Zoltav Resources Inc.
Annual Report and Audited Financial Statements
For the year ended 31 December 2012
CPA02-25763296-5
Zoltav Resources Inc.
Corporate information
Board of Directors
Symon Drake-Brockman - Executive Chairman
Stephen Lowden - Non Executive Director
David Francis - Non Executive Director
Audit Committee
Symon Drake-Brockman and Stephen Lowden
Remuneration Committee
Symon Drake-Brockman and Stephen Lowden
Nomination Committee
Symon Drake-Brockman and Stephen Lowden
Company Secretary
Ogier Corporate Services (Jersey) Limited
Ogier House, The Esplanade, St Helier,
Jersey, JE4 9WG, Channel Islands
Corporate Administrator
Ogier Corporate Services (Jersey) Limited
Ogier House, The Esplanade, St Helier,
Jersey, JE4 9WG, Channel Islands
Bankers
Barclays Private Clients International
Limited
Barclays House, Victoria Street, Douglas,
IM99 1AJ, Isle of Man
Deutsche Bank International Limited
St Paul’s Gate, New Street, St Helier,
Jersey, JE4 8ZB, Channel Islands
Nominated Adviser
Shore Capital & Corporate Limited
Bond Street House, 14 Clifford Street,
London, W1S 4JU, United Kingdom
Broker
Shore Capital Stockbrokers Limited
Bond Street House, 14 Clifford Street,
London, W1S 4JU, United Kingdom
Solicitors
Pinsent Mason
30 Crown Place, Earl Street, London,
EC2A 4ES, United Kingdom
Registrar
Computershare Investor Services (Jersey)
Limited
Queensway House, Hilgrove Street, St Helier,
Jersey, JE1 1ES, Channel Islands
Independent Auditor
Deloitte LLP
Lord Coutanche House, 66-68 The
Esplanade, St Helier, Jersey, JE4 8WA,
Channel Islands
Registered Office
89 Nexus Way, Camana Bay, Grand Cayman
KY1-9007, Cayman Islands
1
Zoltav Resources Inc.
Chairman’s report for the year ended 31 December 2012
Major post balance sheet events
• Proposed acquisition of CenGeo Holdings Limited (CenGeo) for US$26 million
(approximately £17.4 million) satisfied through the issue of 473,157,416 new Zoltav
Resources Inc. (Company) shares announced on 20 March 2013 (Acquisition).
• CenGeo, through a wholly owned subsidiary, holds the Koltogor Blocks comprising a
newly issued 25 year exploration and production licence (Koltogor Licence) containing
the undeveloped Koltogor oil discovery.
• Agreement signed with ARA Capital Limited, the Company's largest shareholder, giving
the Company the right to call US$20 million (approximately £13.4 million) of working
capital to help fund the work programme on the Koltogor Licence by way of a
subscription for new Company shares at 3.5 pence per share.
• Strengthening of the Board with appointments of Michael Lombardi and John Grimshaw
as Non-Executive Directors.
2012 Highlights
• Considerable progress was made on the Company’s acquisition strategy resulting in the
proposed acquisition of CenGeo.
• ARA Capital Limited provided £500,000 of working capital by way of a convertible loan in
support of acquisition strategy and has, post year-end, undertaken to convert this prior to
the publication of the Admission Document (Circular) in respect of the proposed
acquisition of CenGeo.
Summary financials
• Loss for the year ended 31 December 2012: US$3,528,000 (2011: US$2,340,000).
• Loss attributable to shareholders for the year ended 31 December 2012: US$3,528,000
(2011: US$2,340,000).
• Shareholders' equity as at 31 December 2012: US$130,000 (2011: US$1,425,000).
• Basic loss per share for the year ended 31 December 2012: US Cents 0.94 (2011: US
Cents 0.63).
Chairman’s statement
The strategy of the Company is to identify investment opportunities within the natural resources
sector in the CIS, where the Board believes there are attractive opportunities to create value for
shareholders through the acquisition of assets in various stages of development.
The Board was pleased to receive the support for this process from the Company’s largest
shareholder, ARA Capital Limited, which agreed to provide £500,000 of additional working capital
during the year through an unsecured convertible loan. £250,000 of this convertible loan was
drawn down by the Company during 2012, with the balance drawn down in February 2013.
Access to such working capital has allowed the Board the flexibility to carry out detailed due
diligence on target opportunities.
The Board has evaluated a small number of opportunities during the year and I am pleased to
advise that this work, as announced post year-end on 20 March 2013, has resulted in the
announcement of the Company's first major transaction: the proposed acquisition of the entire
issued share capital and shareholder loans of CenGeo which, through its wholly owned
subsidiary, holds the Koltogor Blocks containing the undeveloped Koltogor oil discovery. The
consideration payable for CenGeo is US$26 million (approximately £17.4 million) to be satisfied
entirely through the issue of 473,157,416 Company shares at 3.5 pence per share.
Completion of the transaction, which requires the announcement of and publication of the
Circular in relation to the Company (as enlarged by the Acquisition) and the Acquisition
agreement and the consent of shareholders being given at a General Meeting (GM), will mark
the Company’s transition from being an investment company to an oil and gas company.
2
Zoltav Resources Inc.
Chairman’s report for the year ended 31 December 2012 (continued)
Chairman’s statement (continued)
The Koltogor Licence covers a contiguous area of 528 square kilometres in the Khantiy-Mansisk
Autonomous Okrug, one of Russia’s most prolific oil producing regions. It is in close proximity to
a number of major producing fields including Samotlor, Russia’s largest, underlining the
prospectivity of the Koltogor area.
In parallel with the proposed acquisition of CenGeo, the Company also announced on 20 March
2013 that it has entered into a conditional agreement with its largest shareholder, ARA Capital
Limited, to provide US$20 million (approximately £13.4 million) of working capital to fund the
future work programme on the Koltogor Licence. ARA Capital Limited has also given an
undertaking to convert its £500,000 convertible loan prior to publication of the Circular.
Following completion of the Acquisition, the full ARA Capital Limited investment of US$20 million
and conversion of its loan, it is expected that ARA Capital Limited will own 45.0% of the enlarged
issued share capital of the Company; and that Mr Bukhtoyarov, through his company Bandbear
Limited (beneficial majority owner of CenGeo), will own 29.1% of the Company. The Company is
delighted to receive Mr Bukhtoyarov’s support for the Company's strategy and I look forward to
welcoming him as a shareholder.
Further information on the CenGeo transaction and the Koltogor Blocks can be obtained from the
Company’s 20 March 2013 announcement
the Company’s website
www.zoltav.com) and in the Circular which will be published in due course.
(available on
Financial results
Throughout 2012, the Company continued to operate as an investing company. The Company
made an operating loss of US$3,528,000 (2011: US$2,340,000). As announced at the half year,
the Company chose to realise investment gains on the investments made in Rosneft, Gazprom
and Lukoil. The Company sustained further losses on the investments made by the previous
Board including in relation to Evergreen Energy following its filing for bankruptcy in January
where the investment value has been written down. The value of the Company's shareholding in
Paternoster Resources Plc (formerly Viridas PLC) has also declined significantly.
Board appointments
In line with Company’s commitment to high standards of corporate governance, we announced,
on 20 March 2013, the appointments of Michael Lombardi and John Grimshaw to the Board; they
each bring a great deal of relevant legal and administrative experience to the Company.
Mr Lombardi is a highly experienced commercial lawyer. He is qualified as a Jersey solicitor and
is a senior partner of Ogier, one of the world’s largest offshore law firms, headquartered in
Jersey; and which acts as Company Secretary to the Company.
Mr Grimshaw has considerable experience advising on trust, tax and investment planning. He is
a member of the Society of Trust and Estate Practitioners and the Institute of Directors.
Outlook
Efforts over the past year to identify attractive acquisition opportunities have delivered an
excellent first transaction for the Company. I believe the CenGeo acquisition represents
extremely good value for shareholders and delivers a sizeable appraisal asset with near-term
production potential. It marks a truly transformational moment for the Company.
Symon Drake-Brockman
Chairman
21 May 2013
3
Zoltav Resources Inc.
The Board of Directors - Profiles
Symon Drake-Brockman - Executive Chairman
Symon Drake-Brockman, 51, 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.
Stephen Lowden - Non Executive director
Stephen Lowden, 53, 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 Former Soviet Union. 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, 43, has had a successful 25 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.
Directors' report for the year ended 31 December 2012
The Directors of the Company present their annual report together with the audited financial
statements for the year ended 31 December 2012.
Principal activity
The principal activity of the Company is an investing company, seeking investment opportunities
in the natural resources sector. The proposed acquisition of CenGeo will mark a transition of the
Company from being an investing company into an operational oil and gas company. The
acquisition constitutes a reverse takeover under the AIM Rules and will be conditional upon
shareholder approval at a GM.
Business review
A review of the business for the year and of future developments is given in the Chairman’s
Report. The Company has not yet set any key performance indicators as it is still only an
investing company. Following the successful acquisition of CenGeo and the development of the
Company into an operational oil and gas company, the Directors are currently considering
appropriate performance indicators as required by the AIM Admission Document of the enlarged
Company. The criteria used by the Board to assess the Company’s internal controls are
disclosed under the corporate governance report.
Results
The results of the Company are as shown on page 13.
Dividends
The Directors do not recommend the payment of a final dividend and no interim dividend was
paid during the year (2011: US$nil).
Share capital
Details of movements in the share capital of the Company during the year are set out in note 15
to the financial statements. The Company’s policy in respect of capital and risk management 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.
Directors
The membership of the Board who served during the year is set out on page 4.
Going concern
The Directors have prepared cashflow forecasts through to 31 May 2014, which take account of
the following:
•
•
•
•
the running costs of the Company as an investing company;
the continued support for its operating expenses provided by the Company's major
shareholder, ARA Capital Limited;
the proposed acquisition of CenGeo for US$26 million will be satisfied through the issue
of new shares in the Company. The Company has also entered into an agreement with
ARA Capital Limited to provide a further US$20 million working capital to fund the future
work programme; and
the acquisition constitutes a reverse takeover under the AIM Rules and therefore, trading
in the Company's shares has automatically been suspended under Rule 14. This does
not have any impact upon the going concern of the Company as it will be readmitted
upon fulfilling specific requirements of the Aim Rules.
5
Zoltav Resources Inc.
Directors’ report for the year ended 31 December 2012 (continued)
Going concern (continued)
The forecasts indicate sufficient cash balances remain throughout the period to 31 May 2014.
For this reason, the Directors 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 2012.
Interests in the ordinary shares of the Company are as follows:
Symon Drake-Brockman
David Francis
Stephen Lowden
Symon Drake-Brockman
David Francis
Stephen Lowden
31 December 2012
31 December 2011
Number of
ordinary
shares
Percentage
of existing
share
capital
Number of
ordinary
shares
Percentage
of existing
share
capital
9,381,108
3,754,244
-
13,135,352
2.5%
1.0%
-
3.5%
9,381,108
3,754,244
-
13,135,352
2.5%
1.0%
-
3.5%
31 December 2012
Number of ordinary
share options
31 December 2011
Number of ordinary
share options
25,000,000
5,000,000
10,000,000
40,000,000
-
-
-
-
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 2012 were as follows:
ARA Capital Limited
Mark Nicholas Tompkins
Number of
ordinary shares
Percentage
of existing
share
capital
168,860,154
45,100,000
213,960,154
45.0
12.0
57.0
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 those Rules the Directors have elected to prepare the financial statements in
accordance with International Financial Reporting Standards (IFRS) 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.
6
Zoltav Resources Inc.
Directors’ report for the year ended 31 December 2012 (continued)
Statement of Directors' responsibilities (continued)
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 IFRS. 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.
Independent Auditor
Deloitte LLP were appointed as the Company's independent 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
21 May 2013
7
Zoltav Resources Inc.
Corporate governance report for the year ended 31 December 2012
The Board is committed to high standards of corporate governance and supports the Combined
Code on Corporate Governance (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, whilst the Company is
not obliged to comply with the Code, it has chosen to adopt certain parts thereof.
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 pages 1 and 9 respectively.
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 responsible 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 an 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, Ogier Corporate Services
(Jersey) Limited.
The Board considers that the Independent Non-Executive Directors are free from any
relationship that could materially interfere with the exercise of their independent judgement, and
ensured that they have sufficient time to carry out their duties. The Board contained at least one
Independent Non-Executive Director throughout the year.
8
Zoltav Resources Inc.
Corporate governance report for the year ended 31 December 2012 (continued)
The Board (continued)
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.
Board Committees
The Audit Committee
The Audit Committee currently comprises Symon Drake-Brockman (Chairman) and Stephen
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 Remuneration Committee
The Remuneration Committee currently comprises Symon Drake-Brockman (Chairman) and
Stephen 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, Non-Executive Directors and (as
determined by the Board) senior management, determining the remuneration packages of the
Chairman, the Non-Executive Directors and senior management, reviewing and approving
performance-based remuneration and compensation for loss or termination of office payable to
Non-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 10 to 11.
The Nomination Committee
The Nomination Committee comprises Symon Drake-Brockman (Chairman) and Stephen
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.
9
Zoltav Resources Inc.
Corporate governance report for the year ended 31 December 2012 (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.
Meetings held during the year
Meetings attended during the year
Symon Drake-Brockman
Stephen Lowden
David Francis
Board
meetings
11
11
4
11
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.
10
Zoltav Resources Inc.
Corporate governance report for the year ended 31 December 2012 (continued)
Report on remuneration (continued)
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 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 for the year ended 31 December 2012 is shown in the table
below.
Symon
Drake-
Brockman
*2
US$
Stephen
Lowden
*2
David
Francis
*2
Robert
Owen
*1
Peter
Moss
*1
Johnny
Chan
*1
Total
US$
US$
US$
US$
US$
US$
Salary
236,759
132,882
132,882
Share based
compensation
1,357,708
543,083
271,541
-
-
-
-
-
502,523
-
2,172,332
2012 Total
Salary
2011 Total
1,594,467
96,250
96,250
675,965
61,600
61,600
404,423
61,600
61,600
-
38,490
38,490
-
89,722
89,722
- 2,674,855
361,183
361,183
13,521
13,521
*1 Resigned 3 August 2011
*2 Appointed 3 August 2011
Share price
During the year, the share price of the Company traded in the range of 1.875 pence to 6.875
pence. At 31 December 2012, the share price of the Company stood at 3.525 pence.
11
Zoltav Resources Inc.
Statement of comprehensive income for the year ended 31 December 2012
Continuing operations
Unrealised (loss)/gain on financial assets at fair value
through profit or loss
Realised gain on disposal of 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
Attributable to:
Owners of the Company
Loss for the year
Notes
2012
US$'000
2011
US$'000
12
12
5
6
9
(100)
51
35
-
(3,462)
-
(3,527)
(1)
(3,528)
-
(3,528)
-
77
(2,417)
(51)
(2,340)
-
(2,340)
-
(2,340)
(3,528)
(2,340)
Loss per share attributable to owners of the
Company during the year
10
US cents
US cents
(restated)
Basic - continuing operations
Diluted - continuing operations
(0.94)
(0.63)
(0.87)
(0.61)
All the items dealt with in arriving at the result for the period relate to continuing activities.
There were no components of 'other comprehensive income' which are required to be separately
disclosed during the current and preceding year.
The accompanying notes form an integral part of these financial statements.
13
Zoltav Resources Inc.
Statement of Financial Position as at 31 December 2012
31 December
2012
Notes
US$'000
31 December
2011
(restated)
US$'000
1 January
2011
US$'000
ASSETS
Non-current assets
Trade and other receivables
Current assets
Trade and other receivables
Financial assets at fair value through
Cash and cash equivalents
Total assets
LIABILITIES
Current liabilities
Trade and other payables
Non-current liabilities
Borrowings
Total liabilities
EQUITY
Share capital
Share premium
Other reserves
Accumulated deficit
Total equity attributable to owners of
the Company
Total equity and liabilities
12
13
14
15
-
44
404
108
556
556
81
345
426
-
50
1,166
339
1,555
1,555
38
17
-
73
90
128
130
386
-
130
-
386
3,752
8,892
44,411
(56,925)
130
556
3,752
8,892
42,178
(53,397)
1,425
1,555
3,098
6,022
41,679
(51,057)
(258)
128
The accompanying notes form an integral part of these financial statements.
The financial statements on pages 13 to 40 were approved by the Board of Directors and
authorised for issue on 21 May 2013.
Symon Drake-Brockman
Chairman
14
Zoltav Resources Inc.
Statement of changes in equity for the year ended 31 December 2012
Share
capital
Share
premium
Capital
reserve
At 1 January 2011
Employee share-based
compensation (note 16)
Lapse of share options
Issue of shares
Transactions with owners
Loss for the year
US$’000
3,098
US$’000 US$’000
40,444
6,022
-
-
654
654
-
-
-
2,870
2,870
-
-
-
-
-
-
At 31 December 2011
3,752
8,892
40,444
Prior period adjustment
(note 16)
As restated
Convertible loan note-
equity component (note 14)
Employee share-based
compensation (note 16)
Transactions with owners
Loss for the year
-
-
-
3,752
8,892
40,444
-
-
-
-
-
-
-
-
-
-
-
-
Employee
share-based
compensation
reserve
US$’000
1,235
499
(1,235)
-
(736)
-
499
1,235
1,734
-
2,172
2,172
-
At 31 December 2012
3,752
8,892
40,444
3,906
The accompanying notes form an integral part of these financial statements.
Convertible
loan note
Accumulated
deficit
Total equity
US$’000
-
-
-
-
-
-
-
-
-
61
-
61
-
61
US$’000
(51,057)
US$’000
(258)
-
1,235
-
1,235
499
-
3,524
4,023
(2,340)
(2,340)
(52,162)
1,425
(1,235)
-
(53,397)
1,425
-
-
-
61
2,172
2,233
(3,528)
(3,528)
(56,925)
130
15
Zoltav Resources Inc.
Statement of cash flows for the year ended 31 December 2012
Operating activities
Loss before taxation
Adjustments for:
Finance costs
Employee share-based compensation
Unrealised loss/(gain) on financial assets at fair value through profit or
loss
Realised gain on disposal of financial assets at fair value through profit
or loss
Depreciation of property, plant and equipment
Write off of property, plant and equipment
Operating cash outflow before working capital changes
Decrease/(increase) in trade and other receivables
Decrease in trade and other payables
Net cash outflow used in operating activities
Investing activities
Purchase of property and equipment
Disposal/(purchase) of investment securities
Net cash inflow/(outflow) used in investing activities
Financing activities
Issue of share capital
Issue of convertible Loan Note
Net cash inflow generated from financing activities
Net (decrease)/increase in cash and cash equivalents
Cash and cash equivalents as at 1 January
Cash and cash equivalents as at 31 December
The accompanying notes form an integral part of these financial statements.
2012
US$'000
2011
US$'000
(3,528)
(2,340)
1
2,172
100
(35)
-
-
(1,290)
6
(49)
(1,333)
-
697
697
-
405
405
(231)
339
108
-
499
(51)
-
40
30
(1,822)
(32)
(256)
(2,110)
(32)
(1,115)
(1,147)
3,523
-
3,523
266
73
339
16
Zoltav Resources Inc.
Notes to the financial statements for the year ended 31 December 2012
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 (IFRS) 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 became an investing company with no subsidiary undertakings.
The financial statements for the year ended 31 December 2012 (including the comparatives for
the year ended 31 December 2011) were approved by the Board of Directors on 21 May 2013.
2.
Adoption of new and revised standards
The accounting policies adopted are consistent with those of the previous financial year, except
for the following new and amended IFRS and IFRIC interpretations effective as of 1 January
2012.
(a) Amendments early adopted by the Company:
There were no standards, amendments and interpretations adopted early by the Company.
(b) Standards, amendment to standards and interpretations effective and relevant to the
Company's operations:
Amendments resulting from improvements to IFRS did not have any impact on the accounting
policies, financial position or performance of the Company.
(c) New standards, amendment to standards and interpretations effective but not relevant:
•
•
•
IFRS 1 Amendment: Severe hyperinflation & removal of fixed dates for first time
adopters;
IFRS 7 Amendment: Disclosures - transfers of financial assets;
IAS 12: Deferred Tax - recovery of underlying assets.
(d) Standards, amendments and interpretations not yet effective:
•
•
•
•
•
•
•
•
•
•
IAS 1 Amendment: Financial statement presentation - presentation of items of other
comprehensive income;
IAS 19 Revised: Employee benefits;
IAS 27 Revised: Separate financial statements;
IAS 28 Revised: Investments in associates and joint ventures;
IAS 32 Amendment: Offsetting financial assets and financial liabilities;
IFRS 1 Amendment: Government loans;
IFRS 7 Amendment: Financial instruments: disclosures - enhanced derecognition
disclosure requirements;
IFRS 9: Financial instruments - classification and measurement;
IFRS 10: Consolidated financial statements;
IFRS 11: Joint arrangements;
17
Zoltav Resources Inc.
Notes to the financial statements for the year ended 31 December 2012 (continued)
2.
Adoption of new and revised standards (continued)
(d) Standards, amendments and interpretations not yet effective (continued):
IFRS 12: Disclosure of interests in other entities;
IFRS 13: Fair value measurement;
IFRIC 20: Stripping costs in the production phase of a surface mine;
•
•
•
• Annual improvements May 2012.
Except for IFRS 9 and IFRS 13, the Directors do not expect that the adoption of these accounting
standards and interpretations in future periods will have a material impact on the operations of
the Company.
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 the years
presented unless otherwise stated. The adoption of new or amended IFRS 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 have prepared cashflow forecasts through to 31 May 2014, which take account of
the following:
•
•
•
•
the running costs of the Company as an investing company;
the continued support for its operating expenses provided by the Company's major
shareholder, ARA Capital Limited;
the proposed acquisition of CenGeo for US$26 million will be satisfied through the issue
of new shares in the Company. The Company has also entered into an agreement with
ARA Capital Limited to provide a further US$20 million working capital to fund the future
work programme; and
the acquisition constitutes a reverse takeover under the AIM Rules and therefore, trading
in the Company's shares has automatically been suspended under Rule 14. This does
not have any impact upon the going concern of the Company as it will be readmitted
upon fulfilling specific requirements of the Aim Rules.
The forecasts indicate sufficient cash balances remain throughout the period to 31 May 2014.
For this reason, the Directors continue to adopt the going concern basis in preparing the 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.
18
Zoltav Resources Inc.
Notes to the financial statements for the year ended 31 December 2012 (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.
(c)
Leases
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.
19
Zoltav Resources Inc.
Notes to the financial statements for the year ended 31 December 2012 (continued)
3.
Summary of significant accounting policies (continued)
(c)
Leases (continued)
Assets acquired under finance leases (continued)
Finance charges implicit in the lease payments are charged to the statement of comprehensive
income 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 statement of comprehensive income 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 statement of comprehensive income in the accounting period in which
they are incurred.
(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 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 statement of comprehensive income.
Financial assets
The Company classifies its financial assets into one of the following categories: financial assets
at fair value through profit or loss and receivables.
20
Zoltav Resources Inc.
Notes to the financial statements for the year ended 31 December 2012 (continued)
(e)
Financial instruments (continued)
Financial assets (continued)
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:
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:
•
•
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.
Trade and other receivables
Trade 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:
21
Zoltav Resources Inc.
Notes to the financial statements for the year ended 31 December 2012 (continued)
3.
Summary of significant accounting policies (continued)
(e)
Financial instruments (continued)
Trade and other receivables (continued)
• significant financial difficulty of the debtor;
• a breach of contract, such as default or delinquency in interest or principal payments;
•
the debtor will enter bankruptcy or other
that
financial
it becoming probable
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, 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 statement of comprehensive income 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.
Convertible debt
The fair value of the liability portion of a convertible loan note is determined using a market
interest rate for an equivalent non-convertible loan note. This amount is recorded as a liability on
an amortised cost basis until it is extinguished on conversion or maturity of the bonds. The equity
component is determined by deducting the amount of the liability component from the fair value
of the compound instrument as a whole. This is recognised and included in shareholders' equity,
net of income tax effects and is not subsequently remeasured.
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.
22
Zoltav Resources Inc.
Notes to the financial statements for the year ended 31 December 2012 (continued)
3.
Summary of significant accounting policies (continued)
(e)
Financial instruments (continued)
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
statement of comprehensive income.
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
statement of comprehensive income.
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)
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 statement of comprehensive
income.
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.
Notes to the financial statements for the year ended 31 December 2012 (continued)
3.
Summary of significant accounting policies (continued)
(f)
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.
(g)
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 prior periods on the application of the reverse acquisition accounting
when the Company made its first acquisition.
(h)
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:
• 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.
(i)
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.
24
Zoltav Resources Inc.
Notes to the financial statements for the year ended 31 December 2012 (continued)
3.
(i)
Summary of significant accounting policies (continued)
Employee benefits (continued)
Retirement benefit schemes
No pension contributions were payable in the year. In 2010, the Company participated only in
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
Directors and key management.
All 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.
All share-based compensation is ultimately recognised as an expense in the statement of
comprehensive income 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.
(j)
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.
25
Zoltav Resources Inc.
Notes to the financial statements for the year ended 31 December 2012 (continued)
3.
(j)
Summary of significant accounting policies (continued)
Provisions and contingent liabilities (continued)
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.
(k)
Related parties
Parties are considered to be related to the Company if:
•
•
•
•
•
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 the first bullet point or is
an entity under the control, joint control or significant influence of such individuals.
(l)
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.
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 when preparing financial statements. 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:
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.
26
Zoltav Resources Inc.
Notes to the financial statements for the year ended 31 December 2012 (continued)
4.
Critical accounting estimates and judgements (continued)
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 16 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.
Valuation of liability and equity components of convertible debt:
The fair value of the liability component, included in non-current borrowings, was calculated
using a market interest rate for an equivalent non-convertible loan note. The residual amount,
representing the value of the equity conversion option, is included in shareholders' equity in other
reserves.
5.
Other income
Foreign exchange gain, net
Management fee income
6.
Finance costs
Interest payable
2012
US$’000
2011
US$’000
-
-
-
65
12
77
2012
US$’000
2011
US$’000
1
-
7.
Employee benefit expenses (including directors’ remuneration)
Salaries, allowances and benefits in kind
Share-based compensation
National insurance costs
2012
US$’000
2011
US$’000
503
2,172
-
2,675
575
499
14
1,088
Three Directors served during the current year. The remuneration of the highest paid Director
was US$1,594,467 (2011: US$96,250). Details of Directors’ benefit expense are disclosed in
the report on remuneration on pages 10 to 11.
27
Zoltav Resources Inc.
Notes to the financial statements for the year ended 31 December 2012 (continued)
8.
Loss before taxation
Loss before taxation is arrived at after charging/(crediting):
Auditors’ remuneration:
Fee payable to the Company’s auditor for the audit of the
Company’s financial statements
Depreciation
Employee benefits expenses (including Directors’ remuneration)
Foreign exchange (loss)/gain
Operating lease charges in respect of rental premises
9. Taxation
2012
US$’000
2011
US$’000
45
-
2,675
(2)
-
37
40
1,088
65
147
The Company is subject to Jersey income tax at the rate of 0% (2011 0%).
The Company has significant unrelieved tax losses, the utilisation of which is uncertain and
consequently no deferred tax asset has been recognised.
10.
Loss per share attributable to owners of the Company
Basic loss per share is calculated by dividing the loss attributable to owners of the Company by
the weighted average number of ordinary shares in issue during the year.
Diluted loss per share is calculated by adjusting the weighted average number of ordinary shares
outstanding to assume conversion of all dilutive potential ordinary shares. The Company has two
categories of dilutive potential ordinary shares: convertible loans and share options/warrants.
Loss attributable to owners of the Company - Basic
Loss attributable to owners of the Company - Diluted
Weighted average number of shares for calculating basic loss
per share
Effect of dilutive potential ordinary shares - warrants
Effect of dilutive potential ordinary shares - share options
Effect of dilutive potential ordinary shares - convertible loan
Weighted average number of shares for calculating diluted loss
per share
Basic loss per share
Diluted loss per share
2012
US$’000
2011
US$’000
(3,528)
(3,527)
(2,340)
(2,340)
Number of
Shares
Number of
shares
375,244,344 369,188,858
10,550,000
7,350,000
-
10,550,000
14,016,667
3,623,188
403,434,199 387,088,858
US cents
US cents
(0.94)
(0.87)
(0.63)
(0.61)
28
Zoltav Resources Inc.
Notes to the financial statements for the year ended 31 December 2012 (continued)
10.
Loss per share attributable to owners of the Company (continued)
The diluted loss per share for 2012 is US Cents 0.87 taking into account the existing warrants,
share options and the convertible Loan Note (2011: US Cents 0.61).
11.
Property, plant and equipment
Cost
At 1 January 2011
Additions during 2011
Disposals during 2011
At 31 December 2012 and 31 December 2011
Depreciation and impairment
At 1 January 2011
Charge for 2011
Impairment during 2011
Disposals during 2011
At 31 December 2012 and 31 December 2011
Net book value at 31 December 2012 and 31 December 2011
12.
Financial assets at fair value through profit or loss
Office
equipment
US$’000
61
32
(93)
-
23
40
30
(93)
-
-
Listed securities:
Equity securities - USA
Equity securities - United Kingdom
Fair value of listed securities
2012 2011
US$’000
US$’000
1
403
404
665
501
1,166
The movement in financial assets at fair value through profit or loss during the period is as
follows:
At 1 January
Additions during the year
Disposals during the year
Unrealised (loss)/gain on financial assets at fair value
through profit or loss
Realised gain on disposal of financial assets at fair value
through profit or loss
At 31 December
2012
US$’000
2011
US$’000
1,166
-
(697)
(100)
35
404
-
1,115
-
51
-
1,166
Fair value measurements recognised in the statement of financial position
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:
29
Zoltav Resources Inc.
Notes to the financial statements for the year ended 31 December 2012 (continued)
12.
Financial assets at fair value through profit or loss (continued)
Fair value measurements recognised in the statement of financial position (continued)
•
•
•
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
2012
Financial assets at FVPL
Investments (FVTPL)
For the year ended 31 December
2011
Financial assets at FVPL
Investments (FVTPL)
Level 1
US$'000
Level 2
US$'000
Level 3
US$'000
Total
US$'000
404
-
-
404
Level 1
US$'000
Level 2
US$'000
Level 3
US$'000
Total
US$'000
1,166
-
-
1,166
There were no transfers between level 1, 2 and 3 during the year (2011: none).
30
Zoltav Resources Inc.
Notes to the financial statements for the year ended 31 December 2012 (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:
Rosneft Oil Company
ordinary shares
Lukoil Holding
ordinary shares
Gazprom OAO
ordinary shares
Evergreen Energy Inc.
ordinary shares
Paternoster Resources
Plc
ordinary shares
Aurum Mining Plc
ordinary shares
Number of
shares
2012
Percentage
held
2012
Number of
shares
2011
Percentage
held
2011
Fair value
2012
US$'000
-
-
-
-
-
-
38,400
3,050
23,500
-
-
-
57,692
0.21
57,692
0.21
-
-
-
1
Valuation basis
Fair value
2011
US$'000
$'000
250 Not applicable
162 Not applicable
250 Not applicable
3 Quoted market price at 31
December 2012 of US$0.0122 per
share, listed on NYSE Arca USA
44,000,000
7.61
44,000,000
7.61
221
345 Quoted market price at 31
3,333,333
2.82
3,333,333
2.82
182
December 2012 of £0.0031, listed
on London AIM UK
156 Quoted market price at 31
December 2012 of £0.0337, listed
on London AIM UK
404
1,166
31
Zoltav Resources Inc.
Notes to the financial statements for the year ended 31 December 2012 (continued)
13.
Trade and other payables
Accrued expenses
14.
Borrowings
Convertible Loan Note
2012
US$’000
2011
US$’000
81
130
2012
US$’000
2011
US$’000
345
-
The Company issued an unsecured 1.0% interest bearing convertible loan note (Loan Note), at
the par amount of £500,000 on 15 September 2012 (Issue Date) to be drawn down in two
tranches of £250,000 each. The Loan Note matures three years from the issue date at the
nominal value of £500,000 or at any time during the life of the Loan Note, can be converted into
shares at the holder's option at the rate of 1 share per £0.023. The values of the liability
component and the equity conversion component were determined at the issuance of the Loan
Note.
The fair value of the liability component, included in non-current borrowings, was calculated
using a market interest rate for an equivalent non-convertible loan note. The residual amount,
representing the value of the equity conversion option, is included in shareholders' equity in other
reserves.
During the year ended 31 December 2012, only the first tranche of £250,000 was drawn down by
the Company.
The Loan Note is recognised in the statement of financial position as follows:
Face value of Loan Note
Equity component
Liability component on initial recognition
Interest expense
Liability component
2012
US$’000
2011
US$’000
405
(61)
344
1
345
-
-
-
-
-
The fair value of the liability component of the Loan Note at 31 December 2012 amounted to
US$345,583 (2011: US$nil). The fair value was calculated using cash flows discounted at a rate
based on the borrowings rate of 6.64%.
32
Zoltav Resources Inc.
Notes to the financial statements for the year ended 31 December 2012 (continued)
15.
Share capital
Authorised
(par value of US$0.01 each)
Number of
ordinary shares
Value
US$’000
At 31 December 2012 and 31 December 2011
5,000,000,000
50,000
Issued and fully paid
(par value of US$0.01 each)
At 31 December 2012 and 31 December 2011
375,244,344
3,752
16.
Share-based payments
Share options
The Company may only grant options up to a maximum of 25% of the Company’s issued share
capital. All shares issued in respect of the share options rank pari-passu in all respects with the
ordinary shares.
At 31 December 2012, the Company had a total of 47,350,000 outstanding share options (2011:
restated 7,350,000). 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.
Date of grant
11 January 2005
23 March 2006
23 February 2007
11 January 2008
31 October 2012
2012
Number
2,350,000
200,000
150,000
4,650,000
40,000,000
47,350,000
Option
exercise price
(pence)
21.15
95.20
32.65
22.25
1.00
2011 (restated)
Number
2,350,000
200,000
150,000
4,650,000
-
7,350,000
Option
exercise price
(pence)
21.15
95.20
32.65
22.25
-
During the year ended 31 December 2012 a total of 40,000,000 share options were issued to the
current Directors of the Company. No share options were granted during the year ended 31
December 2011.
Initial Share Options
The Company adopted an employee Share Option Scheme on 4 March 2005 (Share Option
Scheme) in order to incentivise key management and staff. Pursuant to the Share Option
Scheme, a duly authorised committee of the Board of Directors of the Company, at its discretion,
granted options to eligible employees, including Directors, of the Company or any of its
subsidiaries to subscribe for shares in the Company.
The following share options were granted to the former employees and directors of the Company
under the Initial Share Option Scheme adopted on 4 March 2005 (Initial Share Options) and are
still in existence:
33
Zoltav Resources Inc.
Notes to the financial statements for the year ended 31 December 2012 (continued)
16.
Share-based payments (continued)
Initial Share Options (continued)
2012
2011 (restated)
Number
Weighted
average
exercise price
(pence)
Number
Weighted
average
exercise price
(pence)
Outstanding at 1 January
and 31 December
7,350,000
24.11
7,350,000
24.11
The 7,350,000 Initial Share Options which were granted to then employees and directors of the
Company between 2005 and 2008 were erroneously accounted for as lapsed in the year ended
31 December 2011 following change of ownership of the Company and departure of those
employees and directors. Based on additional information obtained and confirmation from former
directors, it has been determined these options are still in existence and as such have been re-
instated in the statement of changes in equity. Correction of this error has not affected the
statement of comprehensive income or statement of financial position as the full fair value had
been spread over the three years to 31 December 2010 from the respective grant dates.
Share options granted under the Initial Share Option scheme were exercisable as follows:
•
•
•
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.
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 binomial option pricing
model, 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 binomial option pricing model applied to the grant of share options in respect of calculating
the fair values. Key inputs to the model are as follows:
Share price at grant
Option exercise price
Expected life of option
Expected volatility
Expected dividend yield
Share options
11 January
2005
23 March
2006
23 February
2007
11 January
2008
20.75p
21.15p
10 years
60 - 65%
5.0%
93.25p
95.20p
10 years
60 - 65%
5.0%
36.25p
32.65p
10 years
60 - 65%
5.0%
22.25p
22.25p
10 years
60 - 65%
5.0%
Volatility has been based on the historical trading performance of the Company and comparable
companies. The risk free rate has been determined based on 10 year government bonds.
Total fair value as considered in the employee share-based compensation reserve for Initial
Share Options was US$1,235,000 (2011: restated US$1,235,000).
34
Zoltav Resources Inc.
Notes to the financial statements for the year ended 31 December 2012 (continued)
16.
Share-based payments (continued)
Directors Share Options
Share options granted to the current Directors of the Company on 31 October 2012 (Directors
Share Options) were exercisable at any time between the commencement of the option period
and third anniversary of the date of grant. Share options granted under this scheme were as
follows:
2012
Number
Weighted
average
exercise price
(pence)
2011
Number
Weighted
average
exercise price
(pence)
Outstanding at 1 January
Issued in the period
Outstanding at 31
December
-
40,000,000
40,000,000
-
1.00
1.00
-
-
-
-
-
-
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 in
respect of calculating the fair values. Key inputs to the model are as follows:
Share price at grant
Option exercise price
Expected life of option
Expected volatility
Expected dividend yield
Risk free rate
Fair value per share option
Exchange rate used (USD:GBP)
Share options
31 October
2012
3.45p
1.00p
3 years
216.1%
0.0%
0.49%
3.342p
1.61529
Volatility has been based on the Company’s trading performance from 1 January 2011. 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 for Directors
Share Options was US$2,172,332 (2011: US$nil).
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:
35
Zoltav Resources Inc.
Notes to the financial statements for the year ended 31 December 2012 (continued)
16.
Share-based payments (continued)
Warrants (continued)
Peter Bayard Moss
Robert John Richard Owen
ECK Partners Holdings Limited
Old Church Street Holdings Limited
Number
250,000
300,000
5,000,000
5,000,000
10,550,000
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 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
217.5%
0%
5.3%
3.075p
1.54
Volatility has been based on the Company’s trading performance from 1 January 2011. 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 for warrants
was US$498,943 (2011: US$498,943).
Total share options and warrants
Total fair value for both share options and warrants as considered in the employee share-based
compensation reserve was US$3,906,275 (2011: restated US$1,733,943).
US$2,172,332 of the employee share-based compensation is included in the statement of
comprehensive income for 2012 (2011: US$498,943).
No liabilities were recognised due to share-based payment transactions.
17.
Operating leases
The Company had no operating lease commitments at 31 December 2012 (2011: none).
36
Zoltav Resources Inc.
Notes to the financial statements for the year ended 31 December 2012 (continued)
18.
Capital commitments
The Company had no material capital commitments at 31 December 2012 (2011: none).
19.
Contingencies
The Company had no material contingencies at 31 December 2012 (2011: none).
20.
Financial risk management, objectives and policies
In common with other businesses, the Company is exposed to risks that arise from its use of
financial instruments. This note describes the Company’s objectives, policies and processes for
managing those risks and the methods used to measure them. Further quantitative information in
respect of these risks is presented throughout these financial statements.
The significant accounting policies regarding financial instruments are disclosed in note 3 and the
critical accounting estimates and judgements are set out in note 4.
The principal financial instruments used by the Company from which financial instrument risk
arises, are as follows:
Trade and other receivables
Financial assets at fair value through profit and loss
Cash and cash equivalents
Trade and other payables
Borrowings
2012 2011
US$’000
US$’000
24
404
108
(81)
(345)
50
1,166
339
(130)
-
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.
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.
37
Zoltav Resources Inc.
Notes to the financial statements for the year ended 31 December 2012 (continued)
20.
Financial risk management, objectives and policies (continued)
Credit risk (continued)
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
convertible Loan Note matures three years from the issue date at its full nominal value of
£500,000 or at any time during the life of the Loan Note, can be converted into shares at the
holder's option at the rate of 1 share per £0.023.
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 material interest rate risk on borrowings as the interest
rate on the Loan Notes is fixed; 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$20,000. Management considers
5% to represent a significant movement for the purposes of monitoring performance.
Currency risk
The Company does not currently enter into forward exchange contracts or otherwise hedge its
potential foreign exchange exposure.
38
Zoltav Resources Inc.
Notes to the financial statements for the year ended 31 December 2012 (continued)
20.
Financial risk management, objectives and policies (continued)
Currency risk (continued)
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 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 $20,000. 5% represents management’s assessment of a
substantial movement in a given period.
Capital
The Company considers its capital and reserves attributable to equity shareholders to be the
Company’s capital. In managing its capital, the Company’s primary long-term objective is to
provide a return for its equity shareholders through capital growth. Going forward the Company
may seek additional investment funds and also maintain a gearing ratio that balances risks and
returns at an acceptable level and also to maintain a sufficient funding base to enable the
Company to meet its working capital needs. Details of the Company’s capital is disclosed in the
statement of changes in equity.
There have been no other significant changes to the Company’s management objectives,
policies and processes in the year nor has there been any change in what the Company
considers to be capital.
The Company is not subject to externally imposed capital requirements.
21. Material related party transactions
Remuneration for key management personnel of the Company, including amounts paid to the
Company’s Directors are disclosed in note 7. Details of the significant transactions between the
Company and other related parties during the year ended 31 December 2012 are as follows:
Management services fee paid to fellow subsidiaries
Other fees paid to fellow subsidiaries and related
parties
22.
Post-balance sheet events
2012 2011
US$’000
US$’000
-
179
72
96
On 9 January 2013, Zoltav Resources Holdings (Jersey) Limited (ZRH) was established in
Jersey as the principal investment holding company for the Group.
On 10 January 2013, as a consequence of the appointment of Ogier Corporate Services (Jersey)
Ltd as Company Secretary, announced on 12 October 2012, the address of its registered office
has changed to 89 Nexus Way, Camana Bay, Grand Cayman, Cayman Islands, KY1-9007.
On 29 January 2013, ZRI Services (UK) Ltd (ZRI) was established in the United Kingdom as a
platform to research, identify, analyse and arrange investments for ZRH and ZRI and to provide
certain office and administrative support services for London-based staff and consultants for ZRH
and ZRI in connection with their present and future investments.
On 5 February 2013, the second and final tranche of £250,000 of the £500,000 unsecured
convertible loan to the Company provided by its largest shareholder, ARA Capital Limited, was
drawn down and received by the Company.
39
Zoltav Resources Inc.
Notes to the financial statements for the year ended 31 December 2012 (continued)
22.
Post-balance sheet events (continued)
On 13 February 2013 the deposit of £23,413 on the Company’s former office at 4 Old Park Lane
was released and payment of additional £3,630 was made in full settlement of lease obligations.
On 19 March 2013, John Grimshaw and Michael Lombardi were appointed as additional
independent Non-Executive Directors of the Company.
On 20 March 2013, the Company announced the proposed acquisition of a private company
CenGeo for US$26 million, satisfied through the issue of approximately 473,157,416 new
Company shares. CenGeo, through its wholly owned subsidiary ZAO Siberian Geologicheskaya
Kompanya (SibGeCo), holds the Koltogor Licence located in the Khantiy-Mansisk region of
western Siberia. The Koltogor Licence contains the undeveloped Koltogor oil field. SibGeCo
has also successfully obtained a 25 year exploration and production licence covering the
Koltogor oil field. The Koltogor Licence was issued by the Russian Federal Agency for Subsoil
Use (Rosnedra) on 15 February 2013. The Company has commissioned a competent person’s
report to assess the volume of contingent resources, the results of which will be included in the
Circular.
The Company has also entered into a conditional agreement with its largest shareholder, ARA
Capital Limited, to provide US$20 million of working capital to fund the future work programme
on the Koltogor Licence. Under the terms of the agreement, ARA Capital Limited will subscribe
for new ordinary shares in the Company at a price of 3.5 pence per share (ARA Subscription).
ARA Capital Limited has also given an undertaking to convert its £500,000 convertible loan prior
to publication of the Circular and to vote in favour of the resolutions at the GM. Further details will
be set out in the Circular which will be sent to shareholders in due course.
Following completion of the Acquisition and the full ARA Subscription and conversion of its loan it
is expected that ARA Capital Limited will own 45.0% of the enlarged issued share capital of the
Company and Mr Bukhtoyarov, through his company Bandbear Limited (beneficial majority
owner of CenGeo), will own 29.1%.
On 9 April 2013, the Company entered into an unsecured loan agreement in the amount of
£250,000 with ARA Capital Limited (Additional Loan Note) to provide additional working capital
to the Company prior to the proposed acquisition of CenGeo. The Additional Loan Note bears
interest at an annual rate of 50 basis points over LIBOR. The Additional Loan Note can be
repaid by the Company at any time in cash or in shares but is expected to be repaid out of the
proceeds of the ARA Subscription. The Additional Loan Note was drawn down in full on 12 April
2013.
23.
Date of approval of financial statements
The financial statements were approved by the Board of Directors on 21 May 2013.
24.
Availability of annual report and financial statements and GM
Copies of the Company's annual report and financial statements will be sent to Registered
Shareholders but will not be sent to holders of Depository Interests. The annual report and
financial statements will be available for inspection at the Company’s registered office and may
also be viewed at the Company's website at: www.zoltav.com. A notice of a GM will be sent to
shareholders in due course.
40