TIDMZOL
RNS Number : 4666N
Zoltav Resources Inc
30 September 2021
30 September 2021
Zoltav Resources Inc.
("Zoltav" or the "Company")
Half Year Report for the Six Months Ended 30 June 2021
Zoltav (AIM: ZOL), the Russia-focused oil and gas exploration
and production company, announces results for the six months ended
30 June 2021.
Financial Summary
-- Revenues increased by 37% to RUB 755 million ( 1 2020: RUB
552 million), due to the increase in production (21%) and the
positive impact of gas prices
-- Total cost of sales increased by 10% to RUB 421 million ( 1 2020: RUB 381 million)
-- Operational and G&A costs increased by 18% to RUB 125
million ( 1 2020: RUB 106 million), mainly due to increases in
staff costs
-- Operating profit increased by 232% to RUB 289.1 million ( 1
2020: RUB 87.2 million), mainly due to the revenue increase,
decreases in depreciation and lower impairment charge
-- Profit before tax increased by 1,131% to RUB 230.2 million ( 1 2020: RUB 18.7 million)
-- Net cash generated from operating activities decreased by 16%
to RUB 221 million ( 1 2020: RUB 262.5 million, mostly due to the
impact of tax credits being received in 2020 in relation to
COVID-19 and debts due in 2019 from Mezhregiongaz being received in
2020
-- Total cash at the end of the period was RUB 90 million ( 1 2020: RUB 31 million)
Shareholder Loan
-- The Company has been unable to repay or refinance the
shareholder loan (announced on 14 July 2020 and extended most
recently on 21 June 2021) and therefore will convene a General
Meeting to seek authority to issue new ordinary shares pursuant to
the agreed conversion terms of 27 pence per share (if such
conversion is requested)
Operational Summary
-- Average net daily production (sold to customers) in 1 2021 was:
o 29.7 mmcf/d (0.84 mmcm/d) of gas ( 1 2020: 24.3 mmcf/d (0.69
mmcm/d))
o 221.2 bbls/d (28.2 t/d) of oil and condensate ( 1 2020: 215
bbls/d (27.5 t/d))
-- Programme of technical works on the West Bortovoy fields continued in H1 2021
-- Further progress made on East Bortovoy project development
including in contractor and equipment selection and technical
planning
o Project final investment decision remains subject to
financing
Lea Verny, Independent Non-executive Chairman, commented:
"Average production for sale from the Bortovoy Licence increased
by 21 % in H1 2021, as a result of the rolling programme of
technical works on the West Bortovoy fields. This positive
operational performance is reflected in the Company's improved
revenues.
The Company made further progress on the East Bortovoy project
and is in the advanced stages of negotiations for project finance
with two major Russian banks. The Board believes a development of
the East Bortovoy fields is essential to ensuring the long-term
financial security of the Company.
It should be noted that the terms of both project finance
packages potentially available to the Company include conditions
which are likely to restrict intra group transfers and cash
outflows from the Group's main operating subsidiary, Diall
Alliance. As a consequence, the Company would be unable to maintain
the listing of its ordinary shares on AIM on an ongoing basis.
Further updates will be provided in due course."
Enquiries:
Zoltav Resources Inc. Tel. +44 (0)20 7390
0234
Lea Verny, Non-executive Chairman (via Vigo Consulting)
SP Angel Corporate Finance LLP (Nomad Tel. +44 (0)20 3470
and Broker) 0470
John Mackay / Jeff Keating / Adam Cowl
Vigo Consulting Tel. +44 (0)20 7390
Ben Simons / Fiona Hetherington 0234
zoltav@vigoconsulting.com
Market Abuse Regulation (MAR) Disclosure
The information contained within this announcement is deemed to
constitute inside information as stipulated under the Market Abuse
Regulation ("MAR") (EU) No. 596/2014, as incorporated into UK law
by the European Union (Withdrawal) Act 2018. Upon the publication
of this announcement, this inside information is now considered to
be in the public domain.
About Zoltav
Zoltav is an oil and gas exploration and production company
focused on Russia . The Company holds the Bortovoy Licence in the
Saratov region of Southwestern Russia, a 3,215 sq km area along the
northern margin of the Pre-Caspian basin, one of the largest
hydrocarbon basins in the CIS. The Bortovoy Licence contains a
number of productive gas fields in the west of the Licence and a
processing plant. The Company is currently evaluating strategies to
commercialise the eastern fields of the Bortovoy Licence. For
further information on Zoltav, or to sign up for our news alert
service, visit: www.zoltav.com.
Glossary
bbls Barrels
bbls/d Barrels per day
bcf Billion cubic feet
km Kilometre
mcf Thousand cubic feet
mcm Thousand cubic metres
mmbbls Million barrels of oil
mmboe Million barrels of oil equivalent
mmcf Million cubic feet
mmcf/d Million cubic feet per day
mmcm Million cubic metres
mmcm/d Million cubic metres per day
mtoe Thousand tonnes of oil equivalent
RUB Russian Ruble
t Tonnes
t/d Tonnes per day
Chairman's Statement
Average production for sale from the Bortovoy Licence, Saratov,
increased by 21% in H1 2021, as a result of the rolling programme
of technical works on the West Bortovoy fields. This operational
performance is reflected in the Company's revenues, which increased
by 37% to RUB 755 million ( 1 2020: RUB 552 million) in the period,
helping Zoltav to deliver an improved profit before tax of RUB
230.2 million ( 1 2020: RUB 18.7 million).
The Company made further progress on the East Bortovoy project,
following the completion of the feasibility study which was
undertaken in 2020, including in contractor and equipment selection
and technical planning.
A project final investment decision on East Bortovoy remains
subject to successful negotiations of binding terms for project
finance from major Russian banks. Considering the natural decline
in production from the West Bortovoy fields and the substantial
capital required to maintain a rolling programme of technical works
and development drilling, management believes a development of the
East Bortovoy fields is essential to ensuring the long-term
financial security of the Company.
The Company is in the advanced stages of negotiations for
project finance with two major Russian banks and will provide a
further update in due course. It should be noted that the terms of
both project finance packages potentially available to the Company
include conditions which are likely to restrict intra group
transfers and cash outflows from the Group's main operating
subsidiary, Diall Alliance. As a consequence, the Company would be
unable to maintain the listing of its ordinary shares on AIM on an
ongoing basis.
In the event that Diall Alliance is unable to secure project
financing in the near term, it will be unable to service its
current loans, including its credit payment due to Promsvyazbank at
the end of October 2021, due to a cash shortfall which is expected
to arise in Q4 2021.
Furthermore, the Company has been unable to repay or refinance
the shareholder loan (announced on 14 July 2020 and extended most
recently on 21 June 2021) and therefore will convene a General
Meeting to seek authority to issue new ordinary shares pursuant to
the agreed conversion terms of 27 pence per share (if such
conversion is requested).
Lea Verny
Non-executive Chairman
29 September 2021
Review of Operations
Production
Production
Production for sale from the Bortovoy Licence, Saratov, averaged
5,178 boepd (706 toepd) during H1 2021, a 21% increase when
compared to 4,257 boepd (581 toepd) in H1 2020.
Average net daily production (sold to customers) during H1 2021
was 29.7 mmcf/d (0.84 mmcm/d) of gas and 221 bbls/d (28.2 t/d) of
oil and condensate (H1 2020: 24.3 mmcf/d (0.69 mmcm/d) of gas and
215 bbls/d (27.5t/d) of oil and condensate).
Overall, in H1 2021, the Company produced approximately:
-- Natural gas: 5.4 bcf (152 mmcm) or 0.9 mmboe (122 mtoe) (H1
2020: 4.4 bcf (125 mmcm) or 0.7 mmboe (100 mtoe))
-- Oil and condensate: 40,040 bbls (5,101 t) (H1 2020: 39,216 bbls (4,996 t))
The Western Gas Plant continued to operate efficiently
throughout H1 2021 with no shutdowns.
Operations at the plant have continued throughout the COVID-19
global pandemic without interruption. Additional measures to
mitigate the risk of infection, including additional cleaning and
personal protective equipment, remain in place.
Development
West Bortovoy
The well stock producing from the two currently producing
Permian fields (Zhdanovskoye and Karpenskoye) consists of 16 gas
wells and two oil wells working via artificial lift. A programme of
technical works continued in H1 2021:
-- Karpenskoye Well 52 underwent workovers in February and June
2021 to transition to the overlying horizon
-- Karpenskoye Well 17 underwent workovers in March and May 2021
to transfer to the overlying horizon
-- Karpenskoye Well 117 had repair and installation works
undertaken in March 2021, and underwent a workover in May 2021 to
transition to the underlying horizon
-- Karpenskoye Well 13 had repair and insulation works undertaken in March 2021
Works continued post period end:
-- Karpenskoye Well 18D and 21D were spudded in July and August,
and are scheduled to be put on production in September and October
2021
-- Karpenskoye Well 12D saw the replacement of an electrically
driven centrifugal pump in July , which has supported production
from the well since August 2021
-- Preparatory work has been completed at Zhdanovskoye Well 103
ahead of bottomhole treatment, which the Company hopes will improve
production rates from the well
Daily production of Zhdanovskoye Well 106 and 105 (put on
production in July and September 2020 respectively) exceeded
planned volumes. These, together with the two standalone vertical
wells, and 7.2 km looping pipe to avoid bottlenecking, which were
completed in 2020, are contributing to the improved production
performance.
East Bortovoy
During H1 2021, the Company made further progress on the East
Bortovoy project following the completion of the feasibility study
which was undertaken in 2020, including in contractor and equipment
selection and technical planning. Should the Company ultimately
take a positive final investment decision, subject to financing,
the progress which is being made on project development is expected
to improve project implementation timelines.
A project final investment decision is subject to successful
negotiations of binding terms for project finance from major
Russian banks. Considering the natural decline in production from
the West Bortovoy fields and the substantial capital required to
maintain a rolling programme of technical works and development
drilling, management believes a development of the East Bortovoy
fields is essential to ensuring the long-term financial security of
the Company.
The Company is in the advanced stages of negotiations for
project finance with two major Russian banks and will provide a
further update in due course.
Koltogor
The Koltogor Licences in the Khantiy Mansisk Autonomous Okrug,
Western Siberia are not currently a focus of investment, however
management continues to seek out potential routes to monetise these
licences.
Tigran Tagvoryan
Chief Executive Officer
29 September 2021
Group Reserves under PRMS as per latest report of DeGolyer and
MacNaughton (May 2014):
Proved and
Proved Probable probable Possible
Bortovoy Licence
Gas bcf 352.9 396.8 749.7 640.0
Oil & liquids mmbbls 2.0 1.8 3.8 2.4
Gas, oil and liquids mmboe 62.0 69.2 131.2 111.2
Koltogor Licences
Gas bcf 0.5 23.5 24.0 55.7
Oil mmbbls 1.6 73.5 75.1 174.0
Total mmboe 1.7 77.5 79.2 183.5
Total
Gas bcf 353.4 420.3 773.7 695.7
Oil & liquids mmbbls 3.6 75.3 78.9 176.4
Gas, oil and liquids mmboe 63.7 146.7 210.4 294.7
Note on conversion rates
Tonnes of crude oil produced are translated into barrels using
conversion rates reflecting oil density from each of the fields.
Crude oil and liquid hydrocarbons expressed in barrels are
translated from tonnes using a conversion rate of 7.85 barrels per
tonne. Translations of cubic feet to cubic metres are made at the
rate of 35.3 cubic feet per cubic metre. Translations of barrels of
crude oil and liquid hydrocarbons into barrels of oil equivalent
("boe") are made at the rate of 1 barrel per boe and of cubic feet
into boe at the rate of 290 cubic feet per boe.
Financial Review
Revenue
The Group's revenues in 1 2021 increased by 37% to RUB 755
million, compared to RUB 552 million in 1 2020, due to the increase
of gas production and the positive impact of gas prices.
81% of revenues were derived from gas sold to Mezhregiongaz, a
Gazprom subsidiary, at the transfer point on entry to the Central
Asia - Centre gas pipeline system. The gas prices are fixed in a
contract with Mezhregiongaz and are subject to indexation. The
Russian Government approved a 3% gas price increase and accordingly
the Company signed an addendum to its contract with Mezhregiongaz
resulting in an average price in 1 2021 of RUB 4,028 per mcm
compared to RUB 3,911 per mcm in 1 2020.
Most of the remaining revenue was from oil and condensate sold
directly at the Western Gas Plant through a tender process to a
small number of different buyers. Oil and condensate prices
increased by 119% to RUB 3,462/bbl (RUB 27,175/t) in 1 2021
compared to RUB 1,583/bbl (RUB 12,428/t) in 1 2020 due to the
influence of Urals oil pricing and USD revaluation.
Cost of sales and G&A costs
Total cost of sales increased by 10% to RUB 421 million in H1
2021 ( 1 2020: RUB 381 million). This comprised a 41% increase in
mineral extraction tax (MET) to RUB 175 million ( 1 2020: RUB 124
million), a 19% increase in wages and salaries of production staff
to RUB 65 million ( 1 2020: RUB 55 million), RUB 57 million of
other taxes and royalties (SibGeCo Koltogorsky licence) ( 1 2020:
RUB 29 million), an 82% decrease in depreciation to RUB 13 million
(reflecting the 2020 impairment) ( 1 2020: RUB 71 million) and RUB
110 million of other cost of sales ( 1 2020: RUB 102 million).
The MET tax formula is based on multi-component gas composition,
average gas prices and reservoir complexity and maturity. The
effective MET rate applicable for the period is RUB 31/mcf or RUB
1,102/mcm ( 1 2020: RUB 27/mcf or RUB 945/mcm).
The Group's operational and G&A costs increased by 18% to
RUB 125 million ( 1 2020: RUB 106 million), mainly due to increases
in staff costs and professional fees in relation to the potential
financing of the East Bortovoy project.
Other income increased by 172% to RUB 84 million ( 1 2020: RUB
31 million) due to the recovering of a provision for inflation rate
and discount amounting to RUB 22 million ( 1 2020: RUB 0 million),
recovering of bonus and unused vacation provisions for 2020 by RUB
18 million ( 1 2020: RUB 0 million), and the increasing of other
incomes as energy realisation and operator services amounting to
RUB 26 million ( 1 2020: RUB 15million).
The Group reviews the application of inflation rates used for
the provision estimation each half-year end. The inflation rate
used in the estimation of the provision as of 30 June 2021 was
4.50% in 2021, decreasing to 4.0% in 2036 (as of 30 June 2020:
4.20% in 2020, decreasing to 4.00% in 2036). The discount rates
used to determine the decommissioning and environmental restoration
provision are based on Russian government bond rates. As of 30 June
2021, the discount rate varies from 7.12% to 7.21% (as of 30 June
2020: from 5.92% to 6.44%) depending on the expected period of
abandonment and site restoration for each gas and oil fields.
Other expenses decreased to RUB 4 million ( 1 2020: RUB 9
million) as a result of a positive change in the decommissioning
and environmental restoration provision.
Operating profit
Zoltav achieved an operating profit for 1 2021 of RUB 289.1
million compared to an operating profit of RUB 87.2 million in 1
2020, mainly due to the revenue increasing, decreases in
depreciation and depletion as a result of 2020's significant
impairment of non-current assets, and lower impairment charge.
Adjusted EBITDA (1) increased by 91% to RUB 302 million ( 1
2020: RUB 158 million), with an EBITDA margin of 40%.
Finance costs of RUB 60 million ( 1 2020: RUB 69 million) are
mainly represented by decreased interest on the refinanced debt of
RUB 1.32 billion with PromSvyazbank, with the repayment of debts
totalling RUB 207 million in 1 2021.
(1) Adjusted EBITDA: EBITDA is adjusted for non-cash items such
as provisions, write-offs and foreign exchange.
Profit before tax
Zoltav generated RUB 230.2 million profit before tax in 1 2021,
compared to a profit before tax of RUB 18.7 million in 1 2020.
Taxation
The income tax charge for the period was RUB 17 million ( 1
2020: RUB 48 million charge tax benefit) due to the increase of
current income tax to RUB 9 million in 1 2021, the decrease of
differed tax assets by RUB 4 million, and the creation of a tax
provision for CenGeo Holdings Limited of RUB 4 million.
Net profit
Zoltav delivered a net profit in 1 2021 of RUB 213 million ( 1
2020: net loss of RUB 29 million).
Cash
Net cash generated from operating activities was RUB 221 million
( 1 2020: RUB 262.5 million).
The Bortovoy Licence operating subsidiary, Diall Alliance,
serviced its credit facility with Promsvyazbank and repaid a
further RUB 207 million during the period. The loan facility
contains a technical covenant requiring 75 mmcm of natural gas
production per quarter. The covenant contains some penalties and
provides legal grounds for the bank to have a formal discussion
with the Company's management regarding a breach. The Company
breached the production covenant for H1 2021 due to a delay in the
development drilling programme on West Bortovoy. The bank accepted
the Company's explanation on the covenant breach. From Q3 2021, the
Company will find it difficult to comply with certain covenants
which require minimum end of day cash of RUB 115 million and 75
mmcm of natural gas production per quarter. The penalty for the
violation will be an increase of 0.2% on the current interest
rate.
In the event that Diall Alliance is unable to secure project
financing for the development of East Bortovoy in the near term, it
will be unable to service its current loans, including its credit
payment due to Promsvyazbank at the end of October 2021, due to a
cash shortfall which is expected to arise in Q4 2021.
Total cash at the end of the period was RUB 90 million ( 1 2020:
RUB 31 million).
Loan Agreement Update
Zoltav announced on 14 July 2020 that it had entered into a loan
agreement with ARA Capital Holdings under which ARA Capital
Holdings provided a revolving loan facility for up to USD 9 million
(the "Loan"). The Loan was due for repayment by 31 March 2021
(unless otherwise extended or converted into equity by mutual
agreement). ARA Capital Holdings agreed in June 2021 to extend the
repayment date to 30 September 2021 (the "Loan Extension") and
increase the Loan facility up to a maximum principal amount of USD
19 million.
The Loan continues to be interest-free save for in the event of
a failure to repay on time, in which circumstances the Loan will
accrue interest from the date of the Loan disbursement at a reduced
rate of 10 percent per annum rather than the 15 percent per annum
that was defined in the original Loan agreement announced on 14
July 2020.
It was agreed on 18 June 2021 that should the Loan not be repaid
by 30 September 2021 or be subject to a further extension by mutual
agreement, ARA Capital Holdings will be entitled to request that
the Loan (including accrued interest) be converted into new
ordinary shares in the Company at the lower price of 27 pence per
share or the volume weighted average price of the Company's shares
between 1 September 2021 and 29 September 2021, with such
conversion taking place no later than 31 December 2021. The Company
does not have sufficient funds to repay the Loan and it has been
unable to secure alternative sources of finance to repay the Loan.
Accordingly, in order to seek authority to issue new ordinary
shares in the Company pursuant to the agreed conversion terms (if
such conversion is requested by ARA Capital Holdings), the Company
intends to convene a General Meeting by the end of this year.
Tigran Tagvoryan
Chief Executive Officer
29 September 2021
Interim condensed consolidated statement of comprehensive income
for the six months ended 30 June 2021
(in '000s of Russian rubles, unless otherwise stated)
Six months Six months
ended 30 ended 30
June June
2021 2020
Note (unaudited) (unaudited)
----- ------------- -------------
Revenue from contracts with customers 3 755,137 552,334
Cost of sales 4 (420,564) (380,621)
------------- -------------
Gross profit 334,573 171,713
Administrative and selling expenses (124,954) (106,038)
Other income 14 83,635 30,768
Other expenses (4,164) (9,245)
Operating profit 289,090 87,198
Finance income 969 471
Finance costs (59,834) (68,964)
------------- -------------
Profit before tax 230,225 18,705
Income tax expense 5 (17,074) (48,136)
------------- -------------
P rofit/(loss) for the period
attributable to owners of the
parent being total comprehensive
income 213,151 (29,431)
============= =============
RUB RUB
------------- -------------
Profit / (loss) per share attributable
to owners of the parent
Basic 9 1.50 (0.21)
Diluted 9 1.50 (0.21)
Tigran Tagvoryan
Chief Executive Officer
29 September 2021
The accompanying notes are an integral part of these
consolidated financial statements.
Interim condensed consolidated statement of financial position
as at 30 June 2021
(in '000s of Russian rubles, unless otherwise stated)
As at 30 As at 31
June December
Note 2021 (unaudited) 2020
----- ------------------ ------------
Assets
Non-current assets
Exploration and evaluation assets 6 3,610,380 3,609,700
Property, plant and equipment 7 1,182,565 664,063
Right-of-use assets 13,244 15,365
Deferred tax assets - 4,400
------------------ ------------
Total non-current assets 4,806,189 4,293,528
------------------ ------------
Current assets
Inventories 17,266 14,069
Trade and other receivables 113,841 158,233
Other current non-financial assets 59,719 33,231
Cash and cash equivalents 12.3 90,053 25,857
------------------ ------------
Total current assets 280,879 231,390
------------------ ------------
Total assets 5,087,068 4,524,918
================== ============
Equity and liabilities
Share capital 8 970,218 970,218
Share premium 5,498,009 5,498,009
Other reserves 1,343,566 1,343,566
Accumulated losses (6,098,796) (6,311,947)
------------------ ------------
Total equity 1,712,997 1,499,846
------------------ ------------
Non-current liabilities
Decommission provision 11 607,573 645,406
Lease liabilities 18,245 20,919
Total non-current liabilities 625,818 666,325
------------------ ------------
Current liabilities
Trade and other payables 647,023 551,746
Contract liabilities 45,720 5,880
Other taxes payables 69,096 100,089
Borrowings 10 1,937,876 1,656,896
Lease liabilities 6,590 6,115
Income tax payable 41,948 38,021
------------------ ------------
Total current liabilities 2,748,253 2,358,747
------------------ ------------
Total liabilities 3,374,071 3,025,072
------------------ ------------
Total equity and liabilities 5,087,068 4,524,918
================== ============
The accompanying notes are an integral part of these
consolidated financial statements.
Interim condensed consolidated statement of cash flows for the
six months ended 30 June 2021
(in '000s of Russian rubles, unless otherwise stated)
Six months Six months
ended 30 ended 30
June June
2021 2020
Note (unaudited) (unaudited)
----- ------------- -------------
Cash flows from operating activities
Loss before tax 230,225 18,705
Adjustments for:
Depreciation, depletion and amortization 6 ,7 19,366 76,101
Finance costs 59,833 68,964
Finance income (969) (471)
Loss on disposal of property, plant
and equipment, net of income from
sale of property, plant and equipment (1,021) 811
Net foreign exchange differences (13,456) (15,074)
Change in the estimates of decommissioning
and environmental restoration provision (21,931) 5,243
Other income and expenses (19,489) 2,303
------------- -------------
Operating cash inflows before working
capital changes 252,558 156,582
Change in inventories (642) 2,352
Change in trade and other receivables
and other current non-financial assets 17,905 80,862
Change in trade and other payables
and contract liabilities 27,064 33,606
Change in other taxes payable (30,993) 36,702
------------- -------------
Net cash flows from operating activities
before income tax and interests 265,892 310,104
Interest received 968 424
Interest paid 10 (37,123) (48,013)
Income tax paid (8,747) (13)
------------- -------------
Net cash flows from operating activities 220,990 262,502
------------- -------------
Cash flows from investing activities
Proceeds from sale of property, plant
and equipment 1,765 80
Capital expenditure on exploration
and evaluation activities (56,558) (53,749)
Purchase of property, plant and equipment (391,637) (324,801)
------------- -------------
Net cash used in investing activities (446,430) (378,470)
------------- -------------
Cash flows from financing activities
Payment of principal portion of lease
liabilities (3,223) (2,112)
Proceeds from borrowings 10 502,713 327,839
Repayment of borrowings 10 (207,117) (182,555)
------------- -------------
Net cash flows from/(used) in financing
activities 292,373 143,172
------------- -------------
Net change in cash and cash equivalents 66,933 27,204
Net foreign exchange difference (2,737) 358
Cash and cash equivalents at the beginning
of the period 25,857 3,629
------------- -------------
Cash and cash equivalents at the end
of the year 90,053 31,191
============= =============
The accompanying notes are an integral part of these
consolidated financial statements.
Interim condensed consolidated statement of changes in equity
for the six months ended 30 June 2021
(in '000s of Russian rubles, unless otherwise stated)
Attributable to owners of the Parent
------------------------------------------------------------
Share Share Other Accumula-ted Total
capital premium reserve losses equity
--------- ---------- ---------- ------------- ----------
At 1 January 2020 970,218 5,498,009 1,343,566 (5,331,861) 2,479,932
--------- ---------- ---------- ------------- ----------
Loss for the period - - - (29,431) (29,431)
--------- ---------- ---------- ------------- ----------
Total comprehensive
loss - - - (29,431) (29,431)
--------- ---------- ---------- ------------- ----------
At 30 June 2020
(unaudited) 970,218 5,498,009 1,343,566 (5,361,292) 2,450,501
========= ========== ========== ============= ==========
At 1 January 2021 970,218 5,498,009 1,343,566 (6,311,947) 1,499,846
--------- ---------- ---------- ------------- ----------
Profit for the
period - - - 213,151 213,151
--------- ---------- ---------- ------------- ----------
Total comprehensive
loss - - - 213,151 213,151
--------- ---------- ---------- ------------- ----------
At 30 June 2021
(unaudited) 970,218 5,498,009 1,343,566 (6,098,796) 1,712,997
========= ========== ========== ============= ==========
The accompanying notes are an integral part of these
consolidated financial statements.
Notes to the consolidated financial statements
1. Background
1.1 The Company and its operations
Zoltav Group (the "Group") comprises Zoltav Resources Inc. (the
"Company"), together with its subsidiaries:
Share of
the Company
in a subsidiary
as of 30
Place of June 2021
Name incorporation Function and 2020
---------------------------------- ---------------- -------------------- -----------------
CenGeo Holdings Limited
(hereinafter "CenGeo Holdings") Cyprus Holding company 100%
CJSC SibGeCo (hereinafter
"SibGeCo") Russia Operating company 100%
Royal Atlantic Energy (Cyprus)
Limited (hereinafter "Royal") Cyprus Holding company 100%
Diall Alliance LLC (hereinafter
"Diall") Russia Operating company 100%
Zoltav Resource LLC Russia Management company 100%
The Company was incorporated in the Cayman Islands on 18
November 2003. The principal activities of the Company and its
subsidiaries are the acquisition, exploration, development and
production of hydrocarbons in the Russian Federation. The Company's
shares are listed on the Alternative Investment Market of the
London Stock Exchange.
1.2 Russian business environment
The Group's operations are primarily located in the Russian
Federation.
Russia continues economic reforms and development of its legal,
tax and regulatory frameworks as required by a market economy. The
future stability of the Russian economy is largely dependent upon
these reforms and developments and the effectiveness of economic,
financial and monetary measures undertaken by the government.
The Russian economy has been negatively impacted by sanctions
imposed on Russia by a number of countries. This resulted in
reduced access to capital, a higher cost of capital and uncertainty
regarding economic growth, which could negatively affect the
Group's future financial position, results of operations and
business prospects. Management believes it is taking appropriate
measures to support the sustainability of the Group's business in
the current circumstances.
In 2021 the negative influence of COVID-19 on world markets
continues. At the moment, it is impossible to fully evaluate the
potential impact of COVID to the Company's results for 2021 as
global oil and gas markets continue to be volatile. Management will
continue to evaluate the influence of this factor on the Company's
operational activity and its financial results.
The impact of the pandemic on economics in countries
individually and globally has had no historical analogies ever when
governments took measures to save the economies. Various forecasts
of changes in the macroeconomic indicators both in the short- and
long-term horizon, the extent of the impact of the pandemic on
businesses including the estimation of how long the crisis and
recovery from it will last, display different views.
The Group considers the influence of the events on the Group's
operations as limited, taking into consideration the following
factors:
Systemic nature and position of the industry where the Group
operates (gas extraction);
The means and volume of use of the Group's production assets
have not changed;
Limited currency risk (the majority of the Group's revenues and
expenditures as well as monetary
assets and liabilities are denominated in RUB);
Absence of direct adverse effect on the main operational
activities of the Group from the regulatory
changes aimed at preventing the spread of COVID-19.
2. Significant accounting policies
2.1 Basis of preparation
These interim condensed consolidated financial statements have
been prepared in accordance with International Accounting Standard
("IAS") 34 "Interim Financial Reporting", as adopted by the
European Union. Accordingly, these interim condensed consolidated
financial statements do not include all the information and
disclosures required for a complete set of financial statements,
and should be read in conjunction with the Group's annual
consolidated financial statements for the year ended 31 December
2020, which were prepared in accordance with International
Financial Reporting Standards, as adopted by the European
Union.
Operating results for the six-month period ended 30 June 2021
are not necessarily indicative of the results that may be expected
for the year ending 31 December 2021.
2.2 Going concern
As of 30 June 2021 the Group's current liabilities exceed its
current assets by 2,467,374 kRUB (31 December 2020: 2,127,357
kRUB). The net working capital deficit was mainly caused by the
fact that the Group breached a covenant, stipulated in the loan
agreement (see Note 10). In accordance with a loan agreement terms,
in case of a covenant breach the bank can demand for a settlement
of a full amount due ahead of schedule, stated in the loan
agreement. This circumstance constitutes a significant liquidity
risk for the Group which causes a material uncertainty and casts
significant doubt on the Group's ability to continue as a going
concern, and therefore the Group may be unable to realise its
assets and discharge its liabilities in the normal course of
business.
In assessing whether the going concern basis for preparing the
financial statements is still appropriate given the above
circumstances, the management has considered the following
factors:
As of the date of these consolidated financial statements are
issued, the bank has not demanded settlement of a full amount due
ahead of schedule. The Group expects that no ahead of schedule
settlement will take place and all loan repayments will be made in
accordance with the loan agreement schedule. The management of the
Group is in constant contact with the bank, providing it with all
necessary explanations and supporting documentation;
As described in Note 10, during 2020 the Group received a loan
from ARA Capital Holdings, related party, for the amount of USD 9
million (664,881 kRUB using RUB/USD exchange rate as at 31 December
2020). In June 2021 this loan agreement was extended and increased
to a maximum principal size of USD 19 million (1,375,074 kRUB using
RUB/USD exchange rate as at 30 June 2021). The loan is due on 30
September 2021. In the event the loan is not repaid by 30 September
2021 or not subject to a further extension by mutual agreement, ARA
Capital Holdings will be entitled to request that the Loan
(including accrued interest) be converted into new ordinary shares
in the Company. It was agreed on 18 June_2021 that should the Loan
not be repaid by 30 September 2021 or be subject to a further
extension by mutual agreement, ARA Capital Holdings will be
entitled to request that the Loan (including accrued interest) be
converted into new ordinary shares in the Company at the lower
price of 27 pence per share or the volume weighted average price of
the Company's shares between 1 September 2021 and 29 September
2021, with such conversion taking place no later than 31 December
2021. The Company does not have sufficient funds to repay the Loan
and it has been unable to secure alternative sources of finance to
repay the Loan. Accordingly, in order to seek authority to issue
new ordinary shares in the Company pursuant to the agreed
conversion terms (if such conversion is requested by ARA Capital
Holdings), the Company intends to convene an EGM by the end of this
year.
The Group is in process of negotiating project finance for
developing Eastern part of Bortovoy licen e field with several
financial institutions;
The Group generated net cash inflow from operating activities
for the six-month period ended 30 June 2021 and budgeted net cash
inflow from operating activities for 2021.
Considering the above factors and plans of the Group, management
believes that a going concern basis for preparing these
consolidated financial statements is appropriate.
2.3 Disclosure of impact of new and future accounting standards
Adoption of new and amended standards
The accounting policies adopted in the preparation of the
interim condensed consolidated financial
statements are consistent with those followed in the preparation
of the Group's annual consolidated
financial statements for the year ended 31 December 2020, except
for the adoption of new standards effective as of 1 January 2021.
The Group has not early adopted any standard, interpretation or
amendment that has been issued but is not yet effective.
Several amendments apply for the first time in 2021, but do not
have an impact on the interim condensed consolidated financial
statements of the Group.
New accounting pronouncements
The new and amended standards and interpretations that are
issued, but not yet effective, up to the date of issuance of the
Group's financial statements are disclosed below. The Group intends
to adopt these new and amended standards and interpretations, if
applicable, when they become effective.
Effective
for annual
periods beginning
Standards issued but not yet effective in the European on
Union or after
Property, Plant and Equipment: Proceeds before 1 January
Intended Use - Amendments to IAS 16 2022
Onerous Contracts - Costs of Fulfilling a Contract 1 January
- Amendments to IAS 37 2022
IFRS 9 Financial Instruments - Fees in the '10 1 January
per cent' test for derecognition of financial liabilities 2022
Amendments to IAS 1 Presentation of Financial Statements: 1 January
Classification of Liabilities as Current or Non-current 2023
- Deferral of Effective Date
Definition of Accounting Estimates - Amendments 1 January
to IAS 8 2023
Disclosure of Accounting Policies - Amendments 1 January
to IAS 1 and IFRS Practice Statement 2 2023
1 January
IFRS 17 Insurance Contracts 2023
Property, Plant and Equipment: Proceeds before Intended Use -
Amendments to IAS 16
In May 2020, the IASB issued Property, Plant and Equipment -
Proceeds before Intended Use, which prohibits entities deducting
from the cost of an item of property, plant and equipment, any
proceeds from selling items produced while bringing that asset to
the location and condition necessary for it to be capable of
operating in the manner intended by management. Instead, an entity
recognises the proceeds from selling such items, and the costs of
producing those items, in profit or loss.
The amendment is effective for annual reporting periods
beginning on or after 1 January 2022 and must be applied
retrospectively to items of property, plant and equipment made
available for use on or after the beginning of the earliest period
presented when the entity first applies the amendment.
The amendments are not expected to have a material impact on the
Group.
Onerous Contracts - Costs of Fulfilling a Contract - Amendments
to IAS 37
In May 2020, the IASB issued amendments to IAS 37 to specify
which costs an entity needs to include when assessing whether a
contract is onerous or loss-making.
The amendments apply a "directly related cost approach". The
costs that relate directly to a contract to provide goods or
services include both incremental costs and an allocation of costs
directly related to contract activities. General and administrative
costs do not relate directly to a contract and are excluded unless
they are explicitly chargeable to the counterparty under the
contract.
The amendments are effective for annual reporting periods
beginning on or after 1 January 2022. The Group will apply these
amendments to contracts for which it has not yet fulfilled all its
obligations at the beginning of the annual reporting period in
which it first applies the amendments.
IFRS 9 Financial Instruments - Fees in the '10 per cent' test
for derecognition of financial liabilities
As part of its 2018-2020 annual improvements to IFRS standards
process, the IASB issued an amendment to IFRS 9. The amendment
clarifies the fees that an entity includes when assessing whether
the terms of a new or modified financial liability are
substantially different from the terms of the original financial
liability. These fees include only those paid or received between
the borrower and the lender, including fees paid or received by
either the borrower or lender on the other's behalf. An entity
applies the amendment to financial liabilities that are modified or
exchanged on or after the beginning of the annual reporting period
in which the entity first applies the amendment.
The amendment is effective for annual reporting periods
beginning on or after 1 January 2022 with earlier adoption
permitted. The Group will apply the amendments to financial
liabilities that are modified or exchanged on or after the
beginning of the annual reporting period in which the entity first
applies the amendment.
The amendments are not expected to have a material impact on the
Group.
Amendments to IAS 1: Classification of Liabilities as Current or
Non-current
In January 2020, the IASB issued amendments to paragraphs 69 to
76 of IAS 1 to specify the requirements for classifying liabilities
as current or non-current. The amendments clarify:
-- What is meant by a right to defer settlement
-- That a right to defer must exist at the end of the reporting period
-- That classification is unaffected by the likelihood that an
entity will exercise its deferral right
-- That only if an embedded derivative in a convertible
liability is itself an equity instrument would the terms of a
liability not impact its classification
The amendments are effective for annual reporting periods
beginning on or after 1 January 2023 and must be applied
retrospectively. The Group is currently assessing the impact the
amendments will have on current practice and whether existing loan
agreements may require renegotiation.
Definition of Accounting Estimates - Amendments to IAS 8
In February 2021, the IASB issued amendments to IAS 8, in which
it introduces a definition of 'accounting estimates'. The
amendments clarify the distinction between changes in accounting
estimates and changes in accounting policies and the correction of
errors. Also, they clarify how entities use measurement techniques
and inputs to develop accounting estimates.
The amendments are effective for annual reporting periods
beginning on or after 1 January 2023 and apply to changes in
accounting policies and changes in accounting estimates that occur
on or after the start of that period. Earlier application is
permitted as long as this fact is disclosed.
The amendments are not expected to have a material impact on the
Group.
Disclosure of Accounting Policies - Amendments to IAS 1 and IFRS
Practice Statement 2
In February 2021, the IASB issued amendments to IAS 1 and IFRS
Practice Statement 2 Making Materiality Judgements, in which it
provides guidance and examples to help entities apply materiality
judgements to accounting policy disclosures. The amendments aim to
help entities provide accounting policy disclosures that are more
useful by replacing the requirement for entities to disclose their
'significant' accounting policies with a requirement to disclose
their 'material' accounting policies and adding guidance on how
entities apply the concept of materiality in making decisions about
accounting policy disclosures.
The amendments to IAS 1 are applicable for annual periods
beginning on or after 1 January 2023 with earlier application
permitted. Since the amendments to the Practice Statement 2 provide
non-mandatory guidance on the application of the definition of
material to accounting policy information, an effective date for
these amendments is not necessary.
The Group is currently assessing the impact of the amendments to
determine the impact they will have on the Group's accounting
policy disclosures.
IFRS 17 Insurance Contracts
In May 2017, the IASB issued IFRS 17 Insurance Contracts (IFRS
17), a comprehensive new accounting standard for insurance
contracts covering recognition and measurement, presentation and
disclosure. Once effective, IFRS 17 will replace IFRS 4 Insurance
Contracts (IFRS 4) that was issued in 2005. IFRS 17 applies to all
types of insurance contracts (i.e., life, non-life, direct
insurance and re-insurance), regardless of the type of entities
that issue them, as well as to certain guarantees and financial
instruments with discretionary participation features. A few scope
exceptions will apply. The overall objective of IFRS 17 is to
provide an accounting model for insurance contracts that is more
useful and consistent for insurers. In contrast to the requirements
in IFRS 4, which are largely based on grandfathering previous local
accounting policies, IFRS 17 provides a comprehensive model for
insurance contracts, covering all relevant accounting aspects. The
core of IFRS 17 is the general model, supplemented by:
-- A specific adaptation for contracts with direct participation
features (the variable fee approach)
-- A simplified approach (the premium allocation approach) mainly for short-duration contracts
IFRS 17 is effective for reporting periods beginning on or after
1 January 2021, with comparative figures required. Early
application is permitted, provided the entity also applies IFRS 9
and IFRS 15 on or before the date it first applies IFRS 17. This
standard is not applicable to the Group.
2.4 Segment reporting
Segment reporting follows the Group's internal reporting
structure.
Operating segments are defined as components of the Group where
separate financial information is available and reported regularly
to the chief operating decision maker ("CODM"), which is determined
to be the Board of Directors of the Company. The Board of Directors
decides how to allocate resources and assesses operational and
financial performance using the information provided.
The CODM receives monthly IFRS-based financial information for
the Group and its development and operating entities. The Group has
other entities that engage as either head office or in a corporate
capacity, or as holding companies. Management has concluded that,
due to the application of aggregation criteria, separate financial
information for segments is not required. No geographic segmental
information is presented, as all of the companies' operating
activities are based in the Russian Federation.
Management has therefore determined that the operations of the
Group comprise one operating segment and the Group operates in only
one geographic area - the Russian Federation.
2.5 Foreign currency translation
a) Functional and presentation currency
The functional currency of the Group entities is the Russian
ruble ("RUB"), the currency of the primary economic environment in
which the Group operates.
The presentation currency is RUB, which the Board considers more
representative for users of these consolidated financial statements
to better assess the performance of the Group.
b) Transactions and balances
Transactions in foreign currencies are initially recorded by the
Group's entities at their respective functional currency spot rates
at the date the transaction first qualifies for recognition.
Monetary assets and liabilities denominated in foreign
currencies are translated at the functional currency spot rates of
exchange at the reporting date.
Differences arising on the settlement or translation of monetary
items are recognised in profit or loss.
Non-monetary items that are measured in terms of historical cost
in a foreign currency are translated using the exchange rates at
the dates of the initial transactions.
c) Group companies
Loans between Group entities and related foreign exchange gains
or losses are eliminated upon consolidation.
Any goodwill arising on the acquisition of a foreign operation
and any fair value adjustments to the carrying amounts of assets
and liabilities on the acquisition are treated as assets and
liabilities of foreign operation and translated at the spot rate of
exchange at the reporting date.
The period-end exchange rates and the average exchange rates for
the respective reporting periods are indicated below.
30 June 31 December
2021 2020
-------- ------------
RUB/USD as at reporting date 72.3723 73.8757
2021 2020
-------- ------------
RUB/USD average for the six months ended
30 June 74.2781 69.3714
2.6 Assets and liabilities not measured at fair value but for
which fair value is disclosed
Fair values analysed by level in the fair value hierarchy of
assets and liabilities of the Group not measured at fair value are
as follows:
30 June 2021 31 December 2020
---------------------------------- -----------------------
Fair value Carrying Carrying
(unaudited) value (unaudited) Fair value value
------------- ------------------- ----------- ----------
Financial assets
Trade and other receivables 113,841 113,841 158,233 158,233
------------- ------------------- ----------- ----------
Total assets 113,841 113,841 158,233 158,233
============= =================== =========== ==========
Financial liabilities
Borrowings 1,713,531 1,937,876 1,643,670 1,656,896
Trade and other payables 647,023 647,023 551,746 551,746
Total liabilities 2,360,554 2,584,899 2,195,416 2,208,642
============= =================== =========== ==========
The fair value of borrowings and other non-current payables is
based on cash flows discounted using a market rate of 7.39% (2020:
6.71%). The fair values of borrowings and other non-current
payables are within level 2 of the fair value hierarchy. The fair
value of trade and other receivables is within level 3
hierarchy.
3. Revenue from contracts with customers
The Group's operations comprise one class of business being oil
and gas exploration, development and production and all revenues
are from one geographic region, the Saratov Region in the Russian
Federation. Companies incorporated outside of Russia provide
support to the operations in Russia.
Revenue from contracts with customers comprises sale of the
following products:
Six months ended 30 June
----------------------------
2021 2020
(unaudited) (unaudited)
------------- -------------
Gas sales 614,239 488,914
Condensate sales 82,417 39,458
Oil sales 56,190 22,626
Sulphur sales 2,291 1,336
Total revenue from contracts with customers 755,137 552,334
All gas sales are made to one customer, Gazprom Mezhregiongaz
Saratov LLC, under a contract effective until 31 December 2027 with
terms reviewed annually. Condensate and oil are sold to local
buyers. The sales of all products are denominated in RUB.
4 . Cost of sales
Six months ended 30 June
----------------------------
2021 2020
(unaudited) (unaudited)
------------- -------------
Mineral extraction tax 174,975 124,035
Wages and salaries 65,427 54,919
Other taxes and royalties 57,315 28,640
Materials and supplies 38,214 35,519
Repair and maintenance 31,097 27,838
Depreciation and depletion 13,147 71,181
Compensation benefits to operations personnel 12,028 13,042
Other 28,361 25,447
------------- -------------
Total cost of sales 420,564 380,621
============= =============
5 . Income tax expense
The tax charge for the year comprises:
Six months ended 30 June
----------------------------
2021 2020
(unaudited) (unaudited)
------------- -------------
Deferred tax expense (4,400) (43,587)
Current tax expense (8,747) (13)
Tax risk provisions (3,927) (4,536)
------------- -------------
Total income tax expense (17,074) (48,136)
============= =============
Reconciliation between theoretical and actual taxation charge is
provided below.
Six months ended 30 June
------------------------------------
2021 (unaudited) 2020 (unaudited)
----------------- -----------------
Profit before income tax 230,225 18,705
----------------- -----------------
Theoretical tax charge at applicable income
tax rate of 20% (H1 2020: 20%) (46,045) (3,741)
Effect of different foreign tax rates (2,762) (3,069)
Effect of unrecognised deferred tax assets 28,047 (34,069)
Tax effect of expenses not deductible for
tax purposes 7,613 (2,721)
Tax risk provisions (3,927) (4,536)
----------------- -----------------
Total income tax expense (17,074) (48,136)
================= =================
The Group's income was subject to tax at the following tax
rates:
Six months Six months
ended 30 ended 30
June 2021 June 2020
----------- -----------
The Russian Federation 20.0% 20.0%
The Republic of Cyprus 12.5% 12.5%
Cayman Islands 0% 0%
The Group is subject to Cayman income tax, otherwise the
majority of the Group's operations are located in the Russian
Federation. Thus 20% tax rate is used for theoretical tax charge
calculations.
6 . Exploration and evaluation assets
Exploration
and evaluation
works capitalised,
including
Sub-soil seismic
licences works Total
---------- -------------------- ----------
Balance at 1 January 2020 1,035,967 2,474,249 3,510,216
Additions - 97,427 97,427
Transfer from property, plant
and equipment - 2,482 2,482
Change in the estimates of decommissioning
provision - 1,342 1,342
Amortization (109) (436) (545)
---------- -------------------- ----------
Balance at 30 June 2020 (unaudited) 1,035,858 2,575,064 3,610,922
Balance at 1 January 2021 1,033,028 2,576,672 3,609,700
Additions - 4,477 4,477
Transfer from property, plant
and equipment - (1,465) (1,465)
Change in the estimates of decommissioning
provision - (2,066) (2,066)
Amortization (266) - (266)
---------- -------------------- ----------
Balance at 30 June 2021 (unaudited) 1,032,762 2,577,618 3,610,380
========== ==================== ==========
In management's opinion, as at 30 June 2021 there were no
non-compliance issues in respect of the licences that would have an
adverse effect on the financial position or the operating results
of the Group.
The impairment is described in Note 7.
7 . Property, plant and equipment
Construction
Oil and Motor Other equipment work in
gas assets vehicles and furniture progress Total
------------- ---------- ---------------- ------------- -------------
Cost at 1 January
2020 5,456,559 17,662 11,346 307,460 5,793,027
Additions 23,278 27 383 311,099 334,787
Reclassification 133,130 - - 133,130 -
Transfer to exploration (2,482
and evaluation assets - - - (2,482) )
Transfer to current
assets - - - (2,682) (2,682)
Change in the estimates
of decommissioning
provision 11,970 - - - 11,970
Disposals (8,636) - - - (8,636)
------------- ---------- ---------------- ------------- -------------
Cost at 30 June 2020
(unaudited) 5,616,301 17,689 11,729 480,265 6,125,984
Cost at 1 January
2021 5,924,033 20,636 12,340 530,048 6,487,057
Additions 8,291 74 2,652 561,092 572,109
Reclassification 53,890 - - (53,890) -
Transfer to exploration
and evaluation assets - - - 1,465 1,465
Transfer to current
assets - - - (1,980) (1,980)
Change in the estimates
of decommissioning
provision (35,724) - - - (35,724)
Disposals (3,987) (1,572) - (850) (6,409)
------------- ---------- ---------------- ------------- -------------
Cost at 30 June 2021
(unaudited) 5,946,503 19,138 14,992 1,035,885 7,016,518
------------- ---------- ---------------- ------------- -------------
Accumulated depreciation,
depletion and impairment
Balance at 1 January
2020 (4,497,073) (16,668) (8,680) (160,331) (4,682,752)
Depreciation and
depletion (72,703) (753) (336) - (73,792)
Disposals 7,745 - - - 7,745
------------- ---------- ---------------- ------------- -------------
Balance at 30 June
2020 (unaudited) (4,562,031) (17,421) (9,016) (160,331) (4,748,799)
Balance at 1 January
2021 (5,579,133) (18,835) (10,551) (214,475) (5,822,994)
Depreciation and
depletion (15,173) (903) (93) - (16,169)
Disposals 4,057 1,153 - - 5,210
------------- ---------- ---------------- ------------- -------------
Balance at 30 June
2021 (unaudited) (5,590,249) (18,585) (10,644) (214,475) (5,833,953)
------------- ---------- ---------------- ------------- -------------
Net book value at
1 January 2020 959,486 994 2,666 147,129 1,110,275
============= ========== ================ ============= =============
Net book value at
30 June 2020 (unaudited) 1,054,270 268 2,713 319,934 1,377,185
============= ========== ================ ============= =============
Net book value at
1 January 2021 344,900 1,801 1,789 315,573 664,063
============= ========== ================ ============= =============
Net book value at
30 June 2021 (unaudited) 356,254 553 4,348 821,410 1,182,565
============= ========== ================ ============= =============
Impairment
In 2019 the Group determined its development strategy of
Bortovoy licen e field. The main focus of this strategy became the
exploration of the Eastern part of Bortovoy licen e field, while no
further development of the Western part of Bortovoy licen e field
was planned. This and the drop in gas volumes extraction in 2019
became a trigger to analyse the Western part of Bortovoy gas field
for impairment. As a result of this analysis the impairment of the
Western part of Bortovoy gas field cash-generating unit ("CGU") was
recognised.
In 2020, the Group updated analysis the impairment of the
Western part of Bortovoy gas field CGU and recognised additional
impairment.
The impairment was allocated between Exploration and evaluation
assets (Note 6), Property, plant and equipment and Right-of-use
assets of the CGU.
In assessing the impairment amount, the carrying value of the
CGU is compared with its recoverable amount. The recoverable amount
used in assessing the impairment charges described below is fair
value less costs of disposal ("FVLCD"). The Company generally
estimates FVLCD using the income approach, specifically the
discounted cash flow ("DCF") method. Discounted cash flows of the
Western part of Bortovoy licen e field were built based on the
long-term business plan the Group. The period: 2020-2027 for
analysis as 31 December 2019, and 2021-2025 for analysis as 31
December 2020.
As of 31 December 2019 the recoverable amount of the Western
part of Bortovoy licence field comprised 722,096 kRUB. The future
cash flows were discounted to their present values using a discount
rate of 15.23% (pre-tax), that reflects current market assessments
of the time value of money and the risks specific to the asset.
Increasing discount rate by 1% would result in an additional
impairment charge of 18,486 kRUB .
As of 31 December 2020 the recoverable amount of the Western
part of Bortovoy licence field comprised 13,806 kRUB. The future
cash flows were discounted to their present values using a discount
rate of 14.09% (pre-tax), that reflects current market assessments
of the time value of money and the risks specific to the asset.
Increasing discount rate by 1% would result in an additional
impairment charge of 4,038 kRUB .
The following key assumptions were used to determine the
recoverable amount of the Western part of Bortovoy licence
field:
As of 31 December 2019:
Cumulative volumes of gas extractions for the period 2020-2027:
1,588 mln of m(3) ;
Annual inflation in the Russian Federation for the period
2021-2027: within 3.7-3.6%;
Cumulative capital expenditure for the period 2020-2027 in
nominal prices: 1,219,366 kRUB .
As of 31 December 2020:
Cumulative volumes of gas extractions for the period 2021-2025:
924 mln of m(3) ;
Annual inflation in the Russian Federation for the period
2021-2025: within 3.8-4.0%;
Cumulative capital expenditure for the period 2021-2025 in
nominal prices: 884,760 kRUB .
8 . Share capital
Number of
At 30 June 2021, 31 December ordinary Nominal value, Nominal value,
2020 shares, pieces USD'000 RUB'000
---------------------------------- ---------------- --------------- ---------------
Authorised (par value of USD
0.20 each) 250,000,000 50,000 1,708,672
Issued and fully paid (par value
of USD 0.20 each) 141,955,386 28,391 970,218
9 . Earnings per share
Basic earnings per share is calculated by dividing the profit
attributable to owners of the Company by the weighted average
number of ordinary shares in issue during the year.
Diluted earnings per share is calculated by adjusting the
weighted average number of ordinary shares outstanding to assume
conversion of all dilutive potential ordinary shares. As of 31
December 2020, all share options have expired and do not have any
effect on the loss per share as of 30 June 2021 also.
Six months ended 30 June
----------------------------
2021 2020
(unaudited) (unaudited)
------------- -------------
Profit / (loss) attributable to owners of
the Company - basic and diluted 213,151 (29,431)
Number of Number of
shares shares
------------ ------------
Weighted average number of shares for calculating
basic earnings per share 141,955,386 141,955,386
Weighted average number of shares for calculating
diluted earnings per share 141,955,386 141,955,386
RUB RUB
----- -------
Basic profit / (loss) per share 1.50 (0.21)
Diluted profit / (loss) per share 1.50 (0.21)
10 . Borrowings
In 2014, the Group entered into a non-revolving credit facility
agreement with Sberbank of Russia PJSC with a maximum facility
amount of 2,400,000 kRUB. The facility was drawn down in full in
2014. The original maturity date of the credit facility was 30
April 2021 but the Group repaid the loan during 2019 ahead of
schedule.
On 13 May 2019 the Group signed a credit line agreement with
Promsvyasbank PJSC. The credit line limit is 1,320,000 kRUB. The
purpose of the credit line was the refinancing of the loan from
Sberbank PJSC and financing of current activities. The interest
rate equals Russian Key rate plus 1.7%. Payment terms depend on the
amount of the credit line used and the final payment is no later
than 29 April 2024. Under the agreement the Group has pledged its
property, plant and equipment items with carrying value as of 30
June 2021 amounting to 5,338 kRUB to secure the loan. The agreement
contains certain loan covenants. The Group was not in compliance
with certain of such covenants as at 31 December 2020 and
accordingly the entire outstanding balance has been reclassified to
a short-term liability.
On 16 March 2021 the Group signed a credit line agreement with
Promsvyasbank PJSC. The credit line limit is 300,000 kRUB. The
purpose of the credit line was the refinancing of the loan from
Sberbank PJSC and financing of current activities. The interest
rate equals Russian Key rate plus 4.5%. Payment terms depend on the
amount of the credit line used and the final payment is no later
than 29 April 2024.
The loan facility contains a technical covenant requiring 75
mmcm of natural gas production per quarter. The covenant contains
some penalties and provides legal grounds for the bank to have a
formal discussion with the Company's management regarding a breach.
The Company breached the production covenant for H1 2021 due to a
delay in the development drilling programme on West Bortovoy. The
bank accepted the Company's explanation on the covenant breach.
From Q3 2021 the Company will find it difficult to comply with
certain covenants which require minimum end of day cash of RUB 115
million and 75 mmcm of natural gas production per quarter. The
penalty for the violation will be an increase of 0.2% on the
current interest rate.
2021 2020
---------- ----------
Credit facility with Promsvyazbank PJSC
-
liability, as at 1 January 964,838 1,256,457
Including current liability 964,838 1,256,457
Interest accrued 35,903 43,924
Interest paid (33,308) (46,108)
Proceeds 283,117 -
Repayment (207,117) (144,000)
---------- ----------
Credit facility Promsvyazbank PJSC -
liability, as at 30 June (unaudited) 1,043,433 1,110,273
========== ==========
Including current liability 1,043,433 1,110,273
On 14 July 2020, the Company announced that it has entered into
a loan agreement dated 12 March 2020 with ARA Capital Holdings
Limited under which ARA Capital Holdings Limited provided a
revolving loan facility for up to USD 9 million (the "Loan"). ARA
Capital Holdings Limited is the parent company of ARA Capital
Limited, both are the Group's shareholders. In June 2021 this loan
agreement was extended and increased to a maximum principal size of
USD 19 million.
The Loan has been made available for drawdown in three
instalments of:
(1) USD 2,000,000, which is provided unconditionally and has
been drawn down by the Company; and
(2) USD 7,000,000, which is secured against the shares of Royal
Atlantic Energy (Cyprus) Limited (of which Diall Alliance, which
holds and operates the Bortovoy Licence, is a wholly owned
subsidiary) and has been drawn down by the Company.
(3) USD 3,000,000, which is provided unconditionally and has been drawn down by the Company
The Loan was originally due for repayment by 31 December 2020.
The final repayment date was extended to 31 March 2021 in December
2020 and subsequently extended further to 30 September 2021 in June
2021. The Loan is interest-free. In the event of the Company's
failure to repay on time, interest at a rate of 10 percent per
annum will be accrued.
It was agreed on 18 June 2021 that should the Loan not be repaid
by 30 September 2021 or be subject to a further extension by mutual
agreement, ARA Capital Holdings will be entitled to request that
the Loan (including accrued interest) be converted into new
ordinary shares in the Company at the lower price of 27 pence per
share or the volume weighted average price of the Company's shares
between 1 September 2021 and 29 September 2021, with such
conversion taking place no later than 31 December 2021. The Company
does not have sufficient funds to repay the Loan and it has been
unable to secure alternative sources of finance to repay the Loan.
Accordingly, in order to seek authority to issue new ordinary
shares in the Company pursuant to the agreed conversion terms (if
such conversion is requested by ARA Capital Holdings), the Company
intends to convene an EGM by the end of this year.
Proceeds from the Loan are being used for general working
capital purposes and in support of operational activities,
including the development drilling programme ongoing at West
Bortovoy and the East Bortovoy project. The amendment to the Loan
agreement made in June 2021 states that in the event the Loan is
not repaid by 30 September 2021 or not subject to a further
extension by mutual agreement, ARA Capital Holdings will be
entitled to request that the Loan (including accrued interest) be
converted into new ordinary shares in the Company.
2021 2020
--------- -----------
Credit facility with ARA Capital Holdings
Limited -
liability, as at 1 January 664,881 -
Including current liability 664,881 -
Interest accrued - -
Interest paid - -
Proceeds 219,596 2 44 , 285
Net foreign exchange difference (16,010) (13,446)
Repayment - -
--------- -----------
Credit facility ARA Capital Holdings
Limited -
liability, as at 30 June (unaudited) 868,467 230,839
========= ===========
Including current liability 868,467 230,839
Also during 2020, the Group received loans from third parties in
the total amount of 147,000 kRUB. The final maturity date for these
loans is 31 December 2021.The loans are denominated in rubles,
interest rate is fixed (9.5% and 20% for different tranches).
2021 2020
-------- ---------
Credit facility with third parties - liability,
as at 1 January 27,177 -
Including current liability 27,177 -
Interest accrued 1,201 1,752
Interest paid (2,402) (710)
Proceeds - 97,000
Repayment - (52,000)
-------- ---------
Credit facility third parties -
liability, as at 30 June (unaudited) 25,976 46,042
======== =========
Including current liability 25,976 46,042
11 . Decommission provision
The decommissioning and environmental restoration provision
represents the net present value of the estimated future
obligations for abandonment and site restoration costs which are
expected to be incurred at the end of the production lives of the
gas and oil fields which is estimated to be within 20 years.
2021 2020
---------- --------
Provision as at 1 January 645,406 591,558
Additions 2,155 10,982
Unwinding of discount 19,733 18,981
Change in estimate of decommissioning and
environmental restoration provision (59,721) 18,555
Provision as at 30 June (unaudited) 607,573 640,076
========== ========
This provision has been created based on the Group's internal
estimates. Assumptions based on the current economic environment
have been made which the directors believe are a reasonable basis
upon which to estimate the future liability. These estimates are
reviewed regularly to take into account any material changes to the
assumptions. However, actual decommissioning costs will ultimately
depend upon future market prices for the necessary dismantlement
works required, which will reflect market conditions at the
relevant time. Furthermore, the timing is likely to depend on when
the fields cease to produce at economically viable rates. This in
turn will depend upon future oil prices and future operating costs,
which are inherently uncertain.
The provision reflects two liabilities: one is to dismantle the
property, plant and equipment assets and the other is to restore
the environment. The decommissioning part of the provision is
reversed when an oil well is abandoned and corresponding
capitalised costs are expensed. The environmental part of the
provision is reversed when the expenses on restoration are actually
incurred.
The provision is reversed when the corresponding capitalised
costs directly attributable to an exploration and evaluation asset
are expensed as it is determined that a commercial discovery has
not been achieved and the restoration of the corresponding
environment has been completed.
The Group reviews the application of inflation rates used for
the provision estimation each half-year end. The inflation rate
used in the estimation of the provision as of 30 June 2021 was
4.50% in 2021, decreasing to 4.0% in 2036 (as of 31 December 2020:
4.50% in 2020, decreasing to 4.0% in 2036). The discount rates used
to determine the decommissioning and environmental restoration
provision are based on Russian government bond rates. As of 30 June
2021, the discount rate varies from 7.12% to 7.21% (as of 31
December 2020: from 5.93% to 6.39%) depending on expected period of
abandonment and site restoration for each gas and oil fields.
12 . Financial instruments and financial risk management
The Group has exposure to the following risks from its use of
financial instruments:
Liquidity risk;
Market risk;
Credit risk.
This note presents information about the Group's exposure to
each of the above risks, the Group's objectives, policies and
processes for measuring and managing risk, and the Group's
management of capital. Further quantitative disclosures are
included throughout these consolidated financial statements.
The Group's risk management policies deal with identifying and
analysing the risks faced by the Group, setting appropriate risk
limits and controls, and monitoring risks and adherence to limits.
Risk management policies and systems are reviewed regularly to
reflect changes in market conditions and the Group's activities.
The Group, through its internal policies, aims to develop a
disciplined and constructive control environment in which all
employees understand their roles and obligations.
12.1 Liquidity risk
Liquidity risk is the risk that the Group will not be able to
meet its financial obligations as they fall due. The Group monitors
the risk of cash shortfalls by means of current liquidity planning.
The Group's approach to managing liquidity is to ensure, as far as
possible, that it will always have sufficient liquidity to meet its
liabilities when due, under both normal and stressed conditions,
without incurring unacceptable losses or risking damage to the
Group's reputation. This approach is used to analyse payment dates
associated with financial assets, and also to forecast cash flows
from operating activities. The contractual maturities of financial
liabilities are presented including estimated interest
payments.
The Group's current liabilities exceed its current assets by
2,467,374 kRUB as at 30 June 2021. The implications are described
in Note 2.2.
The table below summarises the maturity profile of the Group's
financial liabilities based on contractual undiscounted payments,
in kRUB :
Less than
Total 1 year 1-3 years Over 3 years
----------- ----------- ---------- -------------
Financial liabilities
as at 30 June 2021
(unaudited)
Borrowings 1,759,611 1,759,611 - -
Trade and other payables 647,023 647,023 - -
Lease liabilities 30,627 8,315 12,804 9,508
----------- ----------- ---------- -------------
Total 2,437,261 2,414,949 12,804 9,508
=========== =========== ========== =============
Less than
Total 1 year 1-3 years Over 3 years
----------- ----------- ---------- -------------
Financial liabilities
as at 31 December
2020
Borrowings 1,699,812 1,699,812 - -
Trade and other payables 551,746 551,746 - -
Lease liabilities 33,850 8,066 15,258 10,526
----------- ----------- ---------- -------------
Total 2,285,408 2,259,624 15,258 10,526
=========== =========== ========== =============
The Company is in the advanced stages of negotiations for
project finance with two major Russian banks and will provide a
further update in due course. It should be noted that the terms of
both project finance packages potentially available to the Company
include conditions which are likely to restrict intra group
transfers and cash outflows from the Group's main operating
subsidiary, Diall Alliance. As a consequence, the Company would be
unable to maintain the listing of its ordinary shares on AIM on an
ongoing basis.
In the event that Diall Alliance is unable to secure project
financing in the near term, it will be unable to service its
current loans, including its credit payment due to Promsvyazbank at
the end of October 2021, due to a cash shortfall which is expected
to arise in Q4 2021.
12.2 Market risk
Market risk includes interest risk and foreign currency exchange
rate risk.
a) Interest risk
The Group is exposed to interest rate risk because it has a loan
from Promsvyazbank PJSC with a variable interest rate denominated
in RUB, interest rate on which is key rate of the Central Bank of
Russia + 2.35%.
b) Foreign currency risk
Foreign currency risk is the risk that the fair value or future
cash flows of an exposure will fluctuate because of changes in
foreign exchange rates. The Group's exposure to the risk of changes
in foreign exchange rates relates primarily to the Group's
operating activities.
The Group is exposed to currency exchange rate risk due to the
fact that some of its trade payables and loans are denominated in
foreign currencies. The carrying amounts of the Group's monetary
assets and monetary liabilities denominated in foreign currencies.
The Group is mainly affected by changes in the USD exchange
rate.
12.3 Credit risk
Credit risk is the risk that a counterparty will not meet its
obligations under a financial instrument or customer contract,
leading to a financial loss. The Group is exposed to credit risk
from its operating activities (primarily trade receivables) and
from its financing activities, including deposits with banks and
financial institutions, foreign exchange transactions and other
financial instruments.
Customer credit risk is managed by each business unit subject to
the Group's established policy, procedures and control relating to
customer credit risk management. Credit quality of a customer is
assessed based on a credit rating scorecard and individual credit
limits are defined in accordance with this assessment. Outstanding
customer receivables are regularly monitored.
The Group is largely dependent on one customer (Gazprom
Mezhregiongaz Saratov LLC) for a significant portion of earned
revenues. Gazprom Mezhregiongaz Saratov LLC accounted for 81.3% and
88.5% of the Group's total revenue during the first six months of
2021 and 2020 respectively. The loss or the insolvency of this
customer for any reason, or reduced sales of the Group's principal
product, could significantly reduce the Group's ongoing revenue
and/or profitability, and could materially and adversely affect the
Group's financial condition. The credit rating assigned to Gazprom
by Standard & Poor's is BBB-. To manage credit risk and
exposure to the loss of the key customer, the Group has entered
into a contract with Gazprom Mezhregiongaz Saratov LLC, effective
to 31 December 2027. As for the smaller customers, the Group
imposes minimum credit standards that the customers must meet
before and during the sales transaction process.
An impairment analysis is performed at each reporting date using
a provision matrix to measure expected credit losses. The provision
rates are based on days past due for groupings of various customer
segments with similar loss patterns (i.e., by product type,
customer type and rating). The calculation reflects the
probability-weighted outcome, the time value of money and
reasonable and supportable information that is available at the
reporting date about past events, current conditions and forecasts
of future economic conditions. Generally, trade receivables are
written-off if past due for more than one year and are not subject
to enforcement activity. The Group does not hold collateral as
security.
Credit risk related to cash and cash equivalents is reduced by
placing funds with banks with acceptable credit ratings.
To limit exposure to credit risk on cash and cash equivalents
management's policy is to hold cash and cash equivalents in
reputable financial institutions with low credit risk. During the
first six months of 2021 cash was held mainly with Promsvyasbank
PJSC, Alfa Bank and Sberbank. Banks are regularly evaluated by
International and Russian agencies and are considered reliable
banks with low credit risk (ratings at the reporting date are
presented below).
To limit exposure to credit risk on cash and cash equivalents
management's policy is to hold cash and cash equivalents in
reputable financial institutions.
30 June 2021
31 December
(unaudited) 2020
------------- ------------
Ba1.ru, Moody's 108 1,017
Ba2.ru, Moody's 11,915 10,983
Ba 3.ru, Moody's 77,499 13,326
Other 531 531
------------- ------------
Total cash and cash equivalents 90,053 25,857
============= ============
Capital management
The Group considers its capital and reserves attributable to
equity shareholders to be the Group's capital. In managing its
capital, the Group's primary long-term objective is to provide a
return for its equity shareholders through capital growth. Going
forward, the Group may seek additional investment funds and also
maintain a gearing ratio that balances risks and returns at an
acceptable level, while maintaining a sufficient funding base to
enable the Group to meet its working capital needs. Details of the
Group's capital are disclosed in the statement of changes in
equity.
There have been no significant changes to management's
objectives, policies or processes in the period, nor has there been
any change in what the Group considers to be capital.
The Group companies are in compliance with externally imposed
capital requirements as of 30 June 2021 and 31 December 2020.
13 . Commitments and contingencies
13.1 Capital commitments
Capital expenditure contracted for at the end of the reporting
period but not yet incurred at 30 June 2021 was 1,223,483 kRUB, net
of VAT (31 December 2020: 38,873 kRUB, net of VAT).
13.2 Insurance
The insurance industry in the Russian Federation is in a
developing state and many forms of insurance protection common in
other parts of the world are not generally available. The Group's
insurance currently includes cover for damage to or loss of assets,
third-party liability coverage (including employer's liability
insurance), in each case subject to excesses, exclusions and
limitations. However, there can be no assurance that such insurance
will be adequate to cover losses or exposure to liability, or that
the Group will continue to be able to obtain insurance to cover
such risks. Until the Group obtains adequate insurance coverage
there is a risk that the loss or destruction of certain assets
could have a material adverse effect on the Group's operations and
financial position.
13.3 Litigation
The Group has been involved in a number of court proceedings
(both as a plaintiff and as a defendant) arising in the normal
course of business. In the opinion of management there are no
current legal proceedings or other claims outstanding which could
have a material adverse effect on the results of operations,
financial position or cash flows of the Group and which have not
been accrued or disclosed in these financial statements.
13.4 Taxation
Russian tax, currency and customs law allows for various
interpretations and is subject to frequent changes. Management's
interpretation of legislation as applied to the Group's
transactions and activities may be challenged by regional or
federal authorities.
The Group operates in a number of foreign jurisdictions besides
Russian Federation. The Group includes companies established
outside the Russian Federation that are subject to taxation at
rates and in accordance with the laws of jurisdictions in which the
companies of the Group are recognised as tax residents. Tax
liabilities of foreign companies of the Group are determined on the
basis that foreign companies of the Group are not tax residents of
the Russian Federation, nor do they have a permanent representative
office in the Russian Federation and are therefore not subject to
income tax under Russian law, except for income tax deductions at
the source.
In 2021, there was further implementation of mechanisms aimed at
avoiding tax evasion using low-tax jurisdictions and aggressive tax
planning structures. In particular, these changes included the
definition of the concept of beneficial ownership, the tax
residence of legal entities at the place of actual activities, as
well as the approach to taxation of controlled foreign companies in
the Russian Federation.
The Russian tax authorities continue to actively cooperate with
the tax authorities of foreign countries in the international
exchange of tax information, which makes the activities of
companies on an international scale more transparent and requires
detailed study in terms of confirming the economic purpose of the
organization of the international structure in the framework of tax
control procedures.
These changes and recent trends in applying and interpreting
certain provisions of Russian tax law indicate that the tax
authorities may take a tougher stance in interpreting legislation
and reviewing tax returns. The tax authorities may thus challenge
transactions and accounting methods that they have never challenged
before. As a result, significant taxes, penalties and fines may be
accrued. It is not possible to determine the amounts of
constructive claims or evaluate the probability of a negative
outcome. Tax audits may cover a period of three calendar years
immediately preceding the audited year. Under certain
circumstances, the tax authorities may review earlier tax
periods.
In addition, tax authorities have the right to charge additional
tax liabilities and penalties on the basis of the rules established
by transfer pricing legislation, if the price/profitability in
controlled transactions differs from the market level. The list of
controlled transactions mainly includes transactions concluded
between related parties. Requirements for tax control of prices and
preparation of transfer pricing documentation apply to cross-border
transactions between related parties (without applying any
threshold), individual transactions in the field of foreign trade
in goods of world exchange trade and transactions with companies
located in low-tax jurisdictions, as well as transactions between
related parties in the domestic market in some cases.
Tax authorities may carry out a price/profitability check in
controlled transactions and, in case of disagreement with the
prices applied by the Group in these transactions, may additionally
charge additional tax liabilities if the Group is unable to justify
the market nature of pricing in these transactions by providing
transfer pricing documentation (national documentation) in
accordance with the requirements of the legislation.
Management believes that it has provided adequately for tax
liabilities based on its interpretations of applicable tax
legislation, official pronouncements and court decisions. However,
the interpretations of the relevant authorities could differ and
the impact on these consolidated financial statements if the
authorities were successful in enforcing their interpretations
could be significant.
13.5 Environmental matters
The Group's operations are in the upstream oil and gas industry
in the Russian Federation and its activities may have an impact on
the environment. The enforcement of environmental regulations in
the Russian Federation is evolving and the enforcement stance of
government authorities is continually being reconsidered. The Group
periodically evaluates its obligations related thereto. The outcome
of environmental liabilities under proposed or future legislation,
or as a result of stricter interpretation and enforcement of
existing legislation, cannot reasonably be estimated at present,
but could be material.
Under the current levels of enforcement of existing legislation,
management believes there are no significant liabilities in
addition to amounts already accrued as a part of the
decommissioning provision and which would have a material adverse
effect on the financial position or results of the Group.
14 . Related party transactions
Note 1.1 provides information about the Group's structure,
including details of the subsidiaries and the holding company. The
following table provides the total amount of transactions that have
been entered into with related parties for the relevant financial
year (kRUB).
30 June 2021 30 June 2020
(unaudited
(unaudited) )
------------- -------------
Borrowings from shareholder, who has significant
influence
over the Group
ARA Capital Holdings Limited 868,467 230,839
------------- -------------
Total borrowings 868,467 230,839
============= =============
Trade and other receivables from related parties are presented
as follows (kRUB):
30 June 2021 30 June 2020
(unaudited) (unaudited)
------------- -------------
Operations with companies under the control
of
a shareholder with significant influence
Artamira LLC 8 , 416 -
Chalyk-Nafta LLC 157 -
Saratov Geoneft LLC 123 -
Neftepoisk LLC 123 -
Engels Nafta LLC 123 -
------------- -------------
Total trade and other receivables 8,942 -
============= =============
Trade and other payables from related parties are presented as
follows (kRUB):
30 June 2021 30 June 2020
(unaudited) (unaudited)
------------- -------------
Operations with companies under the control
of
a shareholder with significant influence
Artamira LLC 53 , 208 -
Total trade and other payables 53,208 -
============= =============
The income items for transactions with related parties for the
year ended 30 June 2021 and 30 June 2020 are presented below
(kRUB):
30 June 2021 30 June 2020
(unaudited) (unaudited)
------------- -------------
Operations with companies under the control
of a shareholder with significant influence
Artamira LLC (Management and operational
services) 9,891 -
Chalyk-Nafta LLC (Management services) 87 -
Saratov Geoneft LLC (Management services) 86 -
Neftepoisk LLC ( M anagement services) 86 -
Engels Nafta LLC (Management services) 86 -
------------- -------------
Total income items 10,236 -
============= =============
Key management comprises members of the Board of Directors.
The remuneration of key management comprised of salary and
bonuses in the amount 4,976 kRUB (6 months 2020: 4,574 kRUB).
15 . Events after the reporting date
There were no events after the reporting date that require
disclosures in the Group's interim condensed consolidated financial
statements.
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END
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