- Vostok Nafta Investment Ltd was incorporated in Bermuda on April 5, 2007 and following the acquisition of Vostok Komi (Cyprus) Ltd and Vostok Nafta Sverige AB from Vostok Gas Ltd (Old Vostok Nafta) the New Vostok Nafta Group was formed. In connection with the restructuring of Old Vostok Nafta, New Vostok Nafta has acquired non Gazprom assets in the amount of USD 377.5 mln.
- Net result for the period was USD 39.52 mln (Jan 1, 2006–Jun 30, 2006: 13.92). Earnings per share was USD 0.86 (0.30). Net result for the quarter was USD 36.11 mln (Apr 1, 2006–Jun 30, 2006: –43.65). Earnings per share for the quarter was USD 0.78 (–0.95).
- The net asset value of the company was USD 558.22 mln (Dec 31, 2006: 385.38) on June 30, 2007, corresponding to USD 12.13 (8.37) per share. Given a SEK/USD exchange rate of 6.83 the corresponding values were SEK 3,814.62 mln and SEK 82.89, respectively.
- The group’s net asset value per share in USD increased by 44.85% over the period January 1, 2007–June 30, 2007. During the same period the RTS-index decreased by 1.26% in USD terms. Over the period April 1, 2007–June 30, 2007 the Group’s NAV increased by 33.73% (RTS-index –1.96%).
- The number of outstanding shares and warrants at the end of the period was 46,020,901.
- The net asset value per share of Vostok Nafta as of July 31, 2007 was USD 12.68 (SEK 85.33).
Background
In order to highlight the value of the non-Gazprom-related holdings, offer more direct and transparent exposure to Old Vostok Nafta’s portfolio of assets, and meet different investors’ risk preferences, the shareholders in Old Vostok Nafta approved the board of directors’ proposal for the Restructuring of the Company at an extraordinary General Meeting on May 24, 2007.
The Restructuring entailed spinning off the non-Gazprom-related part of Old Vostok Nafta’s portfolio into a new company, New Vostok Nafta. As a result of this Restructuring, Old Vostok Nafta changed name on May 24, 2007 to Vostok Gas Ltd, whereas New Vostok Nafta took over the name Vostok Nafta Investment Ltd.
The board of directors that was elected at the extraordinary General Meeting in Old Vostok Nafta on March 30, 2007, will continue to work in New Vostok Nafta. Furthermore, the current corporate management of Old Vostok Nafta will continue to manage both New Vostok Nafta and Vostok Gas following the Restructuring.
Accounting principles
The accounts of the interim report have been prepared as if the division of the Vostok Nafta Investment Ltd Group was carried out on September 30, 2003, and comprises the consolidated accounts of the companies that will be included in the new Vostok Nafta Group; i e Vostok Komi (Cyprus) Ltd, Vostok Nafta Sverige AB, RusForest (Cyprus) Ltd and RusForest Ltd. The restructuring of the Group further implies that items of the income statement and the balance sheet that relate to non-Gazprom assets, which formerly have been recognized in the accounts of other companies of the Old Vostok Nafta Group, are now included in the consolidated accounts of the New Vostok Nafta Group.
The transactions by which New Vostok Nafta acquires the companies mentioned above and the non Gazprom related assets, which have been recognized in other companies of the Old Vostok Nafta Group, comprises transactions between companies under joint control. These transactions are being recognized to the same values as they were in the selling company, in accordance with the so called predecessor accounting method.
The items of the income statement that have been recognized in other companies of the Old Nafta Group than in the completely transferred subsidiaries are non-Gazprom related realized and unrealized profits or losses from financial assets at fair value through profit or loss, results from investments in associated companies, dividend income (including withholding dividend taxes) and operating expenses that relate to non Gazprom assets.
New Vostok Nafta – legal structure
New Vostok Nafta will continue to invest in accordance with previous strategies, with a clear and sustained focus on Russia and its neighbours. However, its mandate will be extended in terms of geographical areas and industrial sectors. The formation of New Vostok Nafta and the capital being injected into the Company in connection with the Restructuring will also provide a better basis for exploiting the investment opportunities to be found in Russia and the other CIS- states.
Vostok Nafta Investment Ltd was incorporated in Bermuda on April 5, 2007. A change of name from Vostok Nafta Holding Investment Ltd was made effective in June 2007. Following the acquisitions of Vostok Komi (Cyprus) Ltd and Vostok Nafta Sverige AB from Old Vostok Nafta, the Group consists of one Bermudian parent company, one wholly owned Cypriot subsidiary and one wholly owned Swedish subsidiary. The Swedish Depository Receipts of Vostok Nafta (SDB) are from July 4, 2007, listed on the OMX Nordic Exchange Stockholm (previously the Stockholm Stock Exchange), Mid Cap segment, with the ticker VNIL SDB.
The financial year is January 1–December 31.
Financial effects from the restructuring
In connection with the Restructuring, New Vostok Nafta has acquired assets from Old Vostok Nafta for a total amount of USD 377.5 million. Acquired assets were:
- non-Gazprom share portfolio worth of USD 370.7 million
- unsettled trades of USD 1.8 million, and
- cash of USD 5.0 million.
Payment for the acquired assets was made by way of a promissory note equal to USD 377.5 million to Old Vostok Nafta. New Vostok Nafta thereafter sold 46,020,900 Warrants to Old Vostok Nafta for the corresponding amount; Payment for the acquired warrants was made by way of a promissory note to New Vostok Nafta, by which New Vostok Nafta thus had receivables from Old Vostok Nafta in the amount of USD 377.5 million. These receivables were used for the subsequent settlement of the liability to Old Vostok Nafta. After the share split in Vostok Gas (Old Vostok Nafta) half of the number of shares issued were redeemed and exchanged for 46,020,900 Warrants in New Vostok Nafta. One Warrant entitled the holder to subscribe for one newly issued Depository Receipt in New Vostok Nafta at a price of SEK 22.
On July 4, 2007, the restructuring of old Vostok Nafta was completed through the listing of new Vostok Nafta on Stockholm Stock Exchange. The proceeds from the new share issue, net after new share issue costs, amount to approximately USD 145 mln (SEK 990 mln).
Group – results for the period and net asset value
During the period, the result from financial assets at fair value through profit or loss amounted to USD 1.62 mln (16.18). Result from investments in associated companies was USD 33.62 (–0.26) mln. Dividend income was USD 8.07 (0.22) mln.
Operating costs were USD –1.59 (–1.56) mln.
Net financial items were USD –1.75 (–0.58) mln.
Net result for the period was USD 39.52 (13.92) mln.
Total shareholders’ equity amounted to USD 558.22 (385.38) mln on June 30, 2007.
Group – results for the quarter
During the period, the result from financial assets at fair value through profit or loss amounted to USD 4.35 mln (–42.81) Result from investments in associated companies was USD 31.63 (–) mln. Dividend income was USD 2.12 (–) mln.
Operating costs were USD –0.69 (–0.85) mln.
Net financial items were USD –1.75 (0.01) mln.
Net result for the period was USD 36.11 (–43.65) mln.
Parent company
The parent company will finance the Cypriot subsidiary's operations on market terms. The net result for the period April 5, 2007–June 30, 2007 was USD –0.18 mln.
Liquid assets
The liquid assets of the group, defined as cash and bank deposits adjusted for concluded but not yet settled share transactions, amounted to USD 16.19 mln (5.12) on June 30, 2007.
(For complete report see attached file)
