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Zoltav Resources Inc (ZOL)

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Monday 02 July, 2012

Zoltav Resources Inc

Final Results and notice of AGM

RNS Number : 5877G
Zoltav Resources Inc
02 July 2012
 



2 July 2012

 

Zoltav Resources Inc.

(the 'Company' or 'ZOL')

 

Final Results for the year ended 31st December 2011 and notice of AGM

 

Chairman's Statement

 

During the year significant steps were taken to transform the direction and strategy of Zoltav Resources Inc.:

In August 2011 the previous board of the Company stepped down and a new board was appointed, following the investment by ARA Capital Limited ("ARA") into ZOL. I was appointed Executive Chairman and Steve Lowden and David Francis joined the board as Non-Executive Directors.   During the period from September through to December, the board reduced overheads of the Company, including closing its offices in London at no cost to the Company. We terminated a number of existing consultancy agreements with third party advisors.

The board is now confident that the Company is in a position to focus on its investing strategy to explore opportunities in the natural resources sector.

 

During the year there were a number of key mile stones:

·      In the first quarter of 2011 the Company successfully completed a series of capital raisings for £2.25 million, to fund its investments into six listed natural resources companies.

·      In April ARA Capital Limited acquired a 25% interest in the Company.  This was increased to 40% in August, and to 45% in November.

·      In September  Old Church Street Holdings Limited sold its stake below 3%  

·      In November and December Mark Tompkins acquired a stake of 9.06% in the Company. This has subsequently increased to 12.02% in 2012.

·      In January 2012 we realised a profit of $36,000 by selling three of our investments in Russian oil and gas companies.

 

Outlook

 

In the first six months of 2012, we have seen presidential elections in Russia and unprecedented dislocation in the European markets. This has led to a sharp decline in natural resources prices in the past three months. The board believes the global economic scenario will continue to put pressure on commodity prices in the second half of the year. We continue to focus on potential acquisitions that will provide value to our shareholders. However, we do see some need for an adjustment in the expectations on the part of sellers in the current market.  The board believes that the current decline in commodity prices will provide significant opportunities in the second half of 2012.

 

 

Symon Drake-Brockman

Executive Chairman

 

 

 

Further information relating to Zoltav can be found at the Company's website: http://zoltav.com/ 

 

Enquiries:

 

Zoltav Resources Inc

Tel. +41 (0)22 338 2774

Symon Drake-Brockman, Executive Chairman


Martin Bowen, Company Secretary




Shore Capital

Tel. +44 (0)20 7408 4090

Pascal Keane / Toby Gibbs - Corporate Finance


Jerry Keen - Corporate Broking




 

Zoltav Resources Inc. (Formerly Crosby Asset Management Inc.)

Income Statement for the year ended 31 December 2011










2011

2010


Notes

 US$'000

 US$'000

Continuing operations




Unrealised gain on financial assets at fair value through profit or loss

12

51

                      -  

Other income

5

77

175

Administrative expenses


(2,417)

(763)

Other operating expenses


(51)

(329)

Loss from operations


(2,340)

(917)

Finance costs

6

                       -  

(24)

Loss before taxation


(2,340)

(941)

Taxation

9

                       -  

                      -  

Loss for the year from continuing operations


(2,340)

(941)





Discontinued operations




Profit from  discontinued operations

16

                       -  

2,667

(Loss)/profit for the year


(2,340)

1,726





Attributable to:




Owners of the Company




Loss for the year from continuing operations


(2,340)

(941)

Profit from discontinued operations


-

1,752



(2,340)

811

Non-controlling interests




Profit from discontinued operations


                       -  

915

(Loss) /profit for the year


(2,340)

1,726









(Loss)/profit per share attributable to owners of the Company during the year

10

US cents

US cents





Basic




Continuing operations


(0.63)

(0.36)

Discontinued operations


                -  

0.67



(0.63)

0.31

Diluted




Continuing operations


(0.62)

(0.35)

Discontinued operations


                -  

0.65



(0.62)

0.30

 

 

The accompanying notes form an integral part of these financial statements.

 

 

 

 

 

 

 

 

 

Statement of comprehensive income for the year ended 31 December 2011


2011


2010



US$'000


US$'000






(Loss)/profit for the year


(2,340)


1,726






Other comprehensive income:










Exchange differences on translating foreign operations


-


181

Exchange differences arising from disposal of foreign subsidiaries


-


(743)






Other comprehensive loss for the year before and net of tax


-


(562)






Total comprehensive (loss)/income for the year before and net of tax


(2,340)


1,164






Attributable to:





Owners of the Company


(2,340)


249

Non-controlling interests


-


915



(2,340)


1,164

 

 

The accompanying notes form an integral part of these financial statements.

 

 

 

Zoltav Resources Inc. (Formerly Crosby Asset Management Inc.)

Statement of Financial Position as at 31 December 2011



2011

2010


Notes

US$'000

US$'000

ASSETS








Non-current assets




Property, plant and equipment

11

-

38



-

38





Current assets




Trade and other receivables


50

17

Financial assets at fair value through profit or loss

12

1,166

-

Cash and cash equivalents


339

73



1,555

90





Total assets


1,555

128





LIABILITIES








Current liabilities




Trade and other payables

13

130

386

Total liabilities


130

386





EQUITY








Share capital

14

3,752

3,098

Share premium


8,892

6,022

Other reserves


(11,219)

(9,378)

 

Total equity/(capital deficiency) attributable to owners of the Company


 

 

1,425

 

 

(258)





Total equity and liabilities


1,555

128

 




 

The financial statements were approved by the Board of Directors and authorised for issue on 1 July 2012.

 

 

Simon Drake-Brockman

 Director

 

 

The accompanying notes form an integral part of these financial statements.

 


Zoltav Resources Inc. (Formerly Crosby Asset Management Inc.)

Statement of changes in equity for the year ended 31 December 2011.




Equity/(capital deficiency) attributable to owners of the Company



31 December 2010

Share capital

Share premium

Capital reserve

Employee share-based compensation reserve

Foreign exchange reserve

Investment revaluation reserve

Retained deficit

Total

Non-controlling interests

Total equity/capital deficiency


US$'000

US$'000

US$'000

US$'000

US$'000

US$'000

US$'000

US$'000

US$'000

US$'000












At 1 January 2010

2,435

6,344

23,455

3,254

25

-

(36,505)

(992)

1,030

38

Employee share-based compensation

-

-

-

176

-

-

-

176

1

177

Lapse of share options

-

-

-

(2,081)

-

-

2,081

-

-

-

Issue of shares for repayment of loan

663

(322)

-

-

-

-

-

341

-

341

Effect of exercising share options of a subsidiary

-

-

-

(32)

-

-

-

(32)

45

13

Dividend paid to non-controlling shareholders

-

-

-

-

-

-

-

-

(375)

(375)

Release on disposal of subsidiaries

-

-

-

-

-

-

-

-

(1,616)

(1,616)

Reserves appropriation upon disposal of subsidiaries

-

-

16,989

(82)

543

(6)

(17,444)

-

-

-

Transactions with owners

663

(322)

16,989

(2,019)

543

(6)

(15,363)

485

(1,945)

(1,460)

Profit for the year

-

-

-

-

-

-

811

811

915

1,726












Other comprehensive income:











Available-for-sale investments gain on revaluation

-

-

-

-

-

322

-

322

-

322

Recycle to income statement:











Provision for impairment

-

-

-

-

-

6

-

6

-

6

Upon disposal of subsidiaries






(322)


(322)


(322)

Exchange difference:











On translating foreign exchange operations

-

-

-

-

175

-

-

175

-

175

On recycle to income statement upon disposal of subsidiaries

-

-

-

-

(743)

-

-

(743)

-

(743)

Total comprehensive income for the year

-

-

-

-

(568)

6

811

249

915

1,164

At 31 December 2010

3,098

6,022

40,444

1,235

-

-

(51,057)

(258)

-

(258)

 

The accompanying notes form an integral part of these financial statements.

 

 

Zoltav Resources Inc. (Formerly Crosby Asset Management Inc.)

Statement of changes in equity for the year ended 31 December 2011 continued




Equity/(capital deficiency) attributable to owners of the Company



31 December 2011

Share capital

Share premium

Capital reserve

Employee share-based compensation reserve

Foreign exchange reserve

Investment revaluation reserve

Retained deficit

Total

Non-controlling interests

Total equity/capital deficiency


US$'000

US$'000

US$'000

US$'000

US$'000

US$'000

US$'000

US$'000

US$'000

US$'000












At 1 January 2011

3,098

6,022

40,444

1,235

-

-

(51,057)

(258)

-

(258)

Employee share-based compensation

-

-

-

499

-

-

-

499

-

499

Lapse of share options

-

-

-

(1,235)

-

-

1,235

-

-

-

Issue of shares

654

2,870

-

-

-

-

-

3,524

-

3,524

Transactions with owners

654

2,870

-

(736)

-

-

1,235

4,023

-

4,023












Loss for the year

-

-

-

-

-

-

(2,340)

(2,340)

-

(2,340)























At 31 December 2011

3,752

8,892

40,444

499

-

-

(52,162)

1,425

-

1,425

 

The accompanying notes form an integral part of these financial statements.

 

 

Zoltav Resources Inc. (Formerly Crosby Asset Management Inc.)

Statement of cash flows for the year ended 31 December 2011

 




2011

2010


US$'000

US$'000

Operating activities






Continuing operations



Loss before taxation

(2,340)

(941)

Adjustments for:



Finance costs

-

24

Employee share-based compensation

499

101

Unrealised gain on financial assets at fair value through profit or loss

(51)

-

Depreciation of property, plant and equipment

40

22

Write off of property, plant and equipment

30

-

Waiver of amounts due to former fellow subsidiaries

-

(157)

Foreign exchange gains

-

(5)

Operating cash flow before working capital changes

(1,822)

(956)

Increase in trade and other receivables

(32)

(4)

(Decrease)/Increase in trade and other payables

(256)

42

Net cash outflow used in operating activities from continuing operations

(2,110)

(918)




Discontinued operations



Net cash outflow used in operating activities from discontinued operations

-

(2,296)

Net cash outflow used in operating activities

(2,110)

(3,214)




Investing activities



Continuing operations



Purchase of property and equipment

(32)

-

Purchase of investment securities

(1,115)

-

Net cash outflow used in investing activities from continuing operations

(1,147)

-




Discontinued operations



Net cash outflow used in investing activities from discontinued operations

-

(3,856)

Net cash outflow used in investing activities

(1,147)

(3,856)




Financing activities



Continuing operations



Loan from a former fellow subsidiary

-

1,000

Issue of share capital

3,523

-

Net cash inflow generated from financing activities from continuing operations

3,523

1,000




Discontinued operations



Net cash outflow used in financing activities from discontinued operations

-

(564)

Net cash inflow generated from used in financing activities

3,523

436




Net increase/(decrease) in cash and cash equivalents

266

(6,634)




Cash and cash equivalents as at 1 January

73

6,723

Effect of exchange rate fluctuations

-

(16)

Cash and cash equivalents as at 31 December

339

73

 

 

The accompanying notes form an integral part of these financial statements.

 

 

 

 

Zoltav Resources Inc. (Formerly Crosby Asset Management Inc.)

Notes to the financial statements

 

1.      General information

 

The Company was incorporated in the Cayman Islands, which does not prescribe the adoption of any particular accounting framework. The Board has therefore adopted International Financial Reporting Standards ("IFRSs") issued by the International Accounting Standards Board and as adopted by the European Union. The Company's shares are listed on the AIM of London Stock Exchange. The financial statements are prepared in United States Dollars.

 

The Company previously acted as the holding company of a group. Following the disposal of all the subsidiaries to its former holding company, Crosby Capital Limited on 4 October 2010, the Company has become an investing company with no subsidiary undertakings.

 

The financial statements for the year ended 31 December 2011 (including the comparatives for the year ended 31 December 2010) were approved by the Board of Directors on 1 July 2012. Amendments to the financial statements are not permitted after they have been approved.

 

2.      Adoption of new and revised Standards

In the current year, the new and revised Standards and Interpretations adopted have not affected the amounts reported in these financial statements.

 

Standards not affecting the reported results nor the financial position

 

The following new and revised Standards and Interpretations have been adopted in the current year. Their adoption has not had any significant impact on the amounts reported in these financial statements but, with the exception of the amendment to IFRS 1, may impact the accounting for future transactions and arrangements.

 

Amendment to IFRS 3 Business Combinations

IFRS 3 has been amended such that only those non-controlling interests which are current ownership interests and which entitle their holders to a proportionate share of net assets upon liquidation can be measured at fair value or the proportionate share of net identifiable assets. Other non-controlling interests are measured at fair value, unless another measurement basis is required by IFRSs.

Amendment to IFRS 7 Financial Instruments: Disclosures

The amendment clarifies the required level of disclosure around credit risk and collateral held and provides relief from disclosure of renegotiated financial assets.

 

Amendment to IFRS 1 Limited Exemption from Comparative IFRS 7 Disclosures for First-time Adopters

The amendment provides a limited exemption for first-time adopters from providing comparative fair-value hierarchy disclosures under IFRS 7.

IAS 24 (2009) Related Party Disclosures

The revised Standard has a new, clearer definition of a related party, with inconsistencies under the previous definition having been removed.

Amendment to IAS 32 Classification of Rights Issues

Under the amendment, rights issues of instruments issued to acquire a fixed number of an entity's own non-derivative equity instruments for a fixed amount in any currency and which otherwise meet the definition of equity are classified as equity.

Amendments to IFRIC 14 Prepayments of a Minimum Funding Requirement

The amendments now enable recognition of an asset in the form of prepaid minimum funding contributions.

Improvements to IFRSs 2010

Aside from those items already identified above, the amendments made to standards under the 2010 improvements to IFRSs have had no impact on the group.

 

 

2.         Adoption of new and revised Standards continued

At the date of authorisation of these financial statements, the following Standards and Interpretations which have not been applied in these financial statements were in issue but not yet effective (and in some cases had not yet been adopted by the EU):

 

IFRS 1 (amended)                                           Severe Hyperinflation and Removal of Fixed Dates for First-time     

                                                                            adopters

IFRS 7 (amended)                                           Disclosures - Transfers of Financial Assets

IFRS 9                                                                Financial Instruments

IFRS 10                                                              Consolidated Financial Statements

IFRS 11                                                              Joint Arrangements

IFRS 12                                                              Disclosure of Interests in Other Entities

IFRS 13                                                              Fair Value Measurement

IAS 1 (amended)                                              Presentation of Items of Other Comprehensive Income

IAS 12 (amended)                                            Deferred Tax: Recovery of Underlying Assets

IAS 19 (revised)                                                Employee Benefits

IAS 27 (revised)                                                Separate Financial Statements

IAS 28 (revised)                                                Investments in Associates and Joint Ventures

IFRIC 20                                                             Stripping Costs in the Production Phase of a Surface Mine

 

The directors do not expect that the adoption of the standards listed above will have a material impact on the financial statements of the Company in future periods, except as follows:

 

·        IFRS 9 will impact both the measurement and disclosures of Financial Instruments;

·        IFRS 13 will impact the measurement of fair value for certain assets and liabilities as well as the associated disclosures;

 

Beyond the information above, it is not practicable to provide a reasonable estimate of the effect of these standards until a detailed review has been completed.

 

3. Summary of significant accounting policies

 

(a)        Basis of preparation

 

The significant accounting policies that have been used in the preparation of these financial statements are summarised below. These policies have been consistently applied to all the years presented unless otherwise stated. The adoption of new or amended IFRSs and the impacts on the financial statements, if any, are disclosed in note 2 to the financial statements.

 

The financial statements have been prepared under historical cost basis except for financial instruments classified as fair value through profit or loss, which are measured at fair value. The measurement bases are fully described in the accounting policies below.

 

The Directors note that during the year ended 31 December 2010, all of the previous group's trading subsidiaries were disposed. The Company is now an investing company, seeking opportunities in the natural resources sector.

 

 The Directors have prepared cash flow forecasts through to 31 July 2013, which take account of the following:        

·      the running costs of the Company as an investing company; and

·      no acquisition will be undertaken unless sufficient funds are available to complete that acquisition and projected acquisitions.

 

The forecasts indicate sufficient cash balances remain throughout the period to 31 July 2013. For this reason, they continue to adopt the going concern basis in preparing the consolidated financial statements.

 

It should be noted that accounting estimates and assumptions are used in preparation of the financial statements. Although these estimates are based on management's best knowledge and judgement of current events and actions, actual results may ultimately differ from those estimates. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements are set out in note 4 to the financial statements.

 

 

 

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.

 

Finance charges implicit in the lease payments are charged to the income statement over the period of the lease so as to produce an approximately constant periodic rate of charge on the remaining balance of the obligations for each accounting period. Contingent rentals are charged to the income statement in the accounting period in which they are incurred.

 

Operating lease charges as the lessee

Where the Company has the rights to use of assets held under operating leases, payments made under the leases are charged to the income statement on a straight-line basis over the lease terms except where an alternative basis is more representative of the time pattern of benefits to be derived from the leased assets. Lease incentives received are recognised in the income statement as an integral part of the aggregate net lease payments made. Contingent rentals are charged to the income statement in the accounting period in which they are incurred.

 

3. Summary of significant accounting policies continued

 

(d)           Foreign currencies

 

The financial statements are presented in United States Dollars, which is also the functional currency of the Company.

 

Foreign currency transactions are translated into the functional currency of the individual entity using the exchange rates prevailing at the dates of the transactions.

 

Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation of monetary assets and liabilities denominated in foreign currencies at year-end exchange rates are recognised in the income statement.

 

Foreign exchange  gains and losses arising from translation of foreign operations are recognised in the statement of comprehensive income.

 

Non-monetary items carried at fair value that are denominated in foreign currencies are retranslated at the rates prevailing on the date when the fair value was determined and are reported as part of the fair value gain or loss. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated.

 

(e)           Financial instruments

 

Financial assets and financial liabilities are recognised when and only when, the Company becomes a party to the contractual provisions of the instrument. Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognised immediately in the income statement.

 

Financial assets

The Company classifies its financial assets other than hedging instruments into one of the following categories: financial assets at fair value through profit or loss, available-for-sale investments and loans and receivables.

 

Regular purchases of financial assets are recognised on the trade date. Management determines the classification of its financial assets at initial recognition depending on the purpose for which the financial assets were acquired and where allowed and appropriate, re-evaluates this designation at every reporting date. The accounting policies adopted for each category are set out below.

 

Financial assets at fair value through profit or loss

Financial assets at fair value through profit or loss include financial assets held for trading and financial assets designated upon initial recognition at fair value through profit or loss. Financial assets are classified as held for trading if they are acquired for the purpose of selling in the near term, or it is part of a portfolio of identified financial instruments that are managed together and for which there is evidence of a recent pattern of short-term profit-taking.

 

Financial assets may be designated at initial recognition as at fair value through profit or loss if the following criteria are met:

 

(i)            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

 

(ii)           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.

 

 

3. Summary of significant accounting policies continued

 

(e)           Financial instruments continued

 

Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are subsequently measured at amortised cost using the effective interest method, less any impairment losses. Amortised cost is calculated taking into account any discount or premium on acquisition and includes fees that are an integral part of the effective interest rate and transaction cost.

 

Impairment losses on loans and receivables are provided for when objective evidence is received that the Company will not be able to collect amounts due to it in accordance with the original terms of the receivables. The amount of the loss is measured as the difference between the asset's carrying amount and the present value of estimated future cash flows, excluding future credit losses that have not been incurred, discounted at the financial asset's original effective interest rate (i.e. the effective interest rate computed at initial recognition). The amount of the loss is recognised in the income statement for the period in which the impairment occurs.

 

Objective evidence of impairment of individual financial assets includes observable data that comes to the attention of the Company about one or more of the following loss events:

 

(i)            significant financial difficulty of the debtor;

(ii)           a breach of contract, such as default or delinquency in interest or principal payments;

(iii)          it becoming probable that the debtor will enter bankruptcy or other financial reorganisation; and

(iv)           significant changes in the technological, market, economic or legal environment that have an adverse effect on the debtor.

 

Loss events in respect of a Company of financial assets include observable data indicating that there is a measurable decrease in the estimated future cash flows from the Company of financial assets. Such observable data includes but not limited to adverse changes in the payment status of debtors in the Company and, national or local economic conditions that correlate with defaults on the assets in the Company.

 

If, in a subsequent period(s), the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed to the extent that it does not result in a carrying amount of the financial asset exceeding what the amortised cost would have been had the impairment not been recognised at the date the impairment is reversed.

 

 The amount of the reversal is recognised in the income statement in the period in which the reversal occurs.

 

Financial liabilities and equity

Financial liabilities and equity instruments issued by the Company are classified according to the substance of the contractual arrangements entered into and the definitions of a financial liability and an equity instrument. An equity instrument is any contract that evidences a residual interest in the assets of the Company after deducting all of its liabilities. The accounting policies adopted in respect of financial liabilities and equity instruments are set out below.

 

Other financial liabilities

Other financial liabilities include other payables and are recognised initially at fair value and subsequently measured at amortised cost, using the effective interest method.

 

Equity instruments

Equity instruments issued by the Company are recorded at the proceeds received, net of direct issue costs.

 

Debt for equity swaps

Where debt is settled by the issue of equity the equity issued is treated as issued at the value of the amount payable where the creditor is a shareholder.

 

Derecognition

Financial assets are derecognised when the rights to receive cash flows from the assets expire or, the financial assets are transferred and the Company has transferred substantially all the risks and rewards of ownership of the financial assets. On derecognition of a financial asset, the difference between the asset's carrying amount and the sum of the consideration received and the cumulative gain or loss that had been recognised directly in equity is recognised in the income statement.

 

For financial liabilities, they are removed from the balance sheet when the obligation specified in the relevant contract is discharged, cancelled or expires. The difference between the carrying amount of the financial liability derecognised and the consideration paid is recognised in the income statement.

 

3. Summary of significant accounting policies continued

 

(e)        Financial instruments continued

 

Cash and cash equivalents

Cash and cash equivalents comprise cash in hand and amounts repayable on demand with banks and short-term highly liquid investments which are readily convertible into known amounts of cash without notice and are subject to an insignificant risk of changes in value and which were within three months of maturity when acquired, less advances from banks repayable within three months from the date of the advance if the advances form part of the Company's cash management.

 

(f)        Impairment of non-financial assets

 

The Company assesses at each reporting date whether there is an indication that an asset may be impaired. If any such indication exists, or when annual impairment testing for an asset is required, the Company estimates the asset's recoverable amount. An asset's recoverable amount is the higher of an asset's or cash-generating unit's fair value less costs to sell and its value in use and is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets. Where the carrying amount of an asset exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. In determining fair value less costs to sell, an appropriate valuation model is used.

 

Impairment losses of continuing operations are recognised in profit or loss in those expense categories consistent with the function of the impaired asset. For assets excluding goodwill, an assessment is made at each reporting date as to whether there is any indication that previously recognised impairment losses may no longer exist or may have decreased. If such indication exists, the Company makes an estimate of the recoverable amount. A previously recognised impairment loss is reversed only if there has been a change in the estimates used to determine the asset's recoverable amount since the last impairment loss was recognised. If that is the case, the carrying amount of the asset is increased to its recoverable amount. That increased amount cannot exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised for the asset in prior years. Such reversal is recognised in profit or loss.

 

(g)       Income tax

 

Current income tax assets and/or liabilities comprise those obligations to, or claims from, fiscal authorities relating to the current or prior reporting period, that are unpaid at the reporting date. They are calculated according to the tax rates and tax laws applicable to the fiscal periods to which they relate, based on the taxable profit for the year. All changes to current tax assets or liabilities are recognised as a component of tax expense in the income statement.

 

Deferred tax is calculated using the liability method on temporary differences at the reporting date between the carrying amounts of assets and liabilities in the financial statements and their respective tax bases. Deferred tax liabilities are generally recognised for all taxable temporary differences. Deferred tax assets are recognised for all deductible temporary differences, tax losses available to be carried forward as well as other unused tax credits, to the extent that it is probable that taxable profits, including existing taxable temporary differences, will be available against which the deductible temporary differences, unused tax losses and unused tax credits can be utilised.

 

Deferred tax assets and liabilities are not recognised if the temporary difference arises from goodwill or from initial recognition (other than in a business combination) of assets and liabilities in a transaction that affects neither taxable nor accounting profit or loss.

 

Deferred tax liabilities are recognised for taxable temporary differences arising on interests in associates and jointly controlled entities, except where the Company is able to control the reversal of the temporary differences and it is probable that the temporary differences will not reverse in the foreseeable future.

 

Deferred tax is calculated, without discounting, at tax rates that are expected to apply in the period the liability is settled or the asset realised, provided they are enacted or substantively enacted at the reporting date.

 

 

3. Summary of significant accounting policies continued

 

(g)       Income tax continued

 

Changes in deferred tax assets or liabilities are recognised in the income statement or in other comprehensive income or directly in equity if they relate to items that are charged or credited to other comprehensive income or directly to equity.

 

Current tax assets and liabilities are presented net if the Company has the legally enforceable right to set off those recognised amounts; and intends either to settle on a net basis or to realise the asset and settle the liability simultaneously.

 

(h)      Share capital, share premium and capital reserve

 

Ordinary shares are classified as equity. Share capital is determined using the nominal value of shares that have been issued. Any transaction costs associated with the issuing of shares are deducted from share premium (net of any related income tax benefit) to the extent they are incremental costs directly attributable to the equity transaction. Any discount on the issue of ordinary shares is deducted from the share premium account.

 

The capital reserve arose in a prior period on the application of the reverse acquisition of accounting when the Company made its first acquisition.

 

 (i)      Revenue recognition

 

Revenue, which is the fair value of consideration received or receivable, is recognised when it is probable that economic benefits will flow to the Company, when the revenue can be measured reliably, and the stage of completion of the transaction and the costs incurred for the transaction as well as the costs to complete the transaction can be measured reliably, and on the following bases:

 

(i)            Management fee income, included in other income, is recognised as the services are provided.

(ii)           Interest income is recognised as it accrues, taking into account the effective yield on the asset.

(iii)          Dividend income is recognised when the right to receive payment is established.

 

The policies on financial assets at fair value through profit or loss are dealt with in note 3(e) to the financial statements.

 

(j)         Employee benefits

 

Employee leave entitlements

Employee entitlements to long service payment and annual leave are recognised when they accrue to employees. Provision is made for the estimated liabilities for long service payment and annual leave as a result of services rendered by employees up to the reporting date.

 

Non-accumulating compensated absences are not recognised until the time of leave.

 

Retirement benefit schemes

No pension contributions were payable in the year. In 2010 the Company participated only in the defined contribution pension schemes and paid contributions to independently administered funds on a mandatory or contractual basis. The assets of these schemes are held separately from those of the Company in independently administered funds. The retirement benefit schemes are generally funded by payments from employees and by the relevant Company. The Company has no further payment obligations once the contributions have been paid. The contributions are recognised as an employee benefit expense on an accruals basis.

 

Share-based employee compensation

The Company operates equity-settled share-based compensation plans to remunerate its employees and directors.

 

All employee services received in exchange for the grant of any share-based compensation are measured at their fair values. These are indirectly determined by reference to the fair value of the share options and warrants awarded. Their value is appraised at the grant date and excludes the impact of any non-market vesting conditions.

 

3. Summary of significant accounting policies continued

 

(j)         Employee benefits continued

 

All share-based compensation is ultimately recognised as an expense in the income statement unless it qualifies for recognition as an asset, with a corresponding credit to employee share-based compensation reserve in equity. If vesting periods or other vesting conditions apply, the expense is allocated over the vesting period, based on the best available estimate of the number of share options expected to vest. Non-market vesting conditions are included in assumptions about the number of options that are expected to become exercisable. Estimates are subsequently revised, if there is any indication that the number of share options expected to vest differs from previous estimates. No adjustment to expense recognised in prior periods is made if fewer share options ultimately are exercised than vested.

 

Upon exercise of share options or warrants the proceeds received net of any directly attributable transaction costs up to the nominal value of the shares issued are allocated to share capital and the amount previously recognised in employee share-based compensation reserve will be transferred out with any excess being recorded as share premium.

 

When the share options or warrants have vested and then lapsed, the amount previously recognised in the employee share-based compensation reserve is transferred to the retained profits or accumulated losses.

 

Bonus plans

The Company recognises a liability and an expense for bonuses where contractually obliged or where there is a past practice that has created a constructive obligation.

 

(k)      Provisions and contingent liabilities

 

Provisions are recognised when the Company has a present obligation (legal or constructive) as a result of a past event, and it is probable that an outflow of economic benefits will be required to settle the obligation and a reliable estimate of the amount of the obligation can be made. Where the time value of money is material, provisions are stated at the present value of the expenditure expected to settle the obligation.

 

All provisions are reviewed at each reporting date and adjusted to reflect the current best estimate.

 

Where it is not probable that an outflow of economic benefits will be required, or the amount cannot be estimated reliably, the obligation is disclosed as a contingent liability, unless the probability of outflow of economic benefits is remote. Possible obligations, whose existence will only be confirmed by the occurrence or non-occurrence of one or more future uncertain events not wholly within control of the Company are also disclosed as contingent liabilities unless the probability of outflow of economic benefits is remote.

 

(l)      Related parties

 

Parties are considered to be related to the Company if:

 

(i)            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;

(ii)           the Company and the party are subject to common control;

(iii)          the party is an associate of the Company or a joint venture in which the Company is a venturer;

(iv)           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;

(v)            the party is a close family member of such a party referred to in (i) or is an entity under the control, joint control or significant influence of such individuals; or

 

.(m)        Segment reporting

 

The Company operated in the year in one segment, investment in equity instruments of mining operations based in the former Soviet Union. The management information received by the Board is prepared on this basis.

 

 

3. Summary of significant accounting policies continued

 

(n)      Discontinued operations

 

A discontinued operation is a component of the Company that either has been disposed of or is classified as held for sale, and:

(i)            represents a separate major line of business or geographical area of operations;

(ii)           is part of a single co-ordinated plan to dispose of a separate major line of business or geographical area of operations; or

(iii)          is a subsidiary acquired exclusively with a view to trade.

 

Profit or loss from discontinued operations, including prior year components, are presented as a single movement in the income statement. This amount, which comprises the post-tax profit or loss of discontinued operations and the post-tax gain or loss resulting from the disposal, is further analysed in note 16.

 

The disclosures for discontinued operations in the prior year relates to all operations that have been discontinued by the reporting date for the latest period presented.

 

4.         Critical accounting estimates and judgements

 

Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

 

Critical accounting estimates and assumptions

The Company makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next accounting year are discussed below:

 

Going concern

The financial statements have been prepared on going concern basis, the details of which are provided in note 3(a) to the financial statements.

 

Valuations of share options or warrants granted

The fair value of share options or warrants granted was calculated using the Black-Scholes Pricing Model which requires the input of highly subjective assumptions, including the volatility of the share price. Because changes in subjective input assumptions can materially affect the fair value estimate, in the opinion of the Directors of the Company, the existing model will not always necessarily provide a reliable single measure of the fair value of the share options. Details of the inputs are set out in note 15 to the financial statements.

 

Valuation of financial assets categorised as at fair-value through profit or loss:

The fair-value of listed investments classified as at fair-value through profit or loss is based on the listed share prices of the respective investments and translated to United States Dollars using the exchange rate ruling at the balance sheet date.

 

Critical judgements in applying the Company's accounting policies

Management in applying the accounting policies, which are described in note 3 to the financial statements, considers that they have not had to make any significant judgements.

 

 

5.   Other income - continuing operations

 


2011

2010


US$'000

US$'000




Foreign exchange gain, net

65

5

Management fee income

12

4

Waiver of amounts due to former fellow subsidiaries

-

157

Other

-

9

Total

77

175

 

 

6.   Finance costs

 


2011

2010


US$'000

US$'000




Interest payable

-

24

 

 

7.   Employee benefit expenses (including directors' remuneration)

 


 

2011

 

2010


US$'000

US$'000




Fees

-

29

Salaries, allowances and benefits in kind

575

2,281

Commissions paid and payable

-

368

Bonus paid and payable

-

23

Share-based compensation

499

177

Pensions - defined contribution scheme

-

18

National insurance costs

14

26

Total

1,088

2,922




Analysed into:



Continuing operations

1,088

357

Discontinued operations

-

2,565


1,088

2,922




 

The number of current directors is three, seven directors in total served in the year. The remuneration of the highest paid director was $96,250 (2010: 617,400). Details of directors' employee benefit expense are disclosed in the Report on Remuneration on pages 9 to 10.

 

8.   Loss before taxation - continuing operations


 

2011

2010


US$'000

US$'000

Loss before taxation is arrived at after charging/(crediting):






Auditors' remuneration:



Fee payable to the Company's auditor for the audit of the Company's financial statements

 

 

37

 

 

35

Fee payable to the Company's auditor for the other services:



-  regulatory assistance

-

2

Depreciation

 

40

 

22

Employee benefits expenses (including directors' remuneration)

 

780

 

357

Foreign exchange gain

65

5

Operating lease charges in respect of rental premises

147

21







 

 

 



 

9.      Taxation

 


2011

2010


US$'000

US$'000




Current tax credit:



- United Kingdom: under provision in prior years:

-

                   35

- Overseas

-

(32)

Total

-

3




Analysed into:



Continuing operations

-

-

Discontinued operations

-

3

Total

-

3





 

United Kingdom and overseas income tax for the year have been calculated at the rates prevailing in the relevant jurisdictions.

 

The Company has significant unrelieved tax losses, the utilisation of which is uncertain and consequently no deferred tax asset has been recognised.

 

 

The charge for the year can be reconciled to the (loss)/profit per the income statement as follows:





2011

2010


US$'000

US$'000

(Loss)/profit before tax

(2,340)

1,726




Tax at domestic income tax rates

-

96




Effect of:



Income not subject to taxation

-

(96)

Under provision in prior years

-

32

Overprovision in prior years

-

(35)




Tax expense for the year

-

3

 

 

The Company is domiciled in the Cayman Islands and is not subject to United Kingdom taxation.

 

 

10.    (Loss)/profit per share attributable to owners of the Company

 

Basic (loss)/profit per share is calculated by dividing the (loss)/profit attributable to owners of the Company by the weighted average number of ordinary shares in issue during the year.

(a)      Basic

 

2011

 

2010


US$'000

US$'000

(Loss)/profit attributable to owners of the Company:



-       continuing operations

(2,340)

(941)

-       discontinued operations

-

1,752


(2,340)

811





 Number of

shares

Number of

shares




Weighted average number of shares for calculating basic loss per share

369,188,858

259,475,821

Effect of dilutive potential ordinary shares - warrants

10,550,000

10,550,000

Weighted average number of shares for calculating basic (loss)/profit per share

379,738,585

270,025,821





US cents

US cents




Basic (loss)/profit per share

(0.63)

0.31




Diluted (loss)/profit per share

(0.62)

0.30







Diluted

 

The diluted loss per share for 2011 is 0.62 taking into account the existing warrants. The diluted profit per share in 2010 was 0.30 arising from the warrants issued.

 

 

11. Property, plant and equipment

Office equipment


US$'000



Cost


At 1 January 2010

-

Additions

61

At 31 December 2010

61

Additions

32

At 31 December 2011

93



Depreciation and impairment


At 1 January 2010

-

Charge for the year

23

Impairment

-

At 31 December 2010

23

Charge for the year

40

Impairment

30

At 31 December 2011

93



Net book value at 31 December 2011

-



Net book value at 31 December 2010

38



 

 

 

 

 

12.     Financial assets at fair value through profit or loss

 



2011                  

2010



US$'000

US$'000

    Listed securities:




    - Equity securities - USA


665

-

    - Equity securities - United Kingdom


501

-

   Fair value of listed securities


1,166

-





 

 

The movement in financial assets at fair value through profit or loss during the period is as follows:-

 


2011

2010


US$'000

US$'000




At 1 January

-

115

Additions

1,115

-

Disposals

-

(118)

Unrealised gain on financial assets at fair value through profit or loss

51

3

At 31 December

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:

·      Level 1 fair value measurements are those derived from quoted prices (unadjusted) in active markets for identical assets and liabilities;

·      Level 2 fair value measurements are those derived from inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices); and

·      Level 3 fair value measurements are those derived from valuation techniques that include inputs for the asset or liability that are not based on observable market data (unobservable inputs).

 

For the year ended 31 December 2011


Level 1

Level 2

Level 3

Total


US$'000

US$'000

US$'000

US$'000

Financial assets at FVPL





Investments (FVTPL)

1,166

-

-

1,166

Total

1,166

-

-

1,166






 

For the year ended 31 December 2010


Level 1

Level 2

Level 3

Total


US$'000

US$'000

US$'000

US$'000

Financial assets at FVPL





Investments (FVTPL)

-

-

-

-

Total

-

-

-

-






There were no transfers between Level 1, 2 and 3 during the year.



12.     Financial assets at fair value through profit or loss continued

 

Particulars and valuation basis of principal financial assets held at fair value through profit or loss are as follows:-

 

Name

Number of shares

Percentage held

Number of shares

Percentage held

Fair-value


Valuation basis


2011

2011

2010

2010

2011

2010







US$'000

US$'000










Rosneft Oil Company

-  Ordinary   shares

38,400

<0.001

-

-

250

-

Quoted market price at 31 December 2011 of US$6.51 per share, listed on NYSE Arca USA

Lukoil Holding

-  Ordinary   shares

3,050

<0.001

-

-

162


Quoted market price at 31 December 2011 of US$53.2 per share, listed on NYSE Arca USA

Gazprom OAO

-  Ordinary   shares

23,500

<0.001

-

-

250

-

Quoted market price at 31 December 2011 of US$10.66 per share, listed on NYSE Arca USA

Evergreen Energy Inc.

- Ordinary

       shares

57,692

0.21

-

-

3

-

Quoted market price at 31 December 2011 of US$10.66 per share, listed on NYSE Arca USA

Viridas PLC

- Ordinary    shares

44,000,000

7.61

-

-

345

-

Quoted market price at 31 December 2011 of £0.0044, listed on London AIM

Aurum Mining Plc

- Ordinary

       shares

3,333,333

2.82

-

-

156

-

Quoted market price at 31 December 2011 of £0.03, listed on London AIM UK









Total





1,166

-


 

 

13.   Trade and other payables

 


2011

2010


US$'000

US$'000




Other payables

130

277

Accrued charges

-

109

Total

130

386

 

14.     Share capital

 


Number of ordinary shares

Value

US$'000

 

Authorised

(par value of US$0.01 each)



 




 

At 31 December 2011 and 31 December 2010

5,000,000

50,000

 




 

Issued and fully paid

(par value of US$0.01 each)



 




 

At 31 December 2010

309,842,043

3,098

 

 

Issue of shares

 

  65,402,301

 

   654

 




 

At 31 December 2011

375,244,344

3,752

 




 

On 17 January 2011 the Company issued 25,000,000 Ordinary shares of US$0.01 each for proceeds of £1,000,000 before expenses.

 

On 13 January 2011 the Company issued 12,500,000 Ordinary shares of US$0.01 each for proceeds of £500,000 before expenses.

 

On 11 February 2011 the Company issued 18,750,000 Ordinary shares of US$0.01 each for proceeds of £750,000 before expenses.

 

On 18 April 2011 the Company issued 9,152,301 Ordinary shares on exercise of a warrant.

 

 

15. Share-based payments

 

Share Options and warrants

 

The Company adopted an employee Share Option Scheme on 4 March 2005 (the "Employee Share Option Scheme") in order to incentivise key management and staff. Pursuant to the Employee Share Option Scheme, a duly authorised committee of the Board of Directors of the Company may, at its discretion, grant options to eligible employees, including Directors, of the Company or any of its subsidiaries to subscribe for shares in the Company at a price not less than the higher of (i) the closing price of the shares of the Company on the Stock Exchange on the date of grant of the particular option or (ii) the average of the closing prices of the shares of the Company for the five trading days immediately preceding the date of the grant of the options or (iii) the nominal value of the shares.

 

Options which lapse or are cancelled prior to their exercise date are deleted from the register of outstanding options and are available for re-use. Share options granted under the Employee Share Option Scheme are exercisable as follows:

 

(1)    the first 30% of the options between the first and tenth anniversary of the date of grant;

(2)    the next 30% of the options between the second and tenth anniversary of the date of grant; and

(3)    the remaining options between the third and tenth anniversary of the date of grant.

 

The Company may only grant options up to a maximum of 25% of the Company's issued share capital (93,811,086 options as of 31 December 2011). The movement on share options and their weighted average exercise price are as follows for the reporting periods presented:

 


2011

2010


Number

Weighted average exercise price (pence)

Number

Weighted average exercise price (pence)






Outstanding at 1 January

7,350,000

23.85

16,650,000

29.00

Lapsed

(7,350,000)

(23.85)

(9,300,000)

(33.07)

Issued in the period

-

-

-

-

Outstanding at 31 December

-

-

7,350,000

23.85

 

 

At 31 December 2011, the Company had no outstanding share options.

 


2011

2010

Date of grant

Number

Option exercise price (pence)

Number

Option exercise price (pence)






11 January 2005

-

-

2,350,000

21.15

23 March 2006

-

-

200,000

95.20

23 March 2007

-

-

150,000

32.65

11 January 2008

-

-

4,650,000

22.25

Total

-


7,350,000


 

 

During the year ended 31 December 2011  a total of 7,350,000 share options lapsed. No share options were granted during the year ended 31 December 2011 or 31 December 2010.

 

US$498,943 (2010: US$141,000) of the employee share-based compensation is included in the income statement for 2011

 

 No liabilities were recognised due to share-based payment transactions.

 

 

15.   Share-based payments continued

 

Warrants

In August 2011, the Company granted 10,550,000 warrants with an exercise price of 5.0 pence, vesting from 2 August 2011 to 2 August 2014. These were issued to the following:

 


Number



Peter Bayard Moss

250,000

Robert John Richard Owen

300,000

ECK Partners Holdings Limited

5,000,000

Old Church Street Holdings Limited

5,000,000

Total

10,550,000

 

The fair-value of these warrants was $498,743 at the grant date.

 

All shares issued in respect of the warrants rank pari passu in all respects with the ordinary shares.

 

Equity-settled share-based payments are measured at fair value (excluding the effect of non-market-based vesting conditions) as determined through use of the Black-Scholes technique, at the date of grant. The fair value determined at the grant date of the equity-settled share-based payments is expensed on a straight-line basis over the vesting period, based on the Company's estimate of shares that will eventually vest.

 

The Black-Scholes formula is the option pricing model applied to the grant of share options and warrants in respect of calculating the fair values. Key inputs to the model are as follows:


Share warrants


2 August 2011



Share price at grant

3.85p

Warrant exercise price

5.00p

Expected life of warrants

3 years

Expected volatility

150.9%

Expected dividend yield

0%

Risk free rate

5.3%

Fair value per share warrant

3.075p

Exchange rate used (USD:GBP)

1.54

 

Volatility has been based on the Company's trading performance to the grant date (valuation date). The risk free rate has been determined based on 5 year government bonds.

Total fair value as considered in the Employee share-based compensation reserve was $498,743.

Crosby Wealth Management (Asia) Limited ("CWMA"), a former subsidiary of the Company, which was disposed by the Company on 4 October 2010, adopted an employee share option scheme on 27 April 2007 ("CWMA Share Option Scheme") in order to incentivise key management and staff of CWMA. Pursuant to the CWMA Share Option Scheme, a duly authorised committee of the board of directors of CWMA could, at its discretion, grant options to eligible employees, including directors, of CWMA or any of its subsidiaries to subscribe for shares in CWMA. These options were cancelled in 2010.

 

 

16.   Discontinued operations



2011

2010



US$'000

US$'000





Revenue


-

1,630

Cost of sales


-

(291)

Gross profit


-

1,339

Profit on financial assets at fair-value through profit and loss


-

3

Other income


-

3,801

Administrative expenses


-

(3,330)

Impairment of available-for-sale investments


-

(6)

Other operating expenses


-

(221)

Profit from operations


-

1,586

Finance costs


-

(65)

Share of profits of jointly-controlled entities


-

70

Profit before taxation


-

1,591

Taxation


-

3

Profit after taxation


-

1,594

Gain on disposal of discontinued operations


-

1,073



-

2,667

 

17.    Operating leases

 

The Company had no operating lease commitments at 31 December 2011 (2010: nil).

 

 

18.    Capital commitments

 

The Company had no material capital commitments at 31 December 2011 (2010: nil).

 

19.    Contingencies

 

The Company had no material contingencies at 31 December 2011 (2010: nil).

 

20.    Financial risk management, objectives and policies

 

In common with other businesses, the Company is exposed to risks that arise from its use of financial instruments. This note describes the Company's objectives, policies and processes for managing those risks and the methods used to measure them. Further quantitative information in respect of these risks is presented throughout these financial statements.

 

The significant accounting policies regarding financial instruments are disclosed in note 3 and the critical accounting estimates and judgements are set out in note 4.

 

The principal financial instruments used by the Company from which financial instrument risk arises, are as follows:

 


2011

2010


US$'000

US$'000




Trade and other receivables

50

17

Financial assets at fair-value through profit and loss

1,166

-

Cash and cash equivalents

339

73

Trade and other payables

(130)

(386)

 

 

Details of financial assets at fair-value through profit and loss are set out in note 12. These financial assets are valued using market rates quoted on the relevant stock exchange.

 

 

 

20. Financial risk management, objectives and policies continued

 

General objectives, policies and processes

 

The Board has overall responsibility for the determination of the Company's risk management objectives and policies and, while retaining ultimate responsibility for them, it has delegated part of the authority for designing and operating processes that ensure the effective implementation of the objectives and policies to the Company's finance function.

 

 The Board receives reports from financial personnel through which it reviews the effectiveness of the processes put in place and the appropriateness of the objectives and policies it sets. The risks to which the Company is exposed and the policies adopted by the Board have not changed significantly in the year. The overall objective of the Board is to set policies that seek to reduce on-going risk as far as possible without unduly affecting the Company's competitiveness and flexibility. Further details regarding these policies are set out below:

 

Credit risk

 

Credit risk arises principally from the Company's financial investments, trade and other receivables and cash and cash equivalents. It is the risk that the value of the Company's investments will not be recovered and the risk that the counterparty fails to discharge its obligation in respect of the Company's trade and other receivables and cash balances. The maximum exposure to credit risk equals the carrying value of these items in the financial statements.  

 

Credit risk with cash and cash equivalents is reduced by placing funds with banks with acceptable credit ratings and indicated government support where applicable.

 

Liquidity risk

 

Liquidity risk arises from the Company's management of working capital and the amount of funding committed to its investment programme. It is the risk that the Company will encounter difficulties in meeting its financial obligations as they fall due.

 

The Company's policy is to ensure that it will always have sufficient cash to allow it to meet its liabilities when they become due. The principal liabilities of the Company arise in respect of the on-going administration.  Trade and other payables are all payable within six months.

 

The Board receives cash flow projections on a regular basis as well as information on cash balances.

 

Interest rate risk

 

The Company is not currently exposed to interest rate risks on borrowings, however, it is exposed to interest rate risk in respect of surplus funds held on deposit.

 

Market and Price risk

 

The Company is exposed to equity securities price risk because investments are held by the Company and classified on the Statement of Financial Position as investments at fair value through profit or loss.

 

Price risk, is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices (other than those arising from interest rate risk or currency risk), whether those changes are caused by factors specific to the individual financial instrument or its issuer, or factors affecting similar financial instruments traded in the market.

 

The Company is exposed to market price risk arising from its investments in listed securities. The Company's Investment Advisors provide the Company with investment recommendations that are consistent with the Company's objectives. The Company's market risk exposure is managed through a series of investment restrictions, including limitations on the proportion of individual investment to the company's net assets (or total investments, jurisdiction of investment and liquidity of the investments.

 

The basis of the valuation is set out in notes 3 and 4. A 5% movement in the listed prices of the investments held would result in a change in fair value of US$ 59,000. Management considers 5% to represent a significant movement for the purposes of monitoring performance.

 

 

 

 

 

20. Financial risk management, objectives and policies continued

 

Currency risk

 

The Company does not currently enter into forward exchange contracts or otherwise hedge its potential foreign exchange exposure.

 

The Company is exposed to currency risks in respect of its investments (see note 12) which are at risk from movements in the US Dollar, Russian Rouble and Sterling. A 5% fall in the value of the Company's investments arising from currency movements would impact the carrying value of those investments by approximately $59,000. 5% represents management's assessment of a substantial movement in a given period.

 

Capital

 

The Company considers its capital and reserves attributable to equity shareholders to be the Company's capital. In managing its capital, the Company's primary long-term objective is to provide a return for its equity shareholders through capital growth. Going forward the Company may seek additional investment funds and also maintain a gearing ratio that balances risks and returns at an acceptable level and also to maintain a sufficient funding base to enable the Company to meet its working capital needs. Details of the Company's capital is disclosed in the statement of changes in equity.

 

There have been no other significant changes to the Company's management objectives, policies and processes in the year nor has there been any change in what the Company considers to be capital.

 

The Company is not subject to externally imposed capital requirements.

 

21.   Material related party transactions

 

Transactions between the Company and its previous subsidiaries, which were related parties of the Company, are not disclosed in this note as they do not qualify as related parties. Remuneration for key management personnel of the Company, including amounts paid to the Company's Directors as follows are disclosed in note 7.  Details of the significant transactions between the Company and other related parties during the year ended 31 December 2011 are as follows:

 

During the year the Company had the following material related party transactions:



2011

2010



US$'000

US$'000





Rental expenses paid to former subsidiaries


-

(415)

Management services fee paid to fellow subsidiaries


72

-

Other fees paid to fellow subsidiaries and related parties


96

-

Proceeds of sale of subsidiaries to former parent company


-

659

Loan from former subsidiary


-

1,000

Loan repayment to former subsidiary satisfied by issue of equity


-

(341)

Loan repayment to former subsidiary satisfied by the offset of proceeds


-

15

Waiver of amounts due to former subsidiaries


-

157

 

 

On 31 August 2009, the previous group discontinued its joint venture with Apollo Multi Asset Management LLP ("Apollo"). After this date, Cloudy Lane Limited ("Cloudy Lane") took a controlling interest in Apollo. Cloudy Lane is a vehicle that represents the Nomura Employee Benefits Trust of which Mr. Simon Fry, a former Director of the Company, who resigned on 31 January 2010, was a potential beneficiary.

 

 

22.   Disposal of subsidiary undertakings

 

On 4 October 2010 (the "Date of Disposal"), the Company disposed its entire interests in Crosby Capital Partners Limited, Crosby (Hong Kong) Limited, Crosby Special Situations Fund Limited and its subsidiaries, Crosby Corporate Finance (Holdings) Limited and its subsidiaries and Crosby Asset Management (Holdings) Limited and its subsidiaries to the former ultimate parent company, Crosby Capital Limited ("CCL"). The assets and liabilities of the subsidiaries at the Date of Disposal were as follows:


2010


US$'000



Property, plant and equipment

506

Less accumulated depreciation

(331)

Interest in jointly controlled entity

70

Available-for-sale investments

688

Note receivable

525

Intangible assets

21

Trade and other receivables

1,017

Tax recoverable

74

Financial assets at fair value through profit or loss

16

Cash and cash equivalents

3,958

Other payables

(1,189)

Deferred income

(5)

Provision for taxation

(32)

Provision for liabilities

(2,895)

Loan payable

(56)

Obligations under finance leases

(259)

Net assets of subsidiaries disposed of

2,108

Less:


Non-controlling interests

(1,616)

Foreign exchange reserve

(743)

Investment revaluation reserve

(322)


(573)





Total consideration

659

Disposal costs

(159)

Gain on disposal

1,073



 

The total consideration of US$659,000 was settled by offsetting the loan payable to a former fellow subsidiary of US$1,000,000 through CCL, with the residual loan balance of US$341,000 settled by issuing of 66,367,043shares of the Company at 0.325p per share.

 

The cash and cash equivalents disposed of was US$3,958,000 which has been included in the net cash outflow used in investing activities from discontinued operation.

 

23.   Post-balance sheet events

 

The Company has no material post-balance sheet events.

 

24.   Date of approval of financial statements

 

The Company's Annual Report and Financial Statements for the year to 31st December 2011 were approved by the Directors on 1 July 2012.

 

25.   Availability of Annual Report and Financial Statements and notice of AGM.

 

Copies of the Company's Annual Report and Financial Statements will be sent to shareholders and will be available for inspection at the Companies Registered Office. The Annual Report and Financial Statements may also be viewed at Zoltav Resources Inc's website at: http://zoltav.com/. The Company's Annual General Meeting will be held on Wednesday 25th July 2012 at 2pm CET, at The Metropole Hotel, 34 Quai Guisan, Geneva, Switzerland.

 

 

 

 


This information is provided by RNS
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