Exchange differences - (358,156) - (358,156)
30 June 2015 - 3,738,783 1,080,829 4,819,612
Carrying value
30 June 2015 4,781,328 - 385,912 5,167,240
Year to 31 December 2015
Cost
1 January 2015 5,239,353 4,096,939 1,444,628 10,780,920
Exchange differences (289,147) (226,100) - (515,247)
Additions - - 73,013 73,013
31 December 2015 4,950,206 3,870,839 1,517,641 10,338,686
Amortisation
1 January 2015 - 4,096,939 1,080,829 5,177,768
Exchange differences - (226,100) - (226,100)
31 December 2015 - 3,870,839 1,080,829 4,951,668
Carrying value
31 December 2015 4,950,206 - 436,812 5,387,018
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 permit
Through a wholly owned subsidiary, the Group owns
100% of the working interest in the Ksar Hadada exploration
permit onshore Tunisia. The Group is actively searching
for a farm-in partner to fund seismic appraisal and
drilling. If a commercial discovery is made through
drilling then a production licence with a 30 year
duration can be obtained. Management's evaluation
of the commercial terms of the related production
sharing contract confirm that the project remains
economic at current oil prices and at a substantial
discount thereto and indicate a net present value
significantly in excess of the value of the related
intangible assets.
Ribolla Basin CBM assets
The Group's attempts to farm the Ribolla assets out
were unsuccessful, and in light of the uncertainty
over the future renewal of the permit, it was decided
to impair a substantial part of the carrying value
of the historical investment in Fiume Bruna and Casoni
and the goodwill associated with the historical acquisition
of Independent Energy Solutions srl.
Rivara gas storage facility
Despite the expected delay, a review of the latest
management information and projections shows a net
present value significantly in excess of assets and
liabilities relating to the project. The main assumptions,
which the Directors have assessed as unchanged from
the previous period end, 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.
Value in use
Value in use has been calculated separately for the
Group's Rivara gas storage facility. Cash flows are
projected for the periods up to the date that the
project is expected to become commercially operational
and from then until operations are expected to cease,
based upon management's expectations. These dates
depend on a number of variables, including the project's
technical feasibility, regulatory approval, forecast
revenue prices and the associated development and
operational costs.
The project is expected to generate revenue after
five to nine years and to continue doing so for a
further 35 years. The Directors consider that projections
calculated for a period greater than five years are
justified as the projects are still in a development
stage.
Potential impairment of the Rivara project
The Group holds a 100% interest in Rivara Gas Storage
srl. Intangible assets include an amount of GBP5,574,375
with respect to project expenditure. The regional
council, Regione Emilia Romagna, where the project
is located is currently denying authorisation for
project development. However authorisation has been
granted by the national government. As a result Rivara
Gas Storage srl has appealed against this decision
to the Emilia Romogna Bologna Administrative Court
and this appeal is due to be heard in the second half
of 2016.
In the event that Rivara Gas Storage srl's appeal
was to be unsuccessful, there may be an indication
of impairment of the capitalised expenditure which
could significantly reduce the carrying value of this
asset.
6. Investments in equity-accounted joint ventures
Period to
30 June 2016
GBP
Cost
1 January 2016 294,891
Additions in
year -
Impairment -
Cost at 30
June 2016 294,891
Share of post-tax losses of
equity accounted joint ventures
for the six month period
to 31 December 2015 (156,985)
Carrying value at
31 December 2015 137,906
Share of post-tax losses of
equity accounted joint ventures
for the six month
period to 30 June
2016 (137,906)
Carrying value at
30 June 2016 -
The group has a 50% interest in Independent Resources
(Egypt) Limited ("IRE") a company incorporated in
England &
Wales, whose purpose is to invest in the oil and gas
exploration and production activities in the Arab
Republic of Egypt.
The other shareholder in IRE (the "Joint Venture")
is Nostra Terra Oil and Gas Company
plc ("Nostra Terra") a UK resident company whose shares
are traded on the AIM market of the London Stock Exchange.
In October 2015 the Joint Venture acquired a 50% working
interest in the East Ghazalat production licence located
in the Western Desert, Egypt from TransGlobe Energy
Corporation ("TransGlobe") through the acquisition
of the entire share capital of
Trans Globe (GOS) Inc. a wholly-owned subsidiary of
TransGlobe in December 2015,
the name of the acquired company was changed to Sahara
Resources (GOS) Inc.
The total consideration for the transaction was $3.5
million of which $2.5 million has been deferred as
a vendor loan repayable by the Joint Venture on 30
September 2017. The loan note accrues interest at
10% annum on the principal sum, payable semi-annually.
Nostra Terra and Independent Resources plc are joint
and severally liable for the repayment of the loan
note.
The final loan note principal and semi-annual interest
payable to Trans Globe thereon remain subject to final
determination
in accordance with completion working capital adjustment
provisions in the sale and purchase agreement. The
principal of
the loan note is to be adjusted by the net working
capital of Sahara Resources (GOS) Inc.at legal completion.
At 31 December 2015 the loan note principal has been
recorded based on Trans Globe's initial assessment
of working
capital at completion and interest on this estimated
loan note principal has been accrued up to 31 December
2015.
The loan note principal and interest payable was therefore
subject to change during 2016 when the working capital
adjustment was finalised (see note 10).
The US dollar denominated loan liability all to TransGlobe
has been retranslated at prevailing year-end exchange
rates.
As a non-monetary long-term asset, the consideration
for acquiring the share capital of Trans Globe GOS
Inc. has been
recorded at the prevailing exchange rate at the time
of completion of the acquisition but has not been
retranslated at the
prevailing year-end exchange rate.
In January 2016 the Joint Venture was served with
notice of default in relation to cash calls raised
by North Petroleum
International S.A. ("North Petroleum") the operator
of East Ghazalat.
The Joint Venture has rebutted the claims from North
Petroleum but the current breakdown in relations has
meant that operator North Petroleum has been unwilling
to furnish financial information to allow a proper
determination of licence costs and an audit of licence
revenues to be completed.
6. Investments in equity-accounted joint ventures (continued)
In light of this lack of access to primary accounting
records the results of the Joint Venture for the year
ended 31
December 2015 and six month period to 30 June 2016
reflect the investment in Sahara Resources GOS Inc.
at historical
cost and the loan note consideration payable to Trans
Globe and the accrued costs of completing the related
acquisition
but do not consolidate any share of profits or losses
attributable to Sahara Resources GOS Inc. underlying
interests in
the East Ghazalat licence for the period since 1 July
2015, the effective date of the transaction.
The current liabilities of the Joint Venture at 30
June 2016 primarily reflects amounts due to Independent
Resources
plc in respect of costs incurred by it to third parties
in relation to the acquisition by the Joint Venture
of Sahara Resources
GOS Inc.
Summarised financial information in relation to the
joint venture is presented below:
30 June 31 December 30 June
2016 2015 2015
GBP GBP GBP
As at 30 June
Current assets 1 1 1
Non-current
assets 2,303,201 2,303,201 -
Current liabilities (714,556) (266,124) -
Non-current
liabilities (1,877,636) (2,286,990) -
Included in the
above amounts
are:
Cash and cash
equivalents - - -
Current financial liabilities
(excluding trade payables) (714,556) (266,124) -
Non-current financial liabilities
(excluding trade payables) (1,877,636) (2,286,990) -
Net assets
(100%) (288,990) (249,912) -
Group share of
net assets (50%) (144,495) (124,956) -
Period ended
30 June
Revenues - - -
Loss from continuing
operations (628,503) (313,969) -
Total comprehensive
loss (100%) (628,503) (313,969) -
Group share of total
comprehensive loss (50%) (314,252) (156,985) -
Included in the
above amounts
are:
Depreciation
and amortisation - - -
Interest
income - - -
Interest
expense 93,625 36,277 -
Income tax
expense - - -
The Group has recorded its share of total comprehensive
loss of GBP137,906 being the amount at which the carrying
value of the
investment has been reduced to GBPnil.
7. Share capital
30 June 30 June 31 December
2016 2015 2015
GBP GBP GBP
Issued, called up and fully paid
1,262,504,294 (June 2015:
185,143,330, December 2015:
335,924,701)
ordinary shares of 0.01p
1 January 2016 2,159,247 1,051,434 1,051,434
Equity shares issued 168,241 800,000 2,931,135
Sub-division of capital - - (1,823,322)
30 June 2016 2,327,488 1,851,434 2,159,247
The holders of 0.01p ordinary shares are entitled
to receive dividends from time to time and are entitled
to one vote per share at meetings of the company.
In addition to the 0.01p ordinary shares detailed
above on 16 November 2015 as part of a capital reorganisation
202,591,368 deferred shares with a nominal value of
0.9p were created. The deferred shares have no value
or voting rights and the shareholders were not issued
with a share certificate, nor are they listed on AIM.
These shares remain issued, called up and fully paid
at the year end.
On 24 February 2016, the company issued 6,000,000
new ordinary shares at 0.6p in settlement of a supplier
liability.
On 26 February 2016, the company raised gross proceeds
of GBP93,500 through the issue of 77,981,175 new ordinary
shares at 0.12p further to an equity placing.
On 25 April 2016, shareholders of the company approved
a restructuring of the par value of the company's
ordinary shares to reduce the par value of the company's
ordinary shares to 0.01p from 0.1p through the creation
of 419,905,876 new 2016 deferred shares of 0.09p nominal
value each.
On 16 May 2016, the company issued 34,000,000 new
ordinary shares to a trade creditor of the company
at a price of 0.25p per share in payment of GBP87,000
of indebtedness and issued 210,988,895 new ordinary
shares to certain trade creditors of the company at
a price of 0.1p per share in payment of GBP210,989
of indebtedness.
On 16 May 2016, the company issued a convertible loan
note to raise funds of GBP200,000.
On 1 June 2016, the company issued 69,428,571 new
ordinary shares in settlement of certain trade creditors
of the company.
On 3 June 2016, the loan and related accrued interest
was repaid through the issue of 452,380,952 new ordinary
shares at a price of 0.048p each.
8. Share premium account
30 June 30 June 31 December
2016 2015 2015
GBP GBP GBP
1 January 2016 16,628,623 16,302,050 16,302,050
Premium arising on the
issue of equity shares 629,082 - 405,334
Transaction costs (9,889) - (78,761)
30 June 2016 17,247,816 16,302,050 16,628,623
Events arising after the
9. reporting period
On 27 September 2016, the Company, Nostra Terra and
IRE, being the Company's joint venture vehicle with
Nostra Terra which owns the Company's and Nostra Terra's
interests in the East Ghazalat concession, agreed
a settlement agreement with TransGlobe Petroleum TransGlobe
concerning the early repayment of the US$2.5 million
loan note issued to TransGlobe as deferred consideration
for the acquisition of East Ghazalat in October 2015
and repayable on 30 September 2017.
Under the terms of the agreement, the Company, IRE
and Nostra Terra will collectively pay US$200,000
to TransGlobe in full and final settlement of the
Loan Note and all interest accruing on the Loan Note.
This removes the outstanding liability net to the
Company of approximately US$1.38 million (including
accrued interest), leaving no further debt on the
asset or payments owed to TransGlobe.
The impact of the settlement arrangements will be
reflected in the results of IRE and the Company for
the second half of the financial year ending 31 December
2016 and will result in
-- a reduction in the cost of IRE's investment in
its subsidiary company Sahara Resources GOS Inc.
from $3.5 million to $1.2million, this will result
in a reduction in the cost of the Company's investment
in East Ghazalat to $0.6million;
-- a write back of loan note interest accrued from
13 October 2015 until the settlement date of 27
September 2016 (in respect of which there was an
accrual of GBP133,749 in the balance sheet creditors
of IRE at 30 June 2016: and a charge to profit of
GBP93,625 in IRE during the six months ended 30
June 2016). This will result in a reduction in the
Company's balance sheet creditors of GBP62,875 and
a write back to the Company's profit and loss account
of GBP46,813; and
-- a write back of foreign exchange translation
differences arising on the retranslation of the
loan note balance and the associated accrued interest
(in respect of which there was a charge of GBP183,920
in IRE during the six months ended 30 June 2016).
This will result in a write back of GBP91,960 in
the Company's profit and loss account.
On 14 July 2016 the company announced arrangements
to settle GBP400,468 of accrued liabilities relating
to directors' remuneration and senior management remuneration
(which would otherwise be payable in cash) through
the issue of ordinary shares and restricted ordinary
shares. GBP96,000 of accrued remuneration due in respect
of the period to 31 March 2016 was settled through
the issue of 64,000,000 unrestricted ordinary shares
at an issue price of 0.15p and 80,987,096 restricted
ordinary shares at an issue price of 0.25p each.
GBP92,000 of accrued remuneration due in respect of
the quarter ended 30 June 2016 was settled through
the issue of 25,000,000 restricted ordinary shares
at an issue price of 0.30p each and 9,000,000 unrestricted
ordinary shares at an issue price of 0.30p each.
On 28 September 2016, the Company successfully arranged
an unsecured one-year loan facility with Brandon Hill
Capital for GBP160,000. The loan is repayable on 28
September 2017 and bears interest at 15 per cent.
per annum.
Registered office
Independent Resources plc
Tower Bridge House, St. Katharine's Way, London E1W
1DD
Email: mailbox@ir-plc.com
Commercial office
2nd Floor, 12 Melcombe Place London NW1 6JJ, United
Kingdom
Telephone: +44 (0) 203 367 1134
Fax: +44 (0) 203 170 7551
Email: mailbox@ir-plc.com
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR LLFSSAFIIVIR
(END) Dow Jones Newswires
September 30, 2016 10:51 ET (14:51 GMT)
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