WRES.L Regulatory News (WRES)

27 Apr 2005 07:00

Caspian Holdings plc27 April 2005 27 April 2005 CASPIAN HOLDINGS PLC ("Caspian" or "The Company") Preliminary Results Caspian Holdings Plc (AIM:CSH) the London-based AIM-quoted company whose primaryactivity is the exploration, development and operation of oil fields in thecountries around the Caspian Sea, and in particular Kazakhstan, announces itspreliminary results for the year ended 31 December 2004. Highlights * Caspian Holdings PLC admitted on to AIM on 4 November 2004, raising £4.43m * Acquired 70% of Taraz LLP the owner of the Zengeldy oil field in Kazakhstan in March 2004 * Constructed Zengeldy oil field operations in 9 months * Commenced commercial oil production and sales in September 2004 * Drilled 3 new wells and reactivated well number 5 * Applied for expansion of existing licence area to over 30 km2 Post year end highlights * Completed acquisition of 100% interest in Taraz LLP * Drilled an additional 4 wells * Total of 4 wells in production plus 1 under completion * Produced 10,022 barrels of oil (to 31 March 2005) Commenting on the results, Michael Masterman, Executive Chairman, said: "It hasbeen a strong year for us. The AIM listing in November 2004 provided us with thefunds to acquire 100% and then rapidly develop Zengeldy, our first oil fieldwhich is now in production. Since the listing, we have submitted an applicationto expand the licence area of Zengeldy with the view of increasing productionand in addition we continue to actively pursue new projects which we believewill add value to the company." - Ends - For further information, please contact: Caspian Holdings Plc Hoodless Brennan Parkgreen CommunicationsMichael Masterman Luke Cairns Justine Howarth / Ana RibeiroT: +447791288381 T: +44 (0) 20 7538 1166 T: +44 (0)20 7493 3713 CHAIRMAN'S STATEMENT Dear Fellow Shareholder On behalf of the Board of Directors of Caspian Holdings Plc, I am pleased topresent the first Annual Report of the Company since admission to AIM on 4November 2004. The year under review was one of great achievements for the Company. We acquiredand quickly brought into production our first oil field, Zengeldy, and wecompleted a successful IPO of the Company raising £4.43m. Since listing we havemoved to expand oil production from the Zengeldy field, submit an application toexpand the licence area, and we are pursuing other fast track oil fielddevelopment and production activities around the Caspian Sea. We now look to 2005 with great anticipation and excitement as we establishZengeldy as a commercially self sustaining profit centre for the Company. Inaddition we are working to secure an expansion in the current licence area andwe continue to work towards securing new projects that will add to our oilreserves, oil production capacity and add value for shareholders. Yours faithfully Michael MastermanExecutive Chairman REVIEW OF DEVELOPMENT AND OPERATIONS ZengeldyCaspian's first oil project is the Zengeldy field located 18km from Makat in thepre Caspian Basin. The field was acquired through the acquisition of Taraz LLP,the owner of the Zengeldy subsoil contract in February 2004. Caspian moved forward to commence initial development of the Zengeldy fieldthrough 2004 and early 2005. The initial focus has been on bringing intoproduction the Jurassic and Triassic reserves. The top of the Zengeldy salt dome is in the north of the licence area at a depthof approximately 450m and the above sequence only contains Jurassic, Neocomianand Apt oil bearing levels. The Triassic targets are in the east, south, andwest areas of the licence with the most promising reserves in the western areasbelow a salt lake which will be drilled in the summer of 2005. Four wells have been drilled in the Jurassic - 113, 114, 111 and 112 - and allwells have been brought into production. Each of the wells has multipleproduction levels and production to date has been from a single productivelevel. The additional levels will be brought on in series (not parallel)extending well life and recovery (but with lower initial daily rates).Production from wells 113, 111, and 112 has been broadly in line withexpectations for these shallow Jurassic wells of about 50-70 barrels per day perwell. Production from the lower level of 114 has been minimal due to lowpermeability in this layer - production from the higher layer will be broughtinto production later this year. Jurassic production was 590 bbls in theDecember Quarter 2004 and has since risen rapidly to 7,351 bbls in the MarchQuarter 2005. Further increases are expected in the June Quarter 2005 as newwells including the recently drilled 116 are brought online, flow lines andimproved storage are installed and weather conditions improve. Winter drilling on Triassic targets has focused on the southern and easternareas of the licence. A previous well, Well 5, was reactivated in June 2004 andthe well logs, within the cased well showed a 15m oil pay with 32m in the loweropen section. The well initially produced good quantities of oil but due to poorcementation in the old well casing, the well was shut down due to water influxfrom the higher levels. Well 123 drilled further to the south of Well 5 was drydue to a change in lithology from clean to shale sands. In the eastern Triassictargets well 115 had oil shows but insufficient oil saturation for commercialproduction. Updated evaluation of the geological model shows that the bulkTriassic reserves lie in the west of the licence area under the salt lake and tothe west. The lake should be sufficiently dry to commence drilling activities inthe third quarter 2005. Overall Zengeldy field production in 2004 and early 2005 has been limited toproduction from the Jurassic level reserves and is currently running atapproximately 150 barrels per day. Significant increases in production aredependent on the success of the summer Triassic drilling program. Based on geological modelling work, Caspian is of the view that the Zengeldy oilbearing structure extends to the west of the existing licence area. Anapplication has been made to the Kazak Ministry to extend the licence area to 30square km. The Ministry is currently evaluating the application. In parallel wehave had positive discussions with the owner of the adjacent exploration blockregarding joint development of the extension area. We expect a positive outcomefrom the application and negotiations in mid 2005. A 3D seismic program is also planned during the summer to better define thegeological model and reserves estimates. A comprehensive review and revision ofthe geological model and associated reserves estimates will then be completed toincorporate the results of all wells drilled including the summer Triassicprogram, the extension and the 3D seismic results. On the basis of drilling todate the Directors are optimistic that the review could lead to an upgrade inthe Jurassic reserve estimates. New ProjectsThe Company continues to actively evaluate new projects in Kazakhstan and theother countries around the Caspian Sea. Progress has been made in the screening,evaluation and negotiation process and tangible results will be released to themarket in accordance with the continuous disclosure requirements. CONSOLIDATED FINANCIAL STATEMENTS CASPIAN HOLDINGS Plc GROUP PROFIT AND LOSS ACCOUNTFOR THE YEAR ENDED 31 DECEMBER 2004 Notes 2004 2003 TURNOVER 2 - - Administrative expenses 610,302 - OPERATING LOSS 4 Acquisitions (150,067) -Continuing operations (460,235) - (610,302) -Interest receivable and similar income 5 13,254 838 Interest payable and similar charges 6 (6,517) - LOSS/PROFIT ON ORDINARY ACTIVITIESBEFORE (603,565) 838TAXATION Tax on loss/profit on ordinary 7 - -activities LOSS/PROFIT FOR THE FINANCIAL YEARAFTER (603,565) 838TAXATION Minority equity interests 29,707 - RETAINED (LOSS)/PROFIT FOR THE £(573,858) £838FINANCIAL YEAR ====Basic and Diluted loss per share 9 2.2p - The notes form part of these financial statements CASPIAN HOLDINGS Plc GROUP BALANCE SHEET31 DECEMBER 2004 Notes 2004 2003 ------- ------FIXED ASSETSIntangible assets 10 1,877,190 -Tangible assets 11 784,006 - --------- ------ 2,661,196 - CURRENT ASSETSStocks 13 90,112 -Debtors 14 302,503 58,488Cash at bank and 3,100,585 -in hand ----------- ------------ 3,493,200 58,488 CREDITORS:Amounts falling 15 326,416 55,650due within one ---------- -------------year NET CURRENT 3,166,784 2,838ASSETS ------------- ------- TOTAL ASSETSLESSCURRENT 5,827,980 2,838LIABILITIES CREDITORS:Amounts falling 16 226,588 -due after more ------------- -------than one year £5,601,392 £2,838 ============== ========CAPITAL ANDRESERVESCalled up share 17 83,882 2,000capitalShare premium 18 6,087,755 -accountOther reserve 18 2,775 -Profit and loss 18 (573,020) 838account -------------- -------- Shareholders' £5,601,392 £2,838funds =============== ======== Shareholders'fundsattributable toEquity interest £5,601,392 £2,838 ============= ======== The notes form part of these financial statements CASPIAN HOLDINGS PlcCOMPANY BALANCE SHEET31 DECEMBER 2004 Notes 2004 2003 FIXED ASSETSInvestments 12 1,145,146 - CURRENT ASSETSDebtors 14 1,787,873 58,488Cash at bank and 3,025,695 -in hand -------------- ------- 4,813,568 58,488 CREDITORS:Amounts falling 15 166,321 55,650due within ------------- --------one year NET CURRENT 4,647,247 2,838ASSETS ----------- -------- TOTAL ASSETSLESSCURRENT £5,792,393 £2,838LIABILITIES ============= ========== CAPITAL ANDRESERVESCalled up share 17 83,882 2,000capitalShare premium 18 6,087,755 -accountProfit and loss 18 (379,244) 838account ----------- ----------- Shareholders' £5,792,393 £2,838funds ============ ========== Shareholders'fundsattributable toEquity interest £5,792,393 £2,838 ============ ========== The notes form part of these financial statements CASPIAN HOLDINGS PlcGROUP CASH FLOW STATEMENTFOR THE YEAR ENDED 31 DECEMBER 2004 Notes 2004 2003 ------- ------- Net cash outflowfrom operating activities 1 (1,051,019) (2,838) Returns on investments andservicing of 2 6,737 838finance Capital expenditureand financial investment 2 (1,025,330) - Acquisitions and disposals 2 (861,428) - ----------- -------- (2,913,040) (2,000) Financing 2 6,031,625 2,000 ----------------- ------- Increase in cash in the period £3,100,585 £- ================= ==== Reconciliation of net cash flow to 3movement in net debt Increase in cash in the period 3,100,585 -Cash outflow from decrease indebt and 487 -lease financing ----- --- Change in net debt resultingfrom cash 3,101,072 -flows Royalty payments acquired (288,315) - ----------------- --- Movement in net debt in the 2,812,757 -period Net debt at 1 January 2004 - - ---------------- --- Net debt at 31 December 2004 £2,812,757 £- ============ ============== The notes form part of these financial statements CASPIAN HOLDINGS Plc NOTES TO THE GROUP CASH FLOW STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2004 1. RECONCILIATION OF OPERATING LOSS TO NET CASH OUTFLOW FROM OPERATING ACTIVITIES 2004 2003 ------- ------- Operating Loss (610,302) - Depreciation charges 36,902 - (Increase) in stocks (89,819) - (Increase) in debtors (235,899) (58,488) (Decrease)/Increase in creditors (151,901) 55,650 ------------------ --------Net cash inflow from operating activities £(1,051,019) £(2,838) ================ ========== 2. ANALYSIS OF CASH FLOWS FOR HEADINGS NETTED IN THE CASH FLOW STATEMENT Returns on investments and servicing of financeInterest received 13,254 838Interest Paid (6,517) - --------- ------------ Net cash outflow for returns on investments andservicing of finance £6,737 £838 ======== ====== Capital expenditure and financial investment Purchase of intangible fixed assets (224,796) -Purchase of tangible fixed assets (795,132) -Exchange differences (5,402) - --------- ---Net cash outflow for capital expenditure andfinancial £(1,025,330) £-investment ============== ==== Acquisitions and disposalsPurchase of subsidiaries (864,546) -Cash acquired £3,118 - -------- --- Net cash outflow for acquisitions and disposals £(861,428) £- ============ ==== Financing Movement on other reserve 2,775 - Share issue 6,029,337 2,000 Capital element of hire purchase or finance 22,488 -leases Capital element of royalty payments (22,975) - -------------- --------------- Net cash (outflow)/inflow from financing £6,031,625 £2,000 ============ ======== The notes form part of these financial statements CASPIAN HOLDINGS PlcNOTES TO THE GROUP CASH FLOW STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2004 3. ANALYSIS OF CHANGES IN NET DEBT Acquisitions -------------- Cash flow (Excl. cash) At 31.12.04 ----------- -------------- ------------- Net cash:Cash at bank and in hand 3,100,585 - 3,100,585 -------------- ---------------- -------------------- Debt:Hire purchase or finance (22,488) - (22,488)leasesRoyalty lease payments 22,975 (288,315) (265,340) --------------- -------------- ----------------- 487 (288,315) (287,828) --------------- -------------- ----------------- --- Total £3,101,072 £(288,315) £2,812,757 ============= ============= ============= Analysed in BalanceSheet Cash at bank and in hand 3,100,585Hire purchase or financeleaseswithin one year (6,732)after one year (15,756)Royalty lease paymentswithin one year (54,508)after one year (210,832) ------------- Net Debt £2,812,757 ============= 4. PURCHASE OF SUBSIDIARIES Net assets acquired Fixed assets 366,320Stock and work in progress 293Debtors 8,116Cash at bank and in hand 3,118Creditors (221,127)Royalty lease payments (288,315)Minority interest (29,707)Goodwill 1,306,448 ---------------- £1,145,146 ================Satisfied by Cash 864,546Issued share capital 140,300Share capital to be issued 140,300 ------------- £1,145,146 ============ The notes form part of these financial statements CASPIAN HOLDINGS PlcNOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2004 1. ACCOUNTING POLICIES Accounting convention The financial statements have been prepared in accordance with applicable UnitedKingdom accounting standards under the historical cost convention. Basis of consolidation The consolidated financial statements include the accounts of subsidiaries madeup to 31 December 2004. On 8 April 2004 formal completion of the acquisition of 70% of the capital ofTaraz LLP took place. The consolidated financial statements include the resultsof Taraz LLP for the year ended 31 December 2004. The directors consider thatthe pre acquisition results of Taraz LLP are not material to the results shownin the consolidated profit and loss account. The directors have adopted thisaccounting treatment in order that the consolidated results of the group show atrue and fair view. On 1 September 2004, the company signed an agreement to acquire the remaining30% interest in Taraz LLP, formal completion of which took place on 28th March2005. The directors consider that, in order for the consolidated accounts toshow a true and fair view, that Taraz LLP is consolidated as a wholly ownedsubsidiary of the company. Interim audited consolidated accounts were preparedto 30 June 2004 and these accounts have been used to calculate the goodwillarising on the purchase of the remaining 30% interest in Taraz LLP. Thedirectors consider that the results for the two months 1 July 2004 to 1September 2004 are not material. No profit or loss account is presented for the company as permitted by S230 (3)of the Companies Act 1985. Goodwill Goodwill arising on consolidation, which represents the excess of the purchaseprice over the fair value of net assets acquired, is shown in the balance sheetas an asset and will be amortised evenly over its estimated useful life oncetrading has commenced. In addition to the systematic amortisation, the bookvalue is written down to recoverable amount when any impairment is identified. The directors consider the estimated useful life of goodwill to be in line withthe contract between Taraz LLP and the Government of the Republic of Kazakhstanfor the exclusive right to use the subsurface on the Zhengeldy oil field whichterminates on 27 May 2024. Intangible fixed assets Amortisation is calculated and provided in order to write off each asset overits estimated useful economic life, such amortisation to commence when the assetconcerned is initially used within the business. Royalty - 5% - 33% on costSoftware - 5% - 33% on cost Deferred costs represent costs for preparatory work for oil production. Thesecosts are to be written over a period of 4 years starting in the year that thefirst income from selling oil is received. CASPIAN HOLDINGS PlcNOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2004 1. ACCOUNTING POLICIES (cont'd) Tangible fixed assets Depreciation is provided at the following annual rates in order to write offeach asset over its estimated useful life or, if held under finance lease, overthe lease term, whichever is the shorter. Bore holes - 10% on costMotor vehicles - 20% on costPlant and equipment - 20% - 33% on costFurniture and other equipment - 10% - 33% on cost Deferred Tax The tax charge is based on the profit for the period and takes into accounttaxation deferred because of timing differences between the treatment of certainitems for taxation and accounting purposes. Deferred tax is recognised inrespect of all timing differences that have originated but not reversed at thebalance sheet date where transactions or events have occurred at that date thatwill result in an obligation to pay more, or a right to pay less or to receivemore, tax, in the future. In particular: • Provision is made for tax on gains arising from the revaluation (and similar fair value adjustments) of fixed assets, and gains on disposal of fixed assets that have been rolled over into replacement assets, only to the extent that, at the balance sheet date, there is a binding agreement to dispose of the assets concerned. However, no provision is made where, on the basis of all available evidence at the balance sheet date, it is more likely than not that the taxable gain will be rolled over into replacement assets and charged to tax only where the replacement assets are sold. • Provision is made for deferred tax that would arise on remittance of the retained earnings of overseas subsidiaries, associates and joint ventures only to the extent that, at the balance sheet date, dividends have been accrued as receivable. • Deferred tax assets are recognised only to the extent that the Directors consider that it is more likely than not that there will be suitable taxable profits from which the future reversal of the underlying timing differences can be deducted. Deferred tax is measured on an undiscounted basis at the tax rates that areexpected to apply in the periods in which timing differences reverse, based ontax rates and laws enacted or substantively enacted at the balance sheet date. Stock Stock is valued at the lower of cost and net realisable value, after making dueallowance for obsolete and slow moving items. Foreign currencies Transactions in foreign currencies are recorded at the rate ruling at the dateof the transaction or at the contracted rate. Monetary assets and liabilitiesdenominated in foreign currencies are retranslated at the rate of exchangeruling at the balance sheet date or, if appropriate, at the forward contractrate. All differences are taken to the profit and loss account. CASPIAN HOLDINGS PlcNOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2004 1. ACCOUNTING POLICIES (cont'd) Foreign currencies (Cont'd) Where the trade of a foreign enterprise is more dependent on the economicenvironment of the parent company then the Financial Statements of theundertaking are consolidated using the Temporal method on the following basis: • Fixed assets are translated into sterling at the rates ruling on the date of acquisition. • Monetary assets and liabilities denominated in a foreign currency are translated into sterling at the foreign exchange rates ruling at the balance sheet date. • Revenue and expenses in foreign currencies are recorded in sterling at the rates ruling at the date of the transactions. • Any gains or losses arising on translation are as reported in the Profit and Loss Account. Hire purchase and leasing commitments Assets held under finance leases, which are leases where substantially all therisks and rewards of ownership of the asset have passed to the Group, and hirepurchase contracts are capitalised in the balance sheet and are depreciated overtheir useful lives. The capital elements of future obligations under leases andhire purchase contracts are included as liabilities in the balance sheet. Theinterest elements of the rental obligations are charged in the profit and lossaccount over the periods of the leases and hire purchase contracts and representa constant proportion of the balance of capital payments outstanding. Rentals payable under operating leases are charged in the profit and lossaccount on a straight-line basis over the lease term. 2. TURNOVER The group has yet to receive any trading income. 3. STAFF COSTS 2004 2003 ------ ------ Wages and salaries 316,996 -Social security costs 34,825 - --------- -------- £351,821 £- =========== ======= The average monthly number of employees during the year was as follows: Management & administration 10 2Production, technical & operations 25 - ------ -------- 35 2 ====== ======= Of these employees, all the Production, Technical and Operations Staff areemployed in Kazakhstan. CASPIAN HOLDINGS PlcNOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2004 4. OPERATING LOSS The operating loss is stated after charging: 2004 2003 ------ ------ £ £ Depreciation -owned assets 35,337 -Depreciation -assets held underfinance leases andhire purchasecontracts 1,565 -Auditorsremuneration 14,688 - ======== === Directors'emoluments andother benefits £163,067 £- ========== ==== Directors' emoluments D. Greil 88,265M. Masterman 66,802M. Garland 4,000M.R.S. James 4,000 5. INTEREST RECEIVABLE AND SIMILAR INCOME Bank interest £13,254 £838 ========= ====== 6. INTEREST PAYABLE AND SIMILAR CHARGES Bank loans,overdrafts andother loansrepayable withinfive years otherthan by instalments 1,272 -Finance charges -hire purchase contracts orfinance leases 5,245 - £6,517 £- ====== ==== 7. TAXATION Tax on profit on ordinary activities Year to 31st December 2004 The tax charge is made up as follows:Current tax: UK Corporation Tax - Overseas Tax - Total current tax - Deferred Tax: Origination and reversal of timing differences - CASPIAN HOLDINGS PlcNOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2004 7. TAXATION (Cont'd) Total deferred tax - Tax on profit on ordinary activities - The difference between the effective provision forincome tax and the statutory tax provision at thestatutory tax rate is reconciled as follows: Loss on ordinary activitiesbefore tax 380,082 UK Corporation Tax at 30%Permanent differences: non-deductible expenditure (114,024) non-taxable foreign exchange translation 25,797Timing differences: tax losses recognised 88,227 Current tax on ordinary activities - Deferred tax - As at 31st December 2004, the Group had unrecognised tax losses arising inKazakhstan of £21,780 and United Kingdom of £294,091 that are availableindefinitely for offset against future taxable profits of those companies inwhich the losses arose, subject to the conditions of deductibility under therelevant legislation. Deferred tax assets have not been recognised in respect of these losses. Theseassets will be recognised should it become more likely than not that taxableprofits or timing differences, against which they may be deducted, arise. 8. LOSS OF THE PARENT UNDERTAKING The parent undertaking's loss for the financial year before and after taxationamounted to £380,082 (2004 profit - £838). 9. LOSS PER ORDINARY SHARE The calculation of the loss per ordinary share is based on a Group loss of£603,565 to 31st December 2004, and the weighted average ordinary sharesoutstanding of 26,929,102 in the year ended 31st December 2004. On the basis of the above calculation, the loss per ordinary share for the yearto 31st December 2004 is 2.2p. CASPIAN HOLDINGS PlcNOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2004 10. INTANGIBLE FIXED ASSETS Deferred Royalty Software Costs Goodwill Total Group COST Acquisitionsat fair value 329,226 309 98,238 1,306,448 1,734,221Additions - - 224,796 - 224,796Disposals - - - - -Exchangedifferences 4,854 5 1,448 - 6,307 At 31 December2004 £334,080 £314 £324,482 £1,306,448 £1,965,324 ======== ======== ======== ======== ======== DEPRECIATIONAcquisitionsat fair value 70,041 61 - - 70,102Charge for theyear 16,937 62 - - 16,999Disposals - - - - -Exchangedifferences 1,032 1 - - 1,033 At 31 December2004 £ 88,010 £124 £- £- £88,134 ======== ======== ======== ======== ======== NET BOOKVALUE At 31 December2004 £246,070 £190 £324,482 £1,306,448 £1,877,190 ======== ======== ======== ======== ======== 11. TANGIBLEFIXED ASSETS Bore Holes Motor Plant and Furniture & Total Vehicles Equipment Other Equipment Group COST Acquisitionsat fair value - 3,460 8,783 3,919 16,162Additions 626,430 25,556 95,841 47,305 795,132Disposals - - - - -Exchangedifferences - 51 130 58 239 At 31 December2004 £626,430 £29,067 £104,754 £51,282 £811,533 ======== ======== ======== ======== ========DEPRECIATIONAcquisitionsat fair value - 1,730 5,381 403 7,514Charge foryear 9,594 2,268 3,907 4,134 19,903Disposals - - - - -Exchangedifferences - 25 79 6 110 At 31 December2004 £9,594 £4,023 £9,367 £4,543 £27,527 ======== ======== ======== ======== ========NET BOOKVALUE At 31 December2004 £616,836 £25,044 £95,387 £46,739 £784,006 CASPIAN HOLDINGS PlcNOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2004 11. TANGIBLE FIXED ASSETS (Cont'd) Fixed assets, included in the above, which are held under hire purchasecontracts or finance leases are as follows: Motor Vehicles -------------Group COST Additions 25,556 Disposals -Exchange differences - ------------- At 31 December 2004 £25,556 ========== DEPRECIATION Charge for the year 1,565Disposals -Exchange differences - ------------- At 31 December 2004 £1,565 ============ NET BOOK VALUE At 31 December 2004 £23,991 ========== 12. FIXED ASSET INVESTMENTS Held by parent undertaking: The company holds more than 10% of the equity of the following companies: Name of Company Country of Proportion Held Nature of----------------- Registration Business -------------------- ----------------- -------------------- Taraz LLP Kazakhstan 100% Oil Exploration Subsidiary Undertakings --------------------Company--------- COSTAdditions 1,145,146 ------------- At 31 December2004 £1,145,146 ============ CASPIAN HOLDINGS PlcNOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2004 12. FIXED ASSET INVESTMENTS (Cont'd) This consisted of:- Fixed Assets 366,320Stock and Work in Progress 293Debtors 8,116Cash at Bank and in hand 3,118Creditors (221,127)Royalty Lease Payments (288,315)Minority Interest (29,707)Goodwill 1,306,448 ----------- £1,145,146 ============ 13. STOCKS Group Group Company Company 2004 2003 2004 2003 Stock and work in progress £90,112 £- £- £- 14. DEBTORS: AMOUNTS FALLING DUE WITHIN ONE YEAR Group Group Company Company --------- 2004 2003 2004 2003 ------ Trade Debtors 128,373 - - -Amounts due from subsidiaryundertakings - - 1,532,752 -Unpaid share capital 13,225 2,000 13,225 2,000Other debtors 160,905 - 160,905 -Other loans 56,488 - 56,488Prepayments and accrued income - - 80,991 - £302,503 £58,488 £1,787,873 £58,488 ======== ======== ======== ======== Other debtors include £160,905 relating to sums held by JSC Naryuz BankKazakhstan in temporary conservation. The directors are actively attempting torecover these sums. No provision has been made for the non return of these sums. As a result of bank errors, the amount of £13,225 in respect of unpaid sharecapital was unpaid at 31st December 2004. This amount has now been fully paid. CASPIAN HOLDINGS PlcNOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2004 15. CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR Group Group Company Company 2003 -------------- 2004 2003 2004 Trade creditors 23,227 - - -Amounts owed to related - 16,224 - 16,224UndertakingObligations under finance leasesand 6,732 - - -hire purchase contractsRoyalty lease payments 54,508 - - -Social security and other taxes 11,915 - - -Other creditors and accruals 230,034 39,426 166,321 39,426 £326,416 £55,650 £166,321 £55,650 Other creditors and accruals include £140,300 relating to shares issued onformal completion of the purchase of the remaining 30% interest in Taraz LLP,which took place on 28th March 2005. 16. CREDITORS: AMOUNTS FALLING DUE AFTER MORE THAN ONE YEAR Group Group Company Company 2004 2003 2004 2003 Royalty lease payments 210,832 - - -Obligations under finance leasesand hire purchase contracts 15,756 - - - £226,588 £- £- £- ======== ======== ======== ==== 17. SHARE CAPITAL Authorised------------ 150,000,000 Ordinary shares of 0.1p each £150,000 ========== Allotted, issued and fully paid--------------------------------- 83,881,685 Ordinary shares of 0.1p each £83,882 ========== On 27 August 2004 the 10,000 authorised Ordinary shares of £1 each weresub-divided into 1,000 Ordinary shares of 0.1p each. Also on this date theauthorised share capital of the company was increased from £10,000 to £150,000by the creation of 140,000,000 Ordinary shares of 0.1p each, such shares to rankpari passu in all respects with the existing Ordinary shares of 0.1p each. CASPIAN HOLDINGS PlcNOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2004 17. SHARE CAPITAL (cont'd) The following fully paid shares were allotted during the period at a premium asshown below: On 1 March 2004 2,120 Ordinary shares of £1 each at £277 per share. On 30 April 2004 638 Ordinary shares of £1 each at £277 per share. On 18 May 2004 621 Ordinary shares of £1 each at £555 per share. On 12 August 2004 371 Ordinary shares of £1 each at £1,000 per share. On 28 August 2004 250 Ordinary shares of £1 each at £1,000 per share. On 28 August 2004 54,000,000 Ordinary shares of 0.1p at par value pursuant to a9 for 1 rights issue. On 28 August 2004 1,000,000 Ordinary shares of 0.1p at 10p per share. On 25 October 2004 3,610,000 Ordinary shares of 0.1p each at 23p per share. On 4 November 2004 17,571,685 Ordinary shares of 0.1p each at 23p per share byway of public placing. On 5 November 2004 1,700,000 Ordinary shares of 0.1p each at 23p per share byway of private placing. Stock Options: Stock Options Option Price Exercise Period Issued -------------- --------------- -----------------Michael Masterman 2,000,000 0.23p 4th November 2007 Dietmar Greil 2,000,000 0.23p 4th November 2007 Malcolm James 250,000 0.23p 4th November 2007 Michael Garland 250,000 0.23p 4th November 2007 Other staff andconsultants 585,000 0.23p 4th November 2007 CASPIAN HOLDINGS PlcNOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2004 18. RESERVES AND RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS Group Share Capital Other Reserve Share Premium Profit and Loss Total------- ------------- ------------- --------------- Account Shareholders ------------------ Funds ------------------ Loss for thefinancial year - - - (573,858) (573,858)Increase inperiod - 2,775 - - 2,775Shares issued 81,882 - 7,067,285 - 7,149,167Costs of Issue - - (979,530) - (979,530) ------------ ------------- -------------- ------------------ --------------- Net additionstoshareholders'funds 81,882 2,775 6,087,755 (573,858) 5,598,554 Openingshareholders'funds 2,000 - - 838 2,838 ----------- ------------- --------------- ------------------ ----------------- Closingshareholders'funds £83,882 £2,775 £6,087,755 £(573,020) £5,601,392 ========== ========== ============= ============ ============== Company--------- Loss for thefinancial year - - - (380,082) (380,082)Shares issued 81,882 - 7,067,285 - 7,149,167Costs of Issue - - (979,530) - (979,530) ------------ ------------- -------------- ------------------ --------------- Net additionstoshareholders'funds 81,882 - 6,087,755 (380,082) 5,789,555 Openingshareholders'funds 2,000 - - 838 2,838 ---------- ------------- --------------- ------------------ ----------------- Closingshareholders'funds £83,882 £- £6,087,755 £(379,244) £5,792,393 ========== ============= ============== ============ ============== 19. POST BALANCE SHEET EVENTS The Company has drilled 3 new wells since 31st December 2004. All wells havebeen commercially successful and are now in production. The shares purchased under the 1st September 2004 minority purchase agreementshave been formally registered in the name of Caspian Holdings Plc such thatCaspian is the fully registered owner of 100% of Taraz LLP. The Central Bank of Kazakhstan has written formally to the company stating thatit is entitled to the return of USD310,000 in funds that were frozen in acorrespondent bank account at the time of the conservation of Naryuz bank.Timing of the return of the funds is dependent on the timing of therecapitalisation of Naryuz bank, the timing of which the company cannot control.In the event that Naryuz was not recapitalised recovery of the funds would be atrisk. 20. RELATED PARTY TRANSACTIONS During the year, £7,700 was paid to Northsun Italia SpA, a company of whichMichael Masterman and Dietmar Griel are Directors, for recharge of the use ofcourier and telephone services. Recharges were based on the cost from thirdparty service invoices. During the year, a loan of US$99,000 was repaid to Caspian Oil Limited, acompany which Michael Masterman and Dietmar Greil were formerly but are notcurrently directors. This information is provided by RNS The company news service from the London Stock Exchange