Ig Seismic S Regulatory News (IGSS)

IG Seismic Services Plc

Interim condensed consolidatedfinancial statements

for the 6 month period ended 30 June 2014 (unaudited) 

Contents

Report on review of interim condensed consolidated financial statements................................................... 1

Interim consolidated statement of financial position....................................................................................... 2

Interim consolidated statement of comprehensive income............................................................................ 3

Interim consolidated statement of cash flows................................................................................................. 4

Interim consolidated statement of changes in equity...................................................................................... 5

Notes to the interim condensed consolidated financial statements................................................................ 6

Report on review of interim condensed consolidated financial statements

To the shareholders of IG Seismic Services Plc

Introduction

We have reviewed the accompanying interim condensed consolidated financial statements of IG Seismic Services Plc and its subsidiaries (the "Group") as at 30 June 2014, comprising the interim consolidated statement of financial position as at 30 June 2014 and the related interim statements of comprehensive income, changes in equity and cash flows for the six-month period then ended and explanatory notes. Management is responsible for the preparation and presentation of these interim condensed consolidated financial statements in accordance with International Financial Reporting Standard IAS 34 Interim Financial Reporting ("IAS 34") as issued by International Accounting Standards Board and adopted by the European Union. Our responsibility is to express a conclusion on these interim condensed consolidated financial statements based on our review.

Scope of review

We conducted our review in accordance with the International Standard on Review Engagements 2410, "Review of Interim Financial Information Performed by the Independent Auditor of the Entity", as issued by the International Accounting Standards Board and adopted by the European Union. A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing, and consequently, does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the accompanying interim condensed consolidated financial statements are not prepared, in all material respects, in accordance with IAS 34.

15 September 2014

These interim condensed consolidated financial statements were approved and signed by the Director on 15 September 2014

IG Seismic Services Plc

Notes to the interim condensed consolidated financial statements (unaudited)

for 6 months ended 30 June 2014

1. Corporate information

Organizational structure and operations

These are the interim condensed consolidated financial statements of IG Seismic Services PLC (the "Company" or "IGSS") and its subsidiaries (together referred to as the "Group") which is engaged in provision of land and transition zone seismic data acquisition and data processing and interpretation to the petroleum industry in the Russian Federation, the Commonwealth of Independent States ("CIS") and other countries outside of the CIS.

The Company was incorporated in Cyprus as a private limited liability company in accordance with the provisions of the Companies Law, Cap. 113. Its registered office is located at 2-4 Arch. Makariou III Avenue, Capital Center, 9th floor, P.C. 1065, Nicosia, Cyprus. On 10 October 2012 the Company changed its legal form from private limited company into public limited company.

On 11 December 2012 the Company's GDRs were admitted to the Official List maintained by the UK Listing Authority and started trading on the London Stock Exchange's main market on 12 December 2012. Global Depositary Receipts (GDRs) of the Company representing two ordinary shares each are listed and traded on the Main Market of the London Stock Exchange under the ticker IGSS (Bloomberg: IGSS LI, Reuters: IGSSq.L). As of 30 June 2014, the free float of the Company amounted to approximately 24.4% of the issued share capital. The JP Morgan Chase Bank is the depositary bank for the GDR programme of the Company. In April 2014 Mr. Nikolay Levitskiy became the ultimate controlling shareholder of the Group.

Shareholder structure as of 30 June 2014:

Mr. Nikolay Levitskiy 55.82%

Schlumberger 12.00%

Industrial Investors Group 7.78%

Other institutional and private shareholders 24.40%

The Group did not pursue any business acquisitions throughout the first six months 2014 and to the date of the issuance of these interim condensed consolidated financial statements, except for the acquisition of certain non-controlling interest (Note 3).

2. Basis of preparation

Statement of compliance

The interim condensed consolidated financial statements for the six months ended 30 June 2014 have been prepared in compliance with IAS 34 Interim Financial Reporting as issued by the International Accounting Standards Board and adopted by the European Union.

The Group entities registered in the territory of the Russian Federation ("RF") maintain accounting records and prepare financial reports in accordance with Federal Law No.402-FZ Concerning Accounting, the Statute Concerning Accounting and Reporting in the RF and Accounting Statements as approved by relevant orders of the RF Ministry of Finance. The Group entities registered in the territory of the Kazakhstan ("KZ") maintain accounting records and prepare financial reports in accordance with Law of the Republic of Kazakhstan No. 234-III Concerning Accounting.

IG Seismic Services Plc

Notes to the interim condensed consolidated financial statements (unaudited) (continued)

2. Basis of preparation (continued)

Statement of compliance (continued)

These consolidated financial statements have been prepared based on the Russian and Kazakh statutory accounting data adjusted for the purposes of presentation in accordance with IFRS.

The Group has elected to present statement of comprehensive income, statement of financial position, statement of changes in equity and statement of cash flows in the same format as the annual financial statements.

The interim condensed consolidated financial statements do not include all the information and disclosures required to be included in the annual financial statements, and should be read in conjunction with the Group's annual financial statements as at and for the year ended 31 December 2013.

Basis of measurement

These interim condensed consolidated financial statements have been prepared on a historical cost basis, except for certain items that have been measured at fair value as disclosed in the accounting policies. The interim condensed consolidated financial statements are presented in Russian Roubles ("RUR") and all values are rounded to the nearest thousand except when otherwise indicated.

Functional and presentation currency

The Group's revenues, profits and cash flows are primarily generated in Russian Roubles, and are expected to remain principally denominated in Russian Roubles in the future. During the first half of 2014, the Group changed the currency in which it presents its consolidated financial statements from US dollars to Russian Roubles, in order to better reflect the underlying performance of the Group.

A change in presentation currency is a change in accounting policy which is accounted for retrospectively. Interim condensed consolidated financial statements including comparative amounts as of 31 December 2013 and for the period ended 30 June 2013 previously reported in US dollars have been restated into Russian Roubles using the procedures outlined below:

• assets and liabilities denominated in non-Russian Roubles currencies were translated into Russian Roubles at the closing rates of exchange on the relevant statement of financial position date;

• non-Russian Roubles income and expenditure were translated at the average rates of exchange prevailing for the relevant period;

• the cumulative translation reserves except for subsidiaries registered in the territory of the Kazakhstan were set to nil at 1 January 2013, the earliest statement of financial position date which will be presented in the annual consolidated financial statements due to the abovementioned change in accounting policy, and these reserves have been restated on the basis that the Group had reported in Russian Roubles as if this had always been the Group's presentation currency. Share capital, share premium and the other reserves were translated at the historic rates and subsequent rates prevailing on the date of each transaction;

• all exchange rates were extracted from the Group's underlying financial records.

2. Basis of preparation (continued)

Going concern

These interim condensed consolidated financial statements have been prepared on the going concern basis which contemplates the realization of assets and satisfaction of liabilities and commitments in the normal course of business. These accompanying financial statements do not include any adjustments that may be necessary if the Group is unable to continue as a going concern. The Group's interim results and financial position are affected by seasonal factors and are not necessarily indicative of the results that may be expected for the year ending 31 December 2014. Management expects that the Group will be in compliance with its financial obligations and has adequate resources to continue in operational existence in the foreseeable future.

Seasonality

There is a limited season for providing seismic services in certain Siberian regions of the Russian Federation which remain in flood-like, or swampy conditions, in warm weather. Such conditions generally restrict the provision of seismic services in Siberia to a period from December to April.

New standards, interpretations and amendments adopted by the Group

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 2013 except for the adoption of new standards and interpretations effective 1 January 2014. The nature and the impact of each new standard or amendment is described below:

Offsetting Financial Assets and Financial Liabilities - Amendments to IAS 32

These amendments clarify the meaning of "currently has a legally enforceable right to set-off". The amendments also clarify the application of the IAS 32 offsetting criteria to settlement systems (such as central clearing house systems) which apply gross settlement mechanisms that are not simultaneous. These amendments have no impact on the Group.

Novation of Derivatives and Continuation of Hedge Accounting - Amendments to IAS 39

These amendments provide relief from discontinuing hedge accounting when novation of a derivative designated as a hedging instrument meets certain criteria. These amendments have no impact on the Group.

IFRIC 21 Levies

IFRIC 21 is effective for annual periods beginning on or after 1 January 2014 and is applied retrospectively. It is applicable to all levies imposed by governments under legislation, other than outflows that are within the scope of other standards (e.g., IAS 12 Income Taxes) and fines or other penalties for breaches of legislation. These interpretation has no impact on the Group.

The Group has not early adopted any other standard, interpretation or amendment that has been issued but is not yet effective..

3. Acquisition of non-controlling interest

In June 2014, the Group acquired an additional 10.43% interest in the voting shares of its major operating subsidiary OJSC Geotech Seismic Services, having increased its ownership interest to 98.84%, and 1.53% in the share capital of LLC Boguchanskaya Geophisicheskaya Expeditsiya, having increased its ownership interest to 97.14%. Cash consideration of 406,595 was paid to the non-controlling shareholders and expenses in the amount of 21,191 were incurred in relation to these transactions.

Following is a schedule of additional interests acquired by the Group in its operational subsidiaries:

4. Segment information

For management purposes, the Company is organized into business units based on their products and services, and has two reportable operating segments which are Seismic segment and Data processing and interpretation (DPI) segment. Seismic segment includes conducting seismic works for the purpose of search and exploration of oil and gas fields, comprising oilfield seismic works in two or three dimensions, field seismic works in a land-sea transit zone. DPI segment includes processing of seismic and geophysical data, structural interpretation of results of processing, dynamic processing and interpretation of results of processing.

Information on transactions of the holding and managerial companies which conduct managerial services and financial and investment activities was included into the Corporate block, that is not separate operating segment. Information on transactions of the small non-core companies (subsidiaries) was included into the Other block, that is not separate operating segment.

Transfer prices between Seismic segment, DPI segment and Corporate block are on an arm's length basis in a manner similar to transactions with third parties. Internal revenues and expenses primarily pertain to management services rendered by Corporate block to Seismic segment and DPI segment. In the periods presented below, the Group operated primarily in the Russian Federation and Kazakhstan.

The following table's present revenue and profit information regarding the Group's segments for the six months ended 30 June 2014 and 2013, respectively. Intersegment revenues and intersegment costs are presented for reference only and are not taken into account in calculating gross profit.

4. Segment information (continued)

Calculation of the adjusted EBIT and adjusted EBITDA from operating profit/(loss):

4. Segment information (continued)

Restructuring and redundancy costs incurred during six months 2014 primarily relates to the reduction of staff in Moscow office of GEOTECH Holding JSC in connection with the optimization of the Company's corporate structure and business units management structure.

During the 6 month period ended 30 June 2014 and 2013, the Group earned its external sale by its geographical areas as follows:

As of 30 June 2014 and 31 December 2013, the Group had its goodwill and intangible assets, property, plant and equipment and investments in associates by their geographical areas as follows:

5. Property, plant and equipment

Property, plant and equipment as at 30 June 2014 comprised the following:

The above amounts include several vehicles under finance lease agreements. Net book value of these vehicles amounted to 11,089 as of 30 June 2014 (31 December 2013: 11,778).

Properties with a carrying amount of 838,281 are subject to a registered debenture to secure bank loans (31 December 2013: 556,986) (Note 21).

6. Accounts receivable and prepayments

Trade and other receivables comprised the following:

Trade receivables are non-interest bearing and are normally settled within 12 months from the origination date.

Receivables and advances issued are presented net of provision for impairment of 273,592 and 248,783 as at 30 June 2014 and 31 December 2013, respectively.

7. Other financial assets

Other financial assets comprised the following:

Loans issued to third parties are unsecured and mature within one year and bear interest rate between 12% and 14%.

Bank promissory notes include 9% interest bearing promissory notes from City Invest Bank in the amount of 150,000 maturing in September 2014, and discount promissory notes from Sberbank with effective interest rate of 5.5% in the amount of 91,000 maturing in December 2014.

8. Other current assets

Other current assets comprised the following:

9. Cash and cash equivalents

Cash and cash equivalents comprised the following:

Cash represents current bank accounts that carry no interest and demand deposits maturing in less than 3 months.

10. Loans and borrowings

Long-term and short-term borrowings comprised the following:

At the beginning of 2013 the Group entered into non-revolving credit line agreement with Sberbank denominated in euro at interest rate calculated as EURIBOR plus 2.15%. The liability over this credit line in the amount of 341,121 and 136,559 is reported within Long-term bank loans and Current portion of long-term bank loans, respectively as of 30 June 2014.

All other loans and borrowings presented in the table above are at fixed rates and are denominated in Russian roubles.

Long-term loans and borrowings are payable in the following periods:

Pledge obligations and description of security are disclosed in Note 21.

11. Accounts payable and promissory notes payable

Accounts payable comprised the following:

Trade payables are non-interest bearing and are normally settled on 60-day terms. Other payables are non-interest bearing and have an average term of six months.

Short-term and long-term promissory notes issued comprised the following:

Effective interest rate for promissory notes issued by the Group to finance the purchase of UniQ equipment in 2013 was 7% while the contractual interest rate was 4%. At the initial recognition the effect of discounting of the underlying liability to fair value in the amount of 38,006 was recognised within finance income. Effective interest rate accrual in the amount of 12,404 was recognized within finance expense for the six month period ended 30 June 2014 (6,825 for the six month period ended 30 June 2013).

12. Other taxes payable

Other taxes and charges payable comprised the following:

13. Construction type contracts

The Group sales include revenues from seismic contracts of 10,109,912 and 10,223,341 for the six month period ended 30 June 2014 and 2013, respectively. The status of construction type contracts in progress as at 30 June 2014 and 2013 is presented below:

The recognition of the revenue from construction type contracts uncompleted as of 30 June 2014 is primarily based on an assumption of profit margins expected to be earned from inception to completion of each contract. If such expected profit margin decreased by one percent, the revenue from such contracts would decrease by 120,110 (30 June 2013: 109,632).

14. Revenue

Revenue comprised the following:

15. Cost of sales

Cost of sales comprised the following:

16. General and administrative expenses

General and administrative expenses comprised the following:

17. Other operating expenses

Other operating expenses comprised the following:

18. Foreign exchange

Transactions in foreign currencies are translated to the respective functional currency, which is Russian Roubles for the subsidiary companies located in the Russian Federation and Kazakh Tenge for subsidiary companies located in Kazakhstan at exchange rates ruling at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies at the reporting date are translated to the functional currency at the exchange rate at that date.

Foreign currency differences arising in translation are recognized in the statement of comprehensive income. Net foreign exchange loss for the six month period ended 30 June 2014 recognized in profit or loss amounted to 10,512 (loss for the six month period ended 30 June 2013 amounted to 188,154).

19. Earnings per share

The information on the earnings and number of shares used for determining basic and diluted earnings per share is presented below:

20. Financial instruments

The Group's financial instruments comprise accounts receivable and payable, loans receivable, loans payable, and cash, which arise directly from its operations. During the reporting period, the Group did not undertake trading in financial instruments.

Credit risk

Financial assets, which potentially subject Group entities to credit risk, consist principally of trade receivables (Note 6).

The Group has policies in place to ensure that sales of services are made to customers with an appropriate credit history. The carrying amount of accounts receivable, net of provision for impairment of receivables, represents the maximum amount exposed to credit risk. The Group has no significant concentrations of credit risk. Although collection of receivables could be influenced by economic factors, management believes that there is no significant risk of loss to the Group beyond the allowance already recorded.

The aging of accounts receivable at the reporting date was:

20. Financial instruments (continued)

Interest rate risk

At the beginning of 2013 the Group entered into non-revolving credit line agreement with Sberbank denominated in euro at interest rate calculated as EURIBOR plus 2.15%. The following demonstrates the sensitivity of the Group's profit before tax to a reasonably possible change in EURIBOR rate, with all other variables held constant.

The interest rates on other long-term loans of the Group are fixed and therefore do not result in susceptibility of upward interest rate risk through market value fluctuations of interest-bearing loans payable. As at 30 June 2014 the Group did not hedge its interest rate risk.

Market risk

Market risk is the risk that the value of a financial instrument will fluctuate as a result of changes in market prices. The Group manages market risk through periodic estimation of potential losses that could arise from adverse changes in market conditions.

Liquidity risk

Liquidity risk is the risk that the Group will encounter difficulty in raising funds to meet commitments associated with its financial liabilities. Liquidity requirements are monitored on a regular basis and management ensures that sufficient funds are available to meet any commitments as they arise.

The following table shows the undiscounted contractual maturities of liabilities as at 30 June 2014:

20. Financial instruments (continued)

Liquidity risk (continued)

The following table shows the undiscounted contractual maturities of liabilities as at 31 December 2013:

Foreign currency risk

The Group is not engaged in hedging activity to mitigate its foreign currency risk. The Group limits foreign currency risk by monitoring changes in exchange rates in the currencies in which its loans and borrowings are denominated.

The Group has the following USD‑denominated financial assets and liabilities:

The Group has the following EUR‑denominated financial assets and liabilities:

Sensitivity analysis

The following demonstrates the sensitivity to a reasonably possible change in the US dollar exchange rate, with all other variables held constant, of the Group's profit before tax (due to changes in the fair value of monetary assets and liabilities).

20. Financial instruments (continued)

Sensitivity analysis (continued)

As at 30 June 2014, it is estimated that a 10.21% strengthening of RUR against USD, with all other variables held constant, would increase the Group's profit for the six month period ended 30 June 2014 by 88,744 (30 June 2013: 11.04% increase by 137,156). This analysis has been determined assuming that the change in foreign exchange rates had occurred at the reporting date and had been applied to the foreign currency balances to which the Group has significant exposure as stated above, and that all other variables, in particular interest rates, remain constant.

Respective 20.00% and 11.04% weakening of the RUR against USD at 30 June 2014 and 2013 would have had the opposite effect on the amounts shown above in the amount of 173,838 and 137,156 respectively, on the basis that all other variables remain constant.

The following demonstrates the sensitivity to a reasonably possible change in the EUR exchange rate, with all other variables held constant, of the Group's profit before tax (due to changes in the fair value of monetary assets and liabilities).

As at 30 June 2014, it is estimated that a 8.63% strengthening of RUR against EUR, with all other variables held constant, would increase the Group's profit for the six month period ended 30 June 2014 by 41,315 (30 June 2013: 9.53% increase by 54,910). This analysis has been determined assuming that the change in foreign exchange rates had occurred at the reporting date and had been applied to the foreign currency balances to which the Group has significant exposure as stated above, and that all other variables, in particular interest rates, remain constant.

Respective 20.00% and 9.53% weakening of the RUR against EUR at 30 June 2014 and 2013 would have had the opposite effect on the amounts shown above in the amount of 95,748 and 54,212 respectively, on the basis that all other variables remain constant.

20. Financial instruments (continued)

Fair value of financial instruments

The management believes that the fair value of the Group's financial assets and liabilities approximates their carrying amounts.

Capital management

The primary objective of the Group's capital management is to ensure that it maintains a strong credit rating and healthy capital ratios in order to maintain an optimal capital structure to reduce cost of capital and to support its business and maximize shareholder value. For the purposes of the Group's capital management, capital includes issued capital, share premium and all other equity reserves attributable to the equity holders.

The Group manages its capital structure and makes adjustments to it, in light of changes in economic conditions. To maintain or adjust the capital structure, the Group may adjust the dividend payment to shareholders, return capital to shareholders or issue new shares. The Group's current policy is not to pay any dividends.

The Group monitors capital using a range of ratios, including gearing ratio, which is net debt divided by total equity plus net debt. Within net debt the Group includes loans payable, promissory notes and finance lease obligations, less cash and cash equivalents and other financial instruments easily convertible to cash.

21. Risks, commitments and contingencies

Operating environment of the Group

Whilst there have been improvements in the Russian economic situation, such as an increase in gross domestic product and a reduced rate of inflation, 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.

21. Risks, commitments and contingencies (continued)

Operating environment of the Group (continued)

In March-September 2014, the United States, European Union and other countries have introduced a series of unilateral restrictive political and economic actions against the Russian Federation and a number of Russian and Ukrainian individuals and organizations. These official actions, particularly in the case of a further escalation, may result in reduction of economic cooperation between business of before mentioned countries and Russian companies on the international capital markets, as well as other economic consequences. The impact of these events on the future results of operations and financial position of the Company at this time is difficult to determine.

Liquidity

The Russian economy is vulnerable to market downturns and economic slowdowns elsewhere in the world. The global financial crisis has resulted in capital markets instability, significant deterioration of liquidity in the banking sector, and tighter credit conditions within Russia. While the Russian Government has introduced a range of stabilization measures aimed at providing liquidity and supporting debt refinancing for Russian banks and companies, there continues to be uncertainty regarding the access to capital and cost of capital for the Group and its counterparties, which could affect the Group's financial position, results of operations and business prospects.

While management believes it is taking appropriate measures to support the sustainability of the Group's business in the current circumstances, unexpected further deterioration in the areas described above could negatively affect the Group's results and financial position in a manner not currently determinable.

Taxation

Legislation and regulations regarding taxation in Russia continue to evolve. The various legislation and regulations are not always clearly written and their interpretation is subject to the opinions of the local, regional and national tax authorities. Instances of inconsistent opinions are not unusual.

The current regime of penalties and interest related to reported and discovered violations of Russia's laws, decrees and related regulations is severe. Interest and penalties are levied when an understatement of a tax liability is discovered. As a result, the amounts of penalties and interest can be significant in relation to the amounts of unreported taxes.

In Russia tax returns remain open and subject to inspection for a period of up to three years. The fact that a year has been reviewed does not close that year, or any tax return applicable to that year, from further review during the three-year period.

Overall, management believes that the Group has paid or accrued all taxes that are applicable. For taxes where uncertainty exists, the Company has accrued tax liabilities based on management's best estimate of the probable outflow of resources embodying economic benefits, which will be required to settle these liabilities. Possible liabilities which were identified by management at the reporting date as those that can be subject to different interpretations of the tax laws and regulations and are not accrued in the consolidated financial statements as of the reporting date could be up to 1,619,739 (1,491,830 as of 31 December 2013).

21. Risks, commitments and contingencies (continued)

Compliance with covenants

The Group is obliged to comply with a number of restrictive financial and other covenants contained in its loan agreements. Such covenants include maintaining certain financial ratios. As of 30 June 2014 and as of 31 December 2013, the Group was in compliance with all restrictive financial and other covenants contained in its loan agreements.

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 yet generally available. The Group does not have full coverage for its plant facilities, business interruption, or third party liability in respect of property or environmental damage arising from accidents on Group property or relating to Group operations. 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.

Litigation

Group companies remain as a defendant in legal actions filed through 2012-2014 against them by a number of third parties.

Management believes that there are no current claims outstanding, which could have a material effect on the consolidated results of operations or consolidated financial position of the Group and which have not been accrued or disclosed in these consolidated financial statements.

Pledge obligations

Pledged property, plant and equipment

As at 30 June 2014, the Group entered into a number of loan agreements and revolving credit line agreements, which were secured by the Group's property, plant and equipment. The carrying value of the property, plant and equipment pledged at the reporting date amounts to 838,281 (31 December 2013: 556,986).

Pledged rights to claim cash

As at 30 June 2013, the Group entered into a number of loan agreements and revolving credit line agreements, which were secured by the pledge of property rights representing rights to claim cash under the customer agreements for conducting seismic works. The pledged rights to claim cash at the reporting date amounted to 3,560,414 (31 December 2013: 5,617,214).

22. Related party transactions

The following table provides the total amount of transactions that have been entered into with related parties during the six month periods ended 30 June 2014 and 30 June 2013, as well as balances with related parties as of 30 June 2014 and 31 December 2013:

Revenue

Expenses

Outstanding balances

All outstanding balances with related parties are to be settled in cash or through services rendered in case of advances within six months after the reporting date. None of the balances is secured.

Pricing policy

Related party transactions are based on market prices and are effected on an arm's length basis in a manner similar to transactions with third parties.

Key management personnel

The Company enters into transactions with its directors and other key management personnel in the normal course of business. Key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities of the entity, directly or indirectly, and include Chief Executive Officer, Executive Director, and members of the Board of Directors, Chief Financial Officer and Vice-Presidents of the Company. For the six month period ended 30 June 2014, the remuneration paid to key management personnel amounted to 52,596 (six month period ended 30 June 2013: 55,508).

23. Events subsequent to the reporting date

In September 2014 the Group and Rosbank concluded a letter of credit agreement to finance the acquisition of new seismic equipment aimed to the provision of innovative, high-density seismic acquisition technology for the next seismic season. The letter of credit in the amount of EUR 11.5 million (556.4 million Russian roubles) is available for a period of 60-months at floating interest rate calculated as 6 months EURIBOR plus 1.3%.