2014 Half Year Results

Urals Energy Public Company Limited

("Urals Energy" or the "Company")

2014 Half Year Results

Urals Energy PCL (AIM:UEN), the independent exploration and production company with operations in Russia, is pleased to announce its half-year results for the six months ended 30 June 2014.

Operational highlights

Financial highlights

Post-period end and outlook

Alexei Maximov, Chief Executive, commented:

"2014 started with the threat of significant management change initiated by Alpcot Capital Management Ltd ("Alpcot") and Fire East Corporation ("Fire East"), which was defeated at an EGM by the majority of shareholders who voted in support of the existing management and Board.  Simultaneously Adler Impex S.A. ("Adler"), which bought Alpcot and Fire East's shareholdings in the Company became the largest shareholder in Urals.  Since acquiring its shares, Adler has entered into discussions with Urals in relation to increasing Adler's involvement in the Company at board level and/or an executive appointment.  An announcement will be made once an agreement has been concluded with Adler.

"During 2014 the Company continued its activities at both fields aimed at stabilising production in an attempt to curb the natural decline by implementation of workovers and drilling of new wells, which are planned to be finished by the year-end.  The Company has made substantial personnel changes both at Petrosakh and at its head-office. At Petrosakh we have hired a new General Director and Chief Engineer, both of whom have impressive backgrounds in oil production and management.  On the corporate level we have hired a new Chief Geologist and Processing Manager both of whom are focused particularly on improving operations at Pterosakh in addition to determining potential new drilling locations, increasing the margins of refined products and the introduction of a new product mix.

"At Arcticneft the annual tanker shipment is planned for mid-October. Final preparations are being implemented, contracts have been signed and the vessel has been chartered.

"The Company still has to commit resources to the case regarding Vyatcheslav Rovneiko's claim to the Company in relation to the Alleged Debt Repayment Agreement (the "ADRA") which is being defended in two jurisdictions, Russia and Cyprus.  Whilst the Board, as has been stated previously, believes that the ADRA is a forgery and represents no substantive threat to the Company, Rovneiko continues in his attempts to extend the process in order to limit the effect of the London arbitration award against him. In addition, the Company has initiated legal proceedings against Komineftegeofizika ("KNGF") in Russia regarding the non-payment of a loan. The Board is confident that the Company will prevail in both cases; however, to do so will require time and additional legal costs.

"The Board continues in its search for possible acquisition opportunities and has evaluated a number of such potential acquisitions in 2014. Given the overall investing climate towards Russian companies and the overall industry slow-down, we have still not found the "right fit" and will continue to seek new opportunities. We will continue looking at production and exploration opportunities in Russia, with the goal of adding cash-generating assets to the Company's portfolio.

"Aside from the macro-economic environment in Russia caused by the geo-political crisis in Ukraine, the Board does not consider that this will have any immediate impact on the Company's day-to-day operations. Since 2009 the Company's management has made strenuous efforts to rid the Company of its legacy issues primarily stemming from the Taas-Yuriah deal, which to date have been mostly settled (with the exclusion of the Rovneiko situation). We also do not believe that the continued consolidation of the Russian oil sector has had a direct effect on the Company. The Board believes it is in a firm position to move the Company forwards with its operations and is committed to delivering shareholder value."

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Chief Executive Officer's Statement

Operating Environment

The six months ended 30 June 2014 were characterised by a stable crude oil market price at an average level of US$109 per barrel (H1-2013: US$108). Domestic prices for light oil products ranged from US$113 to US$137 per barrel (H1-2013: US$110 to US$142). High and stable domestic prices secured the Company's operating cash flows at a level sufficient to maintain its operations and comply with license requirements at both fields.

There were no deliveries of crude oil exported from Arcticneft during the reporting period. The tanker from Arcticneft is expected in mid-October 2014.

Operating Results

Gross Revenues (US$'000)

For the six months ended 30 June 2014, total gross revenues increased by US$1.1 million as a result of increase of sales volumes totalling 209,564 barrels (compared with 184,861 barrels for the six months ended 30 June 2013). The increase was partially off-set by decline of average net back prices for petroleum (refined) products of US$65.41 per barrel (US$73.86 for the six months ended 30 June 2013) and a slightly lower crude oil net back price of US$58.30 per barrel (US$59.46 per barrel for the six months ended 30 June 2013).  Netback, in the case of domestic crude oil sales, is the gross sales net of VAT.  Netback for domestic product sales is defined as gross product sales minus VAT, transportation, excise tax and refining costs.

For the six months ended 30 June 2014 all domestic sales of crude oil and almost all petroleum (refined) products related to Petrosakh.  During the six months ended 30 June 2014, Arcticneft sold petroleum (refined) products to FGUP "ArcticMorNefteGazRazvedka" ("AMNGR") for US$540,000 (US$474,000 for the six months ended 30 June 2013).

Summary table: Net backs (US$/bbl)

Gross profit (net revenues less cost of sales) for the first half of 2014 decreased 28% to US$3.5 million (H1-2013: US$4.9 million). The main driver of the decrease was the lower netbacks.

Cost of sales during the first half of 2014 totalled US$13.0 million as compared with US$11.0 million in 2013 of which US$3.8 million and US$3.1 million respectively represented non-cash items, principally depreciation, amortisation and depletion. Increase in operating costs mainly explained by the increase in sales volume and decrease in crude oil and oil products inventory levels respectively. At the same time as a result of the strong monitoring procedures implemented, the Company managed to keep all other operating costs in line with the level achieved during the first half of 2013.

Decrease of average netback for petroleum products for the six months ended 30 June 2014 as well as net finance cost resulted in a net loss of US$1.2 million (H1-2013: net loss of US$2.5 million).

Consolidated normalised management EBITDA in the six months ended 30 June 2014 increased to US$3.3 million as compared with US$2.8 million during the six months ended 30 June 2013.

Management EBITDA (US$'000) - Unaudited

Net debt position

As at 30 June 2014, the Company had net debt of US$0.2 million (calculated as long-term and short-term debt less cash in bank and less loans issued to related parties). As at 31 December 2013 net cash was US$6.0 million.

In June 2014 the Company received a loan of US$2.1 million from Petraco. As at 30 June 2013, the long-term and short-term part amounted to US$2.5 million (31 December 2013: nil).

During the first half of 2014 the Group additionally impaired a loan to a formerly related party by $0.4 million (for the six months ended 30 June 2013: $0.4 million).  This amount relates to an overdue loan to a shareholder and former member of management of the Group. The Board demanded repayment of the full amount by 20 May 2011.  By 20 May 2011 the Board did not receive any response from the related party and the Company therefore filed the claim to the London Court of International Arbitration. This arbitration has confirmed the Company's legal rights, vindicated its position and issued a final award that the sum in the amount of US$6.3 million (including loan amount and interest) and legal cost in the amount of US$1.3 million must be repaid to Urals Energy together with a daily accumulating interest. The Company has formally demanded payment from Mr Rovneiko and is committed to using all appropriate means to collect the outstanding amount.  For accounting purposes management has reassessed the carrying value of the loan and has impaired this fully. However, this does not reduce the validity of the legal claim against this related party.

Operational update

Petrosakh

During the period under review the Company continued its focus on minimising the natural decline in production, and improving the Company's drilling programme. The natural decline in production is being addressed by the implementation of standard technological means, sidetracks and workovers. The drilling programme has been re-evaluated by the new management, both at Petrosakh and head office, as a result of which two new wells are being planned for drilling by the current year-end.

Downstream

As the only local refinery on the island, the Company is under constant pressure from the local authorities to supply those refined products that are of particular interest to the local users. However, the Company is slowly reducing the production of low-margin products to be replaced by higher margin products.  With the recent hiring of the new Processing Manager the product mix and technological aspects of the refining process have been assessed with the goal of increasing profitability and capacity utilisation of the plant.  The seasonal aspect has also been taken into consideration, as well as the list of buyers with the aim to limit the dependence on both and increasing the flexibility and speed of product inventory turnover.

Arcticneft

As at Petrosakh, in 2014 the Company continued to focus on reducing natural decline and ensuring stable production in preparation for the annual tanker shipment.

Petraco loan

In May 2014, the Company entered into a new short-term loan agreement with Petraco under which Petraco advances the sum of up to US$7.6 million to the Company.  The proceeds of the loan will be used by the Company to both progress its 2014 drilling plan and working capital financing.

As at 30 of June 2014, total debt to Petraco was US$2.1 million.  The repayment of all this debt coincides with the shipment of the tanker from Arcticneft.

ADRA

After receiving for the first time the ADRA in late 2013, the Board conducted an internal investigation of the "document" and the details of its materialisation and concluded that the ADRA is a forgery, which does not comply with any of the corporate procedures employed by the Company since its inception. It further does not comply with corporate procedures in Cyprus, and represents an attempt by its former director Vyatcheslav Rovneiko to avoid paying back the loan he took from the Company along with other monies awarded by the London Court of International Arbitration in 2012.

The Company has continued legal proceedings against Rovneiko and his companies both in Russia and Cyprus as well as criminal investigation. 

Reserves report

Miller and Lents, Ltd. reserves report recently finalised as at 1 January 2014. The Company is currently undertaking an initial review of this and will announce details of the reserves report later this week.

Outlook

The Company anticipates loading the tanker for export from Arcticneft, in Q4 2014.

Going forward, the Board is aware of the direct and possible difficulties connected with the sanctions against Russia, overall economic slowdown, continued consolidation process in the Russian oil sector, as well as possible unfavourable changes in access to international capital and introduction of new taxation of natural/energy resources in Russia.  Nevertheless, the Company will continue its focus on cash generation and increasing production at both fields.

Alexei Maximov

Chief Executive Officer

Consolidated Statement of Financial Position

(presented in US$ thousands)

Approved on behalf of the Board of Directors on 29 September 2014.

Consolidated Statement of Comprehensive Income

(presented in US$ thousands)

Consolidated Statements of Cash Flows

(presented in US$ thousands)

Consolidated Statements of Changes in Shareholders's Equity

(presented in US$ thousands)

Notes to the Consolidated Financial Statements (presented in US$ thousands)

1 Activities

Urals Energy Public Company Limited ("Urals Energy" or the "Company" or "UEPCL") was incorporated as a limited liability company in Cyprus on 10 November 2003. Urals Energy and its subsidiaries (the "Group") are primarily engaged in oil and gas exploration and production in the Russian Federation and processing of crude oil for distribution on both the Russian and international markets.

The registered office of Urals Energy is at 31 Evagorou Avenue, Suite 34, CY-1066, Nicosia, Cyprus. UEPCL's shares are traded on the AIM Market operated by the London Stock Exchange.

The Group comprises UEPCL and the following main subsidiaries:

2 Summary of Significant Accounting Policies

Basis of preparation.

The consolidated financial statements of the Group have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union (EU) under the historical cost convention as modified by the change in fair value of financial instruments.

The preparation of consolidated financial statements in conformity with IFRS requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the reporting date and the reported amounts of revenues and expenses during the reporting period. These policies have been consistently applied to all the periods presented, unless otherwise stated. Critical accounting estimates and judgments are disclosed in Note 4. Actual results could differ from the estimates.

Functional and presentation currency

The United States dollar ("US dollar or US$ or $") is the presentation currency for the Group's operations as management have used the US dollar accounts to manage the Group's financial risks and exposures, and to measure its performance. Financial statements of the Russian subsidiaries are measured in Russian Roubles, their functional currency.

The functional currency of the Company is the US Dollar as substantially all the cash flows affecting the Company are in US Dollars.

Translation to functional currency

Monetary assets and liabilities denominated in foreign currencies are retranslated into the functional currency at the rate of exchange ruling at the reporting date. Any resulting exchange differences are included in the profit or loss component of the consolidated statement of comprehensive income. Non-monetary assets and liabilities that are measured at historical cost and denominated in a foreign currency are translated into the functional currency using the rates of exchange as at the dates of the initial transactions. The US dollar to Russian Rouble exchange rates were 33.63 and 32.73 as of 30 June 2014 and 31 December 2013, respectively.

Translation to presentation currency 

The Group's consolidated financial statements are presented in US dollars in accordance with IAS 21, The Effects of Changes in Foreign Exchange Rates. The results and financial position of each group entity having a functional currency different from the presentation currency are translated into the presentation currency as follows:

(i) Assets and liabilities for each statement of financial position presented are translated at the closing rate at the date of that statement of financial position. Monetary assets and liabilities denominated in foreign currencies are translated into the functional currency at the rate of exchange ruling at the reporting date. Any resulting exchange differences are included in the profit or loss component of the consolidated statement of comprehensive income. Non-monetary assets and liabilities that are measured at historical cost and denominated in a foreign currency are translated into the functional currency the Company using the rates of exchange as at the dates of the initial transactions. Goodwill and fair value adjustments arising on the acquisitions are treated as assets and liabilities of the acquired entity.

(ii) Income and expenses for each statement of comprehensive income are translated to the functional currency of the Company at average exchange rates (unless this average is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the dates of the transactions).

(iii) All resulting exchange differences are recognised as a separate component of equity.

When a subsidiary is disposed of through sale, liquidation, repayment of share capital or abandonment of all, or part of, that entity, the exchange differences deferred in other comprehensive income are reclassified to the profit and loss.

Uncertain tax positions

The Group's uncertain tax positions are reassessed by management at the end of each reporting period. Liabilities are recorded for income tax positions that are determined by management as more likely than not to result in additional taxes being levied if the positions were to be challenged by the tax authorities. The assessment is based on the interpretation of tax laws that have been enacted or substantively enacted by the end of the reporting period, and any known court or other rulings on such issues. Liabilities for penalties, interest and taxes other than on income are recognised based on management's best estimate of the expenditure required to settle the obligations at the end of the reporting period.

Accounting standards adopted during the period

In the current period, the Group has adopted all of the new and revised Standards and Interpretations issued by the International Accounting Standards Board (the IASB) and the International Financial Reporting Interpretations Committee (the IFRIC) of the IASB that are relevant to its operations and effective for reporting periods beginning on 1 January 2014.

3 Going Concern

A significant portion of the Group's consolidated net assets of US$98.0million (31 December 2013: US$101.3 million) comprises undeveloped mineral deposits requiring significant additional investment. The Group is dependent upon external debt to fully develop the deposits and realise the value attributed to such assets.

The Group had net current assets of US$3.8 million as of 30 June 2014 (31 December 2013: net current assets of US$2.0 million). The most significant creditor as of 30 June 2014 was US$2.2 million loan from Petraco (31 December 2013: nil) (Note 9).

Management have prepared monthly cash flow projections for periods throughout 2014 and 2015. Judgements which are significant to management's conclusion that no material uncertainty exists for going concern this year include future oil prices and planned production which were required for the preparation of the cash flow projections and model. Positive overall cash flows are dependent on future oil prices (a price of US$100 per barrel has been used for 2014 and for 2015). Despite the above matters, the Group still has funding and liquidity constraints, though these are less severe than in the prior year. Despite the uncertainties and based on cash flow projections performed, management considers that the application of the going concern assumption for the preparation of these consolidated financial statements is appropriate.

4 Critical Accounting Estimates and Judgments in Applying Accounting Policies

The Group makes estimates and assumptions that affect the amounts recognised in the consolidated financial statements and the carrying amounts of assets and liabilities within the next financial year. Estimates and judgments are continually evaluated and are based on management's experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. Management also makes certain judgments, apart from those involving estimations, in the process of applying the accounting policies. Judgments that have the most significant effect on the amounts recognised in the consolidated financial statements and estimates that can cause a significant adjustment to the carrying amount of assets and liabilities within the next financial year include:

Tax legislation

Russian tax and customs legislation is subject to varying interpretations, and changes, which can occur frequently. Management's interpretation of such legislation as applied to the transactions and activity of the Group may be challenged by the relevant authorities.

Initial recognition of related party transactions 

In the normal course of business the Company enters into transactions involving various financial instruments with its related parties. IAS 39, Financial Instruments: recognition and measurement, requires initial recognition of financial instruments based on their fair values. Judgment was applied in determining if transactions are priced at market or non-market interest rates, where there is no active market for such transactions. This judgment was based on the pricing for similar types of transactions with unrelated parties and effective interest rate analyses.

Estimation of oil and gas reserves 

Engineering estimates of hydrocarbon reserves are inherently uncertain and are subject to future revisions. Accounting measures such as depreciation, depletion and amortisation charges, impairment assessments and asset retirement obligations that are based on the estimates of proved reserves are subject to change based on future changes to estimates of oil and gas reserves.

Proved reserves are defined as the estimated quantities of hydrocarbons which geological and engineering data demonstrate with reasonable certainty to be recoverable in future years from known reservoirs under existing economic conditions. Proved reserves are estimated by reference to available reservoir and well information, including production and pressure trends for producing reservoirs. Furthermore, estimates of proved reserves only include volumes for which access to market is assured with reasonable certainty. All proved reserves estimates are subject to revision, either upward or downward, based on new information, such as from development drilling and production activities or from changes in economic factors, including product prices, contract terms or development plans. In some cases, substantial new investment in additional wells and related support facilities and equipment will be required to recover such proved reserves. Due to the inherent uncertainties and the limited nature of reservoir data, estimates of underground reserves are subject to change over time as additional information becomes available.

The Group last obtained an independent reserve engineers report as at 1 January 2014.

In general, estimates of reserves for undeveloped or partially developed fields are subject to greater uncertainty over their future life than estimates of reserves for fields that are substantially developed and depleted. As those fields are further developed, new information may lead to further revisions in reserve estimates. Reserves have a direct impact on certain amounts reported in the consolidated financial statements, most notably depreciation, depletion and amortisation as well as impairment expenses. Depreciation rates on production assets using the units-of-production method for each field are based on proved developed reserves for development costs, and total proved reserves for costs associated with the acquisition of proved properties. Assuming all variables are held constant, an increase in proved developed reserves for each field decreases depreciation, depletion and amortisation expenses. Conversely, a decrease in the estimated proved developed reserves increases depreciation, depletion and amortisation expenses. Moreover, estimated proved reserves are used to calculate future cash flows from oil and gas properties, which serve as an indicator in determining whether or not property impairment is present. The possibility exists for changes or revisions in estimated reserves to have a significant effect on depreciation, depletion and amortisation charges and, therefore, reported net profit/(loss) for the year.

Deferred income tax asset recognitionThe recognised deferred tax asset represents income taxes recoverable through future deductions from taxable profits and is recorded in the statement of financial position. Deferred income tax assets are recorded to the extent that realisation of the related tax benefit is probable. The future taxable profits and the amount of tax benefits that are probable in the future are based on the medium term business plan prepared by management and extrapolated results thereafter. The business plan is based on management expectations that are believed to be reasonable under the circumstances. Key assumptions in the business plan are an average oil price of US$100 for 2014 and US$100 in real terms for future sales.

Impairment provision for receivables

The impairment provision for receivables (including loans issued) is based on management's assessment of the probability of collection of individual receivables. Significant financial difficulties of the debtor/lender, probability that the debtor/lender will enter bankruptcy or financial reorganisation, and default or delinquency in payments are considered indicators that the receivable is potentially impaired. Actual results could differ from these estimates if there is deterioration in a debtor's/lender's creditworthiness or actual defaults are higher than the estimates.

When there is no expectation of recovering additional cash for an amount receivable, the expected amount receivable is written off against the associated provision.

Future cash flows of receivables that are evaluated for impairment are estimated on the basis of the contractual cash flows of the assets and the experience of management in respect of the extent to which amounts will become overdue as a result of past loss events and the success of recovery of overdue amounts. Past experience is adjusted on the basis of current observable data to reflect the effects of current conditions that did not affect past periods and to remove the effects of past conditions that do not exist currently.

Asset retirement obligations

Management makes provision for the future costs of decommissioning hydrocarbon production facilities, pipelines and related support equipment based on the best estimates of future cost and economic lives of those assets. Estimating future asset retirement obligations is complex and requires management to make estimates and judgments with respect to removal obligations that will occur many years in the future. Changes in the measurement of existing obligations can result from changes in estimated timing, future costs or discount rates used in valuation.

Useful lives of non-oil and gas properties 

Items of non-oil and gas properties are stated at cost less accumulated depreciation. The estimation of the useful life of an asset is a matter of management judgment based upon experience with similar assets. In determining the useful life of an asset, management considers the expected usage, estimated technical obsolescence, physical wear and tear and the physical environment in which the asset is operated. Changes in any of these conditions or estimates may result in adjustments to future depreciation rates. Useful lives applied to oil and gas properties may exceed the license term where management considers that licenses will be renewed. Assumptions related to renewal of licenses can involve significant judgment of management.

Impairment

Management have estimated the recoverable amount of cash generating units. Changes in the assumptions used can have a significant impact on the amount of any impairment charge.

5 Inventories

6 Property, Plant and Equipment

Average capitalisation rate of capitalised interest expense for the period ended 30 June 2013 is 5.5%.

Average capitalisation rate of capitalised interest expense for the period ended 30 June 2014 is 5.5%.

Included within oil and gas properties at 30 June 2014 and 31 December 2013 were exploration and evaluation assets:

The Group's oil fields are situated in the Russian Federation on land owned by the Russian government. The Group holds production mining licenses and pays production taxes to extract oil and gas from the fields. The licenses expire between 2037 and 2067, but may be extended. Management intends to renew the licenses as the properties are expected to remain productive subsequent to the license expiration date.

Estimated costs of dismantling oil and gas production facilities, including abandonment and site restoration costs, amount to US$0.1 million and US$0.1 million at 30 June 2014 and 31 December 2013, respectively, are included in the cost of oil and gas properties. The Group has estimated its liability based on current environmental legislation using estimated costs when the expenses are expected to be incurred.

7 Other Non-Current Assets

8 Accounts Payable and Accrued Expenses

9 Borrowings

Short-term borrowings

Short-term borrowings were as follows at 30 June 2014 and 31 December 2013:

Petraco

In June 2014 the Company entered into a short-term loan agreement with Petraco under which Petraco will advance the sum up to US$7.6 million. The key terms of the loan are that:- it is repayable immediately following the loading of the next tanker shipment, scheduled for mid- October 2014 or 30 November 2014 (whichever is earlier);- interest is chargeable at the rate of 5% over LIBOR until the date of the bill of lading of the tanker at which point it reduces to 2% over LIBOR; and- the Company pledged 100% of the shares it currently holds in Arcticneft to Petraco as security against the Loan.  

Weighted average interest rate 

The Group's weighted average interest rates on borrowings were nil and 5.5% at 30 June 2014 and 31 December 2013, respectively.

Interest income and expense

Interest income and expense for the six months ended 30 June 2014 and 30 June 2013, respectively, comprised the following:

10 Equity

At 30 June 2014 authorised share capital was US$1,890 thousand divided into 300 million shares of US$0.0063 each.

Restricted Stock Plan

As of 30 June 2014, the number of unvested restricted stock grants and their respective vesting dates are presented in the table below.

Profit/(loss) per share

Basic profit/(loss) per share is calculated by dividing the profit/(loss) attributable to equity holders of the company by the weighted average number of ordinary shares in issue during the year.

11 Revenues

12 Cost of Sales

13 Selling, General and Administrative Expenses

14 Balances and transactions with Related Parties

Parties are generally considered to be related if one party has the ability to control the other party, is under common control, or can exercise significant influence over the other party in making financial or operational decisions as defined by IAS 24 Related Party Disclosures. Key management personnel are considered to be related parties. In considering each possible related party relationship, attention is directed to the substance of the relationship, not merely the legal form.

Balances and transactions with related parties

As of 30 June 2014 and 31 December 2013 the Group has an impairment provision against a loan to a related party of US$8.9 million and US$8.2 million, respectively. This amount relates to a loan to shareholder and former member of management of the Group. This loan is overdue. For accounting purposes management reassessed the carrying value of the loan and impaired this fully. However, this does not reduce the validity of the legal claim against this related party. Management formally demanded repayment of the full amount by 20 May 2011. By 20 May 2011 management did not receive any response from the related party. Considering that according to the loan agreement all disputes shall finally be resolved by arbitration under the Rules of Arbitration of the London Court of International Arbitration (the LCIA) the Company filed a claim to the LCIA in June 2011. This arbitration has confirmed the Company's legal rights, vindicated its position and issued a final award that the sum in the amount of US$6.3 million (including loan amount and interest) and legal cost in the amount of US$1.2 million must be repaid to Urals Energy together with a daily accumulating interest. The Company has formally demanded payment from Mr Rovneiko and is committed to using all appropriate means to collect the outstanding amount.

Loans receivable include amounts due by OOO Komineftegeophysica in the amount of US$0.8 million (31 December 2013: US$0.8 million), where shareholders of the Group hold the majority of shares. The loans bear interest 10%. Loans in the amount of US$0.6 million is short term in nature. Loans in the amount of US$0.2 million mature on 31 December 2015. These loans are not secured.

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