REG - Caspian Sunrise plc - Final Results <Origin Href="QuoteRef">CASPC.L</Origin> - Part 3
15/05/2017 07:06
- Part 3: For the preceding part double click ID:nRSO0679Fb
assets acquired is recorded as goodwill.
Where the Group holds interests in jointly ventures, it accounts for its interests using the equity method.
1.5 Operating Loss
Operating loss is stated after crediting all operating income and charging all operating expenses, but before crediting or
charging the financial income or expenses.
1.6 Foreign currency translation
1.6.1 Functional and presentational currencies
Items included in the financial statements of each of the Group's entities are measured using the currency of the primary
economic environment in which the entity operates ("the functional currency"). The consolidated financial statements are
presented in US Dollars ("US$"), which is the Group's presentational currency. Beibars Munai LLP, Munaily Kazakhstan LLP,
BNG Ltd LLP and Roxi Petroleum Kazakhstan LLP, subsidiary undertakings of the Group, undertake their activities in
Kazakhstan and the Kazakh Tenge is the functional currency of these entities. The functional currency for the Company,
Beibars BV, Ravninnoe BV, Galaz Energy BV, BNG Energy BV and Eragon Petroleum FZE is USD as USD reflects the underlying
transactions, conducts and events relevant to these companies.
1.6.2 Transactions and balances in foreign currencies
In preparing the financial statements of the individual entities, transactions in currencies other than the entity's
functional currency ("foreign currencies") are recorded at the rates of exchange prevailing at the dates of the
transactions. At each reporting date, monetary items denominated in foreign currencies are retranslated at the rates
prevailing at the reporting date. Non-monetary items carried at fair value that are denominated in foreign currencies are
retranslated at the rates prevailing at the date when the fair value was determined. Non-monetary items, including the
parent's share capital, that are measured in terms of historical cost in a foreign currency are not retranslated. Exchange
differences are recognised in profit or loss in the period in which they arise.
1.6.3 Consolidation
For the purpose of consolidation all assets and liabilities of Group entities with a functional currency that is not US$
are translated at the rate prevailing at the reporting date. The profit or loss is translated at the exchange rates
approximating to those ruling when the transaction took place. Exchange difference arising on retranslating the opening net
assets from the opening rate and results of operations from the average rate are recognised directly in other comprehensive
income (the "cumulative translation reserve"). On disposal of a foreign operator related cumulative foreign exchange gains
and losses are reclassified to profit and loss and are recognized as part of the gain or loss on disposal.
1.7 Current tax
Current tax is based on taxable profit for the year. Taxable profit differs from profit as reported in the profit or loss
because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items
that are never taxable or deductible. The Group's liability for current tax is calculated using tax rates that have been
enacted or substantively enacted by the reporting date.
1.8 Deferred tax
Deferred tax is provided on temporary differences between the carrying amounts of assets and liabilities for financial
reporting purposes and the amounts used for taxation purposes. The following temporary differences are not provided for:
the initial recognition of assets or liabilities that affect neither accounting nor taxable profit other than in a business
combination, and differences relating to investments in subsidiaries to the extent that they will probably not reverse in
the foreseeable future.
The amount of deferred tax provided is based on the expected manner of realisation or settlement of the carrying amount of
assets and liabilities, using tax rates enacted or substantively enacted at the reporting date.
Deferred tax liabilities are generally recognised for all taxable temporary differences. A deferred tax asset is recorded
only to the extent that it is probable that taxable profit will be available against which the deductible temporary
differences can be utilised.
1.9 Unproven oil and gas assets
The Group applies the full cost method of accounting for exploration and unproven oil and gas asset costs, having regard to
the requirements of IFRS 6 'Exploration for and Evaluation of Mineral Resources'. Under the full cost method of accounting,
costs of exploring for and evaluating oil and gas properties are accumulated and capitalised by reference to appropriate
cost pools. Such cost pools are based on license areas. The Group currently has two cost pools.
Exploration and evaluation costs include costs of license acquisition, technical services and studies, seismic
acquisition, exploration drilling and testing, but do not include costs incurred prior to having obtained the legal rights
to explore an area, which are expensed directly to the profit or loss as they are incurred.
Plant and equipment assets acquired for use in exploration and evaluation activities are classified as property, plant and
equipment. However, to the extent that such asset is consumed in developing an intangible exploration and evaluation asset,
the amount reflecting that consumption is recorded as part of the cost of the intangible asset.
The amounts included within unproven oil and gas assets include the fair value that was paid for the acquisition of
partnerships holding subsoil use in Kazakhstan. These licenses have been capitalised to the Group's full cost pool in
respect of each license area.
Exploration and unproven oil and gas assets related to each exploration license/prospect are not amortised but are carried
forward until the technical feasibility and commercial usability of extracting a mineral resource are demonstrated.
Commercial reserves are defined as proved oil and gas reserves.
Proven oil and gas properties
Once a project reaches the stage of commercial production and production permits are received, the carrying values of the
relevant exploration and evaluation asset are assessed for impairment and transferred to proven oil and gas properties and
included within property plant and equipment.
Proven oil and gas properties are accounted for in accordance with provisions of the cost model under IAS 16 "Property
Plant and Equipment" and are depleted on unit of production basis based on commercial reserves of the pool to which they
relate.
Impairment
Exploration and unproven intangible assets are reviewed for impairments if events or changes in circumstances indicate that
the carrying amount may not be recoverable as at the reporting date. Intangible exploration and evaluation assets that
relate to exploration and evaluation activities that are not yet determined to have resulted in the discovery of the
commercial reserve remain capitalised as intangible exploration and evaluation assets subject to meeting a pool-wide
impairment test as set out below.
In accordance with IFRS 6 the Group firstly considers the following facts and circumstances in their assessment of whether
the Group's exploration and evaluation assets may be impaired, whether:
§ the period for which the Group has the right to explore in a specific area has expired during the period or will expire
in the near future, and is not expected to be renewed;
§ substantive expenditure on further exploration for and evaluation of mineral resources in a specific area is neither
budgeted nor planned;
§ exploration for and evaluation of hydrocarbons in a specific area have not led to the discovery of commercially viable
quantities of hydrocarbons and the Group has decided to discontinue such activities in the specific area; and
§ sufficient data exists to indicate that although a development in a specific area is likely to proceed, the carrying
amount of the exploration and evaluation assets is unlikely to be recovered in full from successful development or by
sale.
If any such facts or circumstances are noted, the Group perform an impairment test in accordance with the provisions of IAS
36. The aggregate carrying value is compared against the expected recoverable amount of the cash generating unit, being the
relevant cost pool. The recoverable amount is the higher of value in use and the fair value less costs to sell.
An impairment loss is reversed if the asset's or cash-generating unit's recoverable amount exceeds its carrying amount.
Workovers/Overhauls and maintenance
From time to time a workover or overhaul or maintenance of existing proven oil and gas properties is required, which
normally fall into one of two distinct categories. The type of workover dictates the accounting policy and recognition of
the related costs:
Capitalisable costs - cost will be capitalised where the performance of an asset is improved, where an asset being
overhauled is being changed from its initial use, the assets' useful life is being extended, or the asset is being modified
to assist the production of new reserves.
Non-capitalisable costs - expense type workover costs are costs incurred as maintenance type expenditure, which would be
considered day-to-day servicing of the asset. These types of expenditures are recognised within cost of sales in the
statement of comprehensive income as incurred. Expense workovers generally include work that is maintenance in nature and
generally will not increase production capability through accessing new reserves, production from a new zone or
significantly extend the life or change the nature of the well from its original production profile.
1.10 Abandonment
Provision is made for the present value of the future cost of the decommissioning of oil wells and related facilities. This
provision is recognised when the asset is installed. The estimated costs, based on engineering cost levels prevailing at
the reporting date, are computed on the basis of the latest assumptions as to the scope and method of decommissioning. The
corresponding amount is capitalised as a part of the oil and gas asset and, when in production is amortised on a
unit-of-production basis as part of the depreciation, depletion and amortisation charge. Any adjustment arising from the
reassessment of estimated cost of decommissioning is capitalised, while the charge arising from the unwinding of the
discount applied to the decommissioning provision is treated as a component of the interest charge.
1.11 Restricted use cash
Restricted use cash is the amount set aside by the Group for the purpose of creating an abandonment fund to cover the
future cost of the decommissioning of oil and gas wells and related facilities and in accordance with local legal rulings.
Under the Subsoil Use Contracts the Group must place 1% of the value of exploration costs in an escrow deposit account. At
the end of the contract this cash will be used to return the field to the condition that it was in before exploration
started.
1.12 Property, plant and equipment
All property, plant and equipment assets are stated at cost or fair value on acquisition less accumulated depreciation.
Depreciation is provided on a straight-line basis, at rates calculated to write off the cost less the estimated residual
value of each asset over its expected useful economic life. The residual value is the estimated amount that would currently
be obtained from disposal of the asset if the asset were already of the age and in the condition expected at the end of its
useful life. Expected useful economic life and residual values are reviewed annually.
The annual rates of depreciation for class of property, plant and equipment are as follows:
- motor vehicles over 7 years
- other over 2-4 years
The Group assesses at each reporting date whether there is any indication that any of its property, plant and equipment has
been impaired. If such an indication exists, the asset's recoverable amount is estimated and compared to its carrying
value.
1.13 Investments (Company)
Non-current asset investments in subsidiary undertakings are shown at cost less allowance for impairment. Long term
advances to subsidiaries form part of the net investment in the subsidiary and are recorded at cost as part of the
investment.
1.14 Financial instruments
The Group classifies financial instruments, or their component parts on initial recognition, as a financial asset, a
financial liability or an equity instrument in accordance with the substance of the contractual agreement.
Financial assets and financial liabilities are recognised when the Group becomes a party to the contractual provisions of
the financial instrument and are measured initially at fair value adjusted for transaction costs, except for those carried
at fair value through profit or loss which are measured initially at fair value. Subsequent measurement of financial assets
and financial liabilities is described below.
Financial assets are derecognised when the contractual rights to the cash flows from the financial asset expire, or when
the financial asset and substantially all the risks and rewards are transferred. A financial liability is derecognised when
it is extinguished, discharged, cancelled or expires.
The Group's financial assets consist of cash and other receivables. Cash and cash equivalents are defined as short term
cash deposits which comprise cash on deposit with an original maturity of less than 3 months. Other receivables are
initially measured at fair value and subsequently at amortised cost.
The Group's financial liabilities are non-interest bearing trade and other payables, other interest bearing borrowings and
profit oil royalties. Non-interest bearing trade and other payables and other interest bearing borrowings are stated
initially at fair value and subsequently at amortised cost. Profit oil royalties are recognised and measured at fair values
through profit or loss.
Where a loan is renegotiated on substantially different terms, this is treated as an extinguishment of the original
financial liability and the recognition of a new financial liability. The terms are considered to be 'substantially
different' if the discounted present value of the cash flows under the new terms, including any fees paid net of any fees
received and discounted using the original effective interest rate, is at least 10 per cent different from the discounted
present value of the remaining cash flows of the original financial liability. In addition to this quantitative test, a
qualitative test is also applied.
Share capital issued to extinguish financial liabilities is fair valued with any difference to the carrying value of the
financial liability taken to the profit or loss.
1.15 Inventories
Inventories are initially recognised at cost, and subsequently at the lower of cost and net realisable value. Cost
comprises all costs of purchase and other costs incurred in bringing the inventories to their present location and
condition.
1.16 Other provisions
A provision is recognised when the Group has a present legal or constructive obligation as a result of a past event, and it
is probable that an outflow of economic benefits will be required to settle the obligation. If the effect is material,
provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market
assessments of the time value of money and, where appropriate, the risks specific to the liability.
1.17 Share capital
Ordinary and deferred shares are classified as equity. Incremental costs directly attributable to the issue of new shares
or options are shown in equity as a deduction from the proceeds.
1.18 Share-based payments
The Group has used shares and share options as consideration for services received from employees.
Equity-settled share-based payments to employees and others providing similar services are measured at fair value at the
date of grant. The fair value determined at the grant date of such an equity-settled share-based instrument is expensed on
a straight-line basis over the vesting period, based on the Group's estimate of the shares that will eventually vest.
Equity-settled share-based payment transactions with other parties are measured at the fair value of the goods or services
received, except where the fair value cannot be estimated reliably, in which case they are measured at the fair value of
the equity instruments granted, measured at the date the entity obtains the goods or the counterparty renders the service.
The fair value determined at the grant date of such an equity-settled share-based instrument is expensed since the shares
vest immediately. Where the services are related to the issue of shares, the fair values of these services are offset
against share premium where permitted.
Fair value is measured using the Black-Scholes model. The expected life used in the model has been adjusted based on the
Management's best estimate, for the effects of non-transferability, exercise restrictions and behavioural considerations.
1.19 Warrants
Warrants are separated from the host contract as their risks and characteristics are not closely related to those of the
host contracts. Where the exercise price of the warrants is in a different currency to the functional currency of the
Company, at each reporting date the warrants are valued at fair value with changes in fair values recognised through profit
or loss as they arise. The fair values of the warrants are calculated using the Black-Scholes model. Where the warrant
exercise price is in the same currency as the functional currency of the issuer and involve the issuance of a fixed number
of shares the warrants are recorded in equity.
1.20 Revenue
Revenue is measured at the fair value of the consideration received or receivable and represents amounts receivable for oil
and gas products provided in the normal course of business, net of discounts, VAT and other sales related taxes to third
party customers. Revenues are recognised when the risks and rewards of ownership together with effective control are
transferred to the customer and the amount of the revenue and associated costs incurred in respect of the relevant
transaction can be reliably measured. Revenue is not recognised unless it is probable that the economic benefits associated
with the sales transaction will flow to the Group.
1.21 Cost of sales
During test production cost of sales cannot be reliably estimated and therefore a cost of sales equal to revenue is
recognised and credited to the unproven oil and gas assets.
1.22 Segmental reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision
maker. The chief operating decision maker, who is responsible for allocating resources and assessing performance of the
operating segments and making strategic decisions, has been identified as the Board of Directors. The Group has two
operating segment being oil exploration and production in Kazakhstan and one reporting segment.
1.23 Interest receivable and payable
Interest income and expense are reported on an accrual basis using the effective interest rate method.
1.24 Exchange rates
For reference the year end exchange rate from sterling to US$ was 1.23 and the average rate during the year was 1.36. The
year end exchange rate from KZT to US$ was 333.29 and the average rate during the year was 342.16.
1.25 Joint venture agreements
The Group's investments in joint arrangements are characterised as a joint venture in which the Group has rights to a share
of the arrangement's net assets rather than direct rights to underlying assets and obligations for underlying liabilities.
Investments in joint ventures are accounted for using the equity method. The carrying amount of the investment in joint
ventures is increased or decreased to recognise the Group's share of the profit or loss and other comprehensive income of
the joint venture, adjusted where necessary to ensure consistency with the accounting policies of the Group. Unrealised
gains and losses on transactions between the Group and its joint ventures are eliminated to the extent of the Group's
interest in those entities. Where unrealised losses are eliminated, the underlying asset is also tested for impairment.
1.26 Discontinued operations
A discontinued operation is a component of the Group that either has been disposed of, or is classified as held for sale.
Profit or loss from discontinued operations comprises the post-tax profit or loss of discontinued operations and the
post-tax gain or loss resulting from the measurement and disposal of assets classified as held for sale
Non-current assets classified as held for sale are presented separately and measured at the lower of their carrying amounts
immediately prior to their classification as held for sale and their fair value less costs to sell. However, some held for
sale assets such as financial assets or deferred tax assets, continue to be measured in accordance with the Group's
relevant accounting policy for those assets. Once classified as held for sale, the assets are not subject to depreciation
or amortisation. Any profit or loss arising from the sale or re-measurement of discontinued operations is presented as
part of a single line item, profit or loss from discontinued operations.
2 Critical accounting estimates and judgements
In the process of applying the Group's accounting policies, which are described in note 1, the Management has made the
following judgements and key assumptions that have the most significant effect on the amounts recognised in the financial
statements.
2.1 Recoverability of exploration and evaluation costs
Under the full cost method of accounting for exploration and evaluation costs, such costs are capitalised as intangible
assets by reference to appropriate cost pools, and are assessed for impairment on a concession basis based on the IFRS 6
impairment indicators detailed in the accounting policy note 1.9. As at 31 December 2016, the Group assessed the
exploration and evaluation assets disclosed in note 11 and determined that no indicators of impairment existed at a cost
pool level in respect of the BNG cost pool. In forming this assessment, the Board considered the results of the Competent
Person report, the economic models associated with the shallow wells, the results of exploration activity to date, the
status of licences and future plans for the licence areas. The Beibars cost pool remains impaired based on the
continuance of the force majeure.
2.2 Merger completion and carrying value of receivables
The Group has receivables due from Baverstock as detailed in note 15. As at 31 December 2016 the receivables have been
classified as current receivables as they are due to form part of the effective consideration paid as part of the
Baverstock Merger detailed in note 28.
2.3 Decommissioning
Provision has been made in the accounts for future decommissioning costs to plug and abandon wells in note 20. The costs of
provisions have been added to the value of the unproven oil and gas asset and will be depreciated on the unit of production
basis. The decommissioning liability is stated in the accounts at discounted present value and accreted up to the final
expected liability by way of an annual finance charge.
The Group has potential decommissioning obligations in respect of its interests in Kazakhstan. The extent to which a
provision is required in respect of these potential obligations depends, inter alia, on the legal requirements at the time
of decommissioning, the cost and timing of any necessary decommissioning works, and the discount rate to be applied to such
costs. Actual costs incurred in future periods may substantially differ from the amounts of provisions. In addition, future
changes in environmental laws and regulations, estimates of deposit useful lives and discount rates may affect the carrying
value of this provision
2.4 Share-based compensation
In order to calculate the charge for share-based compensation as required by IFRS 2, the Group makes estimates principally
relating to the assumptions used in its option-pricing model as set out in note 25.
3 Segment reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision
maker. The chief operating decision maker, who is responsible for allocating resources and assessing the performance of the
operating segments and making strategic decisions, has been identified as the Board of Directors.
The Group operates in one operating segment (exploration for and production of oil in Kazakhstan). All revenues from test
production are generated domestically in Kazakhstan.
75% of Group's revenue was derived from the major customer Petroleum Operating LLP.
4 Operating loss
Group operating profit for the year has been arrived after charging:
Group2016US$'000 Group2015US$'000
Depreciation of property, plant and equipment (note 12) (42) (40)
Auditors' remuneration (note 5) (170) (220)
Staff costs (note 6) (1,541) (1,699)
Share based payment remuneration (note 6) (555) (555)
Loss from investment in equity accounted joint venture (note 29) - (914)
5 Group Auditor's remuneration
Fees payable by the Group to the Company's auditor BDO and its associates in respect of the year:
Group2016US$'000 Group2015US$'000
Fees for the audit of the annual financial statements 90 -
Auditing of accounts of associates of the Company - -
Other services - corporation tax compliance 59 -
149 -
Fees payable by the Group to the Company's previous auditor Grant Thornton and its associates in respect of the year:
Group2016US$'000 Group2015US$'000
Fees for the audit of the annual financial statements - 104
Auditing of accounts of associates of the Company 21 9
Other services - corporation tax compliance - 107
21 220
6 Employees and Directors
Staff costs during the year Group2016US$'000 Group2015US$'000
Wages and salaries 1,541 1,699
Social security costs 128 176
Pension costs 83 126
Share-based payments 555 555
2,307 2,556
Payroll expenses were capitalized in the amount of US$ 211,000 (2015: US$ 302,000).
Average monthly number of people employed(including executive Directors) Group2016 Group2015
Technical 13 14
Field operations 46 34
Finance 9 9
Administrative and support 22 21
90 78
Directors' remuneration Group2016US$'000 Group2015US$'000
Director's emoluments 525 549
Share-based payments 443 443
968 992
The Directors are the key management personnel of the Company and the Group. Details of Directors' emoluments and interests
in shares are shown in the Remuneration Committee Report. The highest paid director had emoluments totalling US$240,000
(2015: US$240,000).
7 Finance cost
Group2016US$'000 Group2015US$'000
Loan interest payable 765 828
Unwinding of discount on provisions (note 20) 61 118
826 946
8 Finance income
Group2016US$'000 Group2015US$'000
Unwinding of discount of loan receivable from Baverstock (note 15) 235 215
Other - 19
235 234
9 Taxation
Analysis of charge for the year Group2016US$'000 Group*2015US$'000
Current tax charge 1,124 1,749
Deferred tax charge - -
1,124 1,749
Group2016US$'000 Group2015US$'000
Loss on ordinary activities before tax (4,249) (1,869)
Tax on the above at the standard rate of corporate income tax in the UK 20% (2015: 21.5%) (850) (402)
Effects of:
Non-deductible expenses 305 251
Effect of different tax rates overseas - 499
Withholding tax on interest expense 1,124 1,126
Unrecognised tax losses carried forward 545 275
1,124 1,749
* Refer to note 1.2 for details of the reclassification of taxation between the taxation charge and profit on discontinued
activities in 2015.
10 Earnings/(loss) per share
Basic earnings/(loss) per share is calculated by dividing the income/(loss) attributable to ordinary shareholders by the
weighted average number of ordinary shares outstanding during the year including shares to be issued.
In order to calculate diluted earnings/(loss) per share, the weighted average number of ordinary shares in issue is
adjusted to assume conversion of all dilutive potential ordinary shares according to IAS33. Dilutive potential ordinary
shares include share options granted to employees and directors where the exercise price (adjusted according to IAS33) is
less than the average market price of the Company's ordinary shares during the period.
The calculation of income/(loss) per share is based on:
2016 2015**
The basic weighted average number of ordinary shares inissue during the year* 937,191,981 914,698,721
The diluted average number of ordinary shares in issue during the year 945,591,981 924,586,221
The income/(loss) for the year attributable to owners of the parent from continuing operations (US$'000) (3,582) (557)
The income/(loss) for the year attributable to owners of the parent from discontinued operations (US$'000) - 8,386
* Including shares to be issued from the day the funds were received for such shares.
** Refer to note 1.2 for details of the reclassification of taxation between the taxation charge and profit on discontinued
activities in 2015 and its impact on the 2015 EPS for continuing activities and discontinued activities.
The loss per share from continuing operations for 2015 was previously stated at US cents 0.29 and the EPS from discontinued
operations was previously stated at US cents 1.14.
11 Unproven oil and gas assets
COST GroupUS$'000
Cost at 1 January 2015 153,079
Additions 11,734
Sales from test production (882)
Foreign exchange difference (91,803)
Cost at 31 December 2015 72,128
Additions 10,470
Sales from test production (997)
Foreign exchange difference 1,622
Cost at 31 December 2016 83,223
ACCUMULATED IMPAIRMENT GroupUS$'000
Accumulated impairment at 1 January 2015 36,985
Foreign exchange difference (22,180)
Accumulated impairment at 31 December 2015 14,805
Foreign exchange difference 332
Accumulated impairment at 31 December 2016 15,137
Net book value at 1 January 2015 116,094
Net book value at 31 December 2015 57,323
Net book value at 31 December 2016 68,086
Unproven oil and gas assets represent license acquisition costs and subsequent exploration expenditure in respect of two
licenses held by Kazakh group entities. The carrying values of those assets at 31 December 2016 were as follows: Beibars
Munai LLP US$ nil (2015: US$ nil), BNG Ltd LLP US$68,086,000 (2015: US$57,323,000).
The Directors have carried out an impairment review of these assets on a cost pool level as detailed in note 2.1. No
impairment indicators were identified for BNG.
As a result of military training activities the Group currently cannot access the Beibars license area which resulted in a
force-majeure situation. Due to this ongoing force-majeure situation and the uncertainties surrounding the Beibars asset
the carrying value remains fully impaired.
12 Property, plant and equipment
Following the commencement of commercial production in December 2012 the Group reclassified its Munaily assets from
unproved oil and gas assets to proved oil and gas assets. The assets was impaired in 2013 and remains fully impaired based
on an assessment of the value in use of the asset.
Group Proved Motor Other Total
oil and gas assets Vehicles
US$'000 US$'000 US$'000 US$'000
Cost at 1 January 2015 47 135 524 706
Additions - - 30 30
Foreign exchange difference - (31) (252) (283)
Cost at 31 December 2015 47 104 302 453
Additions - 45 19 64
Foreign exchange difference - 4 7 11
Cost at 31 December 2016 47 153 328 528
Depreciation at 1 January 2015 47 78 226 351
Charge for the year - 12 28 40
Foreign exchange difference - (38) (95) (133)
Depreciation at 31 December 2015 47 52 159 258
Charge for the year - 13 29 42
Foreign exchange difference - 2 3 5
Depreciation at 31 December 2016 47 67 191 305
Net book value at:
01 January 2015 - 57 298 355
31 December 2015 - 52 143 195
31 December 2016 - 86 137 223
The net book value presented above relates only to BNG area.
13 Investments (Company)
Investments (equity and long term advances) CompanyUS$'000 *(restated)
Cost
At 1 January 2015 181,951
Additions -
Receipt (10,391)
At 31 December 2015 171,560
Reclassification from receivables 27,337
Receipt (8,302)
At 31 December 2016 190,595
ImpairmentAt 1 January 2015 64,253
Impairment -
At 31 December 2015 64,253
Impairment -
At 31 December 2016 64,253
Net book value at:
31 December 2015 107,307
31 December 2016 126,342
As at 31 December 2016 the Company had invested US$ 124,802,000 in equity shares of subsidiaries (2015: US$ 124,775, 000)
and US$ 65,793,000 (2015: US$ 46,785,000) in the long term advances to the subsidiaries. Impairment reserve relates to
equity investments only. Refer to note 15 for long term advances impairments.
Direct investments
Name of undertaking Country of incorporation Effectiveholding andproportionof votingrights heldat 31 December 2016 Effective holding andproportionof votingrights heldat 31 December 2015 Registered address Natureof business
Eragon Petroleum Limited United Kingdom 59% 59% 5 New Street Square Holding Company
London
EC4A 3TW
Eragon Petroleum FZE Dubai 100% 100% CN-135789,Jebel Ali, Dubai, UAE Management Company
Beibars BV Netherlands 100% 100% Utrechtseweg 79 Holding Company
1213 TM Hilversum
The Netherlands
Ravninnoe BV Netherlands 100% 100% Utrechtseweg 79 Holding Company
1213 TM Hilversum
The Netherlands
Roxi Petroleum Kazakhstan LLP Kazakhstan 100% 100% 152/140 Karasay Batyr Str., Almaty, Kazakhstan Management Company
*Refer to note1.2 and note 27 for details of the restatement.
Indirect investments held by Eragon Petroleum Limited
Name of undertaking Country of incorporation Effectiveholding andproportionof votingrights heldat 31 December 2016 Effective holding andproportionof votingrights heldat 31 December 2015 Registered address Natureof business
Galaz Energy BV Netherlands 100% 100% Utrechtseweg 79 Holding Company
1213 TM Hilversum
The Netherlands
BNG Energy BV Netherlands 100% 100% Utrechtseweg 79 Holding Company
1213 TM Hilversum
The Netherlands
BNG Ltd LLP Kazakhstan 99% 99% 152/140 Karasay Batyr Str., Almaty, Kazakhstan Exploration Company
Munaily Kazakhstan LLP Kazakhstan 99% 99% 152/140 Karasay Batyr Str., Almaty, Kazakhstan Exploration Company
Indirect investments held by Beibars BV
Name of undertaking Country of incorporation Effectiveholding andproportionof votingrights heldat 31 December 2016 Effective holding andproportionof votingrights heldat 31 December2015 Registered address Natureof business
Beibars Munai LLP Kazakhstan 50% 50% 152/140 Karasay Batyr Str., Almaty, Kazakhstan Exploration Company
Beibars Munai LLP is a subsidiary as the Group is considered to have control over the financial and operating policies of
this entity. Its results have been consolidated within the Group.
14 Inventories
Group Group
2016 2015
US$'000 US$'000
Materials and supplies 10 12
10 12
15 Other receivables
Group Group Company Company
2016 2015 2016 2015
US$ '000 US$ '000 US$ '000 US$'000(restated)
Amounts falling due after one year:
Prepayments made 4,187 5,479 32 -
VAT receivable 3,551 3,040 - 50
Loan provided to Baverstock - 2,919 - -
Receivable from Baverstock due to royalty settlement - 3,202 - 3,202
Intercompany receivables - - 2,696 49,376
7,738 14,640 2,728 52,628
Amounts falling due within one year:
Loan provided to Baverstock 3,154 - - -
Receivable from Baverstock due to royalty settlement 3,202 - 3,202 -
Prepayments made 116 87 2 2
Receivable under SPA (note 30) 1,602 1,827 - -
Other receivables 416 182 - -
8,490 2,096 3,204 2
The VAT receivables relate to purchases made by operating companies in Kazakhstan and will be recovered through VAT payable
resulting from sales to the local market and, after the commencement of oil production and its export from Kazakhstan,
through cash refunds in accordance with Kazakh tax legislation.
The loan provided to Baverstock relates to the US$10,000,000 facility provided by Galaz Energy BV (a subsidiary of the
Company) to Baverstock exclusively for the repayment of Kuat Oraziman's loan received in July 2007 (note 26.1 (a)). The
total amount outstanding at the reporting date was US$5,406,000 (2015: US$ 5,406,000) which represent US$5,000,000 of
principal and accrued interest until 01 January 2012. The loan is interest free and is repayable from future dividends
receivable from BNG by Baverstock. The carrying value of the receivable has been adjusted to fair value to reflect the
present value of the estimated cash flows discounted at 8%. As at 31 December 2016, the receivable has been classified as a
current asset as it is due to be extinguished as part of the consideration for the merger, expected to be finalised in 2017
(note 28).
On 24 July 2015 the Company entered into an agreement with Canamens Limited and Sector Spesit IV to cancel future royalty
payments due to them from production from Company's BNG asset in return for the issue of 46,661,654 fully paid Company's
ordinary shares. That resulted in the revaluation and the cancellation of the derivative financial liability in the amount
of US$2.2 million and US$4.6 million respectively, and recognition of the receivable from Baverstock in the amount of
US$3.2 million related to the Baverstock attributable 41% portion of the Company's royalty obligation. The receivable is
recovered through future royalties arising on revenue from the BNG licence. As at 31 December 2016, the receivable has been
classified as a current asset as it is due to be extinguished at US$3,202,000 as part of the consideration for the merger,
expected to be finalised in 2017 (note 28).
The current intercompany receivable bear interest rates between LIBOR + 2% and LIBOR + 7%.
Long-term advances to the subsidiaries in note 13 are shown net of provisions of US$33.3 million (2015: US$26.6 million).
The movement of the bad debt allowance related to the long-term advances was as follows:
Group Group Company Company
2016 2015 2016 2015
Denomination US$'000 US$'000 US$'000 US$'000
As at 1 January - - 26,550 25,100
Charge - - 6,760 1,450
As at 31 December - - 33,310 26,550
16 Cash and cash equivalents
Group Group Company Company
2016 2015 2016 2015
US$'000 US$'000 US$'000 US$'000
Cash at bank and in hand 405 10,462 10 25
Funds are held in US Dollars, Sterling, Euros, Kazakh Tenge and other foreign currency accounts to enable the Group to trade and settle its debts in the currency in which they occur and in order to mitigate the Group's exposure to short-term foreign exchange fluctuations. All cash is held in floating rate accounts.
Group Group Company Company
2016 2015 2016 2015
Denomination US$'000 US$'000 US$'000 US$'000
US Dollar 51 10,415 3 22
Sterling 7 3 7 3
Kazakh Tenge 347 44 - -
405 10,462 10 25
17 Called up share capital
Group and Company
Numberof ordinaryshares US$'000 Numberof deferredshares US$'000
Balance at 1 January 2015 858,433,994 14,761 373,317,105 64,702
Share issue in exchange of cash provided by a shareholder 25,137,429 405 - -
Share options exercised 5,712,500 87 - -
Liability converted to equity (note 15) 46,661,654 726 - -
Balance at 31 December 2015 935,945,577 15,979 373,317,105 64,702
Share options exercised 1,487,500 21 - -
Balance at 31 December 2016 937,433,077 16,000 373,317,105 64,702
As at 31 December 2016 the Company issued total 244,670,973 ordinary shares in favour of Mr. Satylganov in exchange of
US$29,200,000 funding according to the US$40 million funding agreement. As at 31 December 2016 US$10.8million is still
available under the US$40million funding agreement.
18 Trade and other payables - current
Group Group Company Company
2016 2015 2016 2015
US$'000 US$'000 US$'000 US$'000
Trade payables 674 372 183 212
Taxation and social security 101 2,225 26 34
Accruals 225 212 195 180
Other payables 2,020 1,995 - 15
Advances received (deferred revenue) 2,421 165 - -
CIT payable 202 763 202 763
5,643 5,732 606 1,204
As at 31 December 2015 the Group has accrued US$ 2,168,000 bonus related to the extended territory at the BNG oil
field. That amount was paid to the tax authorities during 2016.
Other payables relate mainly to the payable for the purchase of Munaily oil field.
As at 31 December 2016 the Group has received a significant amount of prepayments from the oil traders in relation to
increasing production on the BNG oil field.
Trade and other payables - non-current
Group Group Company Company
2016 2015 2016 2015
US$'000 US$'000 US$'000 US$'000
Intercompany payables - - 21,373 39,234
Taxation and social security 9,614 8,297 - -
9,614 8,297 21,373 39,234
Taxation and social security payable relate to withholding tax accrued on the interest expense.
19 Short-term borrowings
Group Group Company Company
2016 2015 2016 2015
US$'000 US$'000 US$'000 US$'000
Other borrowings 809 308 - -
809 308 - -
Short-term loans provided by Kazakhstan based individuals and are repayable on demand. US$809,000 (2015: US$308,000) was
provided by local individuals during 2007-2016 in the form of financial aid to Kazakhstan based entities for their work
programs execution. Of the total amount borrowed by the Group at 31 December 2016 US$809,000 (2015: US$140,000) was payable
to Kuat Oraziman (note 26.1 (c)). The loans are interest free.
20 Provisions
Group only Employee holiday provision Liabilities under Social Development Program Abandonment fund 2015Total
US$'000 US$'000 US$'000 US$'000
Balance at 1 January 2015 154 3,982 231 4,367
Increase/(decrease) in provision (21) 1,121 9 1,109
Paid in the year - (693) - (693)
Unwinding of discount - 112 6 118
Foreign exchange difference (71) (987) (106) (1,164)
Balance at 31 December 2015 62 3,535 140 3,737
Non-current provisions - 640
- More to follow, for following part double click ID:nRSO0679FdRecent news on Caspian Sunrise
See all newsREG - Caspian Sunrise plc - Testing at the West Shalva Contract Area
AnnouncementREG - Caspian Sunrise plc - General Meeting Results
AnnouncementREG - Caspian Sunrise plc - Completion of the acquisition of the Block 8
AnnouncementREG - Caspian Sunrise plc - Notice of GM
AnnouncementREG - Caspian Sunrise plc - Re-issue of BNG Contract Area licences
Announcement