Zoltav Resources Inc
Annual Report 2011

Plain-text annual report

Zoltav Resources Inc. (Formerly Crosby Asset Management Inc.) Annual Report and Financial Statements 2011 Zoltav Resources Inc. (Formerly Crosby Asset Management Inc.) Corporate information Board of Directors Symon Drake-Brockman - Executive Chairman (appointed 3 August 2011) Steven Lowden - Non Executive director (appointed 3 August 2011) David Francis - Non Executive director (appointed 3 August 2011) Robert Owen (resigned 3 August 2011) Johnny Chan Kok Chung (resigned 3 August 2011) Peter Moss (resigned 3 August 2011) Audit Committee Symon Drake-Brockman and Steven Lowden Remuneration Committee Symon Drake-Brockman and Steven Lowden Nomination Committee Symon Drake-Brockman and Steven Lowden Company Secretary Horizon Trustees (Switzerland) Ltd Rue de St-Jean 30, 1203 Geneva, Switzerland Nominated Adviser Shore Capital & Corporate Limited Bond Street House, 14 Clifford Street, London, W1S 4JU Broker Shore Capital Stockbrokers Limited Bond Street House, 14 Clifford Street, London, W1S 4JU Bankers Deutsche Bank Deutsche Bank International Limited, St Paul‟s Gate, New Street, St Helier, Jersey JE4 8ZB, Channel Islands Solicitors Pinset Mason 30 Crown Place, Earl Street, London EC2A 4ES. Registrars Computershare Investor Services (Jersey) Ltd Queensway House, Hilgrove Street, St Helier, Jersey JE1 1ES Registered Office Cricket Square, Hutchins Drive, PO Box 2681, Grand Cayman KY1-111, Cayman Islands Auditors Deloitte LLP Lord Coutanche House, 66-68 Esplande, St Helier, Jersey JE4 8WA, United Kingdom 2 Zoltav Resources Inc. (Formerly Crosby Asset Management Inc.) Chairman’s report During the year significant steps were taken to transform the direction and strategy of Zoltav Resources Inc. (the “Company” or “ZOL”): In August 2011 the previous board of the Company stepped down and a new board was appointed, following the investment by ARA Capital Limited (“ARA”) into ZOL. I was appointed Executive Chairman and Steve Lowden and David Francis joined the board as Non-Executive Directors. During the period from September through to December, the board reduced overheads of the Company, including closing its offices in London at no cost to the Company. We terminated a number of existing consultancy agreements with third party advisors. The board is now confident that the Company is in a position to focus on its investing strategy to explore opportunities in the natural resources sector. During the year there were a number of key mile stones: In the first quarter of 2011 the Company successfully completed a series of capital raisings for £2.25 million, to fund its investments into six listed natural resources companies. In April ARA Capital Limited acquired a 25% interest in the Company. This was increased to 40% in August, and to 45% in November. In September Old Church Street Holdings Limited sold its stake below 3% In November and December Mark Tompkins acquired a stake of 9.06% in the Company. This has subsequently increased to 12.02% in 2012. In January 2012 we realised a profit of $36,000 by selling three of our investments in Russian oil and gas companies. Outlook In the first six months of 2012, we have seen presidential elections in Russia and unprecedented dislocation in the European markets. This has led to a sharp decline in natural resources prices in the past three months. The board believes the global economic scenario will continue to put pressure on commodity prices in the second half of the year. We continue to focus on potential acquisitions that will provide value to our shareholders. However, we do see some need for an adjustment in the expectations on the part of sellers in the current market. The board believes that the current decline in commodity prices will provide significant opportunities in the second half of 2012. Symon Drake-Brockman Chairman 3 Zoltav Resources Inc. (Formerly Crosby Asset Management Inc.) The Board of Directors – Profiles Symon Drake-Brockman - Executive Chairman Symon Drake-Brockman, 49, has a wealth of experience from a long career in finance covering both debt and equity markets. He was formerly chief executive officer of RBS Global Banking and Markets in the Americas and chief executive officer of RBS Greenwich Capital, Global head of RBS' Debt Markets division and board member of RBS Global Banking and Markets. Mr Drake-Brockman previously held senior positions with ING Barings and JP Morgan in London, New York, Tokyo and Hong Kong. He is currently a Non Executive on the board of Nexus Energy in Australia, and the Managing Partner of Pemberton, the London based Private Equity firm. Steven Lowden - Non Executive director Steven Lowden, 52, has over 25 years experience in the international oil and gas industry across exploration, development, production and gas liquefaction. Throughout his career in the oil industry Mr Lowden has worked around the world but has spent a considerable time working on projects in the FSU. Mr Lowden has previously held positions with Premier Oil plc, including chief petroleum engineer, general manager for development and production and an executive director of the board, and, more recently at Marathon Oil Company as president of Marathon International, head of corporate business development and an officer of the company. Mr Lowden has also been involved with two private energy businesses. He is currently on the board of Nexus Energy. David Francis - Non Executive director David Francis, 42, has had a successful 24 year career in the financial services sector. David spent 17 years within the RBS/Natwest Group, leaving in 2004 when he was Senior Vice President of Coutts Offshore. David bought into Horizon Group, and became Group CEO and major shareholder, overseeing expansion in Jersey and overseas. David has also been instrumental in establishing property ventures in CEE countries and was part of the consortium that acquired Handmade Films in 2010. David was President of the Chartered Institute of Bankers in Jersey from 2001 to 2003. 4 Zoltav Resources Inc. (Formerly Crosby Asset Management Inc.) Directors’ report for the year ended 31 December 2011 The Directors present their annual report together with the audited financial statements for the year ended 31 December 2011. Principal activity The principal activity of the Company was previously that of a holding company of a group of companies engaged in the business of asset management. Following the disposal of all the subsidiaries to its former holding company, Crosby Capital Limited on 4 October 2010, the Company has become an investing company, seeking investment opportunities in the natural resources sector. Business review A review of the business for the year and of future developments is given in the Chairman‟s Report on page 3. The Company has not yet set any key performance indicators as it is a newly formed investing company. The Directors will consider appropriate performance indicators as the Company develops. The criteria used by the Board to assess the Company‟s internal controls are disclosed under „Internal control‟ below. Results The results of the Company are as shown on pages 12 and 13. Dividends The Directors do not recommend the payment of a final dividend and no interim dividend was paid in the year (2010: $375,000). Share capital Details of movements in the share capital of the Company during the year are set out in note 14 to the financial statements. The Company‟s policy in respect of share capital is set out in note 20. Reserves Details of movements in the reserves of the company during the year are set out in the statement of changes in equity on pages 15 and 16. Directors The membership of the Board who served during the year is set out on page 2. Going concern The Directors have prepared cash flow forecasts through to 31 July 2013, which take account of the following: the running costs of the Company as an investing company; and no acquisition will be undertaken unless sufficient funds are available to complete that acquisition and projected acquisitions. The forecasts indicate sufficient cash balances remain throughout the period to 31 July 2013. For this reason, they continue to adopt the going concern basis in preparing the financial statements. Directors’ interests Certain Directors have owned shares of the Company during the year ended 31 December 2011. Interests in the ordinary shares of the Company are as follows: 31 December 2011 Ordinary Percentage of existing share capital 1 January 2011 Ordinary Percentage of existing share capital Symon Drake-Brockman David Francis Steve Lowden 9,381,108 3,754,244 – 13,135,352 2.5% 1.0% – 3.5% - - - - - - - - 5 Zoltav Resources Inc. (Formerly Crosby Asset Management Inc.) Directors’ report for the year ended 31 December 2011 continued Substantial shareholdings The interests in excess of 3% of the issued share capital of the Company which have been notified to the Company as at 31 December 2011 were as follows: ARA Capital Limited Mark Nicholas Tompkins Ordinary Percentage of existing share capital 168,860,154 38,000,000 206,860,154 45.00 10.13 55.13 STATEMENT OF DIRECTORS' RESPONSIBILITIES The directors are responsible for preparing the annual report and financial statements in accordance with applicable law and regulations. AIM Rules for Companies require the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union. The financial statements are required to give a true and fair view of the state of affairs of the Company and of the profit or loss of the Company for that period. International Accounting Standard 1 requires that financial statements present fairly for each financial year the Company's financial position, financial performance and cash flows. This requires the faithful representation of the effects of transactions, other events and conditions in accordance with the definitions and recognition criteria for assets, liabilities, income and expenses set out in the International Accounting Standards Board's „Framework for the preparation and presentation of financial statements‟. In virtually all circumstances, a fair presentation will be achieved by compliance with all applicable IFRSs. However, directors are also required to: properly select and apply accounting policies; present information, including accounting policies, in a manner that provides relevant, reliable, comparable and understandable information; provide additional disclosures when compliance with the specific requirements in IFRSs are insufficient to enable users to understand the impact of particular transactions, other events and conditions on the entity's financial position and financial performance; and make an assessment of the Company's ability to continue as a going concern. The directors are responsible for keeping proper accounting records that disclose with reasonable accuracy at any time the financial position of the Company. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. The directors are responsible for the maintenance and integrity of the corporate and financial information included on the company‟s website. Financial risk management objectives and policies Details of the financial risk management objectives and policies are provided in note 20 to the financial statements. Auditor Deloitte LLP were appointed as auditor on 2 April 2012 and have expressed their willingness to continue in office. For and on behalf of the Board Symon Drake-Brockman Chairman 6 Zoltav Resources Inc. (Formerly Crosby Asset Management Inc.) 1 July 2012 Corporate governance report for the year ended 31 December 2011 The Board is committed to high standards of corporate governance and supports the Combined Code on Corporate Governance (the “Code”). The Company‟s application of the principles of the Code takes into account the size of the Company, and the fact that the Company‟s shares are quoted on the AIM market of the London Stock Exchange and therefore the Company can, if it chooses to, comply with the Code. The following statement explains our governance policies and practices, and provides an insight into how the management runs the business for the benefit of shareholders. The Board The Company supports the concept of an effective Board, which is collectively responsible for the success of the Company. The Board currently comprises of the Executive Chairman and two Independent Non-Executive Directors. Biographies of the directors and details of their committee memberships appear on page 9. The principal role of the Board is to provide strategic leadership to the Company within a framework of prudent and effective controls, which enables risk to be assessed and managed. The Board‟s key objective is currently to identify suitable acquisition targets in the natural resources sector. The Board sets the Company‟s values and standards, and ensures that its obligations to shareholders and others are met and understood. The Board is responsibility for: approving the remuneration of the Directors (based on the recommendations of the Remuneration Committee); approving the Interim and Annual Reports (based on recommendations of the Audit Committee); approving potential investment opportunities; approving any decision to cease to operate all or any material part of the Company‟s business; approving any changes relating to the Company‟s capital structure, including the reduction of capital, share issues and share buy backs; and approval of dividend policy and declaration of interim and final dividends. The Board meets at least quarterly to discuss opportunities available to the Company as a whole. The Company maintains insurance for Directors and Officers of the Company. The Chairman of the Board is executive and is responsible for the leadership and effective running of the Board, including the interaction between executive and non-executive members, and for ensuring that the Board is kept appropriately informed about the business activities of the Company. The Chairman also seeks to ensure effective communication with shareholders and other stakeholders. The Board has access to the Company‟s auditor to advise them on financial, governance and regulatory matters. Any Director wishing to do so in the furtherance of his duties may take independent professional advice at the Company‟s expense. This also applies to any Director in his capacity as a member of the Audit, Remuneration or Nomination committees. Through the Chairman the Directors also have access to the Company Secretary, Horizon Trustees (Switzerland) Limited. The Board considers that the Independent Non-Executive Director is free from any relationship that could materially interfere with the exercise of his independent judgement, and they have ensured that he has had sufficient time to carry out his duties. The Board has contained at least one Independent Non-Executive Director throughout the year. As the Board currently has only two Non-Executive Directors (in addition to the Executive Chairman) it does not believe that it is necessary to appoint a Senior Independent Director at present as provided for by the Code. The Board is supported by specialised committees ensuring that sound governance procedures are followed. The Corporate Governance section of the Company‟s website includes the terms of reference of the Audit, Remuneration and Nomination committees at www.zoltav.com. 7 Zoltav Resources Inc. (Formerly Crosby Asset Management Inc.) Corporate governance report for the year ended 31 December 2011 continued Board Committees The Audit Committee The Audit Committee currently comprises Symon Drake-Brockman (Chairman) and Steve Lowden. The Board is satisfied that collectively the Audit Committee has sufficient, recent and relevant financial experience. The duties of the Audit Committee are to review the financial information of the Company, to oversee the Company‟s financial reporting processes and internal control systems, and to manage the relationship with the Company‟s external auditor. The Audit Committee also has primary responsibility for making recommendations on the appointment, re-appointment and removal of the external auditor, and for approving any significant non- audit services provided by the external auditor to ensure that objectivity and integrity are safeguarded. The Audit Committee reports its work, findings and recommendations to the Board after each meeting. The Audit Committee has met the Independent Auditor during the year to review the 2011 Annual Report. The Audit Committee also met to review these results and those for the six months ended 30 June 2011 and was satisfied with the outcome of its review. The Remuneration Committee The Remuneration Committee currently comprises Symon Drake-Brockman (Chairman) and Steve Lowden. David Francis takes no part in setting his own remuneration and is not present when the Remuneration Committee discusses his remuneration. The principal functions of the Remuneration Committee include recommending to the Board the policy and structure for the remuneration of the Chairman, Executive Directors and (as determined by the Board) senior management, determining the remuneration packages of the Chairman, the Executive Directors and senior management, reviewing and approving performance-based remuneration and compensation for loss or termination of office payable to Executive Directors and senior management, ensuring that no Director is involved in deciding his own remuneration and approving the service contracts of Directors and senior management. As the Company is an investing company and is seeking acquisition opportunities in the natural resources sector, it currently has no employees other than its Directors. The Report on Remuneration is set out on pages 8 to 10. The Nomination Committee The Nomination Committee comprises Symon Drake-Brockman (Chairman) and Steve Lowden. The principal function of the Nomination Committee is to lead the process for appointments to the Board and make recommendations to the Board based on their evaluation of the balance of skills, knowledge and experience on the Board. 8 Zoltav Resources Inc. (Formerly Crosby Asset Management Inc.) Corporate governance report for the year ended 31 December 2011 continued Attendance at Board and Committee Meetings The table below sets out the number of meetings of the Board and its committees during the year and attendance by members at those meetings. Board meetings Audit Committee Remuneration committee 7 7 6 7 2 2 3 2 - - - 2 2 - 2 - - - 2 2 Meetings held during the year Meetings attended during the year Robert Owen *1 Johnny Chan *1 Peter Moss *1 Symon Drake-Brockman *2 Steve Lowden *2 David Francis *2 *1 Resigned 3 August 2011 *2 Appointed 3 August 2011 Internal control The Board is responsible for maintaining a strong system of internal control and risk management to safeguard shareholders‟ investments and the Company‟s assets. The system of internal control is designed, taking into account the Company‟s business objectives and strategy, to provide reasonable, but not absolute, assurance against material misstatement or loss. The criteria the Board uses to assess the effectiveness of the system of internal control include: The nature and extent of the risks facing the Company; The extent and categories of risk that the Board regards as acceptable for the Company to bear; The likelihood of the risks materialising and the financial impact of the risks; The Company‟s ability to reduce the incidence and impact on the business of risks that do materialise; and The costs of operating particular controls relative to the benefit thereby obtained. The Board has considered the need for an internal audit function but has decided, after taking into account the current status of the Company as an investing company, such a function is not at present justified. This decision will be kept under review once an acquisition is completed. Relations with Shareholders The Company believes that effective communication with shareholders is of utmost importance. It has an established cycle for communicating trading results at the interim and year-end stages and, as appropriate, of providing business updates via the Regulatory News Service and press releases. The Company makes information available through regulatory announcements and its interim and annual reports. Copies of all such communications can be found on the Company website, www.zoltav.com. Report on remuneration Introduction The Board recognises that Directors‟ and employees‟ remuneration is of legitimate concern to shareholders, and is committed to following good practice and to ensuring that the interests of the Directors and employees are aligned with those of shareholders. 9 Zoltav Resources Inc. (Formerly Crosby Asset Management Inc.) Corporate governance report for the year ended 31 December 2011 continued Report on remuneration continued On 10 August 2005, the Company established a Remuneration Committee, details of which are provided in the Corporate Governance Report above. The Remuneration Committee is responsible for determining policy on remuneration for, and the annual remuneration of, the Chairman, Executive Director, the Non-Executive Directors and senior management (as determined by the Board). No Director is involved in determining his own remuneration. Policy on remuneration The Company aims to set levels of remuneration that are sufficient to attract, retain and motivate Directors and senior management of the quality required to run the Company successfully, whilst ensuring that the interests of Directors and employees are aligned with those of shareholders. The Company operates within a competitive environment in which the Company‟s performance depends on the individual contributions of the Directors. When determining annual salaries and performance-based remuneration the Company takes into account the following factors: direct and indirect contribution towards both the Company‟s current profitability; the development of businesses or transactions that may help achieve the Company‟s objective in future years; the quality of earnings, in the context of market conditions, as well as the quantity of earnings; vision and innovation; remuneration levels and practices in other firms engaged in similar activities; and incentive to continue to contribute to the Company‟s objectives Directors‟ remuneration The remuneration of the Directors is shown in the tables below: Year ended 31 December 2011. Symon Drake- Brockman US$ Steven Lowden US$ David Francis US$ 96,250 96,250 61,600 61,600 61,600 61,600 Robert Owen US$ 38,490 38,490 Peter Moss US$ Johnny Chan US$ Total US$ 89,722 89,722 13,521 13,521 361,183 361,183 - - - 121,717 34,133 617,140 772,990 2011 Salary Total 2010 Share price During the year, the share price of the Company traded in the range of 1.6 pence to 6.725 pence. At 31 December 2011, the share price of the Company stood at 6.725 pence. 10 Zoltav Resources Inc. (Formerly Crosby Asset Management Inc.) INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF ZOLTAV RESOURCES INC. We have audited the financial statements of Zoltav Resources Inc. (previously Crosby Asset Management Inc.) („the company‟) for the year ended 31 December 2011 which comprise the income statement, statement of comprehensive income, statement of financial position, statement of changes in equity, statement of cash flows and the related notes 1 to 24. 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. This report is made solely to the company‟s members, as a body, in accordance with our engagement letter dated 07 May 2012. 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 auditors‟ 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 auditor 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 An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of: whether the accounting policies are appropriate to the company‟s circumstances and have been consistently applied and adequately disclosed; the reasonableness of significant accounting estimates made by the directors; and the overall presentation of the financial statements. In addition, we read all the financial and non-financial information in the directors‟ report to identify material inconsistencies with the audited financial statements. If we become aware of any apparent material misstatements or inconsistencies we consider the implications for our report. Opinion on financial statements In our opinion: the financial statements give a true and fair view of the state of the company‟s affairs as at 31 December 2011 and of its loss for the year then ended; and the financial statements have been properly prepared in accordance with IFRSs as adopted by the European Union. Deloitte LLP Chartered Accountants St. Helier, Jersey 1 July 2012 11 Zoltav Resources Inc. (Formerly Crosby Asset Management Inc.) Income Statement for the year ended 31 December 2011 Continuing operations Unrealised gain on financial assets at fair value through profit or loss Other income Administrative expenses Other operating expenses Loss from operations Finance costs Loss before taxation Taxation Loss for the year from continuing operations Discontinued operations Profit from discontinued operations (Loss)/profit for the year Attributable to: Owners of the Company Loss for the year from continuing operations Profit from discontinued operations Non-controlling interests Profit from discontinued operations (Loss) /profit for the year Notes 2011 US$'000 2010 US$'000 12 5 6 9 16 51 77 (2,417) (51) (2,340) - (2,340) - (2,340) - 175 (763) (329) (917) (24) (941) - (941) - (2,340) 2,667 1,726 (2,340) - (2,340) - (2,340) (941) 1,752 811 915 1,726 (Loss)/profit per share attributable to owners of the Company during the year 10 US cents US cents Basic Continuing operations Discontinued operations Diluted Continuing operations Discontinued operations The accompanying notes form an integral part of these financial statements. (0.63) - (0.63) (0.62) - (0.62) (0.36) 0.67 0.31 (0.35) 0.65 0.30 12 Zoltav Resources Inc. (Formerly Crosby Asset Management Inc.) Statement of comprehensive income for the year ended 31 December 2011 (Loss)/profit for the year Other comprehensive income: Exchange differences on translating foreign operations Exchange differences arising from disposal of foreign subsidiaries Other comprehensive loss for the year before and net of tax 2011 2010 US$'000 US$'000 (2,340) 1,726 - - - 181 (743) (562) Total comprehensive (loss)/income for the year before and net of tax (2,340) 1,164 Attributable to: Owners of the Company Non-controlling interests (2,340) - (2,340) 249 915 1,164 The accompanying notes form an integral part of these financial statements. 13 Zoltav Resources Inc. (Formerly Crosby Asset Management Inc.) Statement of Financial Position as at 31 December 2011 Notes 2011 US$'000 2010 US$'000 ASSETS Non-current assets Property, plant and equipment Current assets Trade and other receivables Financial assets at fair value through profit or loss Cash and cash equivalents Total assets LIABILITIES Current liabilities Trade and other payables Total liabilities EQUITY Share capital Share premium Other reserves Total equity/(capital deficiency) attributable to owners of the Company Total equity and liabilities 11 12 13 14 - - 50 1,166 339 1,555 1,555 130 130 38 38 17 - 73 90 128 386 386 3,752 8,892 (11,219) 1,425 1,555 3,098 6,022 (9,378) (258) 128 The financial statements were approved by the Board of Directors and authorised for issue on 1 July 2012. Symon Drake-Brockman Chairman The accompanying notes form an integral part of these financial statements. 14 Zoltav Resources Inc. (Formerly Crosby Asset Management Inc.) Statement of changes in equity for the year ended 31 December 2011. Equity/(capital deficiency) attributable to owners of the Company 31 December 2010 Share capital Share premium Capital reserve At 1 January 2010 Employee share-based compensation Lapse of share options Issue of shares for repayment of loan Effect of exercising share options of a subsidiary Dividend paid to non- controlling shareholders Release on disposal of subsidiaries Reserves appropriation upon disposal of subsidiaries Transactions with owners Profit for the year Other comprehensive income: Available-for-sale investments gain on revaluation Recycle to income statement: Provision for impairment Upon disposal of subsidiaries Exchange difference: On translating foreign exchange operations On recycle to income statement upon disposal of subsidiaries Total comprehensive income for the year At 31 December 2010 US$’000 2,435 US$’000 6,344 US$’000 23,455 - - - - 663 (322) - - - - - - - - - - - - - 663 - - - - - - (322) - 16,989 16,989 - - - - - - - - - - 3,098 - 6,022 - 40,444 - 1,235 The accompanying notes form an integral part of these financial statements. Employee share-based compensation reserve US$’000 3,254 Foreign exchange reserve Investment revaluation reserve Retained deficit Total Non- controlling interests Total equity/capital deficiency US$’000 25 US$’000 - US$’000 (36,505) US$’000 (992) US$’000 1,030 US$’000 38 176 (2,081) - (32) - - (82) (2,019) - - - - - - - - - - - 543 543 - - - 175 (743) (568) - - - - - - - - 2,081 - - - - (6) (6) - (17,444) (15,363) 811 322 6 (322) - - 6 - - - - - 811 (51,057) 176 - 341 (32) - - - 485 811 322 6 (322) 175 (743) 249 (258) 1 - - 45 177 - 341 13 (375) (375) (1,616) (1,616) - (1,945) 915 - (1,460) 1,726 - - - - 915 - 322 6 (322) 175 (743) 1,164 (258) 15 Zoltav Resources Inc. (Formerly Crosby Asset Management Inc.) Statement of changes in equity for the year ended 31 December 2011 continued Equity/(capital deficiency) attributable to owners of the Company 31 December 2011 Share capital Share premium Capital reserve At 1 January 2011 Employee share-based compensation Lapse of share options Issue of shares Transactions with owners Loss for the year US$’000 3,098 US$’000 6,022 US$’000 40,444 - - 654 654 - - - 2,870 2,870 - - - - - - At 31 December 2011 3,752 8,892 40,444 Employee share-based compensation reserve US$’000 1,235 499 (1,235) - (736) - 499 The accompanying notes form an integral part of these financial statements. Foreign exchange reserve Investment revaluation reserve Retained deficit Total Non- controlling interests Total equity/capital deficiency US$’000 - US$’000 - US$’000 (51,057) US$’000 (258) US$’000 - US$’000 (258) - - - - - - - - - - - - - 1,235 - 1,235 499 - 3,524 4,023 (2,340) (2,340) (52,162) 1,425 - - - - - - 499 - 3,524 4,023 (2,340) 1,425 16 Zoltav Resources Inc. (Formerly Crosby Asset Management Inc.) Statement of cash flows for the year ended 31 December 2011 Operating activities Continuing operations Loss before taxation Adjustments for: Finance costs Employee share-based compensation Unrealised gain on financial assets at fair value through profit or loss Depreciation of property, plant and equipment Write off of property, plant and equipment Waiver of amounts due to former fellow subsidiaries Foreign exchange gains Operating cash flow before working capital changes Increase in trade and other receivables (Decrease)/Increase in trade and other payables Net cash outflow used in operating activities from continuing operations Discontinued operations Net cash outflow used in operating activities from discontinued operations Net cash outflow used in operating activities Investing activities Continuing operations Purchase of property and equipment Purchase of investment securities Net cash outflow used in investing activities from continuing operations Discontinued operations Net cash outflow used in investing activities from discontinued operations Net cash outflow used in investing activities 2011 US$'000 2010 US$'000 (2,340) - 499 (51) 40 30 - - (1,822) (32) (256) (2,110) (941) 24 101 - 22 - (157) (5) (956) (4) 42 (918) - (2,110) (2,296) (3,214) (32) (1,115) (1,147) - - - - (1,147) (3,856) (3,856) Financing activities Continuing operations Loan from a former fellow subsidiary Issue of share capital Net cash inflow generated from financing activities from continuing operations Discontinued operations Net cash outflow used in financing activities from discontinued operations Net cash inflow generated from used in financing activities Net increase/(decrease) in cash and cash equivalents Cash and cash equivalents as at 1 January Effect of exchange rate fluctuations Cash and cash equivalents as at 31 December The accompanying notes form an integral part of these financial statements. - 3,523 3,523 - 3,523 266 73 - 339 1,000 - 1,000 (564) 436 (6,634) 6,723 (16) 73 17 Zoltav Resources Inc. (Formerly Crosby Asset Management Inc.) Notes to the financial statements continued 1. General information The Company was incorporated in the Cayman Islands, which does not prescribe the adoption of any particular accounting framework. The Board has therefore adopted International Financial Reporting Standards (“IFRSs”) issued by the International Accounting Standards Board and as adopted by the European Union. The Company‟s shares are listed on the AIM of London Stock Exchange. The financial statements are prepared in United States Dollars. The Company previously acted as the holding company of a group. Following the disposal of all the subsidiaries to its former holding company, Crosby Capital Limited on 4 October 2010, the Company has become an investing company with no subsidiary undertakings. The financial statements for the year ended 31 December 2011 (including the comparatives for the year ended 31 December 2010) were approved by the Board of Directors on 1 July 2012. Amendments to the financial statements are not permitted after they have been approved. 2. Adoption of new and revised Standards In the current year, the new and revised Standards and Interpretations adopted have not affected the amounts reported in these financial statements. Standards not affecting the reported results nor the financial position The following new and revised Standards and Interpretations have been adopted in the current year. Their adoption has not had any significant impact on the amounts reported in these financial statements but, with the exception of the amendment to IFRS 1, may impact the accounting for future transactions and arrangements. Amendment to IFRS 3 Business Combinations IFRS 3 has been amended such that only those non-controlling interests which are current ownership interests and which entitle their holders to a proportionate share of net assets upon liquidation can be measured at fair value or the proportionate share of net identifiable assets. Other non-controlling interests are measured at fair value, unless another measurement basis is required by IFRSs. Amendment to IFRS 7 Financial Instruments: Disclosures The amendment clarifies the required level of disclosure around credit risk and collateral held and provides relief from disclosure of renegotiated financial assets. Amendment to IFRS 1 Limited Exemption from Comparative IFRS 7 Disclosures for First-time Adopters The amendment provides a limited exemption for first-time adopters from providing comparative fair-value hierarchy disclosures under IFRS 7. IAS 24 (2009) Related Party Disclosures The revised Standard has a new, clearer definition of a related party, with inconsistencies under the previous definition having been removed. Amendment to IAS 32 Classification of Rights Issues Under the amendment, rights issues of instruments issued to acquire a fixed number of an entity‟s own non-derivative equity instruments for a fixed amount in any currency and which otherwise meet the definition of equity are classified as equity. Amendments to IFRIC 14 Prepayments of a Minimum Funding Requirement The amendments now enable recognition of an asset in the form of prepaid minimum funding contributions. Improvements to IFRSs 2010 Aside from those items already identified above, the amendments made to standards under the 2010 improvements to IFRSs have had no impact on the group. 18 Zoltav Resources Inc. (Formerly Crosby Asset Management Inc.) Notes to the financial statements continued 2. Adoption of new and revised Standards continued At the date of authorisation of these financial statements, the following Standards and Interpretations which have not been applied in these financial statements were in issue but not yet effective (and in some cases had not yet been adopted by the EU): Severe Hyperinflation and Removal of Fixed Dates for First-time IFRS 1 (amended) adopters IFRS 7 (amended) Disclosures – Transfers of Financial Assets IFRS 9 IFRS 10 IFRS 11 IFRS 12 IFRS 13 IAS 1 (amended) IAS 12 (amended) IAS 19 (revised) IAS 27 (revised) IAS 28 (revised) IFRIC 20 Financial Instruments Consolidated Financial Statements Joint Arrangements Disclosure of Interests in Other Entities Fair Value Measurement Presentation of Items of Other Comprehensive Income Deferred Tax: Recovery of Underlying Assets Employee Benefits Separate Financial Statements Investments in Associates and Joint Ventures Stripping Costs in the Production Phase of a Surface Mine The directors do not expect that the adoption of the standards listed above will have a material impact on the financial statements of the Company in future periods, except as follows: IFRS 9 will impact both the measurement and disclosures of Financial Instruments; IFRS 13 will impact the measurement of fair value for certain assets and liabilities as well as the associated disclosures; Beyond the information above, it is not practicable to provide a reasonable estimate of the effect of these standards until a detailed review has been completed. 3. Summary of significant accounting policies (a) Basis of preparation The significant accounting policies that have been used in the preparation of these financial statements are summarised below. These policies have been consistently applied to all the years presented unless otherwise stated. The adoption of new or amended IFRSs and the impacts on the financial statements, if any, are disclosed in note 2 to the financial statements. The financial statements have been prepared under historical cost basis except for financial instruments classified as fair value through profit or loss, which are measured at fair value. The measurement bases are fully described in the accounting policies below. The Directors note that during the year ended 31 December 2010, all of the previous group‟s trading subsidiaries were disposed. The Company is now an investing company, seeking opportunities in the natural resources sector. The Directors have prepared cash flow forecasts through to 31 July 2013, which take account of the following: the running costs of the Company as an investing company; and no acquisition will be undertaken unless sufficient funds are available to complete that acquisition and projected acquisitions. The forecasts indicate sufficient cash balances remain throughout the period to 31 July 2013. For this reason, they continue to adopt the going concern basis in preparing the consolidated financial statements. It should be noted that accounting estimates and assumptions are used in preparation of the financial statements. Although these estimates are based on management‟s best knowledge and judgement of current events and actions, actual results may ultimately differ from those estimates. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements are set out in note 4 to the financial statements. 19 Zoltav Resources Inc. (Formerly Crosby Asset Management Inc.) Notes to the financial statements continued 3. Summary of significant accounting policies continued (b) Property, plant and equipment Measurement bases Property, plant and equipment are stated at cost less accumulated depreciation and impairment losses. The cost of an asset comprises its purchase price and any directly attributable costs of bringing the asset to the working condition and location for its intended use. Subsequent costs are included in the asset‟s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably. All other costs, such as repairs and maintenance are charged to the income statement during the financial period in which they are incurred. The gain or loss arising from a retirement or disposal is determined as the difference between the sales proceeds and the carrying amount of the assets, and is recognised in the income statement. Depreciation Depreciation is provided to write off the cost of property, plant and equipment less their residual values over their estimated useful lives, using the straight-line method, at the following rates per annum: Office equipment 33 1/3% The assets‟ residual values, depreciation method and useful lives are reviewed, and adjusted if appropriate, at each reporting date. Leases (c) An arrangement, comprising a transaction or a series of transactions, is or contains a lease if the Company determines that the arrangement conveys a right to use a specific asset or assets for an agreed period of time in return for a payment or a series of payments. Such a determination is made based on an evaluation of the substance of the arrangement and is regardless of whether the arrangement takes the legal form of a lease. Classification of assets leased to the Company Assets that are held by the Company under leases which transfer to the Company substantially all the risks and rewards of ownership are classified as being held under finance leases. Leases which do not transfer substantially all the risks and rewards of ownership to the Company are classified as operating leases. Assets acquired under finance leases Where the Company acquires the use of assets under finance leases, the amounts representing the fair value of the leased asset, or, if lower, the present value of the minimum lease payments, of such assets, are included in property, plant and equipment and the corresponding liabilities, net of finance charges, are recorded as obligations under finance leases. Subsequent accounting for assets held under finance lease corresponds to those applied to comparable acquired assets. The corresponding finance lease liability is reduced by lease payments less finance charges. Finance charges implicit in the lease payments are charged to the income statement over the period of the lease so as to produce an approximately constant periodic rate of charge on the remaining balance of the obligations for each accounting period. Contingent rentals are charged to the income statement in the accounting period in which they are incurred. Operating lease charges as the lessee Where the Company has the rights to use of assets held under operating leases, payments made under the leases are charged to the income statement on a straight-line basis over the lease terms except where an alternative basis is more representative of the time pattern of benefits to be derived from the leased assets. Lease incentives received are recognised in the income statement as an integral part of the aggregate net lease payments made. Contingent rentals are charged to the income statement in the accounting period in which they are incurred. 20 Zoltav Resources Inc. (Formerly Crosby Asset Management Inc.) Notes to the financial statements continued 3. Summary of significant accounting policies continued (d) Foreign currencies The financial statements are presented in United States Dollars, which is also the functional currency of the Company. Foreign currency transactions are translated into the functional currency of the individual entity using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation of monetary assets and liabilities denominated in foreign currencies at year-end exchange rates are recognised in the income statement. Foreign exchange gains and losses arising from translation of foreign operations are recognised in the statement of comprehensive income. Non-monetary items carried at fair value that are denominated in foreign currencies are retranslated at the rates prevailing on the date when the fair value was determined and are reported as part of the fair value gain or loss. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated. (e) Financial instruments Financial assets and financial liabilities are recognised when and only when, the Company becomes a party to the contractual provisions of the instrument. Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognised immediately in the income statement. Financial assets The Company classifies its financial assets other than hedging instruments into one of the following categories: financial assets at fair value through profit or loss, available-for-sale investments and loans and receivables. Regular purchases of financial assets are recognised on the trade date. Management determines the classification of its financial assets at initial recognition depending on the purpose for which the financial assets were acquired and where allowed and appropriate, re-evaluates this designation at every reporting date. The accounting policies adopted for each category are set out below. Financial assets at fair value through profit or loss Financial assets at fair value through profit or loss include financial assets held for trading and financial assets designated upon initial recognition at fair value through profit or loss. Financial assets are classified as held for trading if they are acquired for the purpose of selling in the near term, or it is part of a portfolio of identified financial instruments that are managed together and for which there is evidence of a recent pattern of short-term profit-taking. Financial assets may be designated at initial recognition as at fair value through profit or loss if the following criteria are met: (i) (ii) the designation eliminates or significantly reduces the inconsistent treatment that would otherwise arise from measuring the assets or recognising gains or losses on them on a different basis; or the assets are part of a group of financial assets which are managed and their performance is evaluated on a fair value basis, in accordance with a documented risk management strategy and information about the Company of financial assets is provided internally on that basis to the key management personnel. Subsequent to initial recognition, the financial assets included in this category are measured at fair value with changes in fair value recognised in the income statement. Fair value is determined by reference to active market transactions or using a valuation technique where no active market exists. Fair value gains or losses do not include any dividend or interest earned on these financial assets. Dividend and interest income is recognised in accordance with the Company‟s policies in note 3 to the financial statements. 21 Zoltav Resources Inc. (Formerly Crosby Asset Management Inc.) Notes to the financial statements continued 3. Summary of significant accounting policies continued (e) Financial instruments continued Loans and receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are subsequently measured at amortised cost using the effective interest method, less any impairment losses. Amortised cost is calculated taking into account any discount or premium on acquisition and includes fees that are an integral part of the effective interest rate and transaction cost. Impairment losses on loans and receivables are provided for when objective evidence is received that the Company will not be able to collect amounts due to it in accordance with the original terms of the receivables. The amount of the loss is measured as the difference between the asset‟s carrying amount and the present value of estimated future cash flows, excluding future credit losses that have not been incurred, discounted at the financial asset‟s original effective interest rate (i.e. the effective interest rate computed at initial recognition). The amount of the loss is recognised in the income statement for the period in which the impairment occurs. Objective evidence of impairment of individual financial assets includes observable data that comes to the attention of the Company about one or more of the following loss events: (i) (ii) (iii) (iv) significant financial difficulty of the debtor; a breach of contract, such as default or delinquency in interest or principal payments; it becoming probable that the debtor will enter bankruptcy or other financial reorganisation; and significant changes in the technological, market, economic or legal environment that have an adverse effect on the debtor. Loss events in respect of a Company of financial assets include observable data indicating that there is a measurable decrease in the estimated future cash flows from the Company of financial assets. Such observable data includes but not limited to adverse changes in the payment status of debtors in the Company and, national or local economic conditions that correlate with defaults on the assets in the Company. If, in a subsequent period(s), the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed to the extent that it does not result in a carrying amount of the financial asset exceeding what the amortised cost would have been had the impairment not been recognised at the date the impairment is reversed. The amount of the reversal is recognised in the income statement in the period in which the reversal occurs. Financial liabilities and equity Financial liabilities and equity instruments issued by the Company are classified according to the substance of the contractual arrangements entered into and the definitions of a financial liability and an equity instrument. An equity instrument is any contract that evidences a residual interest in the assets of the Company after deducting all of its liabilities. The accounting policies adopted in respect of financial liabilities and equity instruments are set out below. Other financial liabilities Other financial liabilities include other payables and are recognised initially at fair value and subsequently measured at amortised cost, using the effective interest method. Equity instruments Equity instruments issued by the Company are recorded at the proceeds received, net of direct issue costs. Debt for equity swaps Where debt is settled by the issue of equity the equity issued is treated as issued at the value of the amount payable where the creditor is a shareholder. Derecognition Financial assets are derecognised when the rights to receive cash flows from the assets expire or, the financial assets are transferred and the Company has transferred substantially all the risks and rewards of ownership of the financial assets. On derecognition of a financial asset, the difference between the asset‟s carrying amount and the sum of the consideration received and the cumulative gain or loss that had been recognised directly in equity is recognised in the income statement. For financial liabilities, they are removed from the balance sheet when the obligation specified in the relevant contract is discharged, cancelled or expires. The difference between the carrying amount of the financial liability derecognised and the consideration paid is recognised in the income statement. 22 Zoltav Resources Inc. (Formerly Crosby Asset Management Inc.) Notes to the financial statements continued 3. Summary of significant accounting policies continued (e) Financial instruments continued Cash and cash equivalents Cash and cash equivalents comprise cash in hand and amounts repayable on demand with banks and short-term highly liquid investments which are readily convertible into known amounts of cash without notice and are subject to an insignificant risk of changes in value and which were within three months of maturity when acquired, less advances from banks repayable within three months from the date of the advance if the advances form part of the Company‟s cash management. (f) Impairment of non-financial assets The Company assesses at each reporting date whether there is an indication that an asset may be impaired. If any such indication exists, or when annual impairment testing for an asset is required, the Company estimates the asset‟s recoverable amount. An asset‟s recoverable amount is the higher of an asset‟s or cash-generating unit‟s fair value less costs to sell and its value in use and is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets. Where the carrying amount of an asset exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. In determining fair value less costs to sell, an appropriate valuation model is used. Impairment losses of continuing operations are recognised in profit or loss in those expense categories consistent with the function of the impaired asset. For assets excluding goodwill, an assessment is made at each reporting date as to whether there is any indication that previously recognised impairment losses may no longer exist or may have decreased. If such indication exists, the Company makes an estimate of the recoverable amount. A previously recognised impairment loss is reversed only if there has been a change in the estimates used to determine the asset‟s recoverable amount since the last impairment loss was recognised. If that is the case, the carrying amount of the asset is increased to its recoverable amount. That increased amount cannot exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised for the asset in prior years. Such reversal is recognised in profit or loss. (g) Income tax Current income tax assets and/or liabilities comprise those obligations to, or claims from, fiscal authorities relating to the current or prior reporting period, that are unpaid at the reporting date. They are calculated according to the tax rates and tax laws applicable to the fiscal periods to which they relate, based on the taxable profit for the year. All changes to current tax assets or liabilities are recognised as a component of tax expense in the income statement. Deferred tax is calculated using the liability method on temporary differences at the reporting date between the carrying amounts of assets and liabilities in the financial statements and their respective tax bases. Deferred tax liabilities are generally recognised for all taxable temporary differences. Deferred tax assets are recognised for all deductible temporary differences, tax losses available to be carried forward as well as other unused tax credits, to the extent that it is probable that taxable profits, including existing taxable temporary differences, will be available against which the deductible temporary differences, unused tax losses and unused tax credits can be utilised. Deferred tax assets and liabilities are not recognised if the temporary difference arises from goodwill or from initial recognition (other than in a business combination) of assets and liabilities in a transaction that affects neither taxable nor accounting profit or loss. Deferred tax liabilities are recognised for taxable temporary differences arising on interests in associates and jointly controlled entities, except where the Company is able to control the reversal of the temporary differences and it is probable that the temporary differences will not reverse in the foreseeable future. Deferred tax is calculated, without discounting, at tax rates that are expected to apply in the period the liability is settled or the asset realised, provided they are enacted or substantively enacted at the reporting date. 23 Zoltav Resources Inc. (Formerly Crosby Asset Management Inc.) Notes to the financial statements continued 3. Summary of significant accounting policies continued (g) Income tax continued Changes in deferred tax assets or liabilities are recognised in the income statement or in other comprehensive income or directly in equity if they relate to items that are charged or credited to other comprehensive income or directly to equity. Current tax assets and liabilities are presented net if the Company has the legally enforceable right to set off those recognised amounts; and intends either to settle on a net basis or to realise the asset and settle the liability simultaneously. (h) Share capital, share premium and capital reserve Ordinary shares are classified as equity. Share capital is determined using the nominal value of shares that have been issued. Any transaction costs associated with the issuing of shares are deducted from share premium (net of any related income tax benefit) to the extent they are incremental costs directly attributable to the equity transaction. Any discount on the issue of ordinary shares is deducted from the share premium account. The capital reserve arose in a prior period on the application of the reverse acquisition of accounting when the Company made its first acquisition. (i) Revenue recognition Revenue, which is the fair value of consideration received or receivable, is recognised when it is probable that economic benefits will flow to the Company, when the revenue can be measured reliably, and the stage of completion of the transaction and the costs incurred for the transaction as well as the costs to complete the transaction can be measured reliably, and on the following bases: (i) (ii) (iii) Management fee income, included in other income, is recognised as the services are provided. Interest income is recognised as it accrues, taking into account the effective yield on the asset. Dividend income is recognised when the right to receive payment is established. The policies on financial assets at fair value through profit or loss are dealt with in note 3(e) to the financial statements. (j) Employee benefits Employee leave entitlements Employee entitlements to long service payment and annual leave are recognised when they accrue to employees. Provision is made for the estimated liabilities for long service payment and annual leave as a result of services rendered by employees up to the reporting date. Non-accumulating compensated absences are not recognised until the time of leave. Retirement benefit schemes No pension contributions were payable in the year. In 2010 the Company participated only in the defined contribution pension schemes and paid contributions to independently administered funds on a mandatory or contractual basis. The assets of these schemes are held separately from those of the Company in independently administered funds. The retirement benefit schemes are generally funded by payments from employees and by the relevant Company. The Company has no further payment obligations once the contributions have been paid. The contributions are recognised as an employee benefit expense on an accruals basis. Share-based employee compensation The Company operates equity-settled share-based compensation plans to remunerate its employees and directors. All employee services received in exchange for the grant of any share-based compensation are measured at their fair values. These are indirectly determined by reference to the fair value of the share options and warrants awarded. Their value is appraised at the grant date and excludes the impact of any non-market vesting conditions. 24 Zoltav Resources Inc. (Formerly Crosby Asset Management Inc.) Notes to the financial statements continued 3. Summary of significant accounting policies continued (j) Employee benefits continued All share-based compensation is ultimately recognised as an expense in the income statement unless it qualifies for recognition as an asset, with a corresponding credit to employee share-based compensation reserve in equity. If vesting periods or other vesting conditions apply, the expense is allocated over the vesting period, based on the best available estimate of the number of share options expected to vest. Non-market vesting conditions are included in assumptions about the number of options that are expected to become exercisable. Estimates are subsequently revised, if there is any indication that the number of share options expected to vest differs from previous estimates. No adjustment to expense recognised in prior periods is made if fewer share options ultimately are exercised than vested. Upon exercise of share options or warrants the proceeds received net of any directly attributable transaction costs up to the nominal value of the shares issued are allocated to share capital and the amount previously recognised in employee share-based compensation reserve will be transferred out with any excess being recorded as share premium. When the share options or warrants have vested and then lapsed, the amount previously recognised in the employee share-based compensation reserve is transferred to the retained profits or accumulated losses. Bonus plans The Company recognises a liability and an expense for bonuses where contractually obliged or where there is a past practice that has created a constructive obligation. (k) Provisions and contingent liabilities Provisions are recognised when the Company has a present obligation (legal or constructive) as a result of a past event, and it is probable that an outflow of economic benefits will be required to settle the obligation and a reliable estimate of the amount of the obligation can be made. Where the time value of money is material, provisions are stated at the present value of the expenditure expected to settle the obligation. All provisions are reviewed at each reporting date and adjusted to reflect the current best estimate. Where it is not probable that an outflow of economic benefits will be required, or the amount cannot be estimated reliably, the obligation is disclosed as a contingent liability, unless the probability of outflow of economic benefits is remote. Possible obligations, whose existence will only be confirmed by the occurrence or non-occurrence of one or more future uncertain events not wholly within control of the Company are also disclosed as contingent liabilities unless the probability of outflow of economic benefits is remote. (l) Related parties Parties are considered to be related to the Company if: (i) (ii) (iii) (iv) (v) the party has the ability, directly, or indirectly through one or more intermediaries, to control the Company or exercise significant influence over the Company in making financial and operating policy decisions, or has joint control over the Company; the Company and the party are subject to common control; the party is an associate of the Company or a joint venture in which the Company is a venturer; the party is a member of the key management personnel of the Company or its parent, or a close family member of such an individual, or is an entity under the control, joint control or significant influence of such individuals; the party is a close family member of such a party referred to in (i) or is an entity under the control, joint control or significant influence of such individuals; or .(m) Segment reporting The Company operated in the year in one segment, investment in equity instruments of mining operations based in the former Soviet Union. The management information received by the Board is prepared on this basis. 25 Zoltav Resources Inc. (Formerly Crosby Asset Management Inc.) Notes to the financial statements continued 3. Summary of significant accounting policies continued (n) Discontinued operations A discontinued operation is a component of the Company that either has been disposed of or is classified as held for sale, and: (i) (ii) represents a separate major line of business or geographical area of operations; is part of a single co-ordinated plan to dispose of a separate major line of business or geographical area of operations; or is a subsidiary acquired exclusively with a view to trade. (iii) Profit or loss from discontinued operations, including prior year components, are presented as a single movement in the income statement. This amount, which comprises the post-tax profit or loss of discontinued operations and the post-tax gain or loss resulting from the disposal, is further analysed in note 16. The disclosures for discontinued operations in the prior year relates to all operations that have been discontinued by the reporting date for the latest period presented. 4. Critical accounting estimates and judgements Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. Critical accounting estimates and assumptions The Company makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next accounting year are discussed below: Going concern The financial statements have been prepared on going concern basis, the details of which are provided in note 3(a) to the financial statements. Valuations of share options or warrants granted The fair value of share options or warrants granted was calculated using the Black-Scholes Pricing Model which requires the input of highly subjective assumptions, including the volatility of the share price. Because changes in subjective input assumptions can materially affect the fair value estimate, in the opinion of the Directors of the Company, the existing model will not always necessarily provide a reliable single measure of the fair value of the share options. Details of the inputs are set out in note 15 to the financial statements. Valuation of financial assets categorised as at fair-value through profit or loss: The fair-value of listed investments classified as at fair-value through profit or loss is based on the listed share prices of the respective investments and translated to United States Dollars using the exchange rate ruling at the balance sheet date. Critical judgements in applying the Company’s accounting policies Management in applying the accounting policies, which are described in note 3 to the financial statements, considers that they have not had to make any significant judgements. 26 Zoltav Resources Inc. (Formerly Crosby Asset Management Inc.) Notes to the financial statements continued 5. Other income – continuing operations Foreign exchange gain, net Management fee income Waiver of amounts due to former fellow subsidiaries Other Total 6. Finance costs Interest payable 7. Employee benefit expenses (including directors’ remuneration) Fees Salaries, allowances and benefits in kind Commissions paid and payable Bonus paid and payable Share-based compensation Pensions – defined contribution scheme National insurance costs Total Analysed into: Continuing operations Discontinued operations 2011 US$’000 2010 US$‟000 65 12 - - 77 5 4 157 9 175 2011 US$’000 2010 US$‟000 - 24 2011 US$’000 2010 US$‟000 - 575 - - 499 - 14 1,088 1,088 - 1,088 29 2,281 368 23 177 18 26 2,922 357 2,565 2,922 The number of current directors is three, seven directors in total served in the year. The remuneration of the highest paid director was $96,250 (2010: 617,400). Details of directors‟ employee benefit expense are disclosed in the Report on Remuneration on pages 9 to 10. 8. Loss before taxation – continuing operations 2011 US$’000 2010 US$‟000 Loss before taxation is arrived at after charging/(crediting): Auditors‟ remuneration: Fee payable to the Company‟s auditor for the audit of the Company‟s financial statements Fee payable to the Company‟s auditor for the other services: - regulatory assistance Depreciation Employee benefits expenses (including directors‟ remuneration) Foreign exchange gain Operating lease charges in respect of rental premises 37 - 40 780 65 147 35 2 22 357 5 21 27 Zoltav Resources Inc. (Formerly Crosby Asset Management Inc.) Notes to the financial statements continued 9. Taxation Current tax credit: - United Kingdom: under provision in prior years: - Overseas Total Analysed into: Continuing operations Discontinued operations Total 2011 US$’000 2010 US$‟000 - - - - - - 35 (32) 3 - 3 3 United Kingdom and overseas income tax for the year have been calculated at the rates prevailing in the relevant jurisdictions. The Company has significant unrelieved tax losses, the utilisation of which is uncertain and consequently no deferred tax asset has been recognised. The charge for the year can be reconciled to the (loss)/profit per the income statement as follows: (Loss)/profit before tax Tax at domestic income tax rates Effect of: Income not subject to taxation Under provision in prior years Overprovision in prior years Tax expense for the year 2011 US$’000 (2,340) 2010 US$‟000 1,726 - - - - - 96 (96) 32 (35) 3 The Company is domiciled in the Cayman Islands and is not subject to United Kingdom taxation. 28 Zoltav Resources Inc. (Formerly Crosby Asset Management Inc.) Notes to the financial statements continued 10. (Loss)/profit per share attributable to owners of the Company Basic (loss)/profit per share is calculated by dividing the (loss)/profit attributable to owners of the Company by the weighted average number of ordinary shares in issue during the year. (a) Basic (Loss)/profit attributable to owners of the Company: - - continuing operations discontinued operations 2011 US$’000 2010 US$‟000 (2,340) - (2,340) (941) 1,752 811 Number of shares Number of shares Weighted average number of shares for calculating basic loss per share Effect of dilutive potential ordinary shares - warrants Weighted average number of shares for calculating basic (loss)/profit per share 369,188,858 10,550,000 259,475,821 10,550,000 379,738,585 270,025,821 Basic (loss)/profit per share Diluted (loss)/profit per share Diluted US cents US cents (0.63) (0.62) 0.31 0.30 The diluted loss per share for 2011 is 0.62 taking into account the existing warrants. The diluted profit per share in 2010 was 0.30 arising from the warrants issued. 11. Property, plant and equipment Cost At 1 January 2010 Additions At 31 December 2010 Additions At 31 December 2011 Depreciation and impairment At 1 January 2010 Charge for the year Impairment At 31 December 2010 Charge for the year Impairment At 31 December 2011 Net book value at 31 December 2011 Net book value at 31 December 2010 Office equipment US$’000 - 61 61 32 93 - 23 - 23 40 30 93 - 38 29 Zoltav Resources Inc. (Formerly Crosby Asset Management Inc.) Notes to the financial statements continued 12. Financial assets at fair value through profit or loss Listed securities: - Equity securities – USA - Equity securities – United Kingdom Fair value of listed securities US$’000 665 501 1,166 The movement in financial assets at fair value through profit or loss during the period is as follows:- 2011 2010 US$‟000 - - - At 1 January Additions Disposals Unrealised gain on financial assets at fair value through profit or loss At 31 December Fair value measurements recognised in the statement of financial position 2011 US$’000 2010 US$‟000 - 1,115 - 51 1,166 115 - (118) 3 - The following table provides an analysis of financial instruments that are measured subsequent to initial recognition at fair value, grouped into level 1 to 3 based on the degree to which the fair value is observable: Level 1 fair value measurements are those derived from quoted prices (unadjusted) in active markets for identical assets and liabilities; Level 2 fair value measurements are those derived from inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices); and Level 3 fair value measurements are those derived from valuation techniques that include inputs for the asset or liability that are not based on observable market data (unobservable inputs). For the year ended 31 December 2011 Financial assets at FVPL Investments (FVTPL) Total Level 1 US$'000 Level 2 US$'000 Level 3 US$'000 Total US$'000 1,166 1,166 - - - - 1,166 1,166 For the year ended 31 December 2010 Financial assets at FVPL Investments (FVTPL) Total Level 1 US$'000 Level 2 US$'000 Level 3 US$'000 Total US$'000 - - - - - - - - There were no transfers between Level 1, 2 and 3 during the year. 30 Zoltav Resources Inc. (Formerly Crosby Asset Management Inc.) Notes to the financial statements continued 12. Financial assets at fair value through profit or loss continued Particulars and valuation basis of principal financial assets held at fair value through profit or loss are as follows:- Name Rosneft Oil Company – Ordinary shares Lukoil Holding – Ordinary shares Gazprom OAO – Ordinary shares Evergreen Energy Inc. – Ordinary shares Viridas PLC – Ordinary shares Aurum Mining Plc – Ordinary shares Total Number of shares 2011 Percentage held 2011 Number of shares 2010 Percentage held 2010 Fair-value Valuation basis 2011 US$’000 2010 US$’000 38,400 <0.001 3,050 <0.001 23,500 <0.001 57,692 0.21 44,000,000 3,333,333 7.61 2.82 - - - - - - - - - - - - 250 162 250 3 345 156 - Quoted market price at 31 December 2011 of US$6.51 per share, listed on NYSE Arca USA Quoted market price at 31 December 2011 of US$53.2 per share, listed on NYSE Arca USA - Quoted market price at 31 December 2011 of US$10.66 per share, listed on NYSE Arca USA - Quoted market price at 31 December 2011 of US$10.66 per share, listed on NYSE Arca USA - Quoted market price at 31 December 2011 of £0.0044, listed on London AIM - Quoted market price at 31 December 2011 of £0.03, listed on London AIM UK 1,166 - 31 Zoltav Resources Inc. (Formerly Crosby Asset Management Inc.) Notes to the financial statements continued 13. Trade and other payables Other payables Accrued charges Total 14. Share capital Authorised (par value of US$0.01 each) 2011 US$’000 2010 US$‟000 130 - 130 277 109 386 Number of ordinary shares Value US$‟000 At 31 December 2011 and 31 December 2010 5,000,000 50,000 Issued and fully paid (par value of US$0.01 each) At 31 December 2010 Issue of shares At 31 December 2011 309,842,043 65,402,301 375,244,344 3,098 654 3,752 On 17 January 2011 the Company issued 25,000,000 Ordinary shares of US$0.01 each for proceeds of £1,000,000 before expenses. On 13 January 2011 the Company issued 12,500,000 Ordinary shares of US$0.01 each for proceeds of £500,000 before expenses. On 11 February 2011 the Company issued 18,750,000 Ordinary shares of US$0.01 each for proceeds of £750,000 before expenses. On 18 April 2011 the Company issued 9,152,301 Ordinary shares on exercise of a warrant. 32 Zoltav Resources Inc. (Formerly Crosby Asset Management Inc.) Notes to the financial statements continued 15. Share-based payments Share Options and warrants The Company adopted an employee Share Option Scheme on 4 March 2005 (the “Employee Share Option Scheme”) in order to incentivise key management and staff. Pursuant to the Employee Share Option Scheme, a duly authorised committee of the Board of Directors of the Company may, at its discretion, grant options to eligible employees, including Directors, of the Company or any of its subsidiaries to subscribe for shares in the Company at a price not less than the higher of (i) the closing price of the shares of the Company on the Stock Exchange on the date of grant of the particular option or (ii) the average of the closing prices of the shares of the Company for the five trading days immediately preceding the date of the grant of the options or (iii) the nominal value of the shares. Options which lapse or are cancelled prior to their exercise date are deleted from the register of outstanding options and are available for re-use. Share options granted under the Employee Share Option Scheme are exercisable as follows: (1) (2) (3) the first 30% of the options between the first and tenth anniversary of the date of grant; the next 30% of the options between the second and tenth anniversary of the date of grant; and the remaining options between the third and tenth anniversary of the date of grant. The Company may only grant options up to a maximum of 25% of the Company‟s issued share capital (93,811,086 options as of 31 December 2011). The movement on share options and their weighted average exercise price are as follows for the reporting periods presented: 2011 Number Weighted average exercise price (pence) 2010 Number Weighted average exercise price (pence) Outstanding at 1 January Lapsed Issued in the period Outstanding at 31 December 7,350,000 (7,350,000) - 23.85 (23.85) - 16,650,000 (9,300,000) - - - 7,350,000 29.00 (33.07) - 23.85 At 31 December 2011, the Company had no outstanding share options. Date of grant 11 January 2005 23 March 2006 23 March 2007 11 January 2008 Total 2011 2010 Number Option exercise price (pence) Number Option exercise price (pence) - - - - - - - - - 2,350,000 200,000 150,000 4,650,000 7,350,000 21.15 95.20 32.65 22.25 During the year ended 31 December 2011 a total of 7,350,000 share options lapsed. No share options were granted during the year ended 31 December 2011 or 31 December 2010. US$498,943 (2010: US$141,000) of the employee share-based compensation is included in the income statement for 2011 No liabilities were recognised due to share-based payment transactions. 33 Zoltav Resources Inc. (Formerly Crosby Asset Management Inc.) Notes to the financial statements continued 15. Share-based payments continued Warrants In August 2011, the Company granted 10,550,000 warrants with an exercise price of 5.0 pence, vesting from 2 August 2011 to 2 August 2014. These were issued to the following: Peter Bayard Moss Robert John Richard Owen ECK Partners Holdings Limited Old Church Street Holdings Limited Total Number 250,000 300,000 5,000,000 5,000,000 10,550,000 The fair-value of these warrants was $498,743 at the grant date. All shares issued in respect of the warrants rank pari passu in all respects with the ordinary shares. Equity-settled share-based payments are measured at fair value (excluding the effect of non-market-based vesting conditions) as determined through use of the Black-Scholes technique, at the date of grant. The fair value determined at the grant date of the equity-settled share-based payments is expensed on a straight-line basis over the vesting period, based on the Company‟s estimate of shares that will eventually vest. The Black-Scholes formula is the option pricing model applied to the grant of share options and warrants in respect of calculating the fair values. Key inputs to the model are as follows: Share price at grant Warrant exercise price Expected life of warrants Expected volatility Expected dividend yield Risk free rate Fair value per share warrant Exchange rate used (USD:GBP) Share warrants 2 August 2011 3.85p 5.00p 3 years 150.9% 0% 5.3% 3.075p 1.54 Volatility has been based on the Company‟s trading performance to the grant date (valuation date). The risk free rate has been determined based on 5 year government bonds. Total fair value as considered in the Employee share-based compensation reserve was $498,743. Crosby Wealth Management (Asia) Limited (“CWMA”), a former subsidiary of the Company, which was disposed by the Company on 4 October 2010, adopted an employee share option scheme on 27 April 2007 (“CWMA Share Option Scheme”) in order to incentivise key management and staff of CWMA. Pursuant to the CWMA Share Option Scheme, a duly authorised committee of the board of directors of CWMA could, at its discretion, grant options to eligible employees, including directors, of CWMA or any of its subsidiaries to subscribe for shares in CWMA. These options were cancelled in 2010. 34 Zoltav Resources Inc. (Formerly Crosby Asset Management Inc.) Notes to the financial statements continued 16. Discontinued operations Revenue Cost of sales Gross profit Profit on financial assets at fair-value through profit and loss Other income Administrative expenses Impairment of available-for-sale investments Other operating expenses Profit from operations Finance costs Share of profits of jointly-controlled entities Profit before taxation Taxation Profit after taxation Gain on disposal of discontinued operations US$’000 - - - - - - - - - - - - - - - - 2011 2010 US$‟000 1,630 (291) 1,339 3 3,801 (3,330) (6) (221) 1,586 (65) 70 1,591 3 1,594 1,073 2,667 17. Operating leases The Company had no operating lease commitments at 31 December 2011 (2010: nil). 18. Capital commitments The Company had no material capital commitments at 31 December 2011 (2010: nil). 19. Contingencies The Company had no material contingencies at 31 December 2011 (2010: nil). 20. Financial risk management, objectives and policies In common with other businesses, the Company is exposed to risks that arise from its use of financial instruments. This note describes the Company‟s objectives, policies and processes for managing those risks and the methods used to measure them. Further quantitative information in respect of these risks is presented throughout these financial statements. The significant accounting policies regarding financial instruments are disclosed in note 3 and the critical accounting estimates and judgements are set out in note 4. The principal financial instruments used by the Company from which financial instrument risk arises, are as follows: Trade and other receivables Financial assets at fair-value through profit and loss Cash and cash equivalents Trade and other payables 2011 2010 US$‟000 US$’000 50 1,166 339 (130) 17 - 73 (386) Details of financial assets at fair-value through profit and loss are set out in note 12. These financial assets are valued using market rates quoted on the relevant stock exchange. 35 Zoltav Resources Inc. (Formerly Crosby Asset Management Inc.) Notes to the financial statements continued 20. Financial risk management, objectives and policies continued General objectives, policies and processes The Board has overall responsibility for the determination of the Company‟s risk management objectives and policies and, while retaining ultimate responsibility for them, it has delegated part of the authority for designing and operating processes that ensure the effective implementation of the objectives and policies to the Company‟s finance function. The Board receives reports from financial personnel through which it reviews the effectiveness of the processes put in place and the appropriateness of the objectives and policies it sets. The risks to which the Company is exposed and the policies adopted by the Board have not changed significantly in the year. The overall objective of the Board is to set policies that seek to reduce on-going risk as far as possible without unduly affecting the Company‟s competitiveness and flexibility. Further details regarding these policies are set out below: Credit risk Credit risk arises principally from the Company‟s financial investments, trade and other receivables and cash and cash equivalents. It is the risk that the value of the Company‟s investments will not be recovered and the risk that the counterparty fails to discharge its obligation in respect of the Company‟s trade and other receivables and cash balances. The maximum exposure to credit risk equals the carrying value of these items in the financial statements. Credit risk with cash and cash equivalents is reduced by placing funds with banks with acceptable credit ratings and indicated government support where applicable. Liquidity risk Liquidity risk arises from the Company‟s management of working capital and the amount of funding committed to its investment programme. It is the risk that the Company will encounter difficulties in meeting its financial obligations as they fall due. The Company‟s policy is to ensure that it will always have sufficient cash to allow it to meet its liabilities when they become due. The principal liabilities of the Company arise in respect of the on-going administration. Trade and other payables are all payable within six months. The Board receives cash flow projections on a regular basis as well as information on cash balances. Interest rate risk The Company is not currently exposed to interest rate risks on borrowings, however, it is exposed to interest rate risk in respect of surplus funds held on deposit. Market and Price risk The Company is exposed to equity securities price risk because investments are held by the Company and classified on the Statement of Financial Position as investments at fair value through profit or loss. Price risk, is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices (other than those arising from interest rate risk or currency risk), whether those changes are caused by factors specific to the individual financial instrument or its issuer, or factors affecting similar financial instruments traded in the market. The Company is exposed to market price risk arising from its investments in listed securities. The Company‟s Investment Advisors provide the Company with investment recommendations that are consistent with the Company‟s objectives. The Company‟s market risk exposure is managed through a series of investment restrictions, including limitations on the proportion of individual investment to the company‟s net assets (or total investments, jurisdiction of investment and liquidity of the investments. The basis of the valuation is set out in notes 3 and 4. A 5% movement in the listed prices of the investments held would result in a change in fair value of US$ 59,000. Management considers 5% to represent a significant movement for the purposes of monitoring performance. 36 Zoltav Resources Inc. (Formerly Crosby Asset Management Inc.) Notes to the financial statements continued 20. Financial risk management, objectives and policies continued Currency risk The Company does not currently enter into forward exchange contracts or otherwise hedge its potential foreign exchange exposure. The Company is exposed to currency risks in respect of its investments (see note 12) which are at risk from movements in the US Dollar, Russian Rouble and Sterling. A 5% fall in the value of the Company‟s investments arising from currency movements would impact the carrying value of those investments by approximately $59,000. 5% represents management‟s assessment of a substantial movement in a given period. Capital The Company considers its capital and reserves attributable to equity shareholders to be the Company‟s capital. In managing its capital, the Company‟s primary long-term objective is to provide a return for its equity shareholders through capital growth. Going forward the Company may seek additional investment funds and also maintain a gearing ratio that balances risks and returns at an acceptable level and also to maintain a sufficient funding base to enable the Company to meet its working capital needs. Details of the Company‟s capital is disclosed in the statement of changes in equity. There have been no other significant changes to the Company‟s management objectives, policies and processes in the year nor has there been any change in what the Company considers to be capital. The Company is not subject to externally imposed capital requirements. 21. Material related party transactions Transactions between the Company and its previous subsidiaries, which were related parties of the Company, are not disclosed in this note as they do not qualify as related parties. Remuneration for key management personnel of the Company, including amounts paid to the Company‟s Directors as follows are disclosed in note 7. Details of the significant transactions between the Company and other related parties during the year ended 31 December 2011 are as follows: During the year the Company had the following material related party transactions: 2011 2010 US$‟000 Rental expenses paid to former subsidiaries Management services fee paid to fellow subsidiaries Other fees paid to fellow subsidiaries and related parties Proceeds of sale of subsidiaries to former parent company Loan from former subsidiary Loan repayment to former subsidiary satisfied by issue of equity Loan repayment to former subsidiary satisfied by the offset of proceeds Waiver of amounts due to former subsidiaries US$’000 - 72 96 - - - - - (415) - - 659 1,000 (341) 15 157 On 31 August 2009, the previous group discontinued its joint venture with Apollo Multi Asset Management LLP (“Apollo”). After this date, Cloudy Lane Limited (“Cloudy Lane”) took a controlling interest in Apollo. Cloudy Lane is a vehicle that represents the Nomura Employee Benefits Trust of which Mr. Simon Fry, a former Director of the Company, who resigned on 31 January 2010, was a potential beneficiary. 37 Zoltav Resources Inc. (Formerly Crosby Asset Management Inc.) Notes to the financial statements continued 22. Disposal of subsidiary undertakings On 4 October 2010 (the “Date of Disposal”), the Company disposed its entire interests in Crosby Capital Partners Limited, Crosby (Hong Kong) Limited, Crosby Special Situations Fund Limited and its subsidiaries, Crosby Corporate Finance (Holdings) Limited and its subsidiaries and Crosby Asset Management (Holdings) Limited and its subsidiaries to the former ultimate parent company, Crosby Capital Limited (“CCL”). The assets and liabilities of the subsidiaries at the Date of Disposal were as follows: Property, plant and equipment Less accumulated depreciation Interest in jointly controlled entity Available-for-sale investments Note receivable Intangible assets Trade and other receivables Tax recoverable Financial assets at fair value through profit or loss Cash and cash equivalents Other payables Deferred income Provision for taxation Provision for liabilities Loan payable Obligations under finance leases Net assets of subsidiaries disposed of Less: Non-controlling interests Foreign exchange reserve Investment revaluation reserve Total consideration Disposal costs Gain on disposal 2010 US$‟000 506 (331) 70 688 525 21 1,017 74 16 3,958 (1,189) (5) (32) (2,895) (56) (259) 2,108 (1,616) (743) (322) (573) 659 (159) 1,073 The total consideration of US$659,000 was settled by offsetting the loan payable to a former fellow subsidiary of issuing of through CCL, with US$1,000,000 66,367,043shares of the Company at 0.325p per share. loan balance of US$341,000 settled by the residual The cash and cash equivalents disposed of was US$3,958,000 which has been included in the net cash outflow used in investing activities from discontinued operation. 23. Post-balance sheet events The Company has no material post-balance sheet events. 24. Date of approval of financial statements The financial statements were approved by the Board of Directors on 1 July 2012. 38 

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