22 May 2009 15:29
22 May 2009
CASPIAN HOLDINGS Plc
("Caspian" or the "Company")
Final Results
Caspian Holdings (AIM:CSH), the oil and gas development company with assets in the USA and Kazakhstan, announces its audited results for the year ended 31st December 2008.
Michael Masterman, CEO of Caspian Holdings commented: "2008 started as a promising year for Caspian with progress at Zhengeldy in Kazakhstan and new initiatives in the United States. Like many companies in 2008, our fortunes dramatically reversed and the Company has had to work hard to stabilise its position. The most problematic issue was the loss of the appeal on the Zhengeldy licence and the associated financing difficulties that this created. The debt for equity swap agreement will provide an initial basis for the Company to move forward in 2009. "
Extracts from the financial statements follow and a full version is available on the Company's website www.caspianoil.co.uk
Enquiries:
| Caspian Holdings Plc | Grant Thornton UK LLP | Hoodless Brennan | |
| Michael Masterman | Fiona Owen | ||
| T: +44 (0) 7791 288381 | T: +44 (0) 20 7383 5100 | T: +44 (0) 20 7538 1166 | |
| www.caspianoil.co.uk |
CHAIRMAN'S STATEMENT
2008 started as a promising year for Caspian Holdings Plc. Significant positive progress was made on restarting production at Zhengeldy and the Company progressively expanded into the USA through first the Pine Meadows Lease and then the acquisition of 50% of Black Gold of Kentucky and the Irvine oil field.
However by August 2008, the Company's fortunes dramatically reversed. The Kazakhstan Ministry choose to terminate the Zhengeldy sub soil licence and the global financial crisis led to significant falls in oil and other commodity prices and very difficult financing conditions which made it very difficult to quickly progress Black Gold and Pine Meadows.
The Kazak Ministry action against Zhengeldy was the most problematic. The letter to terminate the licence was issued in the same month that the same Ministry formally stated its satisfaction with the Company's progress to restart Zhengeldy production. The Company took the Ministry to court and won the first judgement on 27 November 2008. The first judge found that the Company had met, and exceeded, all of its work program obligations and that the actions of the Minister in terminating the licence were illegal. The Ministry appealed and the court of appeal found in favour of the Ministry. The Appeal Court findings ruling was based Caspian not achieving originally estimated production levels as a result of (in the Appeal Courts' view) not taking timely technical advice from the Ministerial committees. Caspian has until 21 January 2010 to appeal the appeal court judgement.
The loss of Zhengeldy and the global financial crisis made it difficult to expedite development of Pine Meadows in California and Irvine in Kentucky. The Pine Meadows lease will expire on 29 May 2009.
The loss of the Zhengeldy appeal in January 2009 has created serious financial problems for Caspian. The Company has reached an agreement, subject to shareholder approval, to convert its outstanding loan notes and major creditor positions to equity at an issue price of £0.005. If approved this will result in the issue of approximately 230 million shares and the removal of major liabilities from the balance sheet. This action together with equipment sales will allow Caspian to continue to trade. The Company intends to focus on its assets in the United States and other energy and resource development opportunities in the forthcoming year, whilst continuing to look for opportunities to create value from its Kazakhstan Assets.
The 2008 Financials show a loss after taxation of £4,397,146 compared to £1,570,595 in the previous year. As the result of the loss of Zhengeldy Subsoil Contract the value of Taraz LLP has been written down to zero and excluded from the consolidated accounts.
Dietmar Greil retired during the year and moved to California. Dietmar had the lead technical role in the development of Zhengeldy. Mr Greil was replaced by Dr Byron Pirola.
We thank all directors and employees, in particular Mariyam Musrepova, for their support and efforts during the year.
EVENTS SINCE THE BALANCE SHEET DATE
As detailed in the Chairman's statement, in January 2009, the Zhengeldy subsoil licence contract was terminated. This termination has forced the company to write off its investment in Taraz LLP, as subject to the potential sale of the equipment owned by that company, no sums will be realised for this investment.
The company completed a placement of 7,000,000 new ordinary shares to the Masterman Superannuation Fund at a price of 0.6p raising £42,000 on 14th January 2009. Mr M Masterman is a beneficiary and trustee of that fund. Following this transaction, Mr Masterman will have an interest in 39,070,000 shares in the company, representing 29.7% of the total voting rights.
The Company has reached an agreement, subject to shareholder approval, to convert its outstanding loan notes and major creditor positions to equity at an issue price of £0.005. If approved this will result in the issue of approximately 230 million shares and the removal of major liabilities from the balance sheet.
GOING CONCERN
As a result of the loss of the appeal on the Zhengeldy licence on 21 January 2009 and the outstanding loan notes falling due on 11 April 2009, the Company was placed in a position where it was difficult to meet its obligations as they fell due.
The Company has reached an agreement, subject to shareholder approval, to convert its outstanding loan notes and creditor positions to equity at an issue price of £0.005. The Company has also commenced the process to realise proceeds from the sale of Zhengeldy equipment which should provide incoming cashflow.
Based on the Directors expectation that shareholders will support the debt equity swap and reasonable expectations of equipment sale proceeds, the Directors are satisfied that the Group has sufficient resources to continue its operation and to meet its commitments in the foreseeable future. The financial statements have therefore been prepared on the going concern basis.
In the event shareholders do not approve the proposed debt for equity swap, the Company will not be able to meet its debt obligations when they fall due and will cease to trade. In the event that equipment sale realisation is delayed or becomes problematic, then the Company would need to raise capital to continue to meet its obligations when they fall due.
The Directors are satisfied that subject to the above, the Group has sufficient resources to continue its operation and to meet its commitments for the foreseeable future. The financial statements have therefore been prepared on the going concern basis.
CASPIAN HOLDINGS Plc
GROUP INCOME STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2008
| Notes | 2008 | 2007 | ||||
| REVENUE | 2 | 48,870 | 820,798 | |||
| Cost of sales | (110,093) | (1,000,222) | ||||
| GROSS PROFIT/(LOSS) Administrative expenses | 4 | (61,223) (4,261,265) | (179,424) (1,708,922) | |||
| OPERATING LOSS | (4,322,488) | (1,888,346) | ||||
| Exchange gains/(losses) in year Provisions created in period | - - | 354,858 5,104 | ||||
| Finance income Finance costs | 5 5 | - (74,658) | 16,689 ( 58,900) | |||
| LOSS BEFORE TAX | 6 | (4,397,146) | (1,570,595) | |||
| Tax | 7 | - | - | |||
| RETAINED LOSS FOR THE FINANCIAL YEAR | 21 | £(4,397,146) | £(1,570,595) | |||
| Basic and diluted loss per share | 9 | 2.52p | 1.60p | |||
CASPIAN HOLDINGS Plc
GROUP BALANCE SHEET
31 DECEMBER 2008
| Notes | 2008 | 2007 | |||
| ASSETS NON-CURRENT ASSETS | |||||
| Investments Intangible assets | 10 11 | 278,242 - | - 195,138 | ||
| Property, plant and equipment | 12 | - | 3,209,092 | ||
|
278,242 | 3,404,230 | ||||
| CURRENT ASSETS | |||||
| Inventories | 13 | - | 197,021 | ||
| Trade and other receivables | 14 | 23,598 | 560,265 | ||
| Cash and cash equivalents | 15 | 36,918 | 83,254 | ||
| 60,516 | 840,540 | ||||
| LIABILITIES CURRENT LIABILITIES Trade and other payables Financial liabilities - borrowings Interest bearing loans and borrowings Provisions | 16 17 18 | 532,762 799,969 - 1,332,731 | 441,594 76,983 61,439 580,016 | ||
| NET CURRENT LIABILITIES/ASSETS | (1,272,215) | 260,524 | |||
| NON CURRENT LIABILITIES Trade and other payables Financial liabilities - borrowings Interest bearing loans and borrowings | 16 17 | - - - | 93,913
699,976 793,889 | ||
| NET LIABILITIES/ASSETS | £(993,973) | £2,870,865 | |||
| SHAREHOLDERS EQUITY Called up share capital | 19 | 124,649 | 98,699 | ||
| Share premium account | 20 | 9,983,895 | 9,474,645 | ||
| Revaluation reserve Translation reserve Profit and loss account | 20 20 20 | - - (11,102,517) | 26,334 29,700 (6,705,371) | ||
| Minority Interest | 21 | - | (53,142) | ||
| £(993,973) | £2,870,865 |
CASPIAN HOLDINGS Plc
COMPANY BALANCE SHEET
31 DECEMBER 2008
| Notes | 2008 | 2007 | |||
| ASSETS NON CURRENT ASSETS | |||||
| Investments | 10 | - | 4,800 | ||
| CURRENT ASSETS | |||||
| Trade and other receivables | 14 | 301,840 | 5,232,665 | ||
| Cash and cash equivalents | 15 | 36,918 | 54,834 | ||
|
338,758 |
5,287,499 | ||||
| LIABILITIES CURRENT LIABILITIES Trade and other payables | 16 | 532,762 | 265,287 | ||
| Financial liabilities - borrowings | 17 | 799,969 | - | ||
| 1,332,731 | 265,287 | ||||
| NET CURRENT LIABILITIES/ASSETS | (993,973) | 5,022,212 | |||
| NON CURRENT LIABILITIES Financial liabilities - borrowings Interest bearing loans and borrowings | 17 | - - |
699,976 699,976 | ||
| NET LIABILITIES/ASSETS | £(993,973) | £4,327,036 | |||
| Called up share capital | 19 | 124,649 | 98,699 | ||
| Share premium account Profit and loss account | 20 20 | 9,983,895 (11,102,517) | 9,474,645 (5,246,308) | ||
| TOTAL EQUITY | £( 993,973) | £4,327,036 | |||
CASPIAN HOLDINGS Plc
GROUP CASH FLOW STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2008
| Notes | 2008 | 2007 | |||
| Cash flows from operating activities Cash generated from operations Finance cost Net cash from operating activities | 1 | (251,646) (74,658) (326,304) | (393,769)(58,900) (452,669) | ||
| Cash flows from investing activities Purchase of intangible fixed assets Purchase of tangible fixed assets Finance income Net cash from investing activities | - - - - | (241,451) (220,373) 16,689 (445,135) | |||
| Cash flows from financing activities Share issue Net Loans Repayment of financial liabilities - borrowings Interest bearing loans and borrowings Net cash from financing activities | 535,200 23,010 - 558,210 | - 776,959 (1,753) 775,206 | |||
| Cash Flow from Acquisitions and Disposals | |||||
| Acquisition of associates and subsidiary | (278,242) | (4,800) | |||
| New Assets acquired with subsidiary | - | 10,000 | |||
|
£(278,242) |
£5,200 | ||||
| (Decrease)/Increase in cash and cash equivalents Cash and cash equivalents at beginning of year | 2 | (46,336) 83,254 | (117,398) 200,652 | ||
| Cash and cash equivalents at end of year | 2 | £36,918 | £83,254 |
CASPIAN HOLDINGS Plc
NOTES TO THE GROUP CASH FLOW STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2008
1. RECONCILIATION OF OPERATING LOSS TO NET CASH OUTFLOW FROM OPERATING ACTIVITIES
| 2008 | 2007 | ||||
| Operating loss Exchange gains/(losses) in period Provisions in Year Translation adjustments Translation adjustments relating to fixed assets | (4,322,488) - - - - | (1,888,346) 354,858 5,104 (152,281) (207,370) | |||
| Movement on Reserves and minority interest Depreciation charges | (2,892) - | - 990,161 | |||
| Impairment losses | 3,404,230 | 326,998 | |||
| Decrease in inventories | 197,021 | 99,247 | |||
| Decrease in trade and other receivables | 536,667 | 207,625 | |||
| (Decrease) in trade and other payables (Decrease)/increase in other provisions | (2,745) (61,439) | (83,018) (46,747) | |||
| Net cash outflow from operating activities | £(251,646) | £(393,769) | |||
2. CASH AND CASH EQUIVALENTS
The amounts disclosed on the cash flow in respect of cash and cash equivalents are in respect of these balance sheet amounts.
| Year ended 31 December 2007 | |||||
| 31.12.07 | 01.01.07 | ||||
| Cash and cash equivalents | £83,254 | £200,652 | |||
| Year ended 31 December 2008 | |||||
| 31.12.08 | 01.01.08 | ||||
| Cash and cash equivalents | £36,918 | £83,254 | |||