REG - Caspian Sunrise plc - Final Results <Origin Href="QuoteRef">CASPC.L</Origin> - Part 2
15/05/2017 07:06
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salary, and other remuneration
for the members of the Board and the senior management team.
Service contracts
Details of the current Directors' service contracts are as follows:
Date of service Date of last renewal
agreement/appointment letter of appointment
Executive
Clive Carver 1 June 2012 11 February 2013
Kuat Oraziman 1 April 2007 1 June 2012
Kairat Satylganov 11 February 2013 11 February 2013
Non-Executive
Edmund Limerick 1 February 2010 1 February 2010
Basic salary and benefits
The basic salaries of the Directors who served during the financial year are established by reference to their
responsibilities and individual performance. The amounts received by the Directors are set out below in US$.
Directors 2016Salary/feesUS$ 2016Share optionsUS$ 2016TotalUS$ 2015TotalUS$
Clive Carver Executive Chairman 240,000 136,441 376,441 376,441
Kuat Oraziman CEO 122,382 136,441 258,823 253,255
Kairat Satylganov CFO 122,382 136,441 258,823 257,946
Edmund Limerick Non-Executive 40,356 34,110 74,466 79,360
Hyunsik Jang Non-Executive - - - 25,875
Total 525,120 443,433 968,553 992,877
Share option amounts refer to the IFRS 2 accounting charge. Mr Hyunsik Jang was Non-Executive Director from 1 January 2014
and resigned 24 July 2015.
Bonus schemes
All Executive Directors are eligible for consideration of participation in the Company bonus scheme. However, as in
previous years no bonuses are payable in respect of the year ended 31 December 2016 (2015: nil).
Share options
The current interests as at approval of accounts of the current Directors and as at 31 December 2016 in share options
agreements are as follows:
Directors Granted Exercise Price Expiry date
Clive Carver 2,400,000 4p 14 December 2021
Kuat Oraziman 4,200,000 4p 14 December 2021
Edmund Limerick 1,200,000 4p 14 December 2021
Directors Granted Exercise Price Expiry date
Clive Carver 538,264 12p 14 August 2019
Kuat Oraziman 269,132 12p 14 August 2019
Edmund Limerick 200,000 12p 15 February 2020
Directors Granted Exercise Price Expiry date
Clive Carver 750,000 13p 12 January 2021
Kuat Oraziman 3,090,000 13p 12 January 2021
Edmund Limerick 750,000 13p 12 January 2021
Directors Granted Exercise Price Expiry date
Clive Carver 3,000,000 20p 21 August 2024
Kuat Oraziman 3,000,000 20p 21 August 2024
Kairat Satylganov 3,000,000 20p 21 August 2024
Edmund Limerick 750,000 20p 21 August 2024
Directors Granted Exercise Price Expiry date
Clive Carver 1,345,660 38p 22 May 2017
Kuat Oraziman 672,830 38p 22 May 2017
Directors Granted Exercise Price Expiry date
Clive Carver 1,215,385 65p 29 February 2018
Clive Carver 387,692 65p 22 April 2018
Kuat Oraziman 607,692 65p 29 February 2018
Kuat Oraziman 193,846 65p 22 April 2018
On behalf of the Directors of Caspian Sunrise plc
Edmund Limerick
Chairman of Remuneration Committee
12 May 2017
Report on Corporate Governance
The Directors consider it important that appropriately high standards of corporate governance are maintained. They have
therefore put in place governance structures and provide information, which would be expected for companies listed on the
Alternative Investment Market of the London Stock Exchange and in light of the Group's size, stage of development and
resources. However, the Company is not required to comply with the UK Corporate Governance Code (the "Code"), as published
by the Financial Reporting Council, so this report does not describe compliance with or departures from the Code.
The Company has one Non-Executive Director and three Executive Directors as follows:
Clive Carver Executive Chairman
Kuat Oraziman Chief Executive Officer
Kairat Satylganov Chief Financial Officer
Edmund Limerick Non-Executive Director
The Board retains full and effective control over the Company. The Company holds a Board meeting at least once per quarter,
at which operational, financial and other reports are considered and, where appropriate, voted on.
Apart from regular meetings, additional meetings are arranged when necessary to review strategy, planning, operational,
financial performance, risk and capital expenditure and human resource and environmental management.
The Board is also responsible for monitoring the activities of the Management.
Board of meetings
The Board met 7 times and 18 times during 2016 and 2015 respectively, with the following attendance:
2016 2015
C Carver 7 18
E Limerick 7 18
K Oraziman 5 6
K Satylganov 4 3
H S Jang NA 4
The Board has established the following committees:
Audit & Risk Committee
The Audit & Risk Committee, which comprises Edmund Limerick and Clive Carver, with Edmund Limerick acting as Chairman,
determines and examines any matters relating to the financial affairs of the Group including the terms of engagement of the
Group's auditors and, in consultation with the auditors, the scope of the audit.
The Audit & Risk Committee receives and reviews reports from the management and the external auditors of the Group relating
to the annual and interim amounts and the accounting and internal control systems of the Group. In addition it considers
the financial performance, position and prospects of the Group and the Company and ensures they are properly monitored and
reported on.
Remuneration Committee
The Remuneration Committee, which comprises Edmund Limerick, Kuat Oraziman and Clive Carver, with Edmund Limerick acting as
Chairman, reviews the performance of the senior management, sets and reviews their remuneration and the terms of their
service contracts and considers the Group's bonus and option schemes.
Rule 21
The Directors comply with Rule 21 of the AIM Rules relating to Directors' dealing and take all reasonable steps to ensure
compliance by the Group's applicable employees. The Company has adopted and operates a share dealing code for Directors and
employees in accordance with the AIM Rules.
Internal controls
The Board acknowledges responsibility for maintaining appropriate internal control systems and procedures to safeguard the
shareholders' investments and the assets, employees and the business of the Group.
The Board has established and operates a policy of continuous review and development of appropriate financial controls
together with operating procedures consistent with the accounting policies of the Group.
The Board does not consider it appropriate for the current size of the Group to establish an internal audit function.
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF
CASPIAN SUNRISE PLC
We have audited the financial statements of Caspian Sunrise plc for the year ended 31 December 2016 which comprise the
consolidated statement of profit or loss and other comprehensive income, the consolidated statement of comprehensive
income, the consolidated statement of changes in equity, the parent company statement of changes in equity, the
consolidated statement of financial position, the parent company statement of financial position, the consolidated and
parent company statement of cash flows and the related notes. The financial reporting framework that has been applied in
their preparation is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European
Union and, as regards the parent company financial statements, as applied in accordance with the provisions of the
Companies Act 2006.
This report is made solely to the Company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies
Act 2006. Our audit work has been undertaken so that we might state to the Company's members those matters we are required
to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept
or assume responsibility to anyone other than the Company and the Company's members as a body, for our audit work, for this
report, or for the opinions we have formed.
Respective responsibilities of Directors and auditors
As explained more fully in the statement of Directors' responsibilities, the Directors are responsible for the preparation
of the financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit
and express an opinion on the financial statements in accordance with applicable law and International Standards on
Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board's Ethical Standards for
Auditors.
Scope of the audit of the financial statements
A description of the scope of an audit of financial statements is provided on the Financial Reporting Council's website at
www.frc.org.uk/auditscopeukprivate.
Opinion on financial statements
In our opinion:
· the financial statements give a true and fair view of the state of the Group's and of the parent company's affairs
as at 31 December 2016 and of the Group's loss for the year then ended;
· the Group financial statements have been properly prepared in accordance with IFRSs as adopted by the European
Union;
· the parent company financial statements have been properly prepared in accordance with IFRSs as adopted by the
European Union and as applied in accordance with the provisions of the Companies Act 2006; and
· the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.
Emphasis of matter - going concern
In forming our opinion of the financial statements, which is not modified, we have considered the adequacy of the
disclosures made in Note 1.1 to the financial statements concerning the Group's ability to continue as a going concern.
Further funding will be required to meet the Group's drilling commitments by 30 June 2018. While the Directors are
confident of being able to secure the funding to meet liabilities as they fall due, the necessary funding is not currently
in place. These conditions indicate the existence of a material uncertainty, which may cast significant doubt about the
Group's ability to continue as a going concern. The financial statements do not include the adjustments that would result
if the Company was unable to continue as a going concern.
Opinion on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of the audit:
· the information given in the strategic report and directors' report for the financial year for which the financial
statements are prepared is consistent with the financial statements; and
· the strategic report and directors' report have been prepared in accordance with applicable legal requirements.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the group and the parent company and its environment obtained in the
course of the audit, we have not identified material misstatements in the strategic report or the directors' report.
We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if,
in our opinion:
· adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not
been received from branches not visited by us; or
· the parent company financial statements are not in agreement with the accounting records and returns; or
· certain disclosures of directors' remuneration specified by law are not made; or
· we have not received all the information and explanations we require for our audit.
Ryan Ferguson
(Senior statutory auditor)
For and on behalf of BDO LLP, statutory auditor
London
United Kingdom
12 May 2017
Consolidated Statement of Profit or Loss and Other Comprehensive Income
Notes Year to31 December2016 Year to31 December2015
US$'000 US$'000
Revenue 1,571 1,051
Cost of sales (1,589) (1,049)
Gross (loss)/profit (18) 2
Share-based payments (555) (555)
Revaluation of royalty liability 24 - 2,183
Other administrative costs (3,085) (2,787)
Total administrative expenses (3,640) (1,159)
Operating loss 4 (3,658) (1,157)
Finance cost 7 (826) (946)
Finance income 8 235 234
Loss before taxation (4,249) (1,869)
Tax charge* 9 (1,124) (1,749)
Loss after taxation from continuing operations (5,373) (3,618)
Profit for the year from discontinued operations (net of tax)* 29,30 - 14,213
(Loss)/profit for the year (5,373) 10,595
(Loss)/profit attributable to owners of the parent (3,582) 7,829
(Loss)/profit attributable to non-controlling interest (1,791) 2,766
(Loss)/profit for the year (5,373) 10,595
Earnings per share 10
Basic (loss)/earnings per ordinary share (US cents)*
From continuing operations (0.38) (0.06)
From discontinued operations - 0.91
Total (0.38) 0.85
Diluted (loss)/earnings per ordinary share (US cents)*
From continuing operations (0.38) (0.06)
From discontinued operations - 0.90
Total (0.38) 0.84
* Refer to note 1.2 for details of reclassifications in respect of the taxation charge and profit on discontinued
operations in the 2015 comparative, together with the impact on earnings per share in 2015.
ConsolidatedStatement of Comprehensive Income
Year ended31 December2016 Year ended31 December2015
US$000 US$000
(Loss)/profit after taxation (5,373) 10,595
Other comprehensive income:
Exchange differences on translating foreign operations from continuing operations* 2,311 (70,861)
Exchange differences and recycling of exchange differences on translating foreign operations from discontinued operations - 2,650
Total comprehensive loss for the year (3,062) (57,616)
Total comprehensive loss attributable to:
Owners of parent (2,055) (29,703)
Non-controlling interest (1,007) (27,913)
*Items which may be reclassified to the consolidated statement of profit or loss. Refer to note 1.2 for details of the
reclassification of the recycling of exchange differences on disposal of Galaz in 2015.
Consolidated Statement of Changes in Equity
Share capitalUS$'000 Share premiumUS$'000 Deferred shares US$'000 Cumulative translation reserveUS$'000 Other reservesUS$'000 Retained deficitUS$'000 Total attributable to the owner of the ParentUS$'000 Non-controlling interestsUS$'000 TotalequityUS$'000
Total equity as at 1 January 2016 15,979 146,664 64,702 (56,533) (583) (124,316) 45,913 3,624 49,537
Loss after taxation - - - - - (3,582) (3,582) (1,791) (5,373)
Exchange differences on translating foreign operations - - - 1,527 - - 1,527 784 2,311
Total comprehensive income/(loss) for the year - - - 1,527 - (3,582) (2,055) (1,007) (3,062)
Arising on employee share options - - - - 555 555 - 555
Stock options exercised 21 64 - - - 85 - 85
Total equity as at 31 December 2016 16,000 146,728 64,702 (55,006) (583) (127,343) 44,498 2,617 47,115
Share capitalUS$'000 Share premiumUS$'000 Deferred shares US$'000 Cumulative translation reserveUS$'000 Other reservesUS$'000 Retained deficitUS$'000 Total attributable to the owner of the ParentUS$'000 Non-controlling interestsUS$'000 TotalequityUS$'000
Total equity as at 1 January 2015 14,761 136,674 64,702 (19,001) (583) (132,700) 63,853 31,537 95,390
Income after taxation - - - - - 7,829 7,829 2,766 10,595
Exchange differences on translating foreign operations - - - (37,532) - - (37,532) (30,679) (68,211)
Total comprehensive income/(loss) for the year - - - (37,532) - 7,829 (29,703) (27,913) (57,616)
Arising on share issues 405 2,595 - - - - 3,000 - 3,000
Arising on employee share options - - - - - 555 555 - 555
Conversion of debts to equity 726 7,083 - - - - 7,809 - 7,809
Stock options exercised 87 312 - - - - 399 - 399
Total equity as at 31 December 2015 15,979 146,664 64,702 (56,533) (583) (124,316) 45,913 3,624 49,537
Refer to note 1.2 for details of the reclassification of the recycling of exchange differences on disposal of Galaz in
2015.
Equity Description and purpose
Share capital The nominal value of shares issued
Share premium Amount subscribed for share capital in excess of nominal value
Deferred shares The nominal value of deferred shares issued
Cumulative translation reserve Gains/losses arising on retranslating the net assets of overseas operations into
US Dollars, less
amounts recycled on disposal of subsidiaries and joint
ventures
Other reserves Fair value of warrants issued and capital contribution arising on
discounted loans
Retained deficit Cumulative losses recognised in the consolidated statement of profit or
loss
Non-controlling interest The interest of non-controlling parties in the net assets of the
subsidiaries
Parent Company Statement of Changes in Equity
Share capitalUS$'000 Share premiumUS$'000 Deferred sharesUS$'000 Other reservesUS$'000 Retained deficitUS$'000 Total attributable to the owner of the ParentUS$'000
Total equity as at 1 January 2016 (restated) 15,979 146,664 64,702 16,715 (134,439) 109,621
Total comprehensive loss for the year - - - - (9,891) (9,891)
Arising on employee share options - - - - 555 555
Stock options exercised 21 64 - - - 85
Total equity as at 31 December 2016 16,000 146,728 64,702 16,715 (143,775) 100,370
Share capitalUS$'000 Share premiumUS$'000 Deferred sharesUS$'000 Other reservesUS$'000 Retained deficitUS$'000 Total attributable to the owner of the ParentUS$'000
Total equity as at 1 January 2015 (as previously stated) 14,761 136,674 64,702 16,715 (119,085) 113,767
Prior year restatement (note 27) - - - - (14,566) (14,566)
Total equity as at 1 January 2015 (restated) 14,761 136,674 64,702 16,715 (133,651) 99,201
Total comprehensive loss for the year - - - - (1,343) (1,343)
Arising on share issues 405 2,595 - - 3,000
Conversion of debts to equity 726 7,083 - - - 7,809
Arising on employee share options - - - - 555 555
Stock options exercised 87 312 - - - 399
Total equity as at 31 December 2015 (restated) 15,979 146,664 64,702 16,715 (134,439) 109,621
Refer to note 1.2 and 27 for details of the prior year restatement.
Equity Description and purpose
Share capital The nominal value of shares issued
Share premium Amount subscribed for share capital in excess of nominal value
Deferred shares The nominal value of deferred shares issued
Other reserves Fair value of warrants issued and capital contribution arising on
discounted loans
Retained deficit Cumulative losses recognised in the profit or loss
Consolidated Statement of Financial Position
Company number 5966431 Notes Group2016US$'000 Group2015US$'000
Assets
Non-current assets
Unproven oil and gas assets 11 68,086 57,323
Property, plant and equipment 12 223 195
Inventories 14 10 12
Other receivables 15 7,738 14,640
Restricted use cash 283 271
Total non-current assets 76,340 72,441
Current assets
Other receivables 15 8,490 2,096
Cash and cash equivalents 16 405 10,462
Total current assets 8,895 12,558
Total assets 85,235 84,999
Equity and liabilities
Capital and reserves attributableto equity holders of the parent
Share capital 17 16,000 15,979
Share premium 146,728 146,664
Deferred shares 17 64,702 64,702
Other reserves (583) (583)
Retained deficit (127,343) (124,316)
Cumulative translation reserve (55,006) (56,533)
Equity attributable to the owners of the Parent 44,498 45,913
Non-controlling interests 2,617 3,624
Total equity 47,115 49,537
Current liabilities
Trade and other payables 18 5,643 5,732
Short - term borrowings 19 809 308
Current provisions 20 3,692 2,957
Total current liabilities 10,144 8,997
Non-current liabilities
Borrowings 21 9,935 9,903
Deferred tax liabilities 22 7,748 7,485
Non-current provisions 20 679 780
Other payables 18 9,614 8,297
Total non-current liabilities 27,976 26,465
Total liabilities 38,120 35,462
Total equity and liabilities 85,235 84,999
Approved by the Board and authorized for issue:
Clive Carver,
Chairman,
12 May 2017
Company number: 5966431
Parent Company Statement of Financial Position
Company number 5966431 Notes Company2016US$'000 Company2015US$'000 (restated) Company2014US$'000 (restated)
Assets
Non-current assets
Investments in subsidiaries 13 126,342 107,307 117,698
Other receivables 15 2,728 52,628 49,512
Total non-current assets 129,070 159,935 167,210
Current assets
Other receivables 15 3,204 2 122
Cash and cash equivalents 16 10 25 18
Total current assets 3,214 27 140
Total assets 132,284 159,962 167,350
Equity and liabilities
Capital and reserves attributableto equity holders of the parent
Share capital 17 16,000 15,979 14,761
Share premium 146,728 146,664 136,674
Deferred shares 17 64,702 64,702 64,702
Other reserves 16,715 16,715 16,715
Retained deficit (143,775) (134,439) (133,651)
Equity attributable to the owners of the Parent 100,370 109,621 99,201
Total equity 100,370 109,621 99.201
Current liabilities
Trade and other payables 18 606 1,204 6,121
Total current liabilities 606 1,204 6,121
Non-current liabilities
Borrowings 21 9,935 9,903 9,075
Other payables 18 21,373 39,234 52,953
Total non-current liabilities 31,308 49,137 62,028
Total liabilities 31,914 50,341 68,149
Total equity and liabilities 132,284 159,962 167,350
The Company incurred loss for the year ended 31 December 2016 in the amount of US$ 9,891,000 (2015: US$ 1,343,000).
Refer to note 1.2 and 27 for details of the prior year restatement.
Approved by the Board and authorized for issue:
Clive Carver,
Chairman,
12 May 2017
Company number: 5966431
Consolidated and Parent Company Statements of Cash Flows
Notes Group2016US$'000 Group2015US$'000 Company2016US$'000 Company2015US$'000
Cash flows from operating activities
Cash received from/(repaid to) customers* 3,823 (3,125) - -
Payments made to suppliers for goods and services (2,256) (3,089) (1,363) (927)
Payments made to employees (1,541) (1,699) (744) (455)
Net cash flow from operating activities 26 (7,913) (2,107) (1,382)
Cash flows from investing activities
Purchase of property, plant and equipment 12 (64) (30) -
Additions to unproven oil and gas assets ** 11 (9,840) (16,915) - -
Transfers from/(to) restricted use cash (12) 52 - -
Loans repaid by joint ventures - 11,280 - 6,900
Disposal of joint venture (net of cash disposed and taxation) 30 - 21,908 - -
Advances repaid by subsidiaries - - 8,302 10,391
Advances issued to subsidiaries - - - (12,102)
Return of exclusivity payment received in advance - - - (1,000)
Net cash flow from investing activities (9,916) 16,295 8,302 4,189
Cash flows from financing activities
Net proceeds from issue of ordinary share capital 85 3,399 85 3,399
Loans repaid (753) (1,924) (753) -
Loans received 501 - - -
Repayment of loans provided by subsidiaries - - (5,542) (6,199)
Net cash flow from financing activities (167) 1,475 (6,210) (2,800)
Net increase/(decrease) in cash and cash equivalents (10,057) 9,857 (15) 7
Cash and cash equivalents at the beginning of the year 10,462 605 25 18
Cash and cash equivalents at the end of the year 16 405 10,462 10 25
Significant non-cash transactions include the following and details can be found in notes 6, 7, 8, 15, 24, 30:
- Share-based payments in the amount of US$ 555,000 (2015: US$ 555,000);
- Withholding tax in the amount of US$ 1,124,000 (2015: US$ 1,126,000);
- Discounting of receivables in the amount of US$ 235,000 (2015: US$234,000);
- Exchange differences on translating foreign operations of US$ 2,311,000 (2015: US$ 68,211,000);
- Depreciation charge of US$ 42,000 (2015: US$ 40,000);
- Conversion of debt to equity of US$ 0 (2015: US$ 7,809,000);
- Interest expense of US$ 826,000 (2015: US$ 946,000);
- Change in the fair value of derivative of US$ 0 (2015: US$ 2,183,000);
- Adjustment of the net working capital position at the date of Galaz disposal of US$ 0 (2015: US$ 966,000);
- Adjustment of the net assets disposed for Galaz disposal of US$ 0(2015: US$ 7,247,000);
- Adjustment for the release of the cumulative translation reserve of US$ 0 (2015: US$ 2,361,000);
- Adjustment for the taxation on Galaz disposal being paid on behalf of the Group by new owners of US$ 0 (2015: US$
3,521,000);
- Adjustment for the deferred consideration on Galaz disposal of US$ 225,000 (2015: US$ 1,827,000).
* The amount of cash returned to the customers of US$ 3,125,000 in 2015 includes prepayments received by Galaz from
traders being returned by the Group.
** Additions to unproven oil and gas assets contain the amount of US$ 211,000 in relation to payroll expenses capitalized
(2015: US$: 302,000).
The Parent Company cash flow comparatives for 2015 include reclassifications of advances issued to subsidiaries, advances
repaid by subsidiaries and repayment of loans provided by subsidiaries. Net cash flows from investing activities were
previously stated as an outflow of US$4,910,000 and net cash flows from financing activities were previously stated as an
inflow of US$6,299,000 prior to the reclassifications.
Notes to the Financial Statements
General information
Caspian Sunrise plc ("the Company") is a public limited company incorporated and domiciled in England and Wales. The
address of its registered office is 5 New Street Square, London, EC4A 3TW. These consolidated financial statements were
authorised for issue by the Board of Directors on 12 May 2017.
The principal activities of the Group are exploration and production of crude oil.
1 Principal accounting policies
The principal accounting policies applied in the preparation of these consolidated financial statements are set out below.
1.1 Basis of preparation
The Group's and Parent's financial statements have been prepared in accordance with International Financial Reporting
Standards as adopted by the European Union ("IFRSs"), and with those parts of the Companies Act 2006 applicable to
companies reporting under IFRSs.
The Directors have prepared cash flow forecasts for the next 12 months which demonstrate that the Group will have
sufficient funds to meet its liabilities as they fall due and operate as a going concern, including completion of its
planned drilling program. The forecasts include growth in revenue including the impact of anticipated deep well test
production.
The Group's $10.1m loan from Vertom is due be converted to equity upon completion of the Baverstock Merger, which remains
subject to conditions precedent although these are not substantive in nature. In the event it is not converted the loan
is due for repayment in April 2018, Vertom have provided a written undertaking to extend the loan repayment to June 2018.
The Group has minimal current cash balances and its operations are currently being financed by local oil traders from
existing production, such that the Group is dependent upon oil trader funding remaining available as well as additional
funding being secured in the immediate future to meet its short term working capital requirements. The Directors are
confident that the existing oil trader funding will continue, based on the production profile and relationships with the
oil traders, and the Group's major shareholder has provided a written undertaking to provide financial support as required
to meet the Group's working capital requirements excluding future drilling costs.
The Group's committed drilling program requires one shallow well (now drilled) and two deep wells to be drilled under its
licence obligations by 30 June 2018, which will require additional debt or equity funding over and above the short term
working capital requirements. There remains some $10.8 million undrawn on the $40 million equity facility provided by
Kairat Satylganov. However such funding would result at new equity being raised at a price of some 7.41p per share, which
is materially below the prevailing share price and, accordingly, it is not currently the intention of the board to call
further on this facility unless necessary. Whilst this facility would meet one of the deep well commitments further funding
will be required to complete the drilling program. In keeping with other oil and gas exploration companies the Group
frequently seeks to raise funds to undertake its drilling program as and when such funds are required. The Directors remain
confident that necessary funding will be obtained for the drilling program, either through additional debt or equity.
However, there can be no guarantee as to the Group's ability to secure sufficient funding to meet its drilling commitments
under the licence on a timely basis. This condition represents a material uncertainty which may cast significant doubt on
the Group's ability to continue as a going concern such that it may be unable to realise its assets and discharge its
liabilities in the normal course of business.
The financial statements do not include the adjustments that would result if the Company were unable to continue as a going
concern.
The Company has taken advantage of section 408 of the Companies Act 2006 and has not included its own profit or loss in
these financial statements. The Group loss for the year included a loss on ordinary activities after tax of US$9,891,000 in
respect of the Company.
The preparation of financial statements in conformity with IFRSs requires the Management to make judgements, estimates and
assumptions that affect the application of policies and reported amounts in the financial statements. The areas involving a
higher degree of judgement or complexity, or areas where assumptions or estimates are significant to the financial
statements are disclosed in note 2.
1.2 Restatement
Company level
The Parent company statement of financial position as at 31 December 2015 and 1 January 2015 as well as Parent statement of
changes in equity for the year ended 31 December 2015 have been restated. Interest was incorrectly accrued in respect of
several non-current advances provided to the subsidiary from 1 January 2012 onwards. The prior year comparatives have been
restated accordingly to exclude this accrued interest.
In addition, in order to properly reflect the nature of the advances provided by the Parent company, which are in substance
an equity investment and formed part of the net investment in subsidiaries, the relevant non-current intercompany
receivables have been reclassified as part of investments in subsidiaries.
For the reconciliation between the previously reported financial position for the years ended 31 December 2015 and 31
December 2014 and the restated financial position refer to note 27. As a result of the restatement, the Parent company's
retained loss has been increased from US$ 115,968,000 to US$ 134,439,000 at 31 December 2015 and the profit and total
comprehensive income for 2015 of US$ 2,562,000 has been restated to a loss and total comprehensive expense of US$
1,343,000.
Consolidated level
Taxation of US $3,531,000 in relation to Galaz disposal in 2015 was previously included as part of the taxation charge
rather than as a deduction from the profit for the year from discontinued operations. The amount has been reclassified in
the current year comparatives, reducing the tax charge and the profit on discontinued operations accordingly. There was no
impact on total equity or the profit for 2015. Basic earnings and diluted earnings per share for continued and discontinued
operations have been adjusted accordingly as a result as detailed in note 10.
Additionally, the amounts relating to the recycling of unrealised foreign exchange of US$2,361,000 was previously recorded
as part of the profit on discontinued operations and as an increase in the cumulative translation reserve. The 2015
comparative has been adjusted to reflect the release of the unrealised foreign exchange within other comprehensive income.
The adjustment had no effect on profit or total equity but resulted in a decrease in the total comprehensive loss for 2015
of US$2,361,000 from US$ 59,977,000 to US$57,616,000.
1.3 New and revised standards and interpretations applied
The following new standards and amendments to standards are mandatory for the first time for the Group for financial year
beginning 1 January 2016. The implementation of these standards did not have a material effect on the Group.
Standard Effective date Impact on initialapplication
Annual Improvements to IFRSs (2012 - 2014 Cycle) 1 Jan 2016 No impact
IAS1 - Presentation of Financial Statements 1 Jan 2016 No impact
IFRS 10, IFRS 12, IAS 28 - Investment Entities 1 Jan 2016 No impact
IAS 16 and IAS 38 - Depreciation and Amortisation 1 Jan 2016 No impact
IFRS 11 - Joint Operations 1 Jan 2016 No impact
IAS 27 - Separate Financial Statements 1 Jan 2016 No impact
Standards, amendments and interpretations, which are effective for reporting periods beginning after the date of this
financial information which have not been adopted early:
Standard Description Effective date
IFRS 9 Financial Instruments 1 Jan 2018
IFRS 15 Revenue from Contracts with Customers 1 Jan 2018
IFRS 16 Leases 1 Jan 2019*
IAS 12* Amendment - Recognition of deferred tax assets for unrealised losses 1 Jan 2017
IAS 7* Amendment - Disclosure initiative 1 Jan 2017
IFRS 2* Amendment - Classification and measurement of share based payment transactions 1 Jan 2018
*Not yet been endorsed by the European Union at the date that this financial information was approved and authorised for
issue by the Board.
IFRS 15 is intended to introduce a single framework for revenue recognition and clarify principles of revenue recognition.
This standard modifies the determination of when to recognise revenue and how much revenue to recognize. The core
principle is that an entity recognises revenue to depict the transfer of promised goods and services to the customer of an
amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.
Management are currently assessing the standard's full impact.
IFRS 16 introduces a single lease accounting model. This standard requires lessees to account for all leases under a
single on-balance sheet model. Under the new standard, a lessee is required to recognise all lease assets and liabilities
on the balance sheet; recognise amortization of leased assets and interest on lease liabilities over the lease term; and
separately present the principal amount of cash paid and interest in the cash flow statement. Management are currently
assessing the impact of this standard as whilst there are no material operating leases in the Group it may be relevant to
future operations.
IFRS 9 addresses the classification and measurement of financial assets and financial liabilities. The complete version of
IFRS 9 was issued in July 2014. It replaces the guidance in IAS 39 that relates to the classification and measurement of
financial instruments. IFRS 9 retains but simplifies the mixed measurement model and establishes three primary measurement
categories for financial assets: amortised cost, fair value through other comprehensive income (OCI) and fair value through
profit or loss. The basis of classification depends on the entity's business model and the contractual cash flow
characteristics of the financial asset. Investments in equity instruments are required to be measured at fair value
through profit or loss with the irrevocable option at inception to present changes in fair value in OCI. There is now a
new expected credit loss model that replaces the incurred loss impairment model used in IAS 39. For financial liabilities
there were no changes to classification and measurement except for the recognition of changes in credit risk in other
comprehensive income, for liabilities designated at fair value through profit or loss. Contemporaneous documentation is
still required but is different to that currently prepared under IAS 39. Management are currently assessing the standard's
full impact.
The remaining items in the table are still being assessed by the Group.
1.4 Basis of consolidation
Subsidiary undertakings are entities that are directly or indirectly controlled by the Group. Control is achieved when the
Group is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect
those returns through its power over the investee. Generally, there is a presumption that a majority of voting rights
result in control. To support this presumption and when the Group has less than a majority of the voting or similar rights
of an investee, the Group considers all relevant facts and circumstances in assessing whether it has power over an
investee. The consolidated financial statements present the results of the Company and its subsidiaries ("the Group") as if
they formed a single entity. Intercompany transactions and balances between group companies are therefore eliminated in
full.
The purchase method of accounting is used to account for the acquisition of subsidiary undertakings by the Group. The cost
of an acquisition is measured at the fair value of the assets given, equity instruments issued and liabilities incurred or
assumed at the date of exchange. Identifiable assets acquired and liabilities and contingent liabilities assumed in a
business combination are measured initially at their fair values at the acquisition date, irrespective of the extent of any
non-controlling interest. The excess of the cost of acquisition over the fair value of the Group's share of the
identifiable net
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