PROSPEX ENERGY PLC — Audit Report / Information 2014

Jun 17, 2015

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RNS Number : 3646Q

Prospex Oil and Gas PLC

17 June 2015

PROSPEX OIL AND GAS PLC

(previously Premier Gold Resources plc)

("Prospex" or the "Company")

Annual Results for the Twelve Months

Ended 31 December 2014

CHAIRMAN'S REPORT

On 15 April 2015 the Company's shareholders approved a new direction for the Company and elected a new Board of Directors.  Concurrently, a new group of investors came forward to entrust the new management and Board with stewardship of their investment.  Thank you all for the opportunity.

As an investment company, in accordance with the Investing Policy, the Company is seeking companies and projects in the natural resources and energy sectors which have potential for income, potential for growth, or both.  Since 15 April 2015, your Company and its advisors and consultants have been very active and have initiated a number of reviews and evaluations of possible deals.  This process is not a trivial exercise as it involves identifying an appropriate opportunity which is financeable within the reasonable limits of the Company, and undertaking a technical review, initially at a high level.  These opportunities are graded internally and the best ones merit further engagement with management of the prospective counter party.  The team is hard at work.

It is noteworthy that there are a number of deals which initially seem attractive at current world energy pricing which we have under review.  We continue to seek, review and negotiate on appropriate transactions.  It is the current intention of the Board to complete at least one significant transaction within the next 12 months.  All efforts are focused on finding the right combination of opportunity and price.

Regarding the financial statements of the Company for the year ended 31 December 2014, other than the subsequent event note, we have no further comments.  However, we wish to acknowledge the work of the former Board and management of the Company.  We are committed to increasing value for all shareholders.

On behalf of the Board, I would also like to extend thanks to the advisors and service providers who were instrumental in allowing the reorganisation and the financing to go forward.  These include Adler Shine LLP (auditors), WH Ireland Limited (NOMAD and Joint Broker), Nabarro LLP (legal counsel) and in particular the efforts of Peterhouse Corporate Finance Limited (Joint Brokers).

Dispatch of Results and Annual General Meeting

Copies of the Annual Report and Accounts are expected to be posted to shareholders on 19 June 2015 and will be posted on the Company's website (www.prospexoilandgas.com) with effect from today. The Annual Report and Accounts includes a copy of the Notice of Annual General Meeting which convenes the Company's Annual General Meeting at 9am on 14 July 2015 at Peterhouse Corporate Finance Limited, 3rd Floor, New Liverpool House, 15 Eldon Street, London, EC2M 7LD.

Enquiries:

Prospex Oil and Gas plc

Edward Dawson, CEO

0207 078 9566

WH Ireland Limited (Nominated Adviser and Broker)

Katy Mitchell

Peterhouse Corporate Finance Limited (Joint Broker)
Lucy Williams / Eran Zucker

0113 394 6600

020 7469 0932

STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2014
	The directors present their strategic report for the year ended 31 December 2014.
	Principal activities
	The principal activity of the Group during the year ended 31 December 2014 was related to mineral exploration for gold and precious metals. The Group operated in Kyrgyzstan in the year under review.
	Strategy
	Up until 15 April 2015, Prospex Oil and Gas plc was a gold exploration and development company quoted on the AIM market of the London Stock Exchange. It focused on gold opportunities in Central Asia, in particular Kyrgyzstan, where the Group's Cholokkaindy project, on the highly prospective Tien Shan gold belt, had numerous targets ready for drilling.
	Following the general meeting held on 15 April 2015, the Company disposed of its entire interest in the Cholokkaindy Licence by selling the entire issued share capital of Central Asia Resources Limited in exchange for the Trivedi Capital Partners (I) LC reducing its loan from £580,000 to £nil. At the same time the Company changed its name from Premier Gold Resources Plc to Prospex Oil and Gas plc.
	Following the sale, the Company's new Investing Policy is to invest in and/or acquire companies and/or projects within the natural resources and/or energy sector with potential for growth and/or income. The Company may also directly apply for new exploration licences or invest in existing licences. It is anticipated that the geographical focus will primarily be Europe.  However, investments may also be considered in other regions should the directors consider that valuable opportunities exist and returns can be achieved.
	Business review
	Following the early exploration success in 2012, no further exploration was possible in the Kyrgyz Republic due to local groups holding up the work programmes illegally. Despite pressing the Kyrgyz authorities and threatening legal action against the government to ensure safe access to the area, little progress was made during 2014. Additionally, the necessary and anticipated funds for the work were not available to the Company. As a result, the Company changed its strategy as detailed above.
	A review of the development and performance of the Group, including important events, progress during the year and likely future developments, can be found in the Chairman's Statement.
	In summary:
	- administrative expenses for the year fell to £615,022 (2013: £873,310);
	- fair value loss on the derivative financial assets £168,188 (2013: £473,833);
	- impairment charges against licence and exploration costs of £3,729,777 (2013: £nil);
	- net loss after taxation was £4,580,445 (2013: £1,531,593);
	- as at 31 December 2014, the Group had cash and cash equivalents of £22,734 (2013: £274,539);
	Key performance indicators
	The business Key Performance Indicators ('KPI') monitored by the Board are focussed on managing the activities of the Group in the exploration and appraisal of mineral reserves. The financial KPI is to ensure that there is adequate funding in place to cover the Group's exploration expenditure and holding company costs.
	Principal risks and uncertainties
	The Board regularly reviews the risks to which the Group is exposed and seeks to minimise the effects of these risks through careful monitoring of the risks on an ongoing basis. The principal risks and uncertainties which the Group faced during the year ended 31 December 2014 were:

	Operational
	In common with other businesses operating in minerals exploration, the Group's activities were speculative and inherently subject to a high degree of risk.
	The Group's operational work involved geological exploration and the implementation of geological work programmes. Interpretation of the results of these programmes was dependent upon judgements and assessments that by their very nature were speculative.
	Work programmes involved drilling operations and other geological work that present significant engineering challenges which are subject to unexpected operational problems. The actual cost of programmed operations can vary significantly from planned levels as a result of such unexpected issues arising.
	Political, economic, legal, regulatory and social
	The Group operated in Kyrgyzstan which may be subject to political, economic and other uncertainties, including but not limited to terrorism, war or unrest, changes in national laws and energy policies and exposure to its legal system.
	The Group assesses legal and political risks as part of its evaluation of potential projects. It actively monitors legal and political developments in Kyrgyzstan where its operation is located. The Group actively engages in dialogue with the local government and legal policy makers to discuss all key legal and regulatory developments applicable to its operations.
	Business strategy
	Since the year end, the Company has changed its strstegy and faces different risks and uncertainties, including:
	The Group has only recent adopted a new Investing Policy to invest in and/or acquire companies and/or projects within the natural resources and/or energy sector.   The Company may also directly apply for new exploration licenses or invest in existing licences.
	There is a risk that the Company may be unable to complete an acquisition or acquisitions or otherwise implement the Investing Policy within twelve months of becoming an investing company.  The Directors will seek to identify suitable acquisition targets and complete the necessary due diligence within the required timeframe.
	Organisational
	The Company is highly dependent on the Directors. Whilst the board will continue to ensure that the Directors are appropriately incentivised, their services cannot be guaranteed, and the loss of their services to the Company may have a material adverse effect on the performance of the Company and the Group. In addition, the competition for qualified personnel in the oil and gas industry can be intense and there can be no assurance that the Company will be able to attract and retain all personnel necessary in the required jurisdictions for the future development and operation of its business.
	Corporate governance
	The board is committed to maintaining high standards of corporate governance. While Prospex Oil and Gas plc does not formally comply with an official corporate governance code, the board has implemented appropriate measures including the establishment of Audit and Remuneration Committees (detailed below) to ensure that the company adheres to a standard which is practicable for a company of its size and stage.

	Remuneration committee
	The Remuneration Committee consists of William Smith, Gavin Burnell and Richard Mays who also chairs the committee, and is responsible for making recommendations to the Board, within agreed terms of reference, on the Company's framework of executive remuneration and its cost. The Committee determines the contract terms, remuneration and other benefits for any executive directors, including performance related bonus schemes, pension rights and compensation payments. The Board itself determines the remuneration of the non-executive directors.
	Audit committee
	The Audit Committee consists of Richard Mays, William Smith and Gavin Burnell, who also chairs the committee, and provides a forum for reporting by the Company's external auditors. The Committee is responsible for reviewing a wide range of matters, including half-year and annual results before their submission to the Board, and for monitoring the controls that are in force to ensure the integrity of information reported to shareholders. The Committee advises the Board on the appointment of external auditors and on their remuneration for both audit and non-audit work, and discusses the nature, scope and results of the audit with the external auditors. The Committee keeps under review the cost effectiveness and the independence and objectivity of the external auditors.
	Edward Dawson
	Chief Executive Officer
	16 June 2015

PROSPEX OIL AND GAS PLC
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2014
			2014		2013
	Notes		£		£
Administrative expenses	4		(615,023)		(873,310)
Share based payments	19		-		(24,666)
			────────		────────
Operating loss	5		(615,023)		(897,976)
Loss on disposal of subsidiary			-		(150,724)
Impairment charges	10		(3,729,777)		-
			────────		────────
Loss on ordinary activities after impairment charges and before interest	5		(4,344,800)		(1,048,700)
Finance income	6		34		190
Fair value loss on derivative financial assets	15		(168,188)		(473,833)
Finance expense	7		(67,491)		(9,250)
			────────		────────
Loss before income taxation			(4,580,445)		(1,531,593)
Income tax expense	8		-		-
			────────		────────
Loss on ordinary activities after taxation			(4,580,445)		(1,531,593)
Non-controlling interests			771,232		52,771
			────────		────────
Loss for the year and total comprehensive income attributable to owners of the parent			(3,809,213)		(1,478,822)
			════════		════════
Loss per share - basic and diluted	9
From continuing operations			(0.28)p		(0.14)p
			════════		════════

PROSPEX OIL AND GAS PLC
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2014
					2014		2013
			Notes		£		£
ASSETS
Non current assets
Intangible assets			10		-		3,752,241
Tangible assets			11		10,355		14,628
Derivative financial assets			15		-		126,875
					─────────		─────────
					10,355		3,893,744
Current assets
Inventories			13	977		-
Trade and other receivables			14	33,928		16,445
Derivative financial assets			15	46,359		236,250
Cash and cash equivalents			16	22,734		274,539
				─────────		─────────
				103,998		527,234
LIABILITIES
Current liabilities
Trade and other payables			17	(365,873)		(240,207)
Borrowings			18	(479,784)		(410,717)
				─────────		─────────
Net current liabilities					(741,659)		(123,690)
					─────────		─────────
Net (liabilities)/assets					(731,304)		3,770,054
					═════════		═════════
EQUITY
Share capital			20		2,304,398		2,288,898
Share premium account					6,063,208		6,059,750
Equity component - convertible loan note					100,216		89,283
Capital redemption reserve					43,333		43,333
Merger reserve					2,416,667		2,416,667
Profit and loss account					(11,531,728)		(7,722,515)
Foreign currency reserve					39,467		(3,874)
					─────────		─────────
					(564,439)		3,171,542
Non-controlling interests					(166,865)		598,512
					─────────		─────────
Total (deficit)/equity					(731,304)		3,770,054
					═════════		═════════
Edward Dawson				Gavin Burnell
Director				Director
Company Registration No. 03896382

PROSPEX OIL AND GAS PLC
COMPANY STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2014
				2014		2013
			Notes	£	£	£	£
ASSETS
Non current assets
Investments			12		-		2,503,170
Derivative financial assets			15		-		126,875
					─────────		─────────
					-		2,630,045
Current assets
Trade and other receivables			14	25,357		1,383,471
Derivative financial assets			15	46,359		236,250
Cash and cash equivalents			16	22,487		269,935
				─────────		─────────
				94,203		1,889,656
LIABILITIES
Current liabilities
Trade and other payables			17	(338,233)		(209,557)
Borrowings			18	(479,784)		(410,717)
				─────────		─────────
Net current liabilities					(723,814)		1,269,382
					─────────		─────────
Net (liabilities)/assets					(723,814)		3,899,427
					═════════		═════════
EQUITY
Share capital			20		2,304,398		2,288,898
Share premium account					6,063,208		6,059,750
Equity component - convertible loan note					100,216		89,283
Capital redemption reserve					43,333		43,333
Merger reserve					2,416,667		2,416,667
Profit and loss account					(11,651,636)		(6,998,504)
					─────────		─────────
Total shareholders' (deficit)/equity					(723,814)		3,899,427
					═════════		═════════
The financial statements were approved by the Board on 16 June 2015
Edward Dawson					Gavin Burnell
Director					Director
Company Registration No. 03896382

PROSPEX OIL AND GAS PLC
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2014
			Share capital	Share premium		Retained earnings		Foreign currency reserve		Capital redemption reserve		Merger reserve		Non controlling interests		Convertible loan note		Total
			£	£		£		£		£		£		£		£		£
Balance at 1 January 2013			1,951,415	5,932,983		(6,268,359)		26,230		43,333		2,416,667		590,080		-		4,692,349
Changes in equity for 2013																-
Total comprehensive income for the year			-	-		(1,478,822)		-		-		-		(52,771)		-		(1,531,593)
On disposal of subsidiaries			-	-		-		-		-		-		54,210		-		54,210
Issue of shares			337,483	147,517		-		-		-		-		-		-		485,000
Costs in respect of shares issued			-	(20,750)		-		-		-		-		-		-		(20,750)
Convertible loan note - equity component	18		-	-		-		-		-		-		-		89,283		89,283
Equity-settled share-based payments	19		-	-		24,666		-		-		-		-		-		24,666
Currency translation differences on foreign currency net investments			-	-		-		(30,104)		-		-		6,993		-		(23,111)
			────────	────────		────────		────────		────────		────────		────────		────────		────────
Balance at 31 December 2013			2,288,898	6,059,750		(7,722,515)		(3,874)		43,333		2,416,667		598,512		89,283		3,770,054
Changes in equity in 2014
Total comprehensive income for the year			-	-		(3,809,213)		-		-		-		(771,232)		-		(4,580,445)
Issue of shares	20		15,500	7,750		-		-		-		-		-		-		23,250
Costs in respect of shares issued			-	(4,292)		-		-		-		-		-		-		(4,292)
Convertible loan note - equity component	18		-	-		-		-		-		-		-		10,933		10,933
Currency translation differences on foreign currency net investments			-	-		-		43,341		-		-		5,855		-		49,196
			────────	────────		────────		────────		────────		────────		────────		────────		────────
Balance at 31 December 2014			2,304,398	6,063,208		(11,531,728)		39,467		43,333		2,416,667		(166,865)		100,216		(731,304)
			════════	════════		════════		════════		════════		════════		════════		════════		════════
Merger reserve_
The merger reserve has been created as a result of the acquisition of the whole of the issued share capital of Central Asia Resources Limited ('CAR') by the Company in exchange for shares in the Company and the nominal value.  It represents the difference between the fair value of the share capital issued by the Company and the nominal value.
PROSPEX OIL AND GAS PLC
COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2014
					-
					Share capital		Share premium		Retained earnings		Capital redemption reserve		Merger reserve		Convertible loan note	Total
					£		£		£		£		£		£	£
Balance at 1 January 2013					1,951,415		5,932,983		(5,964,841)		43,333		2,416,667		-	4,379,557
Changes in equity for 2013
Total comprehensive income for the year					-		-		(1,058,329)		-		-		-	(1,058,329)
Issue of shares					337,483		147,517		-		-		-		-	485,000
Costs in respect of shares issued					-		(20,750)		-		-		-		-	(20,750)
Equity-settled share-based payments		19			-		-		24,666		-		-		-	24,666
Convertible loan note - equity component		18			-		-		-		-		-		89,283	89,283
					────────		────────		────────		────────		────────		────────	────────
Balance at 31 December 2013					2,288,898		6,059,750		(6,998,504)		43,333		2,416,667		89,283	3,899,427
Changes in equity in 2014
Total comprehensive income for the year					-		-		(4,653,132)		-		-		-	(4,653,132)
Issue of shares		20			15,500		7,750		-		-		-		-	23,250
Costs in respect of shares issued					-		(4,292)		-		-		-		-	(4,292)
Convertible loan note - equity component		18			-		-		-		-		-		10,933	10,933
					────────		────────		────────		────────		────────		────────	────────
Balance at 31 December 2014					2,304,398		6,063,208		(11,651,636)		43,333		2,416,667		100,216	(723,814)
					════════		════════		════════		════════		════════		════════	════════
Merger reserve_
The merger reserve has been created as a result of the acquisition of the whole of the issued share capital of Central Asia Resources Limited ('CAR') by the Company in exchange for shares in the Company.  It represents the difference between the fair value of the share capital issued by the Company and nominal value.

PROSPEX OIL AND GAS PLC
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2014
					2014				2013
			£		£		£		£
Cash flows from operating activities
Operating loss					(615,023)				(897,976)
Depreciation of property, plant and equipment					2,946				4,649
Amortisation of intangible assets					-				77
Increase in inventories					(977)				-
(Increase)/decrease in trade and other receivables					(17,483)				53,244
Increase in trade and other payables					87,308				34,251
Equity-settled share based payments					-				24,666
Other movement					85,516				10,723
					─────────				─────────
Net cash used in operating activities					(457,713)				(770,366)
Investing activities
Finance income			34				190
Finance expense			(5,883)				(1,233)
			─────────				─────────
Net cash (outflow)/inflow investing activities					(5,849)				(1,043)
Capital expenditure
Payments to acquire intangible assets			(12,333)				(51,479)
Payments to acquire tangible assets			(196)				-
			─────────				─────────
Net cash outflow for capital expenditure					(12,529)				(51,479)
Acquisitions and disposals
Cash on disposal of subsidiary undertaking			-				(9,955)
			─────────				─────────
Net cash inflow/(outflow) for acquisitions and disposals					-				(9,955)
Financing activities
Issue of share capital			-				225,000
Proceeds received from issue of derivative financial asset			148,578				221,275
Cost of share issue			(4,292)				(20,750)
Convertible unsecured loan notes			80,000				500,000
			─────────				─────────
Net cash generated from financing activities					224,286				925,525
					─────────				─────────
Net (decrease)/increase in cash and cash equivalents in year					(251,805)				92,682
Cash and cash equivalents at beginning of the year					274,539				181,857
					─────────				─────────
Cash and cash equivalents at end of the year					22,734				274,539
					═════════				═════════

PROSPEX OIL AND GAS PLC
COMPANY STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2014
			2014		2013
		£	£	£	£
Cash flows from operating activities
Operating loss			(452,055)		(683,399)
Increase in trade and other receivables			(104,147)		(283,682)
Increase in trade and other payables			90,318		9,601
Equity-settled share based payments			-		24,666
			─────────		─────────
Net cash used in operating activities			(465,884)		(932,814)
Investing activities
Finance income		34		107,960
Finance expense		(5,884)		(1,040)
		─────────		─────────
Net cash inflow investing activities			(5,850)		106,920
Financing activities
Issue of share capital		-		225,000
Proceeds received from issue of derivative financial asset		148,578		221,275
Cost of share issue		(4,292)		(20,750)
Convertible unsecured loan notes		80,000		500,000
		─────────		─────────
Net cash generated from financing activities			224,286		925,525
			─────────		─────────
Net (decrease)/increase in cash and cash equivalents in the year			(247,448)		99,631
Cash and cash equivalents at beginning of the year			269,935		170,304
			─────────		─────────
Cash and cash equivalents at end of the year			22,487		269,935
			═════════		═════════

PROSPEX OIL AND GAS PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2014
	1	Accounting policies and basis of preparation
	1.1	General information
		Prospex Oil and Gas plc (formerly Premier Gold Resources Plc) is incorporated in England and Wales and is quoted on the AIM Market of the London Stock Exchange Plc. The address of its registered office is Stonebridge House, Chelmsford Road, Hatfield Heath, Essex CM22 7BD. The registered number of the company is 03896382. These financial statements are presented in pounds sterling because that is the currency of the primary economic environment in which the company operates.
	1.2	Going concern
		During the year ended 31 December 2014, the Group incurred a loss of £3,809,213 and had net liabilities of £731,304 at the year end. Since the year end, the Directors proposal for a Company Voluntary Arrangement ("CVA") was approved by creditors and members. The Company also completed a settlement deed with Tridevi Capital Partner (I) LP ("Tridevi"), disposing of the entire issued share capital of Central Asia Resource Limited ("CAR"), the Company's wholly owned subsidiary, to Tridevi in full and final settlement of the outstanding loan of approximately £580,000 under the Convertible Loan Agreement.  The Company also raised £1,076,150 (before expenses) through the issue of 35,283,591 New Ordinary Shares to advance the Company's Investing Policy, of which £50,000 has been transferred to the Company in order to enable it to make an improved offer of settlement to the unsecured Creditors of the Company under the CVA.  As a result of the above, the directors are of the opinion that the financial statements should be prepared on a going concern basis.
	1.3	Basis of preparation
		The Group financial statements have been prepared in accordance with International Financial Reporting Standards as adopted by the European Union, (IFRSs) and International Financial Reporting Interpretations Committee ('IFRIC') interpretations issued by the International Accounting Standards Board (IASB) as adopted by the European Union and with those parts of the Companies Act 2006 applicable to companies reporting under IFRS. The Group financial statements have been prepared under the historical cost convention or fair value where appropriate.
	1.4	Parent company profit and loss account
		A separate profit and loss account for the parent company, Prospex Oil and Gas plc, has been omitted under the provisions of Section 408 of the Companies Act 2006. The loss dealt with in the financial statements of the parent company was £4,653,132 (2013: £1,058,329).
	1.5	Basis of consolidation
		The Group financial statements consolidate the financial statements of the Company and all its subsidiaries ('the Group'). Subsidiaries include all entities over which the Group has the power to govern financial and operating policies. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Group controls another entity. Subsidiaries are consolidated from the date on which control commences until the date that control ceases. Intra-group balances and any unrealised gains and losses on income or expenses arising from intra-group transactions, are eliminated in preparing the consolidated financial statements.
		Non-controlling interests in the net assets of consolidated subsidiaries are identified separately from the Group's equity therein. Non-controlling interests consist of the amount of those interests at the date of the original business combination and their share of changes in equity since the date of the combination.

	1	Accounting policies
	1.6	Business combination
		The Group adopts the acquisition method in accounting for the acquisition of subsidiaries. On acquisition the cost is measured at the fair value of the assets given, plus equity instruments issued and liabilities incurred or assumed at the date of exchange. The assets acquired and liabilities and contingent liabilities assumed in a business combination are measured at their fair value at the date of acquisition. Any excess of the fair value of the consideration over the fair value of the identifiable net assets acquired is recorded as goodwill. Any deficiency of the fair value of the consideration below the fair value of identifiable net assets acquired is credited to the income statement in the period of the acquisition. Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line with those used by the Group.
	1.7	Goodwill
		Goodwill on acquisition of subsidiaries represents the excess of the cost of acquisition over the fair value of the Group's share of the net identifiable net assets and contingent liabilities acquired.  Identifiable assets are those which can be sold separately or which arise from legal rights regardless of whether those rights are separable.  Goodwill on acquisition of subsidiaries is included in intangible assets. Goodwill is not amortised but tested annually, or when trigger events occur, for impairment and is carried at cost less accumulated impairment losses.
		Goodwill is initially recognised at fair value. Any negative goodwill is credited to the income statement in the year of acquisition. If an undertaking is subsequently sold, the amount of goodwill carried on the balance sheet at the date of disposal is charged to the income statement in the period of disposal as part of the gain or loss on disposal.
	1.8	Exploration and evaluation development costs
		Capitalisation
		Certain costs (other than payments to acquire the legal right to explore and costs which are directly attributable to those payments) incurred prior to acquiring the rights to explore are charged directly to the income statement. All costs incurred after the rights to explore an area have been obtained, such as geological and geophysical costs and other direct costs of exploration and appraisal are accumulated and capitalised as intangible exploration and evaluation ("E&E") assets. These costs are only carried forward to the extent that they are expected to be recouped through the successful development of the areas or where activities in the areas have not yet reached a stage which permits reasonable assessment of the existence of economically recoverable reserves.
		E&E costs are not amortised prior to the conclusion of appraisal activities.
		At completion of appraisal activities, if technical feasibility is demonstrated and commercial reserves are discovered, then, following development sanction, the carrying value of the relevant E&E asset will be reclassified as a development and production ("D&P") asset, but only after the carrying value of the relevant E&E asset has been assessed for impairment, and where appropriate, its carrying value adjusted. If after completion of appraisal activities in the area, it is not possible to determine technical feasibility and commercial viability or if the legal right to explore expires or if the Group decides not to continue exploration and evaluation activity, then the costs of such unsuccessful exploration and evaluation are written off to the income statement in the period the relevant events occur.

	1	Accounting policies
		Impairment
		If and when facts and circumstances indicate that the carrying value of an E&E asset may exceed its recoverable amount, an impairment review is performed. For E&E assets when there are such indications, an impairment test is carried out by grouping the E&E assets with the D&P assets belonging to the same geographic segment to form the Cash Generating Unit ("CGU") for impairment testing. The equivalent combined carrying value of the CGU is compared against the CGU's recoverable amount and any resulting impairment loss is written off to the income statement. The recoverable amount of the CGU is determined as the higher of its fair value less costs to sell and its value in use.
	1.9	Property plant and equipment
		Property, plant and equipment are stated at cost or valuation less depreciation. Depreciation is provided at rates calculated to write off the cost or valuation less estimated residual value of each asset over its expected useful life, as follows:
		Land and buildings - Leasehold			over the length of the lease
		Fixtures, fittings & equipment			1 - 5 years, straight line
		Motor vehicles			3 - 9 years, straight line
	1.10	Inventories
		Inventories are stated at the lower of cost and net realisable value. Cost comprises all costs of purchase and other costs incurred in bringing the inventories to their present location and condition.
	1.11	Impairment of non-financial assets
		Assets that have an indefinite useful life, for example goodwill, are not subject to amortisation and are tested annually for impairment. Assets that are subject to amortisation are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset's carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset's fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (Cash Generating Units). Non-financial assets other than goodwill that have suffered impairment are reviewed for possible reversal of the impairment at each reporting date.
	1.12	Financial instruments
		Financial assets and financial liabilities are recognised on the Group's balance sheet when the Group becomes a party to the contractual provisions of the instrument.
	1.13	Loans and receivables
		These assets are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market.  The principal financial assets of the company are loans and receivables, which arise principally through the provision of goods and services to customers (e.g. trade receivables) but also incorporate other types of contractual monetary asset. They are included in current assets, except for maturities greater than 12 months after the balance sheet date. These are classified as non-current assets.
		The Group's loans and receivables are recognised and carried at the lower of their original amount less an allowance for any doubtful amounts. An allowance is made when collection of the full amount is no longer considered possible.
		The Group's loans and receivables comprise trade and other receivables and cash and cash equivalents in the consolidated statement of financial position.
		Cash and cash equivalents include cash at bank and in hand and short-term deposits with an original maturity of three months or less.

	1	Accounting policies
	1.14	Derivative financial instruments
		Derivative financial instruments are initially recognised at fair value on the date a derivative contract is entered into and are subsequently carried at fair value with the changes in fair value recognised in the income statement.
	1.15	Trade and other payables
		Trade and other payables are initially measured at fair value and subsequently measured at amortised cost using the effective interest rate method.
	1.16	Convertible debt
		The component of convertible debt that exhibits characteristics of debt is recognised as a liability in the Statement of Financial Position, net of transaction costs. On issue of convertible debt, the fair value of the liability component is determined using a market rate for an equivalent non-convertible bond and this amount is carried as a liability on the amortised cost basis until extinguished on conversion or redemption. The increase in the liability due to the passage of time is recognised as a finance cost. The remainder of the proceeds is allocated to the equity component and is recognised in shareholders' equity. The carrying amount of the equity component is not re-measured in subsequent years. Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12 months after the balance sheet date.
	1.17	Financial liabilities and equity
		Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the entity after deducting all of its financial liabilities. Where the contractual obligations of financial instruments (including share capital) are equivalent to a similar debt instrument, those financial instruments are classed as financial liabilities. Financial liabilities are presented as such in the balance sheet. Finance costs and gains or losses relating to financial liabilities are included in the profit and loss account. Finance costs are calculated so as to produce a constant rate of return on the outstanding liability. Where the contractual terms of share capital do not have any terms meeting the definition of a financial liability then this is classed as an equity instrument. Dividends and distributions relating to equity instruments are debited direct to equity. Equity comprises the following: - Share capital represents the nominal value of equity shares; - Share premium represents the excess over nominal value of the fair value of consideration received for equity shares, net of expenses of the share issue; - Profit and loss reserve represents retained deficit; - Other reserve represents the capital redemption reserve arising on redemption of shares in previous years and own share reserve.
	1.18	Equity-settled share-based payment
		The Company makes equity-settled share-based payments. The fair value of options and warrants granted is recognised as an expense, with a corresponding increase in equity. The fair value is measured at grant date and spread over the vesting period, which is the period over which all of the specified vesting conditions are to be satisfied. The fair value of the options granted is measured based on the Black-Scholes framework, taking into account the terms and conditions upon which the instruments were granted. At each balance sheet date, the Company revises its estimate of the number of options that are expected to become exercisable. It recognises the impact of the revision to original estimates, if any, in the income statement, with a corresponding adjustment to equity.

	1			Accounting policies
	1.19			Foreign currency translation
				Transactions in currencies other than Sterling, the presentational and functional currency of the Company, are recorded at the rates of exchange prevailing on the dates of the transactions. At each balance sheet date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the balance sheet date. Non-monetary assets and liabilities carried at fair value that are denominated in foreign currencies are translated at the rates prevailing at the date when the fair value was determined. Gains and losses arising on retranslation are included in the income statement for the period, except for exchange differences on non-monetary assets and liabilities, which are recognised directly in equity, where the changes in fair value are recognised directly in equity
				On consolidation, the assets and liabilities of the Group's overseas entities (none of which has the currency of a hyper-inflationary economy) are translated at exchange rates prevailing on the balance sheet date. Income and expense items are translated at the average exchange rates for the period. Exchange differences arising, if any, are classified as equity and transferred to the Group's translation reserve. Such translation differences are recognised as income or as expenses in the period in which the operation is disposed of.
				The exchange rate on 31 December 2014 was £1: 91.423 KGS ("Kyrgyzstanian Som") (2013 £1: 81.157 KGS) the functional and presentational currency of the main subsidiary undertaking. The average rate applied to transactions during the year was £1: 87.484 KGS.
	1.20			Taxation
				The income tax expense or taxation recoverable represents the sum of tax currently payable or recoverable and deferred tax. The tax currently payable is based on the taxable profit for the period using the tax rates that have been enacted or substantially enacted by the balance sheet date. Taxable profit differs from the net profit as reported in the income statement because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. Deferred tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes. Deferred tax is determined using tax rates that have been enacted or substantially enacted at the balance sheet date and are expected to apply when the related deferred income tax asset is realised or the deferred tax liability is settled. Deferred tax is charged or credited in the income statement, except when it relates to items charged or credited to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets are only recognised to the extent that it is probable that future taxable profit will be available against which the asset can be utilised.
	1.21			Leasing
				Rentals payable under operating leases are charged against income on a straight line basis over the lease term.
1			Accounting policies
1.22			Accounting Standards issued but not yet effective and/or adopted
			As at the date of approval of these financial statements, the following standards were in issue but not yet effective. These standards have not been adopted early by the company as they are not expected to have a material impact on the company's financial statements.
			IFRS 9		Financial instruments - classification and measurement (revised)
			IFRS 9		Financial instruments - Hedge accounting (revised)
			IFRS 10 and IAS 28		Consolidated financial statements - sale or contribution of assets between an investor and its associates or joint venture (amendment)
			IFRS 11		Joint arrangements - accounting for acquisitions of an interest in a joint operation (amendment)
			IFRS 12		Disclosure of interests in other entities - application of the consolidation exception (amendment)
			IFRS 14		Regulatory deferral accounts
			IFRS 15		Revenue from contracts with customers
			IFRS 2, 3, 8, IAS 16, 24, 38		Annual improvements 2010 - 2012 cycle
			IFRS 1, 3, 13  IAS 40		Annual improvements 2011 - 2013 cycle
			IAS 1		Presentation of financial statements - disclosure initiative (amendment)
			IAS 19		Defined benefit plans: Employee contributions (amendment)
			IAS 27		Separate financial statements - use of equity accounting method for investments (amendment)
			IAS 38		Intangible assets - acceptable methods of depreciation and amortisation (amendment)
			IAS 39		Novation of derivatives and continuation of hedge accounting (amendment)
			IAS 41		Agriculture - bearer plants
			The International Financial Reporting Interpretations Committee has also issued interpretations which the company does not consider will have a significant impact on the financial statements.
	2	Critical accounting estimates and judgements
		The preparation of the financial information in conformity with IFRS requires the use of certain critical accounting estimates that affect the reported amounts of assets and liabilities at the date of the financial information and the reported amounts of revenue and expenses during the reporting period. Although these estimates are based on management's best knowledge of the amounts, events or actions, actual results ultimately may differ from these estimates. The estimates and underlying assumptions are as follows:
		Exploration and evaluation costs and licences
		Capitalisation of exploration and evaluation costs and the cost of acquiring licences requires that costs be assessed against the likelihood that such costs will be recoverable against future exploitation or sale or alternatively, where activities have not reached a stage which permits a reasonable estimate of the existence of mineral reserves, a judgement that future exploration or evaluation should continue. This requires management to make estimates and judgements and to make certain assumptions, often of a geological nature, and most particularly in relation to whether or not an economically viable mining operation can be established in future. Such estimates, judgements and assumptions are likely to change as new information becomes available. When it becomes apparent that recovery of expenditure is unlikely the relevant capitalised amount is written off to the income statement.

	Impairment of assets
	The Group is required to test, on an annual basis, whether its non-current assets have suffered any impairment. Determining whether these assets are impaired requires an estimation of the value in use of the cash-generating units to which the assets have been allocated. The value in use calculation requires the Directors to estimate the future cash flows expected to arise from the cash-generating unit and a suitable discount rate in order to calculate the present value. Subsequent changes to the cash generating unit allocation or to the timing of cash flows could impact on the carrying value of the respective assets.
	Recoverability of other financial assets
	The majority of the Company's financial assets represent loans provided to its subsidiary, which are associated with funding of mineral exploration and development projects. The recoverability of such loans is dependent upon the discovery of economically recoverable reserves, the ability of the Company to maintain necessary financing to complete the development of the reserves and future profitable production or proceeds from the disposition thereof.
	Share based payments
	The estimates of share based payments requires that management selects an appropriate valuation model and make decisions on various inputs into the model including the volatility of its own share price, the probable life of the options before exercise, and behavioural consideration of employees.
	Deferred tax assets
	Deferred taxation is provided for using the liability method. Deferred tax assets are recognised in respect of tax losses where the Directors believe that it is probable that future profits will be relieved by the benefit of tax losses brought forward. The Board considers the likely utilisation of such losses by reviewing budgets and medium term plans for each taxable entity within the Group. The Directors have decided that no deferred tax asset should be recognised at 31 December 2014. If the actual profits earned by the Group differs from the budgets and forecasts used then the value of such deferred tax assets may differ from that shown in these financial statements.
	Valuation of derivative financial asset
	The Company placed 250 million shares with Lanstead Capital L.P. ('Lanstead') for a consideration of £1 million and a second tranche of 150 million shares for a consideration of £260,000. At the same time, the Company and Lanstead entered into equity swap and interest rate swap agreements in respect of the placings for which consideration will be received on a monthly basis over a 24 month period (note 16).  The amount receivable each month is dependent on the Company's share price at the settlement date.  The Directors have made assumptions in the financial statements about the funds receivable at the year end.  However, there is significant uncertainty underlying these assumptions due to the unpredictable nature of the share price.

3	Segmental information
	The Directors are of the opinion that the Group operates in one primary business segment, gold and precious mineral exploration and in one principal geographical area, Kyrgyzstan. The management information received by the Board is prepared on this basis. The Group also conducts business within the UK including fund raising, subsequently passed to subsidiary companies, and the incurring of expenditure in relation to the Company's activities as a holding company. None of this activity is considered to be significantly different to the principal activity of the Group in Kyrgyzstan.
	Geographical market
					2014		2013
	Loss before taxation				£		£
	UK				(687,701)		(1,117,003)
	Kyrgyz Republic				(3,892,744)		(414,590)
					───────		───────
					(4,580,445)		(1,531,593)
					═══════		═══════
	Net (liabilities)/assets
	UK				(723,814)		1,042,786
	Kyrgyz Republic				(7,490)		2,727,268
					───────		───────
					(731,304)		3,770,054
					═══════		═══════
4	Expenses by nature
						2014		2013
						£		£
	Directors' emoluments and key management					222,075		287,286
	Travel and subsistence costs					34,712		37,829
	Legal and professional fees					107,171		249,579
	Financial PR					44,568		43,712
	Other expenses					206,496		254,899
						───────		───────
						615,023		873,310
						═══════		═══════

5	Operating loss
							2014		2013
							£		£
	Operating loss is stated after charging:
	Amortisation of intangible assets						-		77
	Depreciation of tangible assets						2,946		4,649
	Loss on foreign exchange transactions						81,850		242
	Auditors' remuneration		- Fees payable to the company's auditor for the audit of the company's financial statements				19,500		20,000
			- Fees payable to the company's auditor for the audit of the financial statements of a subsidiary				-		2,500
							═══════		═══════
6	Finance income
								2014		2013
								£		£
	Bank interest received							34		190
								═══════		═══════
7	Finance costs
								2014		2013
								£		£
	Other interest							67,491		9,250
								═══════		═══════

8	Income tax expense
						2014	2013
						£	£
	Total tax expenses					-	-
						═══════	═══════
	Factors affecting the tax charge for the year
	Loss before income taxation					(4,580,445)	(1,531,593)
						═══════	═══════
	Loss on ordinary activities before taxation multiplied by standard rate of UK corporation tax of 20.00% (2013 - 23.25%)					(916,089)	(356,095)
						───────	───────
	Effects of:
	Non deductible expenses					803,977	144,738
	Tax losses not utilised					112,112	211,357
						───────	───────
						916,089	356,095
						───────	───────
	Total tax expense					-	-
						═══════	═══════
	There is no provision for UK Corporation Tax due to adjusted losses for tax purposes, subject to agreement with HM Revenue and Customs. The deferred asset arising from the accumulated tax losses of approximately £3.2m (2013: £2.76m) carried forward has not been recognised but would become recoverable against future trading profits.
9	Loss per share
	The loss and number of shares used in the calculation of earnings per ordinary share are set out below:
						2014	2013
						£	£
	Basic:
	Loss for the financial period					(3,809,213)	(1,478,822)
						═════════	═════════
	Weighted average of ordinary shares					1,361,298,989	1,053,805,264
						═════════	═════════
	There was no dilutive effect from the options outstanding during the period (note 19).

10	Intangible fixed assets
				Licences	Exploration and evaluation assets	Total
	The Group			£	£	£
	Cost
	At 1 January 2014			3,447,077	305,164	3,752,241
	Additions			-	12,333	12,333
	Exchange differences			-	(34,797)	(34,797)
	Impairment charge			(3,447,077)	(282,700)	(3,729,777)
				───────	───────	────────
	At 31 December 2014			-	-	-
				───────	───────	────────
	Net book value
	At 31 December 2014			-	-	-
				═══════	═══════	════════
	At 31 December 2013			3,447,077	305,164	3,752,241
				═══════	═══════	════════
	Kyrgyzstan Licences
	On acquisition of Central Asian Resources Limited, the company acquired an 80% interest in the Kyrgyzstan prospecting licences held by Alji LLC, which have subsequently been transferred to Premier Asia Resources LLC. This included a Lithium licence in the Uzunbulak region that was deemed non-core on acquisition, on this basis none of the exploration asset fair value uplift was allocated to the Lithium licence. The other licence acquired was the Cholokkaindy gold prospecting licence covering 24km2. This licence extends for a 5 year period to 31 December 2017 and has been expanded to cover an additional 8 square kilometres.
	The Group has one CGU being that of gold exploration in Kyrgyzstan as disclosed in note 3, segmental information, which is relevant for the purposes of the evaluation of intangible exploration assets.
	The Company has been prevented, by the local community, from progressing the exploration and exploitation of the area covered by its Licence over the last 30 months.  In February 2015, A C A Howe International Limited, Geological and Mining Consultants, valued the Licence at £nil.  Therefore, a full impairment charge has been made writing off the value of the Licence.
	Exploration and evaluation expenditure
	Exploration and evaluation expenditure comprises costs that are directly attributable to:
	- researching and analysing existing exploration data;
	- conducting geological studies, such as geochemistry, geophysics, drilling and sampling;
	- examining and testing extraction and treatment methods; and/or
	- compiling prefeasibility and feasibility studies.
	Exploration expenditure relates to the initial search for mineral deposits with economic potential. Evaluation expenditure arises from a detailed assessment of mineral deposits that have been identified as having economic potential. Expenditure on exploration activity is capitalised to the extent that it is recoverable. Capitalisation of evaluation expenditure commences when there is a high degree of confidence in the project's viability and hence it is probable that future economic benefits will flow to the Group.

10	Intangible fixed assets
	Such capitalised evaluation expenditure is reviewed for impairment at each statement of financial position date. The review is based on a status report regarding the Group's intentions for development of the undeveloped property and when available, any CPR report completed on the relevant assets. Subsequent recovery of the resulting carrying value depends on successful development of the area of interest or sale of the project.
	If a project does not prove viable, all irrecoverable costs associated with the project net of any related impairment provisions are written off.
	The Company has been prevented, by the local community, from progressing the exploration and exploitation of the area covered by its Licence over the last 30 months.  In February 2015, A C A Howe International Limited, Geological and Mining Consultants, valued the exploration and evaluation assets at £nil.  Therefore, a full impairment charge has been made writing off the value of the exploration and evaluation assets.
11		Tangible fixed assets
								Plant and machinery
								£
		Cost or valuation
		At 1 January 2014						15,416
		Exchange differences						(1,740)
		Additions						196
								───────
		At 31 December 2014						13,872
								───────
		Depreciation
		At 1 January 2014						788
		Exchange differences						(217)
		Charge for the year						2,946
								───────
		At 31 December 2014						3,517
								───────
		Net book value
		At 31 December 2014						10,355
								═══════
		At 31 December 2013						14,628
								═══════

12	Investments in subsidiary undertakings
	The Company
									£
	Cost or valuation
	At 1 January 2014								2,503,270
									───────
	At 31 December 2014								2,503,270
									───────
	Provisions for diminution in value
	At 1 January 2014								100
	Charge for the year								2,503,170
									───────
	At 31 December 2014								2,503,270
									───────
	Net book value
	At 31 December 2014								-
									═══════
	At 31 December 2013								2,503,170
									═══════
	Subsidiary undertakings:
	As at 31 December 2014, the company held more than 20% of the share capital of the following companies:
					Country of registration or			Shares held
	Company				incorporation			Class	%
	Central Asia Resources Limited				England & Wales			Ordinary	100
	Premier Asia Resources LLC				Kyrgyz Republic			Ordinary	80
13	Inventories							2014	2013
	The Group							£	£
	Finished goods and goods for resale							977	-
								═══════	═══════
14	Trade and other receivables			The Group				The Company
				2014		2013		2014	2013
				£		£		£	£
	Trade receivables			7,451		-		-	-
	Amounts owed by subsidiary undertakings			-		-		-	1,374,416
	Other receivables			14,434		13,946		13,314	6,556
	Prepayments and accrued income			12,043		2,499		12,043	2,499
				───────		───────		───────	───────
				33,928		16,445		25,357	1,383,471
				═══════		═══════		═══════	═══════
	The Directors consider that the carrying amount of trade and other receivables approximates to their fair value.

	15	Derivative financial assets
							2014	2013
							£	£
		Due within one year					46,359	236,250
		Due after more than one year					-	126,875
							─────────	─────────
		Value of derivative financial assets at 31 December 2014					46,359	363,125
							═════════	═════════
		Lanstead 1 Agreement
		In December 2012, the Company issued 250 million new shares of 0.1p per share at a price of 0.4p per share to Lanstead Capital L.P. ('Lanstead') with a notional value of £1 million. The Company entered into an equity swap price mechanism with Lanstead for a notional 75% of these shares with a notional reference price of 0.5333p per share. Lanstead have hedged the consideration they pay for shares in the Company against the performance of the Company's share price over a 24 month period. All 250 million shares were allotted with full rights on the date of the transaction. To the extent that the share price is greater or lower than the reference price at each swap settlement, the Company will receive greater or lower consideration calculated on pro-rata basis i.e. share price / reference price multiplied by the monthly transfer amount. The valuation for each settlement is determined to be the average share price for the preceding 5 trading days up to settlement date. As the amount of the consideration receivable by the Company from Lanstead will vary subject to the change in the Company's share price and will be settled in the future, the receivable is treated as a derivative financial asset and has been designated at fair value through profit or loss. The Company also issued 25 million shares to Lanstead as a value payment in connection with the equity swap agreement. The fair value of the derivative financial assets has been determined by reference to the Company's share price and has been estimated as follows:
						Share price	Notional number of shares outstanding	Fair value
								£
		Value of derivative financial assets at 1 January 2013				0.43p	187,500,000	806,250
		Consideration received					(78,125,000)	(177,292)
		Loss on revaluation of derivative financial asset						(475,833)
							─────────	─────────
		Value of derivative financial assets at 31 December 2013				0.14p	109,375,000	153,125
		Consideration received					(93,750,000)	(96,988)
		Loss on revaluation of derivative financial asset						(47,278)
							─────────	─────────
		Value of derivative financial assets at 31 December 2014				0.05p	15,625,000	8,859
							═════════	═════════

15	Derivative financial assets
	Lanstead 2 Agreement
	In December 2013, the Company issued 200 million new shares of 0.1p per share at a price of 0.13p per share to Lanstead Capital L.P. ('Lanstead') with a notional value of £260,000. The Company entered into an equity swap price mechanism with Lanstead for a notional 75% of these shares with a notional reference price of 0.17333p per share. Lanstead have hedged the consideration they pay for shares in the Company against the performance of the Company's share price over a 24 month period. All 150 million shares were allotted with full rights on the date of the transaction.
	The Company also issued 20 million shares to Lanstead as a value payment in connection with the equity swap agreement.
	As with the Lanstead 1 Agreement, the consideration receivable from Lanstead has been treated as a derivative financial asset and has been designated at fair value through profit or loss. The fair value of the derivative financial asset has been determined by reference to the Company's share price and has been estimated as follows:
									Share price		Notional number of shares outstanding		Fair value
													£
	Value recognised on inception (notional)								0.17333p		150,000,000		260,000
	Initial payment												(52,000)
	Gain on revaluation of derivative financial asset												2,000
											─────────		─────────
	Value of derivative financial assets at 31 December 2013								0.14p		150,000,000		210,000
	Consideration received										(75,000,000)		(51,590)
	Loss on revaluation of derivative financial asset												(120,910)
											─────────		─────────
	Value of derivative financial assets at 31 December 2014								0.05p		75,000,000		37,500
											═════════		═════════
16		Cash and cash equivalents						The Group				The Company
								2014		2013		2014		2013
								£		£		£		£
		Cash at bank and in hand						22,734		274,539		22,487		269,935
								═══════		═══════		═══════		═══════
		The Directors consider that the carrying amount of cash and cash equivalents approximates to their fair value. All of the Company's cash and cash equivalents are at floating rates of interest.

17	Trade and other payables					The Group				The Company
						2014		2013		2014		2013
						£		£		£		£
	Trade payables					138,096		121,529		137,989		121,529
	Corporation tax					411		411		411		411
	Other taxes and social security costs					1,580		28,118		771		27,807
	Other payables					138,321		50,899		111,597		20,560
	Accruals and deferred income					87,465		39,250		87,465		39,250
						────────		────────		────────		────────
						365,873		240,207		338,233		209,557
						════════		════════		════════		════════
	The Directors consider that the carrying amount of trade and other payables approximates to their fair value.
18	Borrowings								2014		2013
									£		£
	Convertible loan note								479,784		410,717
									═══════		═══════
	In 2013, the Company entered into a convertible loan note agreement for £1 million of which £500,000 was drawn down by 31 December 2013, with further drawdowns totalling £80,000 during 2014. The interest rate on the loan is 10% per annum. The loan matures five years from the issue date at their nominal value. The Loan Note Holder can convert their loan, and accrued interest, into shares at the holder's option commencing six months after the issue date of the loan and up to the maturity date at the rate of 500 shares per £1. The Company has the right to repay the loan at any time up to the maturity date. The values of the liability component and the equity conversion component were determined at issuance of the loan. The convertible loan recognised in the balance sheet is calculated as follows:
									2014		2013
									£		£
	Nominal value of convertible loan issued								580,000		500,000
	Equity component								(100,216)		(89,283)
									───────		───────
	Liability component on initial recognition and at 31 December 2014								479,784		410,717
									═══════		═══════
	Interest of £61,608 (2013: £nil) has been charged in respect of the convertible loan note to the statement of comprehensive income and included in trade and other payables under accruals and deferred income.

19		Share-based payments
		Share options
		At 31 December 2013 and 31 December 2014 outstanding awards to subscribe for ordinary shares of 0.1p each in the company, granted in accordance with the rules of the share option scheme, were as follows:
		31 December 2013														Shares under option		Weighted average remaining contractual life (years)			Weighted average exercise price (pence)
		Brought forward														68,350,000		8.5			0.63
		Granted														-		-			-
		Lapsed														-		-			-
																────────		────────			────────
		Carried forward														68,350,000		7.6			0.63
																════════		════════			════════
		31 December 2014														Shares under option		Weighted average remaining contractual life (years)			Weighted average exercise price (pence)
		Brought forward														68,350,000		7.6			0.63
		Granted														-		-			-
		Lapsed														(1,250,000)		-			(2.25)
																────────		────────			────────
		Carried forward														67,100,000		6.3			0.60
																════════		════════			════════
		The fair value of remaining share options has been calculated using the Black Scholes model. The assumptions used in the calculation of the fair value of the share options outstanding during the year are as follows:
		Grant date											1 September 2012			30 April 2012		31 July 2007			18 November 2005
		Exercise period											September 2012 - September 2022			April 2012 - April 2022		July 2007 - July 2017			November 2005 - November 2015
		Exercise price											0.50p			0.50p		1.00p			1.00p
		Number of employees											1			7		3			2
		Shares under option											2,000,000			52,000,000		9,100,000			4,000,000
		Expected volatility											32%			32%		100%			100%
		Expected life											3.5 years			3.5 years		5 years			5 years
		Risk-free interest rate											0.24% - 0.43%			0.24% - 0.43%		4.4%			4.4%
		Expected dividend yield											-			-		-			-
		Possibility of ceasing employment before vesting											-			-		-			-
		Fair value per option											0.02p			0.19p		0.33p			0.04p
													════════			════════		════════			════════
		The share based payments charge relating to the above options in the year ended 31 December 2014 was a charge of £nil (2013 : £24,666)
		2,000,000 share options lapsed after the year end. As a result of the share reorganisation in April 2015 as detailed in note 25, the table below gives details of the options that existed at the balance sheet date and the revised share options.
19	Share-based payments
												Pre Reorganisation					Post reorganisation
	Issue date							Expiry date				No. of existing options			Current exercise price		No. of new options				New exercise price
	30 April 2012							30 April 2022				52,000,000			0.5p		208,000				125p
	31 July 2007							31 July 2017				9,100,000			1.0p		36,400				250p
	18 November 2005							18 November 2015				4,000,000			1.0p		16,000				250p
20			Share capital							2014				2013			2014			2013
										Number				Number			£			£
			Allotted, called up and fully paid
			Ordinary shares of 0.1p each							1,361,935,975				1,346,435,975			1,361,936			1,346,436
			Deferred shares of 0.1p each							942,462,000				942,462,000			942,462			942,462
										═══════════				═══════════			─────────			─────────
																	2,304,398			2,288,898
																	═════════			═════════
			On 16 January 2014, the Company issued 15,500,000 new Ordinary Shares of 0.1p each allotted as fully paid at 0.15p per share, in settlement of fees for services provided to the Company.
21		Directors' emoluments
		Key management personnel are those persons having authority and responsibility for planning, directing and controlling activities of the Group, including all directors of the Company.
																	2014		2013
																	£		£
		Directors
		Emoluments for qualifying services															215,083		259,750
		Equity-settled share based payment (note 19)															-		24,666
																	───────		───────
																	215,083		284,416
																	═══════		═══════
		Directors and key management personnel															2014		2013
		Salaries and fees															£		£
		Directors' emoluments
		Gerry Desler															35,500		36,000
		Christian Schaffalitzky															21,667		13,750
		Dr Reza Tabrizi (resigned 19 June 2014)															25,000		60,000
		Richard Nolan															60,000		65,000
		Colonel Robert Stewart (resigned 14 October 2014)															20,416		25,000
		Garth Earls															52,500		60,000
																	───────		───────
																	215,083		259,750
																	═══════		═══════

22	Employees
	Number of employees
	There were 14 employees during the year including the directors (2013: 20).
	Employment costs
						2014	2013
						£	£
	Wages and salaries					264,158	338,818
	Social security costs					14,070	17,536
	Equity settled share-based payments					-	24,666
						───────	───────
						278,228	381,020
						═══════	═══════
23	Control
	In the opinion of the directors, there is no ultimate controlling party.
24	Related party transactions
	During the year there were consultancy fees and property related expenses of £39,521 (2013: £16,355) charged by Eurasia Mining Plc and included in trade payables at the year end is £38,081 (2013: £27,592) owing to Eurasia Mining Plc. Christian Schaffalitzky is a director of Eurasia Mining Plc.
	Included in trade and other payables are the following balances due to Directors as at 31 December 2014.
						2014	2013
						£	£
	Christian Schaffalitzky					13,333	-
	Garth Earls					36,119	9,126
	Gerry Desler					25,423	5,527
	Richard Nolan					36,722	-
						═══════	═══════
	Key management compensation
	Key management include directors. The compensation paid or payable to key management for services is shown below.
						2014	2013
						£	£
	Salaries and other short term benefits					215,083	259,750
	Share-based payments					-	24,666
						───────	───────
						215,083	284,416
						═══════	═══════
	In the Company's own accounts, full provision has been made against balances due from Central Asia Resources Limited and Premier Asia Resources LLC amounting to £772,715 (2013: £nil) and £689,546 (2013: £nil) respectively.

25	Subsequent events
	On 14 April 2015, the Company held a General Meeting at which resolutions to effect the following were approved.
	1. The Company enter into a Company Voluntary Arrangement ("CVA") with its creditors.
	2. To dispose of the entire issued share capital of Central Asia Resources Limited ("CAR") to Trivedi Capital Partners (I) LP ("Trivedi") in full and final settlement of the outstanding loan under the Convertible Loan Agreement. ACA Howe independently valued the exploration licence known as the Cholokkaindy licence in the Kyrgyz Republic on 24 February 2015 at £nil. The Licence was owned by Premier Asia Resources LC, which was 80% owned by CAR. Following this transaction, Tridevi's loan will be reduced to £nil, Tridevi will waive any right it may have to participate in the CVA and Tridevi would transfer £50,000 to the Company in order to enable it to make an improved offer of settlement to the unsecured Creditors of the Company, than would have otherwise have been possible.
	3. To adopt an Investing Policy following the disposal of CAR which accounted for the whole of the Group's activities and assets. The Company's new Investing Policy is to invest in and/or acquire companies and/or projects within the natural resources and/or energy sector with potential for growth and/or income. The Company may also directly apply for new exploration licences or invest in existing licences. It is anticipated that the geographical focus will primarily be Europe. However, investments may also be considered in other regions to the extent that valuable opportunities may exist and returns can be achieved.
	4. To re-organise the Company's share capital through the consolidation of every 25,000 existing ordinary shares into one Consolidation Share; thereafter each Consolidation Share would be sub-divided into 100 New Ordinary Shares of 1p each and 1 New Deferred Share. The same reorganisation applies to the number of share options in issue, with a corresponding adjustment to the exercise price (note 19). And
	5. That a new board is appointed and that the Company changes its name to Prospex Oil and Gas plc.
	The Company had conditionally raised £1,076,150 through the placing of 35,283,591 New Ordinary Shares to advance the Company's Investing Policy, of which £50,000 would be transferred to the Company in order to enable it to make an improved offer of settlement to the unsecured Creditors of the Company. With all the resolutions passed at the General Meeting the placing closed and the shares were issued.
	On 15 April 2015 the Company issued share options to the new directors of the Company as follows:
	Directors	Number of options		Percentage of enlarged share capital
	Richard Mays	541,726		1.33%
	Gavin Burnell	541,726		1.33%
	Edward Dawson	680,212		1.67%
	William Smith	541,726		1.33%
	These shares vest immediately and are exercisable for a period of 10 years at a price of 3p per share.
	A further 1,342,926 options were awarded at the same time, which vest immediately, of which 541,726 are exercisable over a 10 year period at 3 pence per share, with the remaining 801,200 being exercisable over a 3 year period at 3 pence per share.
	As a result of the consolidation and placing the Company has in issue a total of 40,731,291 Ordinary Shares of £0.01 each.

	26	Financial instruments
		The principal financial instruments used by the Group, from which financial instrument risk arises are as follows
		- Derivative financial assets
		- Trade and other receivables
		- Cash and cash equivalents
		- Trade and other payables
		A summary of the financial instruments held by category is provided below:
				2014	2013
		Financial assets		£	£
		Loans and receivables
		Trade and other receivables		33,928	16,445
		Cash and cash equivalents		22,734	274,539
		Derivative financial assets		46,359	363,125
				─────────	─────────
		Total financial assets		103,021	654,109
				═════════	═════════
				2014	2013
		Financial liabilities		£	£
		Trade and other payables		845,657	650,924
				═════════	═════════
			Fair value measurement
			Level 1	Level 2	Level 3
			£	£	£
		Derivative financial assets
		At 31 December 2014	-	46,359	-
			═════════	═════════	═════════
		At 31 December 2013	-	363,125	-
			═════════	═════════	═════════
		The Directors consider that the carrying amount of trade and other receivables and trade and other payables approximate their fair value.
		Financial risk management
		The Group's activities expose it to a variety of risks including market risk (foreign currency risk and interest rate risk), credit risk and liquidity risk. The Group manages these risks through an effective risk management programme and through this programme, the Board seeks to minimise potential adverse effects on the Group's financial performance.
		The Board provides written objectives, policies and procedures with regards to managing currency and interest risk exposures, liquidity and credit risk including guidance on the use of certain derivative and non derivative financial instruments

26	Financial instruments
	Credit risk
	Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual obligations. The Group's credit risk is primarily attributable to its receivables and its cash deposits. It is Group policy to assess the credit risk of new customers before entering contracts. The credit risk on liquid funds is limited because the counterparties are banks with high credit-ratings assigned by international credit-rating agencies.
	Liquidity risk and interest rate risk
	Liquidity risk arises from the Group's management of working capital.  It is the risk that the Group will encounter difficulty in meeting its financial obligations as they fall due.  The Board regularly receives cash flow projections for a minimum period of 12 months, together with information regarding cash balances monthly.
	The Group is principally funded by equity and invests in short-term deposits, having access to these funds at short notice. The Group's policy throughout the period has been to minimise interest rate risk by placing funds in risk free cash deposits but also to maximise the return on funds placed on deposit.
	All cash deposits attract a floating rate of interest. The benchmark rate for determining interest receivable and floating rate assets is linked to the UK base rate.
	Foreign currency exposure
	The Group has entities which operate in Kyrgyzstan and are therefore exposed to foreign exchange risk arising from currency exposure to the Kyrgyzstan Som, the functional currency of those subsidiaries.  The overseas subsidiaries operate separate bank accounts which are used solely for those subsidiaries, thus managing the currency in that country. The Group's net assets arising from the overseas subsidiaries are exposed to currency risk resulting in gains or losses on retranslation into sterling.  Given the levels of materiality, the Group does not hedge its net investments in overseas operations as the cost of doing so is disproportionate to the exposure.
	Sensitivity analysis
	The effect of a 10% movement on the foreign exchange rate between Sterling and the Kyrgyzstan Som on the net assets and the Sterling value of cash balances held would be as follows:
	Net assets: 10% movement either way will result in £35,779 increase or decrease in net assets.
	Cash balances: 10% movement either way will result in £102 increase or decrease in cash balances.

This information is provided by RNS

The company news service from the London Stock Exchange

END

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