REG - Caspian Sunrise plc - Final Results <Origin Href="QuoteRef">CASPC.L</Origin> - Part 4
15/05/2017 07:06
- Part 4: For the preceding part double click ID:nRSO0679Fc
140 780
Current provisions 62 2,895 - 2,957
Balance at 31 December 2015 62 3,535 140 3,737
Group only Employee holiday provision Liabilities under Social Development Program Abandonment fund 2016Total
US$'000 US$'000 US$'000 US$'000
Balance at 1 January 2016 62 3,535 140 3,737
Increase/(decrease) in provision 25 751 (3) 773
Paid in the year (21) (232) - (253)
Unwinding of discount - 48 13 61
Foreign exchange difference 2 48 3 53
Balance at 31 December 2016 68 4,150 153 4,371
Non-current provisions - 526 153 679
Current provisions 68 3,624 - 3,692
Balance at 31 December 2016 68 4,150 153 4,371
Liabilities and commitments in relation to Subsoil Use Contracts are disclosed below:
a) Beibars Munai LLP
During 2007 Beibars Munai LLP, a subsidiary undertaking, and the Ministry of Energy and Mineral Resources of the Republic
of Kazakhstan signed a Contract for oil exploration within the block XXXVII-10 in Mangistauskaya oblast (Contract #2287).
The contract term expired in January 2012 and the Group has applied to the Ministry of Oil and Gas for the extension of the
Beibars exploration license, given the force majeure situation. The situation did not change as of 31 December 2016.
In accordance with the terms of the contract Beibars Munai LLP committed to the following:
· to invest at least 5% of annual capital expenditures on exploration during the exploration period on the professional
training of Kazakh personnel involved in contractual operations;
· to invest US$1,000,000 on the development of Astana during the second period of the Contract;
· to invest US$1,000,000 on a social development of Mangystau region, in equal tranches over 5 years. The obligation was
settled in 2007 only in the amount of US$200,000;
· total amount of investments must be at least US$22,362,000 during the exploration period;
· to pay a subscription bonus of US$1,500,000 within 30 calendar days from the effective date of the Contract. The
subscription bonus was paid in full;
· transfer of 1% of exploration costs to the liquidation fund maintained on a special deposit in any bank located on the
territory of the Republic of Kazakhstan, on an annual basis.
The subsoil use rights are not unlimited in time, and each extension should be agreed before the respective subsoil use
agreement or license expires. These rights may be cancelled by the authorised state bodies of the Republic of Kazakhstan if
the Company fails to fulfill its contractual obligations.
The Group considers that Beibars Munai LLPhas complied with the above obligations as it is in the state of force majeure
(see note 11).
b) Munaily Kazakhstan LLP
Munaily Kazakhstan LLP, a subsidiary, signed a contract # 1646 dated 31 January 2005 with the Ministry of Energy and
Mineral Resources of RK (now the Ministry of Oil and Gas (MOG) for the exploration and extraction of hydrocarbons on
Munaily deposit located in the Atyrau region.
The contract is valid for 25 years. On 13 July 2011 Munaily Kazakhstan LLP and a competent authority signed Addendum No. 5
to the Subsoil Use Contract (SSUC), which stipulates the oil production period to be 15 years to 2025 and approves the
minimum work program for the production period.
In accordance with the terms of the contract and addendums Munaily Kazakhstan LLP remains committed to the following:
· Social development of Atyrau region - US$600,000* over the period of the contract;
· To allocate US$400,000* to the Astana city development program;
· Professional education of engaged Kazakhstan personnel - not less than 1% of total investments;
· Transferring, on an annual basis, 1% of production expenditures to a liquidation fund through a special deposit
account in a bank located within the Republic of Kazakhstan; and
· To fund the minimum work program during the 15 year production period of US$29,271,756;
· Once the production stage begins, to pay the remaining part of historical costs of US$1,579,770 within 10 years in
equal quarterly instalments.
*Unpaid amounts in respect of the above social obligations are included within liabilities for social programs above.
c) BNG Ltd LLP
BNG Ltd LLP a subsidiary, signed a contract #2392 dated 7 June 2007 with the Ministry of Energy and Mineral Resources of
RK for exploration at Airshagyl deposit, located in Mangistau region. Under addendum No.1 dated 17 April 2008, the
Contract Area was increased. The contract was valid for 4 years and expired on 7 June 2011. Addendum No. 6 to the Subsoil
Use Contract for extension of exploration period up to June 2013 was obtained on 13 July 2011. On 16 July 2013 BNG Ltd LLP
signed Addendum No. 7 extending the exploration period for two consecutive years until June 2015. On 22 June 2015 BNG Ltd
LLP signed Addendum No. 9 extending the exploration period for three consecutive years until June 2018. On 24 December 2015
BNG Ltd LLP signed Addendum No.10 according to which the geological territory was extended by 140.6 sq kilometres.
In accordance with the terms of the contract and addendums, BNG Ltd LLP remains committed to the following:
· For the three-year extension period up to 2018 US$700,000 per annum should be invested in the social development of
the region;
· To fund minimum work program during the extended exploration period of US$16,540,000
· Investing not less than 1% of total investments in professional training of Kazakhstani personnel engaged in work
under the contract; and
· Transferring, on an annual basis, 1% of exploration expenditures to a liquidation fund through a special deposit
account in a bank located within the Republic of Kazakhstan.
21 Borrowings
Group Group Company Company
2016 2015 2016 2015
US$'000 US$'000 US$'000 US$'000
Loan from Vertom 9,935 9,903 9,935 9,903
9,935 9,903 9,935 9,903
On 29 September 2011 the Company entered into the loan facility with Vertom International NV ("Vertom") whereby Vertom
agreed to lend up to US$5 million to the Company with an associated interest of 12% per annum. The Company has offered
Vertom security over its investments in its operating assets in respect to this loan facility. On 30 April 2012 the Group
extended the term of the loan facility arrangement with Vertom for further two years to 30 April 2014 and at the same time
increased the facility amount to US$7 million. On 28 June 2013 the term of the loan facility was extended until 30 April
2016. On 26 June 2015 the term of the loan facility was extended until 30 April 2018. The loan extension represented a
substantial modification of the terms of the existing financial liability and was accounted for as an extinguishment of the
original financial liability and recognition of a new financial liability in 2015. The loan is due to be converted to the
Company's shares during 2017 subject to the finalization of the merger with Baverstock (note 28).
22 Deferred tax
Deferred tax liabilities comprise:
Group2016 Group2015
US$'000 US$'000
Deferred tax on exploration and evaluation assets acquired 7,748 7,485
7,748 7,485
The Group recognises deferred taxation on fair value uplifts to its oil and gas projects arising on acquisition. These
liabilities reverse as the fair value uplifts are depleted or impaired.
The movement on deferred tax liabilities was as follows:
Group2016 Group2015
US$'000 US$'000
At beginning of the year 7,485 11,164
Foreign exchange 263 (3,679)
7,748 7,485
As at 31 December 2016 the Group has accumulated deductible tax expenditure related to its Kazakhstan assets of
approximately US$118 million (2015: US$106 million) available to carry forward and offset against future profits. This
represents an unrecognised deferred tax asset of approximately US$23.5 million (2015: US$21 million).
23 Share option scheme
During the year the Group and the Company had in issue equity-settled share-based instruments to its Directors and certain
employees. Equity-settled share-based instruments have been measured at fair value at the date of grant and are expensed on
a straight-line basis over the vesting period, based on an estimate of the shares that will eventually vest. Options
generally vest in four equal tranches over the two years following the grant.
The options were issued to Directors and employees as follows:
Number of options granted Number of options expired Options exercised Total options outstanding Weighted average exercise price in pence (p) per share
As at 31 December 2015 85,708,226 (33,107,634) (8,412,500) 44,188,092 19
Directors - - - - -
Employees and others 2,750,000 - (1,487,500) 1,262,500 20
As at 31 December 2016 88,458,226 (33,107,634) (9,900,000) 45,450,592 20
31,600,592 outstanding options as at 31 December 2016 are exercisable.
The range of exercise prices of share options outstanding at the year end is 4p - 65p (2015: 4p - 65p). The weighted
average remaining contractual life of share options outstanding at the end of the year is 4.9 years (2015: 5.5 years).
As at 02 September 2016 As at 8 November 2016 As at 25 September 2014
Total number of options 1,750,000 1,000,000 12,200,000
Fair value at measurement date £0.11 £0.11 £ 0.17
Exercise price £0.20 £0.20 £0.20
Volatility 80% 80% 80%
Probability of vesting condition (admission) 3 years 3 years 3 years
Expected life of warrants 5 years 5 years 5 years
Risk free rate 1.10% 1.10% 2.50%
24 Derivative financial liability and warrants
Derivative liability - royalty
During 2009 the Company entered into a sale and purchase agreement to dispose of 35% of its interest in BNG Ltd LLP to
Canamens BNG BV ("Canamens"). The deal subsequently was terminated on 10 May 2011, the Group received back its 35% interest
in BNG Ltd LLP from Canamens. In return for the reassignment of the loans the Company agreed to pay Canamens a royalty
equivalent to 1.5% of the future gross revenues generated from the BNG operating asset. The fair value of the royalty
payable at 31 December 2014 comprised US$6.7 million.
On 24 July 24 2015 the Company entered into an agreement with Canamens Limited and Sector Spesit IV to cancel future
royalty payments due. That resulted to 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 portion of the Company's royalty obligation (note 15).
Equity - warrants
The Company has 7.5 million warrants valid until 21 May 2017 that are recognised in equity in the amount of US$1,779
thousand.
The total number of warrants that remained outstanding at the yearend was 7,500,000 (2015: 7,500,000). They were accounted
in other reserves.
25 Financial instrument risk exposure and management
In common with all other businesses, the Group and Company are exposed to risks that arise from its use of financial
instruments. This note describes the Group and Company's objectives, policies and processes for managing those risks and
the methods used to measure them. Further quantitative information in respect of these risks is presented throughout these
financial statements.
The significant accounting policies regarding financial instruments are disclosed in note 1.
There have been no substantive changes in the Group or Company's exposure to financial instrument risks, its objectives,
policies and processes for managing those risks or the methods used to measure them from previous years unless otherwise
stated in this note.
Principal financial instruments
The principle financial instruments used by the Group and Company, from which financial instrument risk arises, are as
follows:
Financial assets Group2016US$'000 Group2015US$'000 Company2016US$'000 Company2015US$'000 (restated)
Intercompany receivables - - 2,696 49,376
Loan provided to Baverstock 3,154 2,919 - -
Receivable from Baverstock due to royalty settlement 3,202 3,202 3,202 3,202
Receivable under SPA (note 30) 1,602 1,827 - -
Other receivables 416 182 - -
Restricted use cash 283 271 - -
Cash and cash equivalents 405 10,462 10 25
9,062 18,863 5,908 52,603
Financial liabilities Group2016US$'000 Group2015US$'000 Company2016US$'000 Company2015US$'000
Trade and other payables 2,919 2,579 378 407
Other payables - non-current - - 21,373 39,234
Borrowings - current 809 308 - -
Borrowings - non-current 9,935 9,903 9,935 9,903
13,663 12,790 31,686 49,544
The Baverstock receivable due to royalty settlement was initially measured at fair value based on the Baverstock share of
the royalty obligations settled through the issue of the Company's shares in 2015 (note 24). As at 31 December 2016 the
fair value of the asset has been measured with reference to the value attributed to the receivable as part of the
Baverstock merger as detailed in note 28.
During 2016 and 2015 the movement in Group and Company's derivative financial liabilities were as follows:
Derivative Financial Liability 2016$'000 2015$'000
Balance at the beginning of the year - 6,790
Change in value taken to the Profit or Loss - (2,183)
Settled during the year - (4,607)
Balance at 31 December - -
Principal financial instruments
The principal financial instruments used by the Group and Company, from which financial instrument risk arises, are as
follows:
· other receivables
· cash at bank
· trade and other payables
· borrowings
General objectives, policies and processes
The Board has overall responsibility for the determination of the Group and Company's risk management objectives and
policies and, whilst retaining ultimate responsibility for them, it has delegated the authority for designing and operating
processes that ensure the effective implementation of the objectives and policies to the Group and Company's finance
function. The Board receives regular reports from the finance function through which it reviews the effectiveness of the
processes put in place and the appropriateness of the objectives and policies it sets.
The overall objective of the Board is to set policies that seek to reduce risk as far as possible without unduly affecting
the Group and Company's competitiveness and flexibility. Further details regarding these policies are set out below:
Credit risk
Credit risk arises principally from the Group's other receivables. It is the risk that the counterparty fails to discharge
its obligation in respect of the instrument. The maximum exposure to credit risk equals the carrying value of these items
in the financial statements.
When commercial exploitation commences sales will only be made to customers with appropriate credit rating. Sales during
test production are made on prepayment base thereby eliminating credit risk. The Group hold amounts due in respect of the
sale of Galaz of US$1.6 million which are past due but not impaired based on confirmations received from the counterparty
of settlement in due course.
Credit risk with cash and cash equivalents is reduced by placing funds with banks with high credit ratings.
Capital
The Company and Group define capital as share capital, share premium, deferred shares, other reserves, retained deficit and
borrowings. In managing its capital, the Group's primary objective is to provide a return for its equity shareholders
through capital growth. Going forward the Group will seek to maintain a gearing ratio that balances risks and returns at an
acceptable level and also to maintain a sufficient funding base to enable the Group to meet its working capital and
strategic investment needs. In making decisions to adjust its capital structure to achieve these aims, either through new
share issues or the issue of debt, the Group considers not only its short-term position but also its long-term operational
and strategic objectives.
The Group's gearing ratio as at 31 December 2016 was 22% (2015:21%).
There has been no other significant changes to the Group's Management objectives, policies and processes in the year.
Liquidity risk
Liquidity risk arises from the Group and Company's Management of working capital and the amount of funding committed to its
exploration programme. It is the risk that the Group or Company will encounter difficulty in meeting its financial
obligations as they fall due.
The Group and Company's policy is to ensure that it will always have sufficient cash to allow it to meet its liabilities
when they become due. To achieve this aim, it seeks to raise funding through equity finance, debt finance and farm-outs
sufficient to meet the next phase of exploration and where relevant development expenditure.
The Board receives cash flow projections on a periodic basis as well as information regarding cash balances. The Board will
not commit to material expenditure in respect of its ongoing exploration programmes prior to being satisfied that
sufficient funding is available to the Group to finance the planned programmes.
For maturity dates of financial liabilities as at 31 December 2016 and 2015 see table below. The amounts are contractual
payments and may not tie to the carrying value:
On Demand Less than 3 months 3-12 months 1- 5 years Over 5 years Total
Group 2016 US$'000 809 2,919 - 10,300 - 14,028
Group 2015 US$'000 308 2,579 - 14,103 - 16,990
Company 2016 US$'000 - 378 - 10,300 30,000 40,678
Company 2015 US$'000 - 407 - 14,103 58,066 72,561
Interest rate risk
The majority of the Group's borrowings are at fixed rate. As a result the Group is not exposed to the significant interest
rate risk.
Currency risk
The Group and Company's policy is, where possible, to allow group entities to settle liabilities denominated in their
functional currency (primarily US$ and Kazakh Tenge) in that currency. Where the Group or Company entities have liabilities
denominated in a currency other than their functional currency (and have insufficient reserves of that currency to settle
them) cash already denominated in that currency will, where possible, be transferred from elsewhere within the Group.
In order to monitor the continuing effectiveness of this policy, the Board receives a periodic forecast, analysed by the
major currencies held by the Group and Company.
25 Financial instrument risk exposure and management
The Group and Company is primarily exposed to currency risk on purchases made from suppliers in Kazakhstan, as it is not
possible for the Group or Company to transact in Kazakh Tenge outside of Kazakhstan. The finance team carefully monitors
movements in the US$/Kazakh Tenge rate and chooses the most beneficial times for transferring monies to its subsidiaries,
whilst ensuring that they have sufficient funds to continue its operations. The currency risk relating to Tenge is
significant.
In the event that Kazakhstani Tenge devalues against the US$ by 30% the Group would incur foreign exchange losses in the
amount of US$48 million (2015: US$48 million) that would be reflected in other comprehensive income. The impact of such a
devaluation on the translation of monetary assets and liabilities held in Kazakhstan and denominated in non-Tenge
currencies would be exchange losses recorded in the statement of changes in equity of US$48 million (2015: US$48 million).
26 Related party transactions
The Company has no ultimate controlling party.
26.1 Loan agreements
a) Loan to Baverstock
In August 2010 Galaz Energy BV (a subsidiary of the Company) provided Baverstock GmbH (holds 41% interest in Eragon) with a
loan facility of up to US$10,000,000, it was initially at LIBOR +7%, from 01 January 2012 the loan is interest free. The
amounts borrowed under this loan agreement were to be used exclusively for the repayment of Kuat Oraziman's US$10,000,000
loan received in July 2007. The facility is to be repaid through future dividends receivable by Baverstock from Eragon. In
December 2010 the first tranche of US$5,000,000 under the facility agreement was transferred to Kuat Oraziman directly by
Galaz Energy BV to be repaid by Baverstock (Kuat Oraziman is a main shareholder in Baverstock).
b) Receivable from Baverstock due to royalty
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 to cancellation of the derivative financial liability in the amount of US$6.8 million and
recognition of the receivable from Baverstock in the amount of US$3.2 million related to the Baverstock portion of the
Company's royalty obligation (note 15). As at 31 December 2016 the fair value of the receivable has been measured with
reference to the value attributed to the receivable as part of the Baverstock merger as detailed in note 28.
c) Other loans payable to Kuat Oraziman
The Company had other loans outstanding as at 31 December, 2016 and 2015 with Kuat Oraziman, details of which have been
summarised in the note 19. The loans provided are interest free.
d) Loan payable to Vertom
During the year ended 31 December 2011 the Company entered into two loan facilities with Vertom International NV, details
of which have been summarised in note 21. The loan payable at 31 December 2016 was US$9,935,000 (2015: US$9,903,000). A
director of the Company Kuat Oraziman is a director of and holds 100% of the issued share capital of both Vertom
International N.V. ("Vertom") and Vertom International BV. Interest accrued for the year is US$ 765,000 (2015: US$
776,000).
e) US$40 million funding agreement
During 2015 the Company received US$3,000,000 from Mr. Kairat Satylganov, Company's shareholder and CFO, according to
the US$40 million funding agreement.
26.2 Key management remuneration
Key management comprises the Directors and details of their remuneration are set out in note 6.
26.3 Purchases
During 2016 the Group purchased drilling services from the related party STK Geo LLP, the company registered in Kazakhstan,
which is owned by the member of Kuat Oraziman's family, in the amount of US$4.4 million (2015: US$4.8 million). These
expenses were capitalized to unproven oil and gas assets. As at year end the Group has prepayments made in the amount of
US$2.4 million (2015: US$4.9 million) and trade receivables in the amount of US$69,300 (2015: US$67,900) in relation to
these drilling services.
27 Restatement
The Parent company statement of financial position as at 31 December 2015 and 1 January 2015 as well as Parent statement of
changes in equity for the year ended 31 December 2015 and 1 January 2015 have been restated. Interest was incorrectly
accrued in respect of several non-current advances provided to the subsidiary from 1 January 2012 onwards. The prior year
comparatives have been restated accordingly to exclude this accrued interest.
In addition, in order to properly reflect the nature of the advances provided by the Parent company, which are in substance
an equity investment and formed part of the net investment in subsidiaries, the relevant non-current intercompany
receivables have been reclassified as part of investments in subsidiaries.
For the reconciliation between the previously reported financial position for the years ended 31 December 2015 and 31
December 2014 and the restated financial position refer to note 27. As a result of the restatement, the Parent company's
retained loss has been increased from US$ 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.
The reconciliation between the previously reported financial position for the years ended 31 December 2015 and 1 January
2015 and the restated financial position are as follows:
31-Dec-15 Adjustment 31 December 2015 (restated)
US$'000 US$'000 US$'000
Investments in subsidiaries 60,522 46,785 107,307
Other receivables 117,884 (65,256) 52,628
Non-current assets 178,406 (18,471) 159,935
Current assets 27 - 27
Non-current liabilities
Borrowings (9,903) (9,903)
Other payables (39,234) (39,234)
Current liabilities (1,204) - (1,204)
Net assets 128,092 (18,471) 109,621
Share capital, premium and deferred shares 227,345 - 227,345
Other reserves 16,715 - 16,715
Retained deficit (115,968) (18,471) (134,439)
Total equity 128,092 (18,471) 109,621
Profit/(loss) for the year 2,562 (3,905) (1,343)
1 Jan 2015 Adjustment 1 Jan 2015(restated)
US$'000 US$'000 US$'000
Investments in subsidiaries 60,522 57,176 117,698
Other receivables 121,254 (71,742) 49,512
Non-current assets 181,776 (14,566) 167,210
Current assets 140 - 140
Non-current liabilities
Borrowings (9,075) (9,075)
Other payables (52,953) (52,953)
Current liabilities (6,121) - (6,121)
Net assets 113,767 (14,566) 99,201
Share capital, premium and other reserve 216,137 - 216,137
Other reserves 16,715 - 16,715
Retained deficit (119,085) (14,566) (133,651)
Total equity 113,767 (14,566) 99,201
28 Events after the reporting period
Baverstock merger
On 24 March 2017 the Company's shareholders voted to approve the merger with Baverstock (the company that owns 41% in
Eragon Petroleum Limited) subject to satisfaction of conditions precedent including approval of the transaction by the
Kazakh authorities. On May 12 2017 the Company announced that approval had been received from the Kazakh Authority. Under
the terms of the merger 651,436,544 new Caspian Sunrise shares representing 41% of the then enlarged share capital will be
issued to the Baverstock quotaholders in return for the Company acquiring 40.59% of BNG Ltd LLP, so that in aggregate the
enlarged Group will have a 99% interest in the BNG Contract Area.
The number of shares issued as consideration was subject to adjustments to the number of shares to reflect amounts
receivable by the Group from Baverstock, together with adjustments to the number of shares for liabilities which are due to
be shared with Baverstock as a result of the merger. As such, the receivables will be extinguished as part of the merger
and form part of the effective consideration for the asset. The Company fair valued its receivables due from Baverstock
based on the terms of the merger.
Also approved by independent shareholders was the capitalisation of approximately US$10.1 million due to Vertom (expected
value of the loan at the merger date), a company controlled by Kuat Oraziman, to be satisfied upon completion of the
Baverstock Merger by the issue of a further new Caspian Sunrise shares, following which the Group will be free of material
long term debt with only short-term financing from local traders based upon existing production.
The merger with Baverstock is expected to be finalised by 30 June 2017.
29 Discontinued operation in equity accounted joint venture
The Company changed its accounting policy on joint ventures from 1 January 2014 following the introduction of IFRS 11 Joint
arrangements. The joint venture agreements and structures for Galaz and Company LLP provided the Company with interests in
the net assets of Joint venture, rather than interests in its underlying assets and obligations. Accordingly, under IFRS
11, the group's share of joint venture were accounted for using the equity method rather than proportionately consolidated,
from the beginning of the earliest period presented.
On 10 February 2015 Galaz Energy BV entered into a SPA with Netherlands Sinian Investment BV ("SI BV") for the sale of its
residual 58% interest in Galaz and Company LLP, resulting in a profit on disposal before tax of US$18.7million as disclosed
in Note 30. The transaction was finalized on 20 May 2015.
Set out below is the summarised financial information for Galaz and Company LLP which was accounted for using the equity
method up to 20 May 2015 (amounts stated at 58% that represent Group's interest in Galaz and Company LLP).
Year ended 31 December 2016 Year ended 31 December 2015
US$'000 US$'000
Non-current assets - -
Current assets - -
Total assets - -
Non-current liabilities - -
Current liabilities - -
Total liabilities - -
Equity attributable to owners of the parent - -
Non-controlling interests - -
Expenses - (914)
Loss after tax - (914)
Reconciliation of the summarized financial information presented to the carrying amount of the group's interest in the
Galaz and Company LLP joint venture:
Year ended 31 December 2016 Year ended 31 December 2015
US$'000 US$'000
Opening net assets - 7,872
Loss for the period - (914)
Other comprehensive loss - 289
Closing net assets - (7,247)
Carrying value - -
Total comprehensive loss for the year attributable to owners of the parent - -
Total comprehensive loss for the year attributable to NCI - (369)
Total comprehensive loss for the year - (256)
30 Galaz disposal
On 10 February 2015 Galaz Energy BV entered into a SPA with Netherlands Sinian Investment BV (part of consortium led by
Xinjiang Zhundong Petroleum Technology Co., a Company listed on the Shenzhen Stock Exchange in China) for the sale of its
58% of the equity in Galaz and Company LLP for US$29.2 million.
This transaction completed on 20 May 2015. Consequently as a result of the transaction Roxi lost its share in Galaz and
Company LLP.
Up to the date of disposal, Galaz and Company LLP was treated as an investment in equity accounted joint venture.
The gain on disposal of Galaz and Company LLP was determined as follows:
At date ofdisposalUS$'000
Total consideration under SPA 29,232
Adjustment for net working capital position at the date of disposal (966)
Total consideration after adjustment for net working capital position 28,266
Net assets disposed (7,247)
Less release of cumulative translation reserve (2,361)
Gain on disposal recognised in the income statement 18,658
Loss for the period - note 29 (914)
Gain on disposal net of losses 17,744
Taxation (3,531)
Gain on disposal net of taxation 14,213
Net cash inflow 22,908
The US$2,361,000 release of cumulative translation reserves arose from the disposal of Galaz B.V. 58% interest in Galaz
and Company LLP to SI BV. This represents the previously capitalised translation losses attributed to the interest sold,
written off during 2015.
Of the net US$28,266,000 purchase consideration US$3,531,000 was withheld by SI BV in order to pay withholding tax on the
capital gain that arose in Galaz Energy BV. Purchase consideration in the amount of US$22,908,000 was received during 2014
and 2015. US$225,000 was withheld based on the agreement during 2016. The residual part of the purchase consideration net
of withhold amounts of US$1,602,000 is expected to be received by the end of 2017. This amount is presented in other
receivables line of Consolidated Statement of Financial Position.
This information is provided by RNS
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