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A CameroonGas UtilityVictoria Oil & Gas PlcAnnual Report 2015

Victoria Oil & Gas Plc Annual Report 2015

Strategic Report1 Highlights of the Year2 The Market4 GDC Business Model5 Operations6 Chairman’s Statement &

Operations Review10 Existing Reserves & Expansion12 Objectives & Strategy14 Key Performance Indicators16 Corporate & Social Responsibility

Report18 Financial Review20 Principal Risks & Uncertainties

Corporate Governance23 Directors & Other Information24 Directors’ Biographies25 Corporate Governance Statement27 Directors’ Report29 Directors’ Remuneration Report31 Statement of Directors’ Responsibilities

Financial Statements32 Independent Auditors’ Report33 Consolidated Income Statement33 Consolidated Statement of

Comprehensive Income34 Consolidated Balance Sheet35 Company Balance Sheet36 Consolidated Statement of Changes

in Equity37 Company Statement of Changes

in Equity38 Consolidated Cash Flow Statement39 Company Cash Flow Statement40 Notes to the Consolidated Financial

Statements

75 Notice of Annual General Meetingibc Definitions, Abbreviations & Glossary

Contents

AIM-quoted Victoria Oil & Gas Plc (“VOG” or “the Company”) haspioneered the monetisation of onshore gas in Cameroon from its 60%owned Logbaba gas and condensate project and created a profitablebusiness less than five years from spudding the first wells. Through theCompany’s wholly-owned subsidiary and operator of the project, Gaz duCameroun S.A. (“GDC”), a 33km gas distribution pipeline network hasbeen built feeding gas to a range of industrial customers situated inDouala, the gateway port city to Central Africa. GDC delivered1,967mmscf to customers in the year to 31 May 2015 and is able to setprices on a purely commercial basis with no restrictions on sales set byGovernment. The Logbaba gas and condensate project is an example ofprofitable onshore gas monetisation in Sub-Saharan Africa, with energyprovision clearly aligned with national interests.

GDC estimates demand for gas in Cameroon for thermal and powergeneration to be in excess of 150mmscf/d. GDC is currently providing clean,reliable gas to major industrial customers such as Castel Group, Guinness,Dangote and the key power provider, ENEO Cameroon S.A. (“ENEO”),which provides over 50MW of power to the Douala grid. ENEO alonerequires an additional 50 to 80MW of power per year for the next five years.

GDC is currently the only supplier of natural gas to Douala and it ownsand manages the whole supply chain from wellhead to customerconnection. GDC is largely insulated from oil price fluctuations becauseit competes with fuel sources such as heavy fuel oil on many differentcriteria other than supply price. GDC has in place long-term gas supplycontracts with customers using gas for a range of different applications,with prices ranging from $9/mmbtu to $16/mmbtu. GDC has secured itsposition as a dominant gas supplier to industry in Douala. The Group’sstrategy for GDC is to focus on the safe delivery of gas to the optimum,long-term market. GDC intends to maintain its position by leveraging itsexperience, as well as its gas processing and pipeline assets. GDC isfocused on exploiting new gas reserve discoveries and opening up majornew power-hungry markets in the region and beyond.

Operational Highlights• 143% increase in annual gas sold from809mmscf to 1,967mmscf

• 356% increase in year-end monthly averagegas production from 2.72mmscf/d in May 2014 to 12.39mmscf/d in May 2015

• Terms agreed for the supply of gas to ENEOfor grid power and project implemented

• Bassa power station brought online – firstgas/power 90 days after contract signed

• Gas distribution network crosses WouriRiver to Bonaberi shore and tested

• First Bonaberi connections online

• Completion of the gas plant purchase fromExpro Worldwide BV (“Expro”)

Financial Highlights• 90% increase in revenue to $27.9 million inyear ended 31 May 2015, compared to$14.7 million in year ended 31 May 2014

• EBITDA adjusted for one-off items (net ofRSM arbitration and impairment adjustments)increased by $13.1 million from a negative$4.7 million to a positive $8.4 million

• Addition of $8.6 million to the tangibleassets of the Logbaba gas development inCameroon

• Group current liabilities down $8.3 millioncompared to prior year

• Impairment of Russian asset at 30 November2014, giving impairment loss of $49.8 million

STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS Victoria Oil & Gas Plc Annual Report 2015 1

È143%

Annual Gas Sales

È356%

Year-End Monthly Average Gas Production

È90%

Increase in Revenue

Cameroon Development – Five years from spudding to production

2008-09• VOG enters Cameroon as

operator of Logbaba.• VOG spuds the first

onshore well in Cameroonsince 1950s.

2010-11• Two wells drilled

successfully: La-105tested at 55mmscf/d andLa-106 tested at rates upto 22mmscf/d.

• President Biya signsExploitation Licence on29 April 2011.

2012-13• First commercial gas and

condensate productionoperations in July 2012.

• Gas supply networkconstruction.

• Presidential inaugurationof production facilitiesand pipeline.

2014-15• Significant production

build-out to 12.39mmscf/dby May 2015.

• ENEO grid power supplyterms signed December2014.

• 50MW power online 90days after contract signedwith ENEO.

• 33km of pipeline by May2015.

2015-16E• Two well drilling

programme scheduled tobegin 1H 2016.

• CNG project feasibilitycompleted.

• 3D seismic programmeplanned.

2 Victoria Oil & Gas Plc Annual Report 2015

The Market

DoualaThe port city of Douala, located on theCameroon coast, has emerged as the majoreconomic zone within the Central Africanregion. Political stability and establishedinfrastructure for both the production andtransport of goods has created a key hub foreconomic development.

Major international companies have deployed significant levelsof capital investments in Douala. The last few years have seena substantial increase in the cement industry with new marketentrants such as the Dangote Group, CIMAF and Medcembuilding plants.

According to the International Monetary Fund, Cameroon isprojected to have 6% GDP growth in 2015 with furtherdevelopment to be supported by the $700 million three yearemergency public investment package recently drafted by theGovernment and scheduled to start by the end of this year.

Other industries such as food processing and agriculturalbusinesses are also experiencing strong growth. Some arescheduled to open soon and others are planning to doublecapacity in order to meet the demand.

The market for grid-connected power, in addition to ENEO,includes several independent power producers who plan todevelop gas-fired projects. Dibamba (200MW), GRENOR(150MW) and KENDYA NET (340MW) are some of theseaforementioned projects.

For the manufacturing sector, it is worth mentioning thatQuality Habitat, a supplier of affordable housing, is planningto start operations by the end of November 2015. QualityHabitat has acquired its own generator and should consumeapproximately 150,000scf/d.

GDC has established an excellent position as a gas supplierwithin the region but significant demand still exists for thesupply of gas to thermal and power generation applications inaddition to new markets such as Compressed Natural Gas.


Hydropower shortfall in dry seasons and year-roundtransmission issues, combined with prohibitive costs andsocial problems with hydro expansion, makes natural gasan effective scalable solution to energy shortfalls. Thetake-or-pay agreements entered into with ENEO, the stateenergy supplier, are seasonal to take into consideration theperiods when hydropower is limited.

Douala, Cameroon and AfricaOur gas wells and gas processing facilitiesin Douala are in the heart of the mainindustrial port city in Cameroon. Within10km of the wellhead is a large and diversecustomer base. Cameroon is the gatewayto Central Africa.

Average Monthly Rainfall in Douala and ENEO Take-or-Pay Levels


GDC Business Model

Building Energy Sales Within a Thriving African EconomyVOG has created a gas utility business, GDC, 60% owner and operator of the Logbaba gasproject, that manages all gas supply stages from extraction to customer connection. The projecthas onshore gas reservoirs in Cameroon to provide the industrial region of Douala with cost-effective, clean and reliable energy solutions. The Company is focused going forward on a “puregas” sale model, delivering a consistent cleaner fuel source to a diverse range of markets andapplications. GDC has successfully proved first concept of gas conversion to power and is nowworking with equipment suppliers and potential joint venture partners to provide energy solutions.

Grid PowerSupply of gas to state power operator ENEO’s power stations for the generation of50MW of electricity to the national grid. Modular generation sets supplied and runthrough equipment partners Altaaqa Alternative Solutions Projects DWC-LLC(“Altaaqa”). A “pure gas” supply solution within the main Douala network. ENEO haveadvised GDC of their need to supply 50-80MW of additional power to the Douala gridfor each of the next five years.

In addition to ENEO, other grid power suppliers have plans to convert existing powerstations to gas from GDC if the supply is available. Consequently GDC is examiningexpansion plans for the existing gas processing plant and evaluating limits to pipelinecapacity. Importantly, it is also planning for reserves expansion in 2016 through itsproposed drilling programme.

ThermalGDC supplies gas to customers for thermal use in boilers, process plants and furnaces.The core customers are those in medium to heavy industry.

Gas CondensateGas condensate, a by-product of the production of natural gas, is used as a cleanerand solvent, lantern and stove fuel and as a premium product in heavy oil production.Condensate can be taken by road tanker to various parts of the country. 29,700 barrelswere produced during the period. Post-period, with significant levels of gas now beingsupplied to customers, condensate production levels will rise. GDC is examiningalternative uses of condensate as with an API gravity of 43, it is close to diesel qualityand could command a higher premium.

Retail PowerGas supplied to dedicated 1.5MW gas-fired electricity generators (“Gensets”) forcustomers’ factories and plants became a key part in demonstrating the ability of GDCto drive power using gas. This current business is likely to move to a “pure gas” supplymodel with the next phase of Gensets being the sole responsibility of the customers.

Compressed Natural Gas (“CNG”)GDC is in discussion with a preferred supplier for the provision of a CNG solution,whereby the supplier will finance and install all gas compression and logisticaloperations. This model will preserve GDC’s strategy of concentrating on gas salesrather than downstream development. The potential benefits of CNG are:• Widens our customer radius enabling operations up to 300km from Douala to be

provided with our gas;• High margin business for “pure gas” supply model;• No capacity pressure on pipeline;• CNG production can also occur during off-peak periods to help maintain balanced

gas production; and• Minimal GDC capital requirement.

Liquid Petroleum Gas (“LPG”)Market research and technical studies are being undertaken to establish whether thereis a commercial opportunity for GDC to expand into this market.

Current ProductsGDC maximises its gas production throughsales across a range of varied uses.

With a significant central pipeline networkestablished in Douala, GDC’s engineeringteam helps design and install necessaryconversion systems or power connectionsfor new gas users.

Douala city in Cameroon is currently in aperiod of economic expansion. GDC supportsregional economic expansion by ensuringconsistent gas supply for thermal and poweruses.

Future ProductsFollowing a period of significant salesexpansion we have realigned our focus onreserves and production expansion. Newseismic programmes are being undertaken,with a twin-well campaign aimed atincreasing reserves scheduled to begin atthe Logbaba gas and condensate project inthe first half of 2016. With the purchase ofthe gas processing plant from Expro, GDC iswell positioned to adapt the plant to enableit to potentially double its capacity toapproximately 40mmscf/d and supply newproduct types.

Gas usage by customer type during the year to 31 May 2015


Operations

A Thermal 51%B Retail Power 19%C Grid Power 30%


Dear Shareholder,

I am pleased to report progress for this financial year and toshare some of our objectives for the immediate future. In the year ended 31 May 2015, Victoria Oil & Gas Plc (“VOG”or “the Company”) realised outstanding production growth asnew markets in Cameroon, particularly supplying gas togenerate grid power, were opened up to Gaz du CamerounS.A. (“GDC”).

A Notable YearAt the end of the financial year, VOG had accomplished thefollowing operational advances:• A 356% increase in financial year-end monthly average gasproduction from 2.72mmscf/d in May 2014 to12.39mmscf/d in May 2015;

• Reached an agreement with ENEO Cameroon S.A.(“ENEO”), Cameroon’s national electricity generatingcompany, to provide gas to installations at the Bassa andLogbaba power stations in Douala via take-or-pay contractsthat secured substantial revenue for at least the next twoyears;

• Delivered first gas to provide 50MW of capacity to theCameroon grid through ENEO;

• Completed the main Douala pipeline network, successfullycrossing the Wouri River to the Bonaberi shore, opening upnew markets in this growing area; and

• Purchased the Logbaba gas processing plant andcommenced planning for expansion to double capacity toapproximately 40mmscf/d.

As a gas production utility supplying energy to the industrialport city of Douala, our core business has been somewhatinsulated from the effects of the major shift in oil pricing, whichhas seen one of the worst downturns in twenty years. Duringthe year our business withstood the competitive price pressureof heavy fuel oils (“HFO”). GDC’s gas products are moreattractive than HFO due to zero storage costs, transparency,cleanliness (emissions and equipment deterioration) andreliability.

The oil downturn has affected us in equity markets, whereVOG’s share price has suffered somewhat, in line with its peergroup in the exploration and production sector. Our responseis to continue building our business, increasing cash flow andimproving margins. We continue to work hard to ensure thatthe market recognises the distinction between our cashgenerating assets and riskier exploration and productioncompanies.

Our operations are funded by Group cash, modest bankfinancing and from our concession partner, RSM ProductionCorporation (“RSM”). We have not sought shareholder equityfinance since February 2013.

One of our core focuses during the year was to bring onlinenew product applications for GDC gas. The most obvioususage was that of power, with existing thermal customers inthe private sector requesting GDC to apply our gas for anelectricity generation solution.

The ENEO agreement, which was completed in late December 2014, is an excellent example of how three diversecompanies, ENEO, GDC and Altaaqa Alternative SolutionsProjects DWC- LLC (“Altaaqa”), the modular generatorsupplier, can work together to achieve impressive results. Allcompanies took considerable risks engaging in the first majorgas to power project in Cameroon and successfully suppliedpower to the grid within 90 days of signing agreements.Working in Africa sometimes presents challenges but thisproject demonstrates that working with the right partners, withthe right business model, can realise real value forshareholders. The model that has evolved for GDC is to focuson gas supply only, and to keep it simple.

As a result of the Government of Cameroon’s full support ofour activities, we have been able to work in a commercialenvironment without the restrictive price regulating practiceswhich hamper power development and stifle economies insome other African countries. Douala is now a port city that isbecoming the primary investment destination for manyinternational companies seeking a regional hub.

Chairman’s Statement & Operations Review

CorporateThe financial accounts for the twelve months ending31 May 2015 state a loss on ordinary activities after taxationof $50.8 million, and revenue of $27.9 million. The loss isprimarily due to a $49.8 million impairment charge relating tothe Group’s Russian asset West Medvezhye. For the samefinancial year, our operations in the Group’s Cameroonsegment reported a profit after tax of $5.4 million.

The impairment of the Russian asset was included in of theInterim Results for the six months ended 30 November 2014.The Directors continue to pursue ways to derive value fromthe asset through farm-out, joint venture or sale, however thishas been challenging due to the state of relations betweenRussia and the West, combined with the low oil price, and sothe asset continues to be carried fully impaired.

Ahead of the projected production expansion at GDC in thefirst half of 2015 the Company decided to undertake a capitalreorganisation and share consolidation. Following shareholderapproval at the 2014 AGM, every 40 existing ordinary sharesof 0.5 pence became one consolidated ordinary share of 20 pence (“Consolidation”). Immediately following theConsolidation, each of the consolidated ordinary shares wassub-divided into one new ordinary share of 0.5 pence and onenew deferred share of 19.5 pence. The reorganisation wascarried out following feedback from major investment groupswho viewed the pre-existing market price of VOG shares ataround a penny as being too low. VOG now has a share pricelevel appropriate to a revenue producing utility company whilemaintaining high liquidity.

During the year Numis Securities Ltd (“Numis”) was appointedas sole broker to the Company. Following announcement ofthe ENEO terms in December 2014, Numis published newresearch and guidance on the Company incorporating the firstminimum take-or-pay commitments into their forecasts. VOGis committed to delivering operational success within theframework of a detailed financial analysis of the Company byan established UK broker.

Continuing VOG’s ongoing commitment to strengthening theBoard, two Independent Non-Executive Directors wereappointed. James McBurney joined the Board in June 2014.John Bryant was appointed to the Board in December 2014.

I am also delighted that Ahmet Dik has agreed to join us as aDirector of VOG and Chief Executive Officer (“CEO”) of GDC.Ahmet has worked by my side for the last two years and isinstrumental in delivering major technical and commercialsuccess from our gas operations in Cameroon. Ahmet’s all-round project development, legal and leadership skills makehim an excellent person to have on both the VOG and GDCBoards as we move into the next stage of development. Intime it is our intention that Ahmet will become CEO of VOG,which will enable me to relinquish the role of interim CEO andfocus on strategic and growth plans for the Company.

Operations ReviewThe beginning of the year saw GDC demonstrate its ability tosupply gas for electric power use, with connection of the firstgas-fired electricity generation sets (“Gensets”) to customersites within Douala. The four sites connected were all existingthermal customers who needed a consistent supply of electricpower to overcome regular grid blackouts. Through anagreement with a third-party, GDC leased 1.5MW Gensets andinstalled them at Camlait (dairy), Icrafon (plastic mouldings),SCTB (flour mill) and the Guinness Brewery. Despite import-related delays in delivering this new product line during theprevious year, once released by port authorities the Gensetswere installed and running at the customer sites within amonth.

Our retail power customers immediately received the benefitsof a consistent supply of power with a stable load, no outagesor downtime costs and no material wastage. The installationof the Gensets also provided GDC with the first new derivativeproduct from Logbaba gas in addition to thermal combustion.The retail power model demonstrated “proof-of-concept” andwas a key factor in our negotiations with ENEO. Now that theconcept has been proven, the four retail power customers areexpected to take over Genset rental contracts directly from thesupplier and GDC will be a gas supplier only to thesecustomers.


Chairman’s Statement & Operations Review continued


Work on the spur pipeline to the Dangote Cement Plc(“Dangote”) cement works was also completed early in 2015.The $115 million Dangote plant, a 1.0 MMTPA, clinker grindingand bagging facility located at Douala port, wascommissioned in early June 2015 and has been a consistentand slowly increasing consumer of GDC gas since this time.GDC also successfully completed connections on the Doualamain shore to customers such as Socapursel, a foodmanufacturing business and SOTEX, a textile manufacturer.

With the main Douala network firmly established, a key taskfor GDC was to establish a presence on the Western Bonaberishore across the Wouri estuary. This area hosts a number ofpotential customers but also has the space for industrialdevelopments requiring port access. I am particularly proudthat GDC, under its new outsourced contracting system, laid678 metres of 400mm gas pipe 15 metres under the WouriRiver in October 2014. Crossing the river onto the Bonaberishore was completed despite a technically difficult sub-surface pipe ‘shot’ exercise. In addition, some 1,129 metresof branch lines were established in the Bonaberi-Magzi Estatearea with the first customers connected within five weeks ofcrossing, following successful safety checks and flow testing.New Bonaberi thermal customers were Sopriacam, a cookingoil and soap refinery, New Foods, a biscuit manufacturer andSasel, a salt manufacturer. These three customers are nowconsuming gas on the Bonaberi side and we are confident ofadding at least eight more in 2016.

Other than the newly commissioned Dangote plant all newthermal customers were previously using HFO for boilersdriving mechanical plant and processes. The GDC marketingand engineering teams worked with the senior managementof these businesses to demonstrate the cost savings expectedto occur following conversion to gas from HFO and thenimplemented individual engineering solutions that ensured anefficient conversion for these customers.

On 29 December 2014, the Company announced that GDChad signed a legally binding term sheet with ENEO,Cameroon’s integrated electricity company, to supply gas totwo power stations located in the city of Douala. The Bassapower station was located 0.3km from the GDC existingnorthern pipeline and the Logbaba power station was located

1.3km along the proposed eastern leg of the main line. ENEOneeded to produce a total of 50MW of power from the twostations.

The agreement with ENEO was a significant gas supplycontract for VOG in terms of scale and revenue generation,with guaranteed minimum take-or-pay gas consumption at afixed $9/mmbtu over the two year contract term. The contractcan be extended by mutual agreement. The take-or-payelement gave GDC the necessary incentives to allocatesignificant levels of gas to a single customer. The ENEO dealsignificantly increases production and secures GDC revenuesunder the fixed take-or-pay conditions. The minimum take-or-pay levels are 9mmscf/d in the January-June dry season and3mmscf/d in the July-December wet season. GDC anticipatesactual demand from ENEO will be higher than the minimumtake-or-pay levels during both seasons with ENEO advisingGDC of their need to supply 50-80MW of additional power tothe Douala grid for each of the next five years. Altaaqa wasengaged to provide power generation equipment to the projectand took responsibility for importing and installing the Gensetsat the Douala power stations.

On 23 March 2015, the Company announced the first supplyof 4.5mmscf/d of gas to the sixteen Altaaqa Gensets installedat Bassa power station. Following the pipeline connection toBassa by GDC and the successful installation of the Gensetsby Altaaqa, 20MW of gas generated power was being fed intothe grid for the first time. Shortly afterwards on 23 April 2015,it was announced that the Logbaba power station project wasonline and delivering 30MW to the grid. This meant that the50MW target under the ENEO agreement and GDC’sobligation to deliver gas to both stations had been met. Thisprincipal delivery factor triggered the take-or-pay conditionsin the contract with ENEO. The total project was deliveredwithin four months of contract signing.

On 27 May 2015, the Company announced that it had madepayment in full for the purchase of the Logbaba gasprocessing plant (“the Plant”) from Expro. The Plant has beenpurchased from Expro for $2.58 million, using cash generatedfrom GDC operations and contributions from RSM. Ownershipof this plant has significantly reduced monthly operating costsat Logbaba.




Looking ForwardThe Logbaba gas and condensate project is a rare andsuccessful example of profitable onshore gas monetisation inSub-Saharan Africa. Demand for gas in Cameroon for thermaland power generation is estimated by GDC to be in excess of150mmscf/d. We need to grow production to meet thisdemand.

We have an established cash generative business inCameroon, with the GDC team now considering a series ofnew supply opportunities within the local market. The task nowis to ensure that we have the reserves and capacity to be ableto deliver new allocations of gas to new customers andmarkets. Consequently, we are actively planning to drill twonew wells at the Logbaba concession site. These wells areprimarily twins of wells completed in the 1950s, whichproduced good gas flows. Spudding of the first well will be inthe first half of the calendar year 2016. We plan to fund thedrilling of these wells from internal cash flow, bank finance andpartner contributions and at this stage do not expect the needto seek shareholder funding.

GDC is currently the only supplier of natural gas to Douala. Itowns and manages the whole value chain from the wellheadto customer connection. We are well insulated from oil pricefluctuations because GDC has completed long-term supplycontracts with customers at prices from $9/mmbtu to$16/mmbtu and we are an emerging and important gas utilityin Cameroon. GDC’s gas price is not subject to regulation.

VOG intends to maintain its position as a dominant gassupplier to industry in Douala. It will leverage its advantage byusing its experience in gas treatment and pipeline assets tobe a ‘gas consolidator’ in the region and beyond.

With our existing customers and growing demand from thepower sector it is important that we maintain a balancedrevenue contribution of gas customers and markets with newprivate sector sales opportunities. Compressed Natural Gasand dedicated small power users can all be allocated gassupply in addition to maintaining our supply to the regionalelectricity generator.

We have also begun to look at other opportunities withinCameroon to take advantage of our proven ability to monetisegas and have been in discussions with several participants inthe sector about possible joint ventures and farm-in projects.

Finally, I would like to thank my fellow Directors, themanagement team and, especially, our shareholders for theirsupport over what has been an incredibly positive year for theCompany.

Kevin FooExecutive Chairman27 October 2015


Existing Reserves & Expansion

1P

2P

3P

45

208

346

ProspectResources 1,350

0.67

3.11

5.18

22.5

Condensate (mmbls)Gas (bcf)

* As at 1 October 2015

Logbaba (Cameroon) Reserves*

Reserve Expansion for Future Customer CommitmentsThe two well drilling programme planned for execution in 2016 includesa near vertical twin of La-104, a well drilled by SEREPCA in 1957, and astep-out well, directionally drilled into a target about 1.1km to the SouthEast of the Logbaba drilling pad. The twin well is intended to developProven Reserves, and includes a contingent exploration tail into thedeeper Mundeck Formation. The step-out well objective is to move someof our 2P Reserves into the Proven Developed category. Well design workhas commenced for this project.

The Company is also looking at seismic data options for increasingunderstanding of the Logbaba resource area. The first avenue beingpursued by specialist geophysicists is the reprocessing of historicseismic data using modern technologies.


“Our Company is committedto delivering gas to newmarkets. 2015 saw GDCsupply first gas to the gridpower network in Cameroon.”


Development of future objectives Performance during the yearObjectives set at the start of the year

Expanding a utility business withsustainable margins in CameroonWhilst continuing to grow our existing revenuestreams, GDC is now focusing on diversifying ourgas supply to different markets. We believe thatdelivering gas to a range of different customertypes in terms of scale, pricing and energy usageis important in order to ensure long-term pricingsecurity and to prevent over-dependency on asingle customer type.

With significant gas supply expansions havingoccurred during the financial year, GDC is nowprogressing its CNG strategy. CNG is a low costventure where we envisage a partnership modelthat confines compression infrastructure spend andlogistics to the other partner. CNG would allow GDCto draw gas during our other customers’ lowdemand periods – putting no extra capacity on themain pipeline network and expanding ourgeographic reach.

Following the studies completed on theopportunities for CNG, GDC has identified somepotential partners in the project and are currentlynegotiating terms.

GDC is also undergoing studies for LPG.

During the year the Company continued to focuson the delivery of thermal gas to industrialcustomers and expansion of our network. Earlyin the year the sale of gas for retail power wasinitiated. The key milestone in the period was thefirst delivery of gas supply for electricitygeneration to the national grid.

1 Build a profitable utility business inCameroonVOG’s key objective was to build our gasbusiness and increase cash flow from theCompany’s flagship Logbaba gas depositwith sustainable margins to fund furtherexpansion in Cameroon and Africa.

Maintain our first-mover advantage andsuccessfully demonstrate that our businessmodel can be replicated elsewhere.With onshore drilling now being undertaken in theDouala area by other companies, GDC is positionedto become a leading supply partner for new gas inthe industrial sector of Douala.

GDC has demonstrated its ability to build andoperate an economically sustainable gas supplybusiness in Cameroon, having identified viablereserves located within a legislative and economicenvironment that supports power development.

VOG’s business development team is now activelyseeking new opportunities in Cameroon and otherAfrican countries with the intention of expanding orreplicating the gas-to-power model.

GDC has maintained and protected its first-moveradvantage and remains the sole supplier ofonshore gas in Douala and has continued toexpand its pipeline network, with the keydevelopment in the period being the crossing ofthe Wouri River into Bonaberi.

Our track record continues to grow with thecontinued reliable, consistent supply of gas, notjust to industrial customers but now also to thenational grid. The Company has become a gasutility.

2 Leverage our first-mover advantage –having established a wellhead tocustomer modelWith a significant gas supply infrastructureestablished in an area that is a key industrialregion of West Central Africa, GDC plannedto maximise its position as an energy utility.The Company had established a track recordas a consistent and low cost supplier ofclean energy to Cameroon businesses andour approach was to use this growingreputation to meet the demand for gas in theDouala region.

Maintain our position as a part ofCameroon’s national energy strategyThe continuing supply of gas under the ENEOagreement during these early months will provideus with an increasing track record to build on thisrelationship and proof-of-concept for continuedsupply and potential other power projects.

To maintain our position VOG will look to unlockfurther reserves to supply more grid projects andcounterbalance total production with increasedsupply to other gas markets and customers.

During the year GDC concluded its negotiationswith ENEO and commissioned the supply of gasto the Cameroon state energy utility’s two powerstations at Logbaba and Bassa through Gensetssupplied by Altaaqa.

This has resulted in GDC achieving its object ofbecoming an important part of the national powerplan.

3 Become a key part of Cameroon’snational energy strategyEnergy shortages and lack of infrastructureare two of Africa’s major hurdles to economicand social prosperity. We have established atrack record of unlocking energy reserveswithin Cameroon for industrial use, efficientlysupplying customers with low cost, cleanerenergy compared to existing fuel types. Atthe start of the year we were in negotiationswith the Cameroon state energy utility,ENEO, aimed at supporting the national gridby providing gas to Gensets. Cameroon isseeing a new phase of major investment intoits energy infrastructure.

Objectives & Strategy

The core focus of the Group during the year has been its operations in Cameroon where the key objectivehas been on the safe and reliable delivery of gas to the optimum, long-term markets. Whilst this continuesfor GDC, VOG continues to build on its corporate profile and assess other opportunities.


Development of future objectives Performance during the yearObjectives set at the start of the year

Continuation of thermal and retail power gassupply connectionsGDC continues to seek to identify potentialcustomers on or around our existing pipeline.Pipeline expansions and spur lines are assessedfor their ability to deliver their return on capitalon a case-by-case basis. Extending our pipelinereach in Bonaberi is our primary focus.

The retail power business has created the proof-of-concept results and, as the initial contractscome to an end, GDC intends to become thesupplier of gas, with customers contractingdirectly with the equipment suppliers.

During the year the river crossing and first phaseof the Bonaberi pipeline were completed andthermal customers have been connected on theother side of the river. Additional key thermalcustomer connections were made during theperiod, notably Dangote, who came online on thecompletion of the construction of their newfacility.

During the year new and some existing thermalcustomers commissioned their Gensets for theretail power use of gas.

4 Increase near term gas supplyconnectionsThe objective was to cross the Wouri Riverto the Magzi-Bonaberi industrial area toallow GDC expand its customer reach andmake customer connections in this area andelsewhere on our existing pipeline.

Maintain reliable and safesupply of gasPlanning is underway for a drilling programme onwells La-107 and La-108 due to start in the firsthalf of the calendar year 2016.

GDC has engaged consultants to review thehistorical data sources on the Logbaba field toscope and cost a 3D seismic program.

Following the acquisition of the Expro processingplant GDC has engaged Expro to complete ascoping study for the expansion of plant toincrease its capacity.

The completion of the above-mentioned projectswill ensure that GDC continues to have thereliability of supply of gas going forward.

Safety is paramount to GDC’s operations, both atthe site of the wells and gas processing plant andacross the extensive pipeline built under the cityof Douala. All work will continue to be undertakento the standards established by British Gas (theUK’s major gas distributor).

GDC successfully completed remediation andperforation works on well La-106 in early 2015to unlock further gas supply from the upper zonesof the Logbaba structure.

During the period GDC also acquired thepreviously leased processing plant from Expro.

GDC has an excellent safety record for bothworkers and those who live in the communitiesadjacent to our operations. Every year we reviewhow GDC can improve this record by workingwith, and listening to, all our key stakeholders. Alloperations at GDC are managed to British Gassafety standards.

5 Maintain reliable and safesupply of gas GDC undertook to complete additional workson wells La-106 and La-105 in early 2015and unlock further gas supply from the upperzones of the Logbaba structure.

Corporate profile andequity performanceWhilst the financial markets during the year havenot assisted VOG’s equity value it has continued tooutperform its peers.

The Company’s focus is to keep the market wellinformed on VOG progress and future opportunitiesand ensure that the Company’s performance isrecognised in its share price performance.

Alongside the operational performance during theyear VOG completed the targets set.

The appointment of a new broker, Numis, whohave initiated research coverage and have spenta lot of time during the year presenting with VOGto institutions and other existing and potentialstakeholders.

The capital reorganisation significantly reducedthe number of shares in issue to bring VOG in linewith its peers.

Two independent non-executive directors wereappointed during the year.

6 Develop corporateprofile VOG looked to strengthen its corporateprofile most notably through two keyelements: the appointment of a new brokerand a capital reorganisation.

Objectives & Strategy continued


Key Performance Indicators (“KPIs”)

We measure our progress through our KPIs which cover a range of operationaland financial metrics and are closely aligned with our Group Strategy focusingon the safe delivery of gas to the optimum, long-term, markets.

Performance

È143%

AssessmentProduction is driven by customer usageand therefore represents an importantKPI for the Group to reflect businessdevelopment and revenue generation.

Performance and outlookThe increase over the period was a resultof the increased network, the bringing ofnew thermal and retail power customersonline and commissioning of supply tothe ENEO power stations. The continuedramp-up of the power station usage andcontinued business development ofother gas products will all contribute toincreased production going forward.

Gas Sold(Annualised bcf)

The Directors consider the current KPIs for the Group should be set to monitor the performanceand key risks, assisting the Group in its ability to:

1 Increase sales volumes of natural gas and condensate2 Increase revenue and generate cash3 Managing capital expenditure4 Maintain a strong health and safety record

2015 1.9672014 0.8092013 0.400

Performance

È356%

AssessmentThe customer usage of gas is affected bytheir production cycles and seasonality.The daily rates of gas exported reflectour production but also offer keyinformation when monitoring thesecycles and business developmentagainst our supply capacity.

Performance and outlookThe drivers for daily rate increases overthe period mirror those of the annualisedproduction figures. At the end of theperiod the processing plant was operatingat 62% capacity. The purchase of theprocessing plant and the commissioningof studies with a view to expand the plantare steps being taken to ensure our futureprocessing capacity can accommodatemajor new increases in supply demand.

Rates of Production at Year End (May)(Monthly mmscf/d)2015 12.3920142013 1.60

2.72

Performance

È111%

AssessmentCondensate production is dependent onthe amount of gas produced andgenerates its own revenue stream.

Performance and outlookA local refinery has a contract topurchase all of the condensate producedand we are investigating alternativepurchasers and other routes to market.The projected increased gas productionwill see an increase in the condensateproduced.

Condensate Produced(bbls)

Increase Sales Volumes

Monthly Gas Sold by Type (mmscf)

06/140 Thermal07/14 08/14 09/14 10/14 11/14 12/14 01/15 02/15 03/15 04/15 05/15

Retail Power

Grid Power

50

100

150

200

250

300

350

400

2015 29,7002014 14,1072013 7,784


Key Performance Indicators continued

AssessmentGDC does not store any gas orcondensate and as a result revenue isdirectly related to production which, inturn, is driven by customer demand.

Performance and outlookCustomers have agreed fixed pricecontracts and revenue growth hasresulted from increased volumes of gassold and the associated condensatesales. We anticipate that the continuedbusiness development of current andpotential products and the incorporationof take-or-pay terms in material contractswill result in the further increase of sales.

Performance

È90%

Revenue(US Dollars millions)2015 27.92014 14.72013 6.9

AssessmentThe generation of cash from operations.

Performance and outlookCash receipts from sales increasedduring the year with increased salesrevenues. In addition, RSM’s settlementof historical amounts due for its 40%share of the project expendituresincreased operating cash flows andreduced the amounts receivable fromRSM from $8.6 million at 31 May 2014 to$2.2 million at 31 May 2015.

Performance

È14%

Cash Flows from Operating Activities (US Dollars millions)

Note: Gas pipeline KPIWith the central distribution network laid in Douala, now covering 33km, a value isbeing leveraged off smaller extensions and spur lines for connection and the nextstage of expansion relates to reserves. With this being the case pipeline metres laid isa less important metric as a KPI for ongoing success.

Future pipeline extension plans will be carefully analysed to ensure the expected yieldsare favourable against the capital costs.

Increase Revenue and Generate Cash

Manage Capital Expenditure

Health & Safety

2015 6.52014 5.7

(7.7) 2013

AssessmentInvestments to enable the business togrow.

Performance and outlookOur pipeline network expansion, thewells La-105 and La-106 work-over andperforation work, and the completion ofthe purchase of the processing planthave all been completed to support thedevelopment of both the downstreamand upstream elements of the business.The capital expenditure made in this andprevious reporting periods is nowyielding returns and will increase as newcapacity and markets develop. Plantexpansion projects and drillingprogrammes going forward will enablethe supply of gas to increase beyond ourcurrent capacity constraints.

Capital Expenditure (Cash)(US Dollars millions)2015 9.02014 11.52013 9.5

AssessmentSafe working conditions for employeesand contractors – Lost time injuriesfrequency rate (“LTIFR”).

Performance and outlookDuring the period a total of 137,507 manhours (2014: 397,540) were put into ouroperations by employees and contractors,principally in Cameroon, and we laid over8km of pipe and connected nine newcustomers to our network.

Health & Safety Performance(LTIFR)2015 1.65

2013 1.882014 0.50


Community Relations & EmployeesThroughout the development of the Logbaba field fromexploration into production, local consultation sessions haveformed part of both formal and informal processes. Thesesessions have kept our local community informed andeducated in the progress of the project and has enabled GDCto answer any questions, address any concerns and pre-emptany issues.

GDC maintains an engaged and proactive relationship withlocal communities within Douala. As a domestic supplier ofgas we see our contribution to the people of Cameroon asconstituting four separate elements:1. Supporting the provision of power – Using our pipelineinfrastructure we deliver one of the country’s under-utilisednatural resources to provide the means of consistent gridpower and economic growth, creating new jobs andopportunities that are afforded from a developing industrialhub.

2. Fiscal contributions – We are a responsible and ethicalCompany, interacting with the Cameroonian government ina fair and honest manner, paying all applicable taxes andcommitments as they become due and disclosing ourdealings in an appropriate and transparent manner.

3. Direct employment and skills training – 40% of the GDCsenior management are Cameroon nationals and othersenior positions are now filled, in the majority, by individualsfrom the region. 95% of GDC’s employees are Camerooniannationals. We maintain an equal opportunities employmentpolicy and have defined skills and training programmes,both internally and externally provided, to develop ouremployees’ careers. GDC is particularly proud of its staffretention record and we have reskilled a core team, thathave been with us from the start, that have adapted theirroles in step with our transition from an E&P company togas supply utility. The consistent, highly skilled work forcewe have within the Group is one of our key strengths.

4. Direct community engagement – GDC has a longestablished track record of engaging with communitiesthrough communication and contributions to help improvesocial welfare. With a dedicated community function withinthe GDC business we have been able to quickly pre-emptissues, allay concerns and help improve social welfarethrough project partnering.

The core tenet of our community contribution strategy is thatfunds must be directed through established organisations andthat the benefit is clearly outlined from the beginning, and thatthe delivery is tracked. We also base our engagement incommunity projects on extensive feedback and knowledgebuilt up from our network of local stakeholders.

Key community work programmesEducation supportAs part of an ongoing commitment to education withinCameroon, GDC allocated financial support to a series ofinitiatives within tertiary education. Contributions were alsomade to student fees and materials for selected groups ofscholars including those with disabilities. GDC also operatesa scheme whereby employees can borrow funds against futureearnings to cover school fees for their dependants.

Nutrition and waterGDC supplied nutrition support to a number of groupsincluding the New Bell orphanage and disadvantaged groupsin the local area. GDC has also provided and maintains waterwells in Douala providing communities with access to freshwater. In selected areas the company installed sanitary unitsand fresh water facilities at health care facilities. During theperiod GDC donated Bentonite (a material used in the drillingprocess) to support a trial water well drilling training project.This project supported rural communities in the North Westregion of Cameroon and is run by Water for Cameroon.

Health supportRefurbishment of the La Misericorde health centre. The healthcentre is one of the five hospitals of the Archdiocese of Douala,located at Ndogpassi, and is commonly called “Hôpital desSoeurs”. A key focus of its operations is maternity. Thehospital maternity statistics record on average 115 to 120births a month. The hospital welcomes all patients irrespectiveof religion and origin, and welcomes patients from a widecatchment area surrounding Douala. GDC staff engaged in afunded, social partnership scheme where employees workedover a period of months to help repaint the entire maternityward area.

Out staff were also engaged in helping to remove waste,completely unconnected with GDC operations, from a keycommunity area.

Corporate & Social Responsibility Report


Through our active health support programme we also supportindividuals with disabilities in the community. This has includedconstruction of sanitary facilities and the payment ofphysiotherapy sessions.

We have also focused our secondary economy programmeduring the period towards those with physical disabilities.Items such as grinding mills, laptops and industrial sewingmachines have been purchased and support in terms oftraining given for individuals to start new businesses.

This year GDC acknowledged International Women’s Day bymaking donations to six disabled women as part of the above-mentioned health support and secondary economy schemes.

EnvironmentThe Group is subject to best practice standards and extensiveregulations, which govern environmental protection. TheGroup is committed to uphold these standards and regulationsas a minimum, and to keep these important matters undercontinuous review and operates to ensure compliance with thestandards expected of an international oil and gas explorationand production company.

At the outset of GDC’s Logbaba gas and condensate projectthe Group commissioned an independent Social and

Environmental Due Diligence study in the context of theEquator Principles, 2006 and the IFC Performance Standards,2012. The project was identified as being limited in adversesocial or environmental impact and any impacts were likely tobe few in number, generally site specific, largely reversible andreadily addressed through mitigation measures.

As previously committed, the Group has engaged an externalconsultant to undertake an additional Environmental ImpactAssessment in advance of the proposed additional drilling atthe Logbaba project.

The Group aims to minimise the use of natural resources, suchas energy and water.

West MedvezhyeThe Group’s asset in Russia is in an environmentally sensitivearea, however activities are currently focused on geologicaland geotechnical studies and resource evaluation. TheGroup’s Russian subsidiary, which owns the Russian asset,has been audited by the Ministry of the Environment andreceived a certificate of environmental compliance. As inprevious years, work continues in 2015 to include fundingtreatment for senior citizens, subsisting on governmentpensions, at rehabilitation sanatoriums and permanent labourcontracts signed with ten local residents.

Corporate & Social Responsibility Report continued

Health & Safety

Safety is paramount to GDC’s operations, bothat the site of the wells and the gas processingplant and across the extensive pipeline builtunder the city of Douala. All work isundertaken to the standards established byBritish Gas (the UK’s major gas distributor).The majority of the gas pipeline network isburied underground and patrolled 24/7 by oursafety patrol who work closely with localcommunities.

The Group engages external consultants tocarry Hazard Studies on our operations toensure GDC operates to a high standard of inrelation to Emergency and Response Planning.

GDC operates its own training programmes,for employees and customers; carryingemergency response and gas leak drills atboth the gas processing plant and oncustomer sites. GDC also works very closelywith the emergency services in Douala.


Revenue and ResultsThe results for the year, and the Group’s financial position at theend of the year, are shown in the attached financial statements.

The Group’s revenue for the year was $27.9 million, comparedto $14.7 million in the prior year. EBITDA adjusted for one-offitems (shown below) increased by $13.1 million from a negative$4.7 million to positive $8.4 million. Revenue is derived from theLogbaba gas and condensate field in Cameroon. The primaryrevenue streams were:• Gas sold to industrial customers for thermal energyproduction;

• Gas sold to Cameroon’s power utility company for electricitygeneration;

• Gas sold to industrial customers for electricity generation; and• Sale of condensate, a by-product from gas production andprocessing.

The loss on ordinary activities after taxation of the Group forthe year ended 31 May 2015 amounted to $50.8 million(2014: $1.7 million). The current year loss includes animpairment charge of $49.8 million against the Group’sRussian asset, discussed in more detail below and in Note 4Impairment of Exploration and Evaluation Assets.

It should also be noted that the comparative results includedhistorical adjustments as a consequence of the decision in thearbitration between the Group and RSM. The adjustmentsreflect RSM’s obligation to meet its cumulative share of prioryear operating expenses, as the arbitration decision was thatRSM had not forfeited its 40% interest in the Logbaba gas andcondensate project. The Directors believe that EBITDA (net ofthis adjustment and the impairment provision) providescontext for the results in the current and prior years.

2015 2014$m $m

Loss before taxation (52.2) (4.7)Less:Finance costs 1.5 2.0Depreciation and amortisationexpense 9.3 4.6Impairment adjustment 49.8 –RSM arbitration adjustment – (6.6)

EBITDA adjusted for one-off items 8.4 (4.7)

The total gas sold during the year was 1,967mmscf(2014: 809mmscf). Customers using gas for thermal purposeshave signed long-term, exclusive gas sales agreements witha fixed US Dollar price for five years, whilst the power utilitycustomer, ENEO, has signed a two-year fixed-priceagreement. In both cases, the fixed US Dollar price isconverted to Central African Francs (“XAF”) and is payable inXAF. This helps us to manage our foreign currency exposureas the majority of our development and operating costs are inXAF but influenced by US Dollar prices for goods and servicesin our industry. The ENEO agreement commenced in thesecond half of the 2015 financial year, and the price applicableto the agreement is $9/mmbtu, which is lower than the priceachieved under the other gas sales agreements, however thisagreement is expected to generate significant revenue for theGroup due to the anticipated high levels of gas consumption.The agreement also includes a take-or-pay component,meaning that the Group will receive certain levels of revenueirrespective of actual gas consumption by the customer.

Condensate production is dependent on the amount of gasproduced, and averaged approximately 15 barrels per mmscfof gas during the year (2014: approximately 17 barrels permmscf of gas), with 29,700bbls of condensate produced(2014: 14,107bbls). The global downturn in oil prices adverselyaffected the condensate sales price during the year, as this islinked directly to the price of Brent Crude. The average pricefor condensate achieved during the year was $72.36/bbl(2014: $106.14/bbl). All condensate is sold to a refinery inLimbe, just north of Douala.

Impairment of Russian Asset (West Medvezhye)At the end of the interim report period ended 30 November 2014,the Directors announced that the Group’s exploration andevaluation asset, the Russian West Medvezhye asset, hadbeen fully impaired for the purposes of the Group’s accounts.An impairment provision for the full value of the asset wasmade as it was considered that the political issues in Russia,combined with the weakness in the world price of oil, makederiving value from the asset through the current marketingprocess significantly more difficult and, due to the level ofuncertainty, it was difficult to form a view on the value that theasset should be held at in the accounts. The impairmentincreased the loss for the year by $49.8 million, withcorresponding balance sheet reductions of the same value.

Financial Review

EBITDA adjusted for one-off itemsincreased by $13.1 million from anegative $4.7 million to positive$8.4 million.

Operating CostsCost of sales (excluding royalties) of $14.8 million(2014: $6.3 million) includes $9.1 million (2014: $4.4 million) ofdepreciation and amortisation, a non-cash item.

Administration costs increased to $12.3 million compared tothe prior year cost of $9.3 million, with the increased activitiesin Cameroon and one-off corporate costs incurred during thefinancial year.

Balance SheetIntangible assetsThe West Medvezhye exploration and evaluation asset wasfully impaired during the year, as described above inImpairment of Russian Asset (West Medvezhye) and in Note 4Impairment of Exploration and Evaluation Assets.

Investment in Cameroon Holdings LimitedDuring the year, the level of transactions between the Groupand Cameroon Holdings Limited (“CHL”) increased. As a resultof this and other changes, CHL became an associate of theGroup, leading to a change of accounting for the investmentwith the equity method now being adopted (CHL waspreviously held as an Unlisted Investment and accounted forat cost at initial recognition). A consequence of the change isthat the current year Income Statement reflects a share ofprofit of associate of $1.1 million. Details of the Company’sinvestment in CHL are provided in Note 18 Investment inCameroon Holdings Limited and full details of the Group’stransactions with CHL during the year are provided in Note 34Related Party Transactions.

Deferred tax assetsThe taxable losses incurred by the Cameroon segment duringthe year increased the deferred tax asset by $0.3 million anda corresponding credit to income tax expense was recordedon the Income Statement.

BorrowingsThe BGFIBank facility was renewed during the year, andconverted into a three-year-term loan, repayable in 36 monthlyinstalments. Accordingly, whereas the loan was previously fullyrecorded as a current liability, the non-current portion of theloan has now been classified as a non-current liability.

Deferred tax liabilitiesThe deferred tax liability arose on the acquisition of GDC byBramlin Limited, prior to Bramlin Limited becoming part of theGroup. During the year, the deferred tax liability was releasedin line with the amortisation of the related acquired assets.

Translation reserveThe devaluation of the Russian Rouble accounted for themajority of the $7.7 million movement in the translationreserve. The translation reserve movements arose because thefinancial accounts of the Group’s Russian subsidiary aremaintained in Russian Roubles.

Cash FlowOperating activitiesThe Group’s operations in Cameroon are conducted througha joint operation with RSM. During the year under review, RSMsettled the balance of historical amounts due for its 40% shareof project expenditures, reducing the amount receivable fromRSM from $8.6 million at 31 May 2014 to $2.2 million at31 May 2015.

Trade and other payables reduced from $12.5 million at31 May 2014 to $7.8 million at 31 May 2015, as the Groupused available funds to reduce the amounts due. Significantly,trade payables reduced from $7.8 million at the end of the2014 financial year to $2.0 million at the end of the 2015financial year.

Investing activitiesInvesting activities related primarily to the expansion of thepipeline network in Cameroon and improvements to theproducing wells, with payments of $8.6 million for property,plant and equipment (2014: $10.8 million).

Additionally, the Company received $1.8 million from itsassociate, in the form of loan repayments.

Financing activitiesFinancing cash flows in the year related solely to therepayment of debts.

Share-Based PaymentsDuring the year, a former Director exercised options grantedto him by the ESOP Trust, which resulted in an increase in theDirectors’ remuneration expense of $0.6 million in the IncomeStatement. Further details are outlined in Note 30 Share-BasedPayments.

Robert PalmerFinance Director27 October 2015


Financial Review continued


Principal Risks & Uncertainties

Principal risk Detail Mitigation Movement in risk

The Group is subject to a number of potential risks and uncertainties, which couldhave a material impact on the long-term performance of the Group and couldcause actual results to differ materially from expectation.

The management of risk is the collective responsibility of the Board of Directors andthe Group has developed a range of internal controls and procedures in order tomanage risk. These systems are discussed and reviewed annually by the AuditCommittee and their findings reported to the Board.

The level of risk remainsunchanged.

The Group’s only producing assetsare wells La-105 and La-106 inDouala, Cameroon. There is a riskthat the production from these wellsmay be insufficient to meet customerneeds due to unexpected productionissues.

Field deliveryrisk

The continued revenuegeneration from the Logbabaproject has improved theGroup’s ability to access debtfunding and therefore reducedthis risk. Additionally, the riskhas been further reduced asRSM has continued to fund itsshare of Logbaba projectcosts.

The Board reviews and approves an annualbudget, and regularly reviews changes toGroup cash flow projections. The Boardconsiders different possible sources offunds, including funds generated from sales,debt financing, convertible loans and raisingequity.

Management maintains relationships withlenders and ensures that appropriate debtfunding avenues are available to the Groupas required. New debt facilities have beenoffered by lenders, and are being consideredby the Board.

The Group’s ability to fund operations inCameroon has been enhanced during thefinancial year with RSM, the Group’s partnerin the Logbaba project, consistently fundingits 40% share of project costs.

The Board also manages this risk byregularly meeting with shareholders and theinvestor community and communicatesthrough its website, investor relations andregulatory reporting.

It is possible that the Group willrequire additional funding for thedevelopment of wells La-107 andLa-108. There is no guarantee thatfuture market conditions will permitthe raising of the necessary funds byway of debt financing, issue of newequity or farming out of interests. Ifunsuccessful, this may significantlyaffect the Group’s ability to executeits long-term growth strategy.

Requirementfor furtherfunding

The risk has remainedunchanged during the year.

The Group’s activities are in proven gasbasins. The Group uses a range ofgeotechnical techniques to minimise riskprior to drilling and utilises independentreserves auditors to assess reserves andcommercial viability.

Exploration activities are speculativeand capital intensive and there is noguarantee of identifying commerciallyrecoverable reserves.

Further exploration activities will berequired in Cameroon to meet futurestrategic objectives.

Geologicalanddevelopmentrisks

The Group monitors the producing wells toensure that there are no indicators ofproduction problems and undertakes a pre-planned schedule of maintenance to ensurewell integrity. During the year, the Groupundertook perforation work to enhance theflow rates and production from the wells.

The Board and Management are activelylooking at other projects and have commencedthe design and engineering work on a plannedtwo-well drilling programme to increase theavailable reserves. Drilling is expected tocommence in the 2016 financial year.


Principal Risks & Uncertainties continued

The main change to thepolitical situation in Cameroonhas been threats from BokoHaram, however this has beenlargely localised in thecountry’s northern bordersshared with Nigeria and hasnot directly impacted theGroup’s operations, which arelocated over 900km away inDouala.

Apart from this threat, thepolitical situation has remainedlargely stable.

Cameroon encourages foreign investmentand is politically stable.

The Group’s project is longstanding and wehave established strong relationships withlocal and national government which enablethe Group to monitor the political andregulatory environment.

In addition, the Group maintains an insurancepolicy to protect against negative impacts ofpolitical violence on the Group’s operationsand business interruption. A security reviewhas also been scheduled to ensure the Groupand its assets are sufficiently protectedagainst such security risks.

The Group’s principal asset islocated in Cameroon and thereforethe Group is exposed to country-specific risks such as the political,social and economic stability ofCameroon.

Political risk


The risk is unchanged fromthe previous year.

The Group continues tomaintain good relationshipswith both local and centralgovernment, mitigating thisrisk.

The Directors monitor any threats to theGroup’s interest in its licences and employthe services of experienced and competentlawyers in relevant jurisdictions to defendthose interests.

Management manages the risk by havingregular communication and meetings withthe relevant government bodies to presentand discuss current activities and futurework plans in order to receive feedback fromthose bodies.

The GDC Managing Director and legal teamare responsible for monitoring compliancewith licence obligations and changes tolegislation applicable to the company andreports as necessary to the Board.

Title to oil and gas assets can becomplex and may be disputed.

Operations in Cameroon must becarried out in accordance with theterms of the concession contract, fielddevelopment plan, annual workprogrammes and budgets which areagreed with the state-owned nationaloil and gas company of Cameroon,Société Nationale des Hydrocarbures.Typically, the law provides that finesmay be imposed and operationssuspended, amended or terminated ifan operator fails to comply with itsobligations under such agreements.

Title to assetsand licenceobligations

The risk reduced in the yeardue to the security bondpledged by ENEO.

The Group manages credit risk by pre-assessing the creditworthiness ofcounterparties and maintaining creditinsurance.

A large portion of the Group’s revenues isnow generated from ENEO, Cameroon’snational electricity generating company. Asecurity bond has been pledged by ENEOwhich the Group may call upon if ENEO failsto pay invoices on time, significantlyreducing the credit risk.

Substantially all of the Group’srevenues will come from the sale ofgas and associated condensate.Inability of the customers to pay forthe gas or condensate purchasedwould have a negative effect on therevenue generated by the Group.

Credit risk

The risk is unchanged fromthe previous year.

The Board is committed to maintaining highenvironmental and community standardsand Board members review procedures andmonitor performance.

The Group has engaged independent externalconsultants to periodically audit the socialand environmental impact of operations inCameroon and the management thereof.

The Group maintains insurances to managethe Group’s financial exposure to anaccident or other adverse event.

The Group’s operations in Cameroonare located in the metropolitan areaof Douala with a population of2.5 million. Our gas wells are locatedon the outskirts of the city and ourgas pipeline network is being laidthroughout the city.

The scope and potential impact ofthe risks are increased by thediversity of our operations.

The potential impact of a major eventcould be significant for our employees,contractors, local communities or theenvironment and may result in a lossof revenue, production or shareholdervalue.

Risk ofnegativeimpacts onhealth,environmentalandcommunityrelations

This Strategic Report was approved by the Board of Directors on 27 October 2015 and signed on its behalf by:

Kevin FooExecutive Chairman


Principal Risks & Uncertainties continued

The risk increased during theyear as the Group had tocompete with the falling priceof competing commodities,and the price of ourcondensate fell with the priceof Brent Crude.

The Group has one producing asset, theLogbaba project in Cameroon, and hassigned five-year, fixed-price gas salescontracts with industrial customers, and atwo-year, fixed-price gas sales agreementwith ENEO, Cameroon’s national electricitygeneration company. The price chargedrepresents a saving compared with the costof using alternative fuels, particularly whentaking into consideration the reduction instorage, maintenance, and transportationcosts. The pricing is reviewed periodicallyand the comparative cost of alternative fuelsis continually monitored.

The price the Group charges for itscondensate production is tied to BrentCrude, but this represents less than 10%of revenue.

The majority of the Group’s revenuescome from the sale of gas. The priceof gas is volatile and influenced byfactors such as levels of supply anddemand, exchange rates andpolitical events. The price for gas is,in addition, influenced by moreregional factors such as proximity toa market and the local cost ofalternative fuels.

Similarly the revenues generatedfrom the sale of condensate areaffected by global factors.

Commodityprice risk

This risk did not changeduring the year.

The Group has one producing asset inCameroon. The fiscal regime in Cameroonhas been very stable in recent years and theCompany has provision in the LogbabaConcession Contract, granted by theCameroonian Government, that it will not beadversely affected by changes in taxlegislation.

The Group engages local tax specialists toadvise on tax matters in the jurisdictions thatwe operate.

The Group is subject to local andnational taxes, which are subject tofrequent change. The legislationoften lacks clarity and there is theadded risk of receiving substantialfines for non-compliance.

Tax risk

The risk increased during theyear as ENEO came onlineand became the Group’slargest customer (on anannualised basis).

The agreement with ENEO includes a take-or-pay component which means that even ifthe customer does not consume the Group’sgas, they are contractually obliged to pay forcertain levels of gas.

The Group continues to review the feasibilityof expanding the pipeline network to addnew customers and the possibility ofdiversifying into different product lines.

The Group also ensures that it engagespositively with customers to foster goodrelations and open communication.

The Group has a degree of relianceon a relatively small number of keycustomers, particularly ENEO. Theloss of one such customer couldlead to a significant reduction inrevenues.

Reliance on keycustomers

Details of the Group’s financial riskand management policies are setout in Note 29 Financial RiskManagement.

Financial riskmanagement


Current DirectorsKevin Foo, Executive ChairmanGrant Manheim, Deputy ChairmanAhmet Dik, DirectorRobert Palmer, Finance DirectorJames McBurney, Independent Non-Executive DirectorJohn Bryant, Independent Non-Executive Director

Company SecretaryLeena Nagrecha

Company Number5139892

Registered OfficeVictoria Oil & Gas Plc1st FloorHatfield House52/54 Stamford StreetLondonSE1 9LX

AuditorsDeloitteDeloitte & Touche HouseEarlsfort TerraceDublin 2Ireland

BankersBarclays Bank PlcLevel 27One Churchill PlaceLondonE14 5HP

SolicitorsKerman & Co LLP200 StrandLondonWC2R 1DJ

Nominated AdviserStrand Hanson Limited26 Mount RowLondonW1K 3SQ

BrokersNumis Securities LimitedThe London Stock Exchange Building10 Paternoster SquareLondonEC4M 7LT

RegistrarsComputershare Investor Services PlcThe PavilionsBridgwater RoadBristolBS99 6ZY


Directors & Other Information


Kevin Foo MSc, DIC, Dip Met,MIMMMExecutive ChairmanKevin has had a 40-year career inthe resources industry. He hasworked in five continents and hasbeen responsible for developingmines in remote locations. He wasthe founder of Victoria Oil & GasPlc in 2004 and was responsiblefor the acquisition of the Logbaba

project in Cameroon. He has held CEO and Chairmanpositions in several AIM-listed companies including CelticResources Holdings Plc, Eureka Mining Plc, Bramlin Limitedand Bakyrchik Gold Plc. From the end of September 2013,Kevin has assumed the role of Executive Chairman of theCompany.

Grant ManheimDeputy ChairmanGrant has extensive financialexperience in the City of Londongained over 38 years at N.M.Rothschild and Sons Limited with25 years as a main board director.In addition to his financialexperience, he also hasknowledge of the oil and gassector having been the Deputy

Chairman of the Executive Committee of New Court NaturalResources Plc, a company whose business was theinvestment in and development of oil and gas properties in theUnited States.

Ahmet DikDirectorAhmet has worked for GDC on aconsultancy basis for the last twoyears, and he has recentlyaccepted the position of CEO onthe GDC Board. He has workedon the structuring and deliveryof a wide range of oil andgas, minerals, resources andinfrastructure projects and was

part of the senior management team at Dominion PetroleumLtd, an AIM-listed company, in 2007, working on theacquisition of its East African assets. Dominion wassubsequently sold to Ophir Energy Plc. Primarily his work hasbeen with major corporates, governments and sovereignwealth funds focused on Africa and the Middle East. As anoriginator of large scale projects, Ahmet has been involved insetting up corporate structures, raising funds at all levels andlisting of companies on a number of stock exchanges.

Robert Palmer FCAFinance DirectorRobert is a Chartered Accountant.He combines his role as FinanceDirector with his position as asenior partner in The GallagherPartnership LLP, a businessconsultancy-based accountancypractice where he specialises inproviding financial advice to small-and medium- sized enterprises.

He holds a number of directorships in private companies.

James McBurneyIndependent Non-ExecutiveDirectorMr McBurney has over 25 years’experience advising energy,power and gas companies. Heheaded the European NaturalResources investment bankinggroup at Bank of AmericaSecurities in London from 2002 to2005, which followed his role as a

managing director with Merrill Lynch & Co. Inc.’s Energy &Power Group in New York where he advised many of the US’spower and gas companies during and after the deregulationof the industries. Mr McBurney served for five years in the USMarine Corps and has an MBA from Harvard Business Schooland a BA from Yale College.

John BryantIndependent Non-ExecutiveDirectorMr Bryant has broad commercialand financial experience indeveloping and managing newbusinesses gained over 40 years’experience in the oil, gas andenergy services, both in the USand the UK. He is the Non-Executive Chairman of Weatherly

International plc, the Senior Independent Director of IGasEnergy plc and a Non-Executive Director of China AfricaResources plc, all AIM-listed companies. His currentdirectorships also include other private companies. Mr Bryanthas held a number of senior executive positions in companiesinvolved in power generation and distribution, gas distribution,renewable energy and oil and gas services. These haveincluded operations in North America, Europe, Asia and Africa.Mr Bryant holds an MSc in Economics from ReadingUniversity and graduated in Economics with a BA fromNottingham University, and is a fellow of the Institute ofDirectors and a fellow of the Royal Society of Arts.

Directors’ Biographies

The Directors support high standards of corporate governanceand are committed to managing the Group in an honest andethical manner.

The Company is subject to the requirements of AIM Rules, therecommendations of the Quoted Companies Alliance andtakes cognisance of the provisions of the UK CorporateGovernance Code (“the Code”). The Company is committedto adhering to corporate governance standards as appropriatefor a company of this size and nature. The Company is notrequired to comply with the Code nor issue a statement ofcompliance with it.

The Board seeks to ensure that the Group is managed in anefficient, effective and entrepreneurial manner for the benefitof all shareolders over the longer term.

BoardThe Board of Directors consists of the Executive Chairman,three Directors and two Independent Non-Executive Directors.During the year, two Independent Non-Executive Directorswere appointed, with James McBurney joining the Board on 2June 2014 and John Bryant on 1 December 2014. AustenTitford resigned as a Director on 16 July 2014 and Ahmet Dikwas appointed as a Director on 27 October 2015. Kevin Fooholds the position of Executive Chairman and is responsiblefor leadership of the Board and for the running of the Group’sbusiness, where he is assisted by other Board members informulating strategy and its delivery once agreed by the Board.The structure of the Board ensures that no one individualdominates the decision-making process. The Directors havesignificant and relevant resource exploration and productionexperience together with finance and corporate developmentskills.

The Board provides effective leadership and overallmanagement of the Group’s affairs. The Board approves theGroup’s strategy and investment plans and regularly reviewsoperational and financial performance and risk managementmatters. A schedule of matters reserved for Board decision ismaintained. This includes the approval of business plans, theannual budget, major capital expenditure, acquisitions anddisposals, risk management policies and the approval of thefinancial statements.

The Board holds six scheduled meetings each year. Additionalmeetings are held where necessary to consider matters ofimportance which cannot be held over until the next scheduledmeeting. During the year ended 31 May 2015, the Board heldsix scheduled meetings and also met a further six times at shortnotice. It approved matters through a written resolution of theBoard on one occasion. Details of the attendance of theDirectors at these meetings, together with meetings of the Auditand Remuneration Committees are set out below.

Board Board Audit RemunerationDirectors (scheduled) (additional) Committee Committee

Kevin Fooa 6 5 1 –Grant Manheim 6 4 3 2Robert Palmer 6 5 – 2James McBurney 6 4 3 2John Bryantb 2 2 – 1Austen Titfordc 1 – – –a Kevin Foo ceased to be a member of the Audit Committee effective 11 December 2014.b John Bryant joined the Board on 1 December 2014. He was unable to attend one scheduled Board meeting due to change ofdate.

c Austen Titford resigned from the Board on 16 July 2014.

The Board delegates certain of its responsibilities to the Boardcommittees, listed below, which have clearly defined terms ofreference.

All Directors have access to the advice and services of theCompany’s solicitors and the Company Secretary, who isresponsible for ensuring that all Board procedures are followed.Any Director may take independent professional advice at theCompany’s expense in the furtherance of his duties.

The Company’s Articles of Association requires one-third ofthe Directors to retire by rotation at each Annual GeneralMeeting (“AGM”) of the Company and each may be re-elected.Furthermore, every Director must stand for re-election onceevery three years. The Company’s Articles also require anynew director appointed by the Board during the year to retireat the next AGM.

At present, the Board does not consider a nominationscommittee necessary. When appropriate, any decision will betaken on a clearly defined basis by the Board as a whole.

Audit CommitteeA number of changes were made to the membership of theAudit Committee following the 2014 AGM. On 11 December2014, James McBurney, Independent Non-Executive Director,replaced Grant Manheim as Chair of the Audit Committee andJohn Bryant, Independent Non-Executive Director, wasappointed a member. Grant Manheim remains a member ofthe committee. Kevin Foo resigned as a committee memberon 11 December 2014.

The Finance Director and other members of the finance teamattend the committee meetings by invitation.

The committee meets at least three times per year. It isresponsible for ensuring that the financial activities of the Groupare properly monitored, controlled and reported on complyingwith relevant legal requirements. The committee receives andreviews reports from management and the Group’s auditorsrelating to the Group’s Annual Report, the interim results andreview of the accounting policies. Meetings are held at leasttwice a year with the auditors, once at the audit planning stageto consider the scope of the audit and thereafter at thereporting stage, to receive post-audit findings. The ultimateresponsibility for reviewing and approving the Annual Reportremains with the Board of Directors. The committee is alsoresponsible for reviewing the relationship with the externalauditors, making recommendations to the Board on theirappointment and remuneration, monitoring their independence,as well as assessing scope and results of their work, includingany non-audit work.

The committee reviews with management of the effectivenessof internal controls.


Corporate Governance


Remuneration CommitteeThe Remuneration Committee is chaired by Grant Manheim,Deputy Chairman, and Robert Palmer, Finance Director, is alsoa committee member. During the year, two Independent Non-Executive Directors were appointed as members of thecommittee, with James McBurney appointed on 25 June 2014and John Bryant appointed on 11 December 2014.

The committee sets the scale and structure of the Directors’remuneration and that of senior management and the basis oftheir service agreements with due regard to the interests ofshareholders. In determining the remuneration of the Directorsand senior management, the committee seeks to ensure thatthe Company will be able to attract and retain executives ofthe highest calibre. It makes recommendations to the fullBoard concerning bonus awards and any representations tobe made to the ESOP for the allocation of incentive shares toemployees. No Director participates in discussions ordecisions concerning his own remuneration.

The Chairman of the committee will attend the AGM andrespond to any shareholder questions on the committee’sactivities.

Relations with ShareholdersThe Directors attach great importance to maintaining goodrelationships with the shareholders. Extensive informationabout the Company’s activities is included in the AnnualReport and the Interim Report. The Chairman also issues anupdate letter to shareholders from time to time.

Market sensitive information is regularly released to allshareholders in accordance with Stock Exchange rules forAIM-listed companies. The Group is active in communicatingwith both its institutional and private shareholders. The AGMprovides an opportunity for all shareholders to communicatewith and to question the Board on any aspect of the Group’sactivities. The Company presents at conferences andmaintains a corporate website where information on theCompany is regularly updated, including Annual and InterimReports and all announcements.

Internal ControlsThe Board acknowledges that it is responsible for establishingand maintaining the Group’s system of internal controls andreviewing its effectiveness. The procedures that include, interalia, financial, operational, health and safety, compliancematters and risk management (as detailed in the StrategicReport) are reviewed on an ongoing basis. The Group’s internalcontrol procedures include Board approval for all significantprojects, including corporate transactions and major capitalprojects. The Board receives and reviews regular reportscovering both the technical progress of projects and theGroup’s financial affairs to facilitate its control. The Group hasin place internal control and risk management systems inrelation to the Group’s financial reporting process and theGroup’s process for preparing consolidated accounts. Thesesystems include policies and procedures to ensure thatadequate accounting records are maintained and transactionsare recorded accurately and fairly to permit the preparation ofconsolidated financial statements in accordance withInternational Financial Reporting Standards (“IFRSs”). TheAudit Committee reviews draft annual and interim reportsbefore recommending their publication to the Board. The AuditCommittee discusses with the Executive Chairman, FinanceDirector and external auditors the significant accountingpolicies, estimates and judgments applied in preparing thesereports. The internal control system can only providereasonable and not absolute assurance against materialmisstatement or loss. The Board has considered the need fora separate internal audit function but, bearing in mind thepresent size and composition of the Group, does not considerit necessary at the current time.

Corporate Governance continued

Principal Activities, Business Review and FutureDevelopmentsThe principal activities of the Group are oil and gas exploration,development and production in Cameroon. During the year,the Group continued the sale of gas and condensate tocustomers in Cameroon. The main activity in the year has beenthe ongoing development of the Logbaba gas and condensatefield, including entering into a two-year contract with ENEOCameroon S.A. to supply gas to two power stations,expansion of the gas pipeline distribution network, supplyinggas to industrial customers for their thermal energy needs, anddevelopment of the Group’s strategy to increase gas sales inCameroon.

The Group has an exploration project in Russia, the 100%-owned West Medvezhye field. During the year, the Companyhas continued to pursue ways to derive value from the assetthrough farm-out, joint venture or sale. West Medvezhye hassignificant gas and gas condensate reserves but the currentstate of relations between Russia and the West, combined witha low oil price, makes near-term development of the assetchallenging and divestiture is a more prudent course. With theGroup’s focus on the expanding operations in Cameroon, theBoard announced with the interim results that a decision hasbeen taken to fully impair the Russian asset, writing it downby $49.8 million at 30 November 2014 (refer Note 4 Impairmentof Exploration and Evaluation Assets). The Companycontinues to seek divestment opportunities to derive valuefrom the asset.

The Group operates through overseas branches andsubsidiary undertakings as appropriate to the fiscalenvironment.

Subsidiary undertakings of the Group are set out in Note 19Investments in Subsidiaries and Advances. Operations arefunded by sales generated locally, with the deficit coveredfrom funds held centrally by the Group which is accessed bycash calls from each operation on a monthly basis.

A detailed review of the significant developments andoperating activities of the Group, as well as the businessenvironment, future prospects and the main trends and factorsthat are likely to affect the future development, performanceand position of the Group’s business are contained in theStrategic Report.

DirectorsThe following Directors held office during the year:

Directors Kevin FooGrant Manheim Robert PalmerAusten Titford (resigned 16 July 2014)Ahmet Dik (appointed 27 October 2015)

Independent Non-Executive DirectorsJames McBurney (appointed 2 June 2014)John Bryant (appointed 1 December 2014)

Rotation and re-election of DirectorsIn accordance with the Articles of Association, Kevin Foo willretire by rotation and he will be standing for re-election. JohnBryant and Ahmet Dik, who were appointed by the Boardduring the year will also retire and stand for election.

Biographical details of the current Directors are available in thesection Directors’ Biographies.

DividendsThe Directors do not propose that a dividend be paid(2014: Nil).

Directors’ IndemnitiesThe Company maintained directors’ and officers’ liabilityinsurance during the year and it remains in force at the date ofthis report.

AuditorsEach person who is a Director at the date of approval of thisannual report confirms that:• So far as the Director is aware, there is no information ofwhich the Company’s auditors are unaware; and

• The Director has taken all steps that he ought to have takenas a Director in order to make himself aware of any relevantaudit information and to establish that the Company’sauditor is aware of that information.

This confirmation is given and should be interpreted inaccordance with the provisions of section 418 of theCompanies Act 2006.

A resolution to re-appoint the auditors, Deloitte, will beproposed at the Annual General Meeting.

Substantial ShareholdersAt 31 May 2015, the Company had received notification fromthe following shareholders of interests in excess of 3% of theCompany’s issued Ordinary Shares with voting rights:

PercentageNumber of issued

Shareholder of shares share capital

The Capital Group Companies, Inc. 6,966,560 6.38%Forest Nominees Limited 3,614,992 3.31%

Share CapitalDetails of changes to share capital in the year are set out inNote 26 Called-Up Share Capital.

Information set out in the Strategic ReportThe Directors have chosen to set out the following informationin the Strategic Report which would otherwise be required tobe contained in the Directors’ Report:• Results for the financial year• Principal risks and uncertainties• Likely future developments

Going ConcernThe Directors have given careful consideration to theappropriateness of the going concern basis in the preparationof the financial statements. The validity of the going concernconcept is dependent on funding being available for theworking capital requirements of the Group in order to financethe continuing development of its existing projects. Sufficientfunds are available in the short term to fund the working capitalrequirements of the Group. The Directors believe that this willenable the Group and the Company to continue in operationalexistence for the foreseeable future and to continue to meetobligations as they fall due. Further information in respect ofgoing concern considerations is set out in Note 3 GoingConcern.


Directors’ Report


Annual General Meeting (“AGM”)The AGM of the Company will be held in London on30 November 2015. In addition to the usual business to bedealt with at the AGM, the Notice contains special businessrelating to the renewal of authority for the Board to allot sharesand the dis-application of statutory pre-emption rights onequity issues for cash. The Notice of the Annual GeneralMeeting is set out on pages 75 to 76 of the Annual Report.Shareholders should complete the proxy form received eitherby e-communications or by post and it will also be availableon the Company’s website (www.victoriaoilandgas.com).

By order of the Board,

Leena NagrechaCompany Secretary27 October 2015

Directors’ Report continued

As an AIM-listed company, VOG is not obliged to implementthe remuneration reporting requirement for premium listedcompanies set out in The Large and Medium-sized Companiesand Groups (Accounts and Reports) (Amendment) Regulations2013. However, the Remuneration Committee (the“Committee”) has chosen to disclose the following informationin the interests of greater transparency.

This report sets out the following:• An overview of the remuneration policy for the Group’sexecutives; and

• Remuneration arrangements including payments and awardsmade to the Directors for the year ended 31 May 2015.

Remuneration CommitteeThe remit of the Committee is provided in the CorporateGovernance section. During the year, two Independent Non-Executive Directors were appointed to the Committee. TheCommittee members are currently Grant Manheim, JamesMcBurney, John Bryant and Robert Palmer. The ExecutiveChairman, Kevin Foo, attends meetings by invitation.

The Committee has met twice during the year. In July 2015,the Committee initiated a review of the executive remunerationarrangements to ensure these remain competitive and toenable the Company to recruit senior executives of the rightcalibre.

The Committee has engaged the services of Pricewaterhouse-Coopers LLP (“PwC”) to provide wholly independent adviceon executive remuneration and to assist the Company inconducting this review. There were no other services providedby PwC to the Group during the year.

Remuneration PolicyThe Company’s policy is to maintain levels of remunerationsufficient to recruit and retain senior executives of the requiredcalibre who can deliver growth in shareholder value. TheCompany seeks to strike an appropriate balance betweenfixed and performance-related reward, forming a clear linkbetween pay and performance. The performance targets willbe aligned to the key drivers of the business strategy, therebycreating a strong alignment of interest between executives andshareholders.

Executive remuneration currently consists of salary and annualbonus and does not offer any benefits or a long-term incentiveplan. As part of the executive remuneration review, theCommittee intends to introduce benefits and a long-termincentive plan going forward.

The Committee will update the Company’s remunerationpolicy following review of the existing arrangements by PwC,to ensure it remains fit for purpose for the Company, drivinghigh levels of executive performance and ensuring theCompany remains competitive in the market.


Directors’ Remuneration Report

Year Ended 31 May 2015Directors’ service contractsDirectorsThe Directors are employed under rolling contracts with notice periods of 12 months or less from the Company or Director.

Non-Executive DirectorsThe Non-Executive Directors are appointed for an initial term of 3 years, with a notice period of 1 month from the Company orthe Non-Executive Director. As at 31 May 2015, the unexpired terms of the Non-Executive Directors letters of appointment were:

Service Agreement Start Date Service Agreement End Date Unexpired Term at 31 May 2015

James McBurney 2 June 2014 2 June 2017 2 yearsJohn Bryant 1 December 2014 1 December 2017 2 years 6 months

A copy of the Service Agreement for each Director is available for inspection at the Company’s Registered Office.

Directors remuneration (audited)Directors’ remuneration in aggregate for the year ended 31 May 2015 was as follows:

Salary Annual Benefits Share-based and fees cash bonus in kind payment Total

$ $ $ $ $

12 months to 31 May 2015DirectorsKevin Foo 475,791 234,192 5,564a – 715,547Grant Manheim 177,628 43,716 – – 221,344Robert Palmerb 190,963 – – – 190,963Austen Titfordc 771,170d – – 638,320e 1,409,490Non-Executive DirectorsJames McBurneyf 126,878 – – – 126,878John Bryantg 61,103 – – – 61,103

1,803,533 277,908 5,564 638,320 2,725,325


Salary Annual Benefits Share-based and fees cash bonus in kind payment Total

$ $ $ $ $

12 months to 31 May 2014DirectorsKevin Fooh 374,089 199,071 – – 573,160Grant Manheim 181,425 66,357 – – 247,782Robert Palmer 203,052 66,357 – – 269,409Austen Titford 372,586 132,714 – – 505,300John Scotti 196,800 – – – 196,800

1,327,952 464,499 – – 1,792,451a Relates to travel costs.b Paid to The Gallagher Partnership LLP.c Resigned as Director on 16 July 2014. d Includes accrued leave entitlements at resignation date, payment in lieu of notice and settlement payment. e Relates to the exercise of option rights to purchase 612,500 shares from the ESOP Trust, which occurred post-resignation.f Appointed as Director on 2 June 2014.g Appointed as Director on 1 December 2014.h Part paid to HJ Resources Limited (see Note 34 Related Party Transactions).i Resigned as Director on 27 September 2013.

SalaryThe Directors did not receive any salary increases during the year ended 31 May 2015.

BonusIn recognition of contribution made during the year to progress a number of operational and strategic milestones, the Committeedetermined to pay bonuses to certain executives. This included bonus awards equivalent to 50% of salary for the ExecutiveChairman and 25% for the Deputy Chairman in cash. The bonus awards to the Directors are set out in the table above.

Existing Employee Share Option PlanThe Company has a discretionary share incentive scheme whereby fully paid shares can be awarded by the Trustees of theEmployee Share Ownership Plan (“ESOP”) as a long-term incentive for the Directors, senior managers and staff. The Trustees ofthe ESOP did not subscribe for any shares during the year (2014: no subscription). The Trust transferred 612,500 shares to aformer Director during the year (2014: no awards shares).

Payment to Director leaving officeAusten Titford resigned as Director of the Company on 16 July 2014. His compensation for leaving was $697,065 and is set outin the table above.

Grant ManheimRemuneration Committee Chairman27 October 2015

Directors’ Remuneration Report continued

The Directors are responsible for preparing the Annual Reportand the financial statements in accordance with applicablelaws and regulations.

Company law requires the Directors to prepare financialstatements for each financial year. Under that law, theDirectors are required to prepare the Group financialstatements in accordance with IFRS as adopted by theEuropean Union and have also chosen to prepare theCompany financial statements under IFRSs as adopted by theEU. Under company law, the Directors must not approve thefinancial statements unless they are satisfied that they give atrue and fair view of the state of affairs of the Company and ofthe Group and of the profit or loss of the Group for that year.

In preparing the financial statements for the Group and theCompany, International Accounting Standard 1 requires thatthe Directors:• properly select and apply accounting policies;• present information, including accounting policies, in amanner that provides relevant, reliable, comparable andunderstandable information;

• provide additional disclosures when compliance with thespecific requirements in IFRSs are insufficient to enableusers to understand the impact of particular transactions,other events and conditions on the Group’s financialposition and financial performance; and

• make an assessment of the Group’s ability to continue asa going concern.

The Directors are responsible for keeping adequateaccounting records that are sufficient to show and explain theCompany’s transactions and disclose with reasonableaccuracy at any time the financial position of the Companyand enable them to ensure that the financial statementscomply with the Companies Act 2006. They are alsoresponsible for safeguarding the assets of the Company andhence for taking reasonable steps for the prevention anddetection of fraud and other irregularities.

The Directors are responsible for the maintenance and integrityof the corporate and financial information included on theCompany’s website. Legislation in the United Kingdomgoverning the preparation and dissemination of financialstatements may differ from legislation in other jurisdictions.

Responsibility statementWe confirm that to the best of our knowledge:• the financial statements, prepared in accordance withIFRSs, give a true and fair view of the assets, liabilities,financial position and profit or loss of the Company and theundertakings included in the consolidation taken as a whole;and

• the Strategic Report and the Directors’ Report include a fairreview of the development and performance of the businessand the position of the Company and the undertakingsincluded in the consolidation taken as a whole, togetherwith a description of the principal risks and uncertaintiesthat they face.

By order of the Board

Kevin A. Foo Robert PalmerExecutive Chairman Finance Director27 October 2015 27 October 2015


Statement of Directors’ Responsibilities


We have audited the financial statements of Victoria Oil &Gas Plc for the year ended 31 May 2015 which comprise ofthe Consolidated Income Statement, the ConsolidatedStatement of Comprehensive Income, the Consolidated andCompany Balance Sheets, the Consolidated and CompanyStatements of Changes in Equity, the Consolidated andCompany Cash Flow Statements and the related notes 1 to35. The financial reporting framework that has been applied intheir preparation is applicable law and International FinancialReporting Standards (“IFRSs”) as adopted by the EuropeanUnion and, as regards the Parent Company financialstatements, as applied in accordance with the provisions ofthe Companies Act 2006.

This report is made solely to the Company’s members, as abody, in accordance with Chapter 3 of Part 16 of theCompanies Act 2006. Our audit work has been undertaken sothat we might state to the Company’s members those matterswe are required to state to them in an auditors’ report and forno other purpose. To the fullest extent permitted by law, wedo not accept or assume responsibility to anyone other thanthe Company and the Company’s members as a body, for ouraudit work, for this report, or for the opinions we have formed.

Respective responsibilities of directors and auditorAs explained more fully in the Directors’ ResponsibilitiesStatement, the Directors are responsible for the preparation ofthe financial statements and for being satisfied that they givea true and fair view. Our responsibility is to audit and expressan opinion on the financial statements in accordance withapplicable law and International Standards on Auditing (UKand Ireland). Those standards require us to comply with theAuditing Practices Board’s Ethical Standards for Auditors.

Scope of the audit of the financial statementsAn audit involves obtaining evidence about the amounts anddisclosures in the financial statements sufficient to givereasonable assurance that the financial statements are freefrom material misstatement, whether caused by fraud or error.This includes an assessment of: whether the accountingpolicies are appropriate to the Group’s and the ParentCompany’s circumstances and have been consistently appliedand adequately disclosed; the reasonableness of significantaccounting estimates made by the Directors; and the overallpresentation of the financial statements. In addition, we readall the financial and non-financial information in the AnnualReport to identify material inconsistencies with the auditedfinancial statements and to identify any information that isapparently materially incorrect based on, or materiallyinconsistent with, the knowledge acquired by us in the courseof performing the audit. If we become aware of any apparentmaterial misstatements or inconsistencies we consider theimplications for our report.

Opinion on financial statementsIn our opinion:• the financial statements give a true and fair view of the stateof the Group’s and of the Parent Company’s affairs as at31 May 2015 and of the Group’s loss for the year thenended;

• the Group financial statements have been properly preparedin accordance with IFRSs as adopted by the EuropeanUnion;

• the Parent Company financial statements have beenproperly prepared in accordance with IFRSs as adopted bythe European Union and as applied in accordance with theprovisions of the Companies Act 2006; and

• the financial statements have been prepared in accordancewith the requirements of the Companies Act 2006.

Emphasis of Matter – Realisation of Property, Plant &Equipment and Recoverability of Amounts due fromSubsidiariesIn forming our opinion on the financial statements, which isnot modified, we have considered the adequacy of thedisclosures made in Notes 17, 19 and 21 to the financialstatements concerning the valuation of property, plant andequipment, the valuation of investments in subsidiaries andthe recoverability of amounts due from subsidiaries. Therealisation of property, plant and equipment of $121.4 millionincluded in the Consolidated Balance Sheet and investmentsin subsidiaries of $12.4 million and amounts due fromsubsidiaries of $98.3 million included in the Company Balancesheet is dependent on continued successful development ofeconomic reserves. The financial statements do not includeany adjustments relating to these uncertainties and theultimate outcome cannot, at present, be determined.

Separate opinion in relation to IFRSs as issued by the IASBAs explained in note 1 to the Group financial statements, theGroup, in addition to complying with its legal obligation toapply IFRSs as adopted by the European Union, has alsoapplied IFRSs as issued by the International AccountingStandards Board (“IASB”).

In our opinion the group financial statements comply withIFRSs as issued by the IASB.

Opinion on other matter prescribed by the CompaniesAct 2006In our opinion the information given in the Strategic Report andthe Directors’ Report for the financial year for which thefinancial statements are prepared is consistent with thefinancial statements.

Matters on which we are required to report by exceptionWe have nothing to report in respect of the following matterswhere the Companies Act 2006 requires us to report to you if,in our opinion:• adequate accounting records have not been kept by theParent Company, or returns adequate for our audit have notbeen received from branches not visited by us; or

• the Parent Company financial statements are not inagreement with the accounting records and returns; or

• certain disclosures of Directors’ remuneration specified bylaw are not made; or

• we have not received all the information and explanationswe require for our audit.

Ciarán O’Brien(Senior Statutory Auditor)For and on behalf of DeloitteChartered Accountants and Statutory AuditorDeloitte & Touche House, Dublin, Ireland27 October 2015

Independent Auditors’ ReportTo the members of Victoria Oil & Gas Plc

2015 2014Notes $000 $000

Continuing operationsRevenue 6 27,931 14,729Cost of sales

Production royalties 32 (4,016) (3,953)Other cost of sales (14,817) (6,295)

(18,833) (10,248)

Gross profit 9,098 4,481

Sales and marketing expenses (206) (620)Administrative expenses 10 (12,341) (9,303)Other gains/(losses) 7 1,453 (3,967)Share of profit of associate 18 1,098 –Impairment of exploration and evaluation assets 4 (49,775) –Adjustment resulting from arbitration decision 5 – 6,543

Operating loss (50,673) (2,866)

Finance revenue 8 19 146Finance costs 9 (1,527) (2,004)

Loss before taxation 10 (52,181) (4,724)Income tax credit 11 1,373 3,059

Loss after taxation for the financial year (50,808) (1,665)

Cents Cents

Loss per share – basic 15 (48.28) (1.58)*Loss per share – diluted 15 (48.28) (1.58)*

* Comparative year earnings/(loss) per share has been restated as a result of the Capital Reorganisation detailed in Note 26Called-Up Share Capital.

Consolidated Statement of Comprehensive Income For the year ended 31 May 2015

2015 2014$000 $000

Loss for the financial year (50,808) (1,665)Items that may be reclassified subsequently to profit or lossExchange differences on translation of foreign operations (7,651) 1,348

Total comprehensive loss for the year (58,459) (317)


Consolidated Income StatementFor the year ended 31 May 2015


2015 2014Notes $000 $000

Assets:Non-current assetsIntangible assets 16 91 57,797Property, plant and equipment 17 121,353 121,772Unlisted investments 18 – 6,600Investment in associate 18 5,398 –Deferred tax assets 11 3,627 3,297

130,469 189,466

Current assetsInventories 20 21 38Trade and other receivables 21 11,325 14,026Cash and cash equivalents 22 15,963 17,018

27,309 31,082

Total assets 157,778 220,548

Liabilities:Current liabilitiesTrade and other payables 23 7,803 12,452Borrowings 24 6,925 10,563

14,728 23,015

Net current assets 12,581 8,067

Non-current liabilitiesBorrowings 24 3,945 86Deferred tax liabilities 11 4,914 6,599Provisions 25 10,611 9,551

19,470 16,236

Net assets 123,580 181,297

Equity:Called-up share capital 26 34,240 34,240Share premium 229,556 229,556ESOP Trust reserve 27 (1,061) (1,165)Translation reserve (17,714) (10,063)Other reserve 28 3,321 4,197Retained earnings – deficit (124,762) (75,468)

Total equity 123,580 181,297

The financial statements of Victoria Oil & Gas Plc, registered number 5139892, were approved by the Board of Directors on27 October 2015.

Kevin A. Foo Robert PalmerExecutive Chairman Finance Director

Consolidated Balance SheetAt 31 May 2015

2015 2014Notes $000 $000

Assets:Non-current assetsProperty, plant and equipment 17 14 17Unlisted investments 18 – 6,600Investment in associate 18 4,502 –Investments in subsidiaries and advances 19 12,400 72,638

16,916 79,255

Current assetsTrade and other receivables 21 99,139 113,814Cash and cash equivalents 22 13,190 14,381

112,329 128,195

Total assets 129,245 207,450

Liabilities:Current liabilitiesTrade and other payables 23 1,877 2,020Borrowings 24 4,701 5,299

6,578 7,319

Net current assets 105,751 120,876

Net assets 122,667 200,131

Equity:Called-up share capital 26 34,240 34,240Share premium 229,556 229,556Other reserve 28 3,321 4,197Retained earnings – deficit (144,450) (67,862)

Total equity 122,667 200,131

The financial statements of Victoria Oil & Gas Plc, registered number 5139892, were approved by the Board of Directors on27 October 2015.

Kevin A. Foo Robert PalmerExecutive Chairman Finance Director


Company Balance SheetAt 31 May 2015


Retainedearnings/

Share ESOP Trust Translation Other (accumulatedShare capital premium reserve reserve reserves deficit) Total

$000 $000 $000 $000 $000 $000 $000

At 31 May 2013 34,240 229,556 (1,061) (11,411) 4,583 (74,504) 181,403Effect of movements in foreignexchange – – (104) – – – (104)Transfer expired warrants to retained earnings – – – – (701) 701 –Warrants issued – – – – 315 – 315Total comprehensive income/(loss) forthe year – – – 1,348 – (1,665) (317)

At 31 May 2014 34,240 229,556 (1,165) (10,063) 4,197 (75,468) 181,297Shares granted to ESOP members – – 5 – – 638 643Effect of movements in foreignexchange – – 99 – – – 99Transfer expired warrants to retainedearnings – – – – (876) 876 –Total comprehensive loss for the year – – – (7,651) – (50,808) (58,459)

At 31 May 2015 34,240 229,556 (1,061) (17,714) 3,321 (124,762) 123,580

Share premium reserveThe share premium reserve is comprised of the excess of monies received in respect of share capital over the nominal value ofshares issued, less direct and incremental share issue costs.

ESOP Trust reserveThe ESOP Trust reserve comprises of shares in the Company held by Victoria Oil & Gas ESOP Trust.

Translation reserveThe translation reserve represents the foreign exchange gain/loss on translation of financial statements of foreign subsidiaries.

Other reserveThe other reserve includes the share-based payment reserve and an amount of $2.9 million which was the difference betweenthe fair value on redemption and the redemption value of a convertible loan note settled in 2008.

Accumulated deficitAccumulated deficit comprises accumulated losses in the current and prior years.

Consolidated Statement of Changes in EquityFor the year ended 31 May 2015

Retainedearnings/

Share Other (accumulatedShare capital premium reserves deficit) Total

$000 $000 $000 $000 $000

At 31 May 2013 34,240 229,556 4,583 (63,532) 204,847Transfer expired warrants to retained earnings – – (701) 701 –Warrants issued – – 315 – 315Total comprehensive loss for the year – – – (5,031) (5,031)

At 31 May 2014 34,240 229,556 4,197 (67,862) 200,131Shares granted to ESOP members – – – 638 638Transfer expired warrants to retained earnings – – (876) 876 –Total comprehensive loss for the year – – – (78,102) (78,102)

At 31 May 2015 34,240 229,556 3,321 (144,450) 122,667

Share premium reserveThe share premium reserve is comprised of the excess of monies received in respect of share capital over the nominal value ofshares issued, less direct and incremental share issue costs.

Other reserveThe other reserve includes the share-based payment reserve and an amount of $2.9 million which was the difference betweenthe fair value on redemption and the redemption value of a convertible loan note settled in 2008.

Accumulated deficitAccumulated deficit comprises accumulated losses in the current and prior years.


Company Statement of Changes in EquityFor the year ended 31 May 2015


2015 2014Notes $000 $000

Cash flows from operating activitiesLoss for the year (50,808) (1,665)Income tax credit recognised in the Income Statement (1,373) (3,059)Share of profit of associate (1,098) –Finance revenue recognised in the Income Statement (19) (146)Finance costs recognised in the Income Statement 1,527 2,004Depreciation and amortisation of non-current assets 9,282 4,608Other (gains)/losses recognised in the Income Statement (1,453) 3,978Impairment of exploration and evaluation assets 49,775 –Shares vested by ESOP Trust recognised in the Income Statement 638 –

6,471 5,720

Movements in working capitalDecrease in trade and other receivables 6,072 4,727Decrease/(increase) in inventories 17 (4)(Decrease)/increase in trade and other payables (3,804) 3,140

Net cash generated from operating activities 8,756 13,583

Cash flows from investing activitiesProceeds from disposal of intangible assets – 115Payments for intangible assets (276) (752)Payments for property, plant and equipment (8,633) (10,807)Loan repayments received 1,836 –Dividends received from associates 202 –Interest received 19 15

Net cash used in investing activities (6,852) (11,429)

Cash flows from financing activitiesProceeds from borrowings – 5,234Repayment of borrowings (1,816) (3,140)Finance costs (626) (493)

Net cash (used in)/generated from financing activities (2,442) 1,601

Net (decrease)/increase in cash and cash equivalents (538) 3,755

Cash and cash equivalents – beginning of year 17,018 13,107Effects of exchange rate changes on the balance of cash held in foreign currencies (517) 156

Cash and cash equivalents – end of year 22 15,963 17,018

Consolidated Cash Flow StatementFor the year ended 31 May 2015

2015 2014Notes $000 $000

Cash flows from operating activitiesLoss for the year (78,102) (5,031)Income tax expense recognised in the Income Statement 149 –Investment income recognised in the Income Statement (221) (146)Finance costs recognised in the Income Statement 303 871Depreciation and amortisation of non-current assets 7 8Other losses/(gains) recognised in the Income Statement 167 (183)Impairment of investment in subsidiary 60,571 –Shares vested by ESOP Trust recognised in the Income Statement 638 –

(16,488) (4,481)

Movements in working capitalDecrease in trade and other receivables 14,415 11,006Decrease in trade and other payables (184) (4,081)

Net cash (used in)/generated from operating activities (2,257) 2,444

Cash flows from investing activitiesPayments for property, plant and equipment (6) (15)Loan repayments received 1,836 –Dividends received from associates 202 –Interest received 19 15

Net cash generated from investing activities 2,051 –

Cash flows from financing activitiesRepayment of borrowings (858) (756)Finance costs (64) (180)

Net cash used in financing activities (922) (936)

Net (decrease)/increase in cash and cash equivalents (1,128) 1,508

Cash and cash equivalents – beginning of year 14,381 12,625Effects of exchange rate changes on the balance of cash held in foreign currencies (63) 248

Cash and cash equivalents – end of year 22 13,190 14,381


Company Cash Flow StatementFor the year ended 31 May 2015


The principal accounting policies adopted by the Group andCompany are summarised below.

(i) Statement of ComplianceThese financial statements, of Victoria Oil & Gas Plc and itssubsidiaries (“the Group”), for the year ended 31 May 2015,have been prepared in accordance with International FinancialReporting Standards (“IFRSs”). These financial statementshave also been prepared in accordance with the InternationalFinancial Reporting Standards adopted for use by theEuropean Union. They have also been prepared in accordancewith the Companies Act 2006.

(ii) Basis of PreparationThe financial statements are prepared under the historical costconvention except for certain financial instruments that aremeasured at revalued amounts or fair values at the end of eachreporting period. The financial statements are presented in USDollars, rounded to the nearest thousand ($000) except whereotherwise indicated.

(iii) Basis of ConsolidationThe consolidated financial statements incorporate the financialstatements of the Company and entities (including structuredentities) controlled by the Company and its subsidiaries.Control is achieved when the Company:• has the power over the investee;• is exposed, or has rights, to variable returns from itsinvolvement with the investee; and

• has the ability to use its power to affect its returns.

The Company reassesses whether or not it controls aninvestee if facts and circumstances indicate that there arechanges to one or more of the three elements of control listedabove.

When the Company has less than a majority of the votingrights of an investee, it has the power over the investee whenthe voting rights are sufficient to give it the practical ability todirect the relevant activities of the investee unilaterally. TheCompany considers all relevant facts and circumstances inassessing whether or not the Company’s voting rights in aninvestee are sufficient to give it power, including:• the size of the Company’s holding of voting rights relativeto the size and dispersion of holdings of the other voteholders;

• potential voting rights held by the Company, other voteholders or other parties;

• rights arising from other contractual arrangements; and• any additional facts and circumstances that indicate thatthe Company has, or does not have, the current ability todirect the relevant activities at the time that decisions needto be made, including voting patterns at previousshareholders’ meetings.

Consolidation of a subsidiary begins when the Companyobtains control over the subsidiary and ceases when theCompany loses control of the subsidiary. Specifically, incomeand expenses of a subsidiary acquired or disposed of duringthe year are included in the consolidated income statementand other comprehensive income from the date the Companygains control until the date when the Company ceases tocontrol the subsidiary.

Profit or loss and each component of other comprehensiveincome are attributed to the owners of the Company and tothe non-controlling interests. Total comprehensive income ofsubsidiaries is attributed to the owners of the Company andto the non-controlling interests even if this results in the non-controlling interests having a deficit balance.

When necessary, adjustments are made to the financialstatements of subsidiaries to bring their accounting policiesinto line with the Group’s accounting policies.

All intragroup assets and liabilities, equity, income, expensesand cash flows relating to transactions between members ofthe Group are eliminated in full on consolidation.

Changes in the Group’s ownership interests in existingsubsidiariesChanges in the Group’s ownership interests in subsidiariesthat do not result in the Group losing control over thesubsidiaries are accounted for as equity transactions. Thecarrying amounts of the Group’s interests and the non-controlling interests are adjusted to reflect the changes in theirrelative interests in the subsidiaries. Any difference betweenthe amount by which the non-controlling interests are adjustedand the fair value of the consideration paid or received isrecognised directly in equity and attributed to owners of theCompany.

When the Group loses control of a subsidiary, a gain or loss isrecognised in profit or loss and is calculated as the differencebetween (i) the aggregate of the fair value of the considerationreceived and the fair value of any retained interest and (ii) theprevious carrying amount of the assets (including goodwill),and liabilities of the subsidiary and any non-controllinginterests. All amounts previously recognised in othercomprehensive income in relation to that subsidiary areaccounted for as if the Group had directly disposed of therelated assets or liabilities of the subsidiary (reclassified toprofit or loss or transferred to another category of equity asspecified/permitted by applicable IFRSs). The fair value of anyinvestment retained in the former subsidiary at the date whencontrol is lost is regarded as the fair value on initial recognitionfor subsequent accounting under IAS 39 FinancialInstruments: Recognition and Measurement, when applicable,the cost on initial recognition of an investment in an associateor a joint venture.

Business combinationsAcquisitions of businesses are accounted for using theacquisition method. The consideration transferred in abusiness combination is measured at fair value, which iscalculated as the sum of the acquisition-date fair values of theassets transferred by the Group, liabilities incurred by theGroup to the former owners of the acquiree, and the equityinterests issued by the Group in exchange for control of theacquiree. Acquisition-related costs are generally recognisedin the Income Statement as incurred.

At the acquisition date, the identifiable assets acquired andthe liabilities assumed are recognised at their fair value at theacquisition date, except that:• deferred tax assets or liabilities and liabilities or assetsrelated to employee benefit arrangements are recognisedand measured in accordance with IAS 12 Income Taxes andIAS 19 Employee Benefits respectively;

Notes to the Consolidated Financial StatementsFor the year ended 31 May 2015

1. PRINCIPAL ACCOUNTING POLICIES

• liabilities or equity instruments related to share-basedpayment arrangements of the acquiree or share-basedpayment arrangements of the Group entered into to replaceshare-based payment arrangements of the acquiree aremeasured in accordance with IFRS 2 Share-Based Paymentat the acquisition date; and

• assets (or disposal groups) that are classified as held forsale in accordance with IFRS 5 Non-Current Assets Held forSale and Discontinued Operations are measured inaccordance with that Standard.

Goodwill is measured as the excess of the considerationtransferred, the amount of any non-controlling interests in theacquiree, and the fair value of the acquirer’s previously heldequity interest in the acquiree (if any) over the net of theacquisition-date amounts of the identifiable assets acquiredand the liabilities assumed. If, after reassessment, the net ofthe acquisition-date amounts of the identifiable assetsacquired and liabilities assumed exceeds the sum of theconsideration transferred, the amount of any non-controllinginterests in the acquiree and the fair value of the acquirer’spreviously held interest in the acquiree (if any), the excess isrecognised immediately in the Income Statement as a bargainpurchase gain.

Non-controlling interests that are present ownership interestsand entitle their holders to a proportionate share of the entity’snet assets in the event of liquidation may be initially measuredeither at fair value or at the non-controlling interests’proportionate share of the recognised amounts of theacquiree’s identifiable net assets. The choice of measurementbasis is made on a transaction-by-transaction basis. Othertypes of non-controlling interests are measured at fair valueor, when applicable, on the basis specified in another IFRS.

When the consideration transferred by the Group in a businesscombination includes assets or liabilities resulting from acontingent consideration arrangement, the contingentconsideration is measured at its acquisition-date fair value andincluded as part of the consideration transferred in a businesscombination. Changes in the fair value of the contingentconsideration that qualify as measurement period adjustmentsare adjusted retrospectively, with corresponding adjustmentsagainst goodwill. Measurement period adjustments areadjustments that arise from additional information obtainedduring the ‘measurement period’ (which cannot exceed oneyear from acquisition date) about facts and circumstances thatexisted at the acquisition date.

The subsequent accounting for changes in the fair value of thecontingent consideration that do not qualify as measurementperiod adjustments depends on how the contingentconsideration is classified. Contingent consideration that isclassified as equity is not remeasured at subsequent reportingdates and its subsequent settlement is accounted for withinequity. Contingent consideration that is classified as an assetor a liability is remeasured at subsequent reporting dates inaccordance with IAS 39 Financial Instruments: Recognitionand Measurement, or IAS 37 Provisions, Contingent Liabilitiesand Contingent Assets, as appropriate, with the correspondinggain or loss being recognised in the Income Statement.

When a business combination is achieved in stages, theGroup’s previously held equity interest in the acquiree isremeasured to its acquisition-date fair value and the resultinggain or loss, if any, is recognised in profit or loss. Amountsarising from interests in the acquiree prior to the acquisition

date that have previously been recognised in othercomprehensive income are reclassified to profit or loss wheresuch treatment would be appropriate if that interest weredisposed of.

If the initial accounting for a business combination isincomplete by the end of the reporting period in which thecombination occurs, the Group reports provisional amountsfor the items for which the accounting is incomplete. Thoseprovisional amounts are adjusted during the measurementperiod (see above), or additional assets or liabilities arerecognised, to reflect new information obtained about factsand circumstances that existed at the acquisition date that, ifknown, would have affected the amounts recognised at thatdate.

Investments in associatesAn associate is an entity over which the Group has significantinfluence. Significant influence is the power to participate inthe financial and operating policy decisions of the investee butis not control or joint control over these policies.

The results and assets and liabilities of associates areincorporated in these consolidated financial statements usingthe equity method of accounting. Under the equity method, aninvestment in an associate is initially recognised in theconsolidated statement of financial position at cost andadjusted thereafter to recognise the Group’s share of the profitor loss and other comprehensive income of the associate.When the Group’s share of losses of an associate exceeds theGroup’s interest in that associate (which includes any long-term interests that, in substance, form part of the Group’s netinvestment in the associate), the Group discontinuesrecognising its share of further losses. Additional losses arerecognised only to the extent that the Group has incurred legalor constructive obligations or made payments on behalf of theassociate.

An investment in an associate is accounted for using theequity method from the date on which the investee becomesan associate. On acquisition of the investment in an associate,any excess of the cost of the investment over the Group’sshare of the net fair value of the identifiable assets andliabilities of the investee is recognised as goodwill, which isincluded within the carrying amount of the investment. Anyexcess of the Group’s share of the net fair value of theidentifiable assets and liabilities over the cost of theinvestment, after reassessment, is recognised immediately inprofit or loss in the period in which the investment is acquired.

The requirements of IAS 39 Financial Instruments: Recognitionand Measurement are applied to determine whether it isnecessary to recognise any impairment loss with respect tothe Group’s investment in an associate. When necessary, theentire carrying amount of the investment (including goodwill)is tested for impairment in accordance with IAS 36 Impairmentof Assets as a single asset by comparing its recoverableamount (higher of value in use and fair value less costs ofdisposal) with its carrying amount. Any impairment lossrecognised forms part of the carrying amount of theinvestment. Any reversal of that impairment loss is recognisedin accordance with IAS 36 to the extent that the recoverableamount of the investment subsequently increases.

In the Company’s financial statements, investments inassociates are held at cost less impairment.


Notes to the Consolidated Financial Statements continuedFor the year ended 31 May 2015

1. PRINCIPAL ACCOUNTING POLICIES continued


Interests in joint operationsThe Group’s operations in Cameroon are conducted througha joint operation. A joint operation is a joint arrangementwhereby the parties that have joint control of the arrangementhave rights to the assets, and obligations for the liabilities,relating to the arrangement, such as is the case between GDCand RSM. Joint control is the contractually agreed sharing ofcontrol of an arrangement, which exists only when decisionsabout the relevant activities require unanimous consent of theparties sharing control.

When a group entity undertakes its activities under jointoperations, the Group as a joint operator recognises in relationto its interest in the joint operation:• its assets, including its share of any assets held jointly;• its liabilities, including its share of any liabilities jointlyincurred;

• its revenue from the sale of its share of the output arisingfrom the joint operation;

• its share of the revenue from the sale of the output by thejoint operation; and

• its expenses, including its share of any expenses incurredjointly.

The Group accounts for the assets, liabilities, revenues andexpenses relating to its interest in a joint operation inaccordance with the IFRSs applicable to the particular assets,liabilities, revenues and expenses.

In these consolidated financial statements, the Group hasrecognised its interest in the joint operation in Logbaba,Cameroon as described above.

When a group entity transacts with a joint operation in whicha group entity is a joint operator (such as a sale or contributionof assets), the Group is considered to be conducting thetransaction with the other parties to the joint operation, andgains and losses resulting from the transactions arerecognised in the Group’s consolidated financial statementsonly to the extent of other parties’ interests in the jointoperation.

When a group entity transacts with a joint operation in whicha group entity is a joint operator (such as a purchase ofassets), the Group does not recognise its share of the gainsand losses until it resells those assets to a third party.

(iv) RevenueSales revenueSales revenue comprises the fair value of considerationreceived or receivable for the sale of gas and condensate andrelated incidental services in the ordinary course of the Group’sactivities. Revenue is stated at the invoice value net of VAT.

Revenue from the sale of gas and condensate is recognisedwhen the significant risks and rewards of ownership have beentransferred to a third-party purchaser. Transfer of ownershipoccurs once the gas and condensate has been delivered asper the terms of the sales contract.

Interest incomeInterest income is accounted for on an accrual basis byreference to the principal amount and the effective interest rateapplicable.

(v) Production RoyaltiesRoyalty expenses are recognised on an accrual basis at thetime of sale of the hydrocarbons.

(vi) InventoryInventories consist of gas and condensate stocks. Inventoriesare stated at the lower of cost and net realisable value. Costsof inventories are determined on a weighted average basis.

(vii) Foreign CurrenciesThe presentation currency of the Group financial statementsis US Dollars and the functional currency and the presentationcurrency of the Company is US Dollars. The individual financialstatements of each Group company are maintained in thecurrency of the primary economic environment in which itoperates (its functional currency). The Group’s expenses,which are primarily for development and operation of theLogbaba gas and condensate field, are incurred principally inCentral African Francs and US Dollars but also Sterling, Euros,Russian Roubles and Kazakhstan Tenge. For the purpose ofthe consolidated financial statements, the results and financialposition of each Group company are expressed in US Dollars,the presentation currency.

In preparing the financial statements of the individualcompanies, transactions in currencies other than the entity’sfunctional currency (foreign currencies) are recorded at therates of exchange prevailing on the dates of the transactions.At each Balance Sheet date, monetary assets and liabilitiesthat are denominated in foreign currencies are translated atthe rates prevailing on the Balance Sheet date. Non-monetaryitems carried at fair value that are denominated in foreigncurrencies are translated at the rates prevailing at the datewhen the fair value was re-determined. Non-monetary itemsthat are measured in terms of historical cost in a foreigncurrency are not retranslated. Exchange differences arising onthe settlement of monetary items, and on the retranslation ofmonetary items, are included in the Income Statement for theyear, other than when a monetary item forms part of a netinvestment in a foreign operation, then exchange differenceson that item are recognised in equity. Exchange differencesarising on the retranslation of non-monetary items carried atfair value are included in the Income Statement for the yearexcept for differences arising on the retranslation of non-monetary items in respect of which gains and losses arerecognised directly in equity.

The assets and liabilities of foreign operations are translatedinto US Dollars at the rate of exchange ruling at the BalanceSheet date and their income statements are translated at theaverage exchange rates for the year, unless exchange ratesfluctuate significantly during that year in which case theexchange rates at the date of transaction are used. Theexchange differences arising on the translation are takendirectly to a separate component of equity. On disposal of aforeign entity, the deferred cumulative amount recognised inequity relating to that particular foreign operation is recognisedin the Income Statement.

Fair value adjustments arising on the acquisition of a foreignentity are treated as assets and liabilities of the foreign entityand translated at the closing rate.



(viii) Intangible AssetsExploration and evaluation assetsExpenditure incurred in respect of research of potentialhydrocarbon exploration, prior to the Group acquiring anexploration licence, is expensed in the Income Statement.

Exploration expenditure relates to the initial search for depositswith economic potential. Evaluation expenditure arises from adetailed assessment of deposits that have been identified ashaving economic potential.

The costs of exploration assets include the cost of acquiringrights to explore. Rights and costs incurred in relation toevaluating the technical feasibility and commercial viability ofextracting a hydrocarbon resource are capitalised as part ofexploration and evaluation assets.

Exploration costs include an allocation of administration andsalary costs, including share-based payments, as determinedby management.

Exploration costs are capitalised until technical feasibility andcommercial viability of extraction of reserves aredemonstrable. At that point, all costs which have beencapitalised to date and included in exploration and evaluationassets are assessed for impairment. All impairment losses arerecognised immediately in the Income Statement. To theextent they are not impaired, they are reclassified as eithertangible assets or intangible assets. Costs which are deemedto be intangible assets are written off over the life of the proveddeveloped reserves on a unit-of-production basis (accountedfor under IAS 38 Intangible Assets). Costs which are tangibleare accounted for under IAS 16 Property, Plant andEquipment.

Impairment of exploration and evaluation assetsExploration and evaluation assets are assessed for impairmentwhen facts and circumstances suggest that the carryingamount may exceed its recoverable amount. The Companyreviews and tests for impairment on an ongoing basis andspecifically if the following occurs:a) the period for which the Group has a right to explore in thespecific area has expired during the period or will expire inthe near future, and is not expected to be renewed;

b) substantive expenditure on further exploration for andevaluation of mineral resources in the specific area is neitherbudgeted nor planned;

c) exploration for and evaluation of hydrocarbon resources inthe specific area have not led to the discovery ofcommercially viable quantities of hydrocarbon resourcesand the entity has decided to discontinue such activities inthe specific area; and

d) sufficient data exists to indicate that, although adevelopment in the specific area is likely to proceed, thecarrying amount of the exploration and evaluation asset isunlikely to be recovered in full from successful developmentor by sale.

SoftwareSoftware is stated at cost less accumulated amortisation andany impairment losses. Amortisation is charged so as to writeoff the cost of software over its useful life using the straightline method.

(ix) Property, Plant and EquipmentComponentsWhere an asset has a significant component or components,on initial recognition, the cost is allocated between thesignificant components, and each significant component isdepreciated separately, based on its expected useful life.Components that are not individually significant are groupedtogether and are depreciated as a group based on itsexpected life.

Plant and equipmentPlant and equipment is stated at cost less any subsequentaccumulated depreciation and any accumulated impairmentlosses.

Depreciation of an asset begins when it is available for use,that is when it is in the location and condition necessary for itto be capable of operating in the manner intended bymanagement. Depreciation of an asset ceases at the earlier ofthe date that the asset is classified as held for sale and thedate that the asset is derecognised.

Depreciation is charged so as to write off the cost of plant andequipment over its useful life using the straight line method orunit-of-production method, whichever is considered mostappropriate.

Oil and gas interestsCosts less assessed impairment losses are transferred toproperty, plant and equipment assets when technical feasibilityand commercial viability of extraction of reserves aredemonstrated.

Depreciation and depletion of costs is provided so as to writeoff the cost of the assets over their useful lives using thestraight line method or the unit-of-production method,whichever is considered most appropriate.

Calculations under the unit-of-production method are basedon proved developed reserves. Changes in estimates affectingunit-of-production calculations for depreciation anddecommissioning provisions are accounted for prospectively.

Expected decommissioning costs of a property are providedon the basis of net present value of the liability. An equivalentamount is added to the oil and gas asset and charged to theIncome Statement on a unit-of-production basis.

Assets under constructionAssets under construction are stated at cost less impairmentlosses. They are not depreciated until construction is completeand the assets are ready for use.





(x) LeasingLeases are classified as finance leases whenever the terms ofthe lease transfer substantially all the risks and rewards ofownership to the lessee. All other leases are classified asoperating leases.

Assets held under finance leases are initially recognised asassets of the Group at their fair value at the inception of thelease or, if lower, at the present value of the minimum leasepayments. The corresponding liability to the lessor is includedin the Balance Sheet as a finance lease obligation.

Lease payments are apportioned between finance expensesand reduction of the lease obligation so as to achieve aconstant rate of interest on the remaining balance of theliability. Finance expenses are recognised immediately in theIncome Statement, unless they are directly attributable toqualifying assets, in which case they are capitalised inaccordance with the Group’s general policy on borrowingcosts (see Note 1(xi) Borrowing Costs below). Contingentrentals are recognised as expenses in the periods in whichthey are incurred.

Operating lease payments are recognised as an expense on astraight-line basis over the lease term, except where anothersystematic basis is more representative of the time pattern inwhich economic benefits from the leased assets areconsumed. Contingent rentals arising under operating leasesare recognised as an expense in the period in which they areincurred.

In the event that lease incentives are received to enter intooperating leases, such incentives are recognised as a liability.The aggregate benefit of incentives is recognised as a reductionof rental expense on a straight-line basis, except where anothersystematic basis is more representative of the time pattern inwhich economic benefits from the leased asset are consumed.

(xi) Borrowing CostsBorrowing costs directly attributable to the acquisition,construction or production of qualifying assets, which areassets that necessarily take a substantial period of time to getready for their intended use or sale, are added to the cost ofthose assets, until such time as the assets are substantiallyready for their intended use or sale.

Investment income earned on the temporary investment ofspecific borrowings pending their expenditure on qualifyingassets is deducted from the borrowing costs eligible forcapitalisation.

All other borrowing costs are recognised in the IncomeStatement in the period in which they are incurred.

(xii) ProvisionsProvisions are recognised when the Group has a presentobligation as a result of a past event, it is probable that theGroup will be required to settle that obligation, and a reliableestimate can be made of the amount, taking into account therisks and uncertainties surrounding the obligation.

Provisions are measured at the Directors’ best estimate of theexpenditure required to settle the obligation at the BalanceSheet date and are discounted to present value where theeffect is material. The amortisation or “unwinding” of thediscount applied in establishing the net present value ofprovisions is charged to the Income Statement in eachaccounting period. The amortisation of the discount is shownas a finance cost, rather than as an operating cost.

Decommissioning and rehabilitation (“D&R”) provisionD&R costs include the dismantling and demolition ofinfrastructure and the removal of residual materials andremediation of disturbed areas.

The amount recognised as a D&R provision is the bestestimate of the consideration required to settle the presentobligation at the Balance Sheet date. D&R costs are a normalconsequence of exploration, development and productionactivities and the majority of such expenditure is incurred atthe end of the life of the field. Although the ultimate cost to beincurred is uncertain, the provision has been estimated inaccordance with management’s expectation of the D&R costsand of the period when those costs are to be incurred.

The initial D&R provision, together with other movements inthe provision, including those resulting from new disturbance,updated cost estimates, changes to the estimated lives ofoperations and revisions to discount rates is included withinexploration and evaluation assets or property, plant andequipment as appropriate. These costs are then depreciatedover the lives of the assets to which they relate. Whererehabilitation is conducted systematically over the life of theoperation, rather than at the time of closure, provision is madefor the estimated outstanding continuous rehabilitation workat each Balance Sheet date and the cost is charged to theIncome Statement.

When some or all of the economic benefits required to settlea provision are expected to be recovered from a third party,the receivable is recognised as an asset if it is virtually certainthat reimbursement will be received and the amount of thereceivable can be measured reliably.

(xiii) Financial InstrumentsFinancial instruments are recognised in the Group’s BalanceSheet when the Group becomes a party to the contractualprovisions of the instrument.

Financial assetsFinancial assets within the scope of IAS 39 FinancialInstruments: Recognition and Measurement are classified asfinancial assets at fair value through profit or loss, loans andreceivables, held-to-maturity investments, or available-for-salefinancial assets, as appropriate. When financial assets arerecognised initially, they are measured at fair value, plus, in thecase of investments not at fair value through profit or loss,directly attributable transaction costs. The Group determinesthe classification of its financial assets on initial recognitionand, where allowed and appropriate, re-evaluates thisdesignation at each financial year end.



Loans and receivables are non-derivative financial assets withfixed or determinable payments that are not quoted in anactive market. After initial measurements, loans andreceivables are carried at amortised cost using the effectiveinterest method less any allowance for impairment. Gains andlosses are recognised in the Income Statement when the loansand receivables are de-recognised or impaired, as well asthrough the amortisation process.

The Group assesses, at each Balance Sheet date, whether afinancial asset or group of financial assets is impaired. If thereis objective evidence that an impairment loss on assets carriedat amortised cost has been incurred, the amount of the loss ismeasured as the difference between the asset’s carryingamount and the present value of estimated future cash flows(excluding future expected credit losses that have not beenincurred) discounted at the financial asset’s original effectiveinterest rate (i.e. the effective interest rate computed at initialrecognition). The carrying amount of the assets is reducedthrough use of an impairment account. The amount of the lossis recognised in the Income Statement.

If, in a subsequent period, the amount of the impairment lossdecreases and the decrease can be related objectively to anevent occurring after the impairment was recognised, thepreviously recognised impairment loss is reversed, to theextent that the carrying value of the asset does not exceed itsamortised cost at the reversal date. Any subsequent reversalof an impairment loss is recognised in the Income Statement.

Unlisted investmentsUnlisted investments are stated at cost, less any accumulatedimpairments.

Investment in subsidiaries Investments in subsidiaries are stated in the Company BalanceSheet at cost, less any accumulated impairments.

Advances to subsidiariesAdvances to subsidiaries represents funding by the Companyof development expenditure incurred by subsidiaries for whichrepayment is neither planned nor likely to occur in theforeseeable future. These are treated as part of the Company’snet investment in the subsidiary.

Trade receivablesTrade receivables are measured at initial recognition at fairvalue, which is usually invoice value, and are subsequentlymeasured at amortised cost using the effective interest ratemethod. In relation to trade receivables, an allowance forimpairment is made when there is objective evidence (such asthe probability of insolvency or significant financial difficultiesof the debtor) that the Group will not be able to collect all ofthe amounts due under the original terms of the invoice. Thecarrying amount of the receivable is reduced through use ofan impairment account. Impaired debts are de-recognisedwhen they are assessed as uncollectible.

VAT recoverableVAT recoverable is recognised to the extent permitted undercurrent legislation.

Cash and cash equivalentsCash and cash equivalents is comprised of short-term, highly-liquid investments that are readily convertible to knownamounts of cash and which are subject to an insignificant riskof changes in value.

Financial liabilitiesFinancial liabilities are classified as either financial liabilities atfair value through profit or loss or other financial liabilitiesdepending on the substance of the contractual arrangementsentered into.

Trade payables Trade payables classified as financial liabilities are initiallymeasured at fair value, which is usually invoice value, and aresubsequently measured at amortised cost using the effectiveinterest rate method.

Other financial liabilitiesOther financial liabilities, including borrowings, are initiallymeasured at fair value, net of transaction costs.

Other financial liabilities are subsequently measured atamortised cost using the effective interest method, withinterest expense recognised on an effective interest ratemethod.

The effective interest method is a method of calculating theamortised cost of a financial liability and of allocating interestexpense over the relevant period. The effective interest rate isthe rate that exactly discounts estimated future cash paymentsthrough the expected life of the financial liability, or (whereappropriate) a shorter period, to the net carrying amount oninitial recognition.

Derecognition of financial liabilitiesThe Group derecognises financial liabilities when the Group’sobligations are discharged, cancelled or they expire.

Equity instrumentsEquity instruments issued by the Company are recorded at thevalue of proceeds received.

(xiv) TaxationThe tax expense represents the sum of the tax currentlypayable and deferred tax.

The current tax payable is based on taxable profit for the year,or, in the case of the Group’s operations in Cameroon, taxableprofit or revenue (refer Note 11 Income Tax). Taxable profitdiffers from net profit as reported in the Income Statementbecause it excludes items of income or expense that aretaxable or deductible in other years and it further excludesitems that are never taxable or deductible. The Group’s liabilityfor current tax is calculated using tax rates and laws that havebeen enacted or substantively enacted by the Balance Sheetdate.

Deferred tax is recognised on temporary differences betweenthe carrying amounts of assets and liabilities in the financialstatements and the corresponding tax bases used in thecomputation of taxable profit.

Deferred tax liabilities are generally recognised for all taxabletemporary differences. Deferred tax assets are generallyrecognised for all deductible temporary differences to theextent that it is probable that taxable profits will be available





against which those deductible temporary differences can beutilised. Such deferred tax assets and liabilities are notrecognised if the temporary differences arise from the initialrecognition of goodwill or from the initial recognition of otherassets and liabilities in a transaction that is not a businesscombination and that affects neither the taxable profit nor theaccounting profit. Deferred tax liabilities are recognised fortaxable temporary differences associated with investments insubsidiaries, associates and joint ventures, except where theGroup is able to control the reversal of the temporarydifference and it is probable that the temporary difference willnot reverse in the foreseeable future.

Deferred tax assets arising from deductible temporarydifferences associated with such investments are onlyrecognised to the extent that it is probable that there will besufficient taxable profits against which to utilise the benefitsof the temporary differences and they are expected to reversein the foreseeable future.

The carrying amount of deferred tax assets is reviewed at eachBalance Sheet date and reduced to the extent that it is nolonger probable that sufficient taxable profits will be availableto allow all or part of the asset to be recovered.

Unrecognised deferred tax assets are reassessed at eachBalance Sheet date and are recognised to the extent that ithas become probable that future taxable profits will allow thedeferred tax asset to be recovered.

Deferred tax assets and liabilities are measured at the tax ratesthat are expected to apply in the period when the liability issettled or the asset is realised, based on tax rates (and taxlaws) that have been enacted or substantively enacted at theBalance Sheet date. The measurement of deferred taxliabilities and assets reflects the tax consequences that wouldfollow from the manner in which the Group expects, at the endof the reporting period, to recover or settle the carrying amountof its assets and liabilities.

Deferred tax assets and liabilities are offset when there is alegally enforceable right to set off current tax assets againstcurrent tax liabilities and when they relate to income taxeslevied by the same taxation authority and the Group intendsto settle its current tax assets and liabilities on a net basis.

(xv) Share-Based PaymentsThe Group has applied the requirements of IFRS 2 Share-Based Payment.

When the Group issues equity-settled share-based paymentsto suppliers or employees, they are measured at the fair valueat the date of grant. Depending on the nature of the cost, thefair value at the grant date is expensed or capitalised on astraight-line basis over the vesting period, based on theGroup’s estimate of shares that will eventually vest andadjusted for the effect of non-market based vestingconditions.

Where the value of the goods and services received inexchange for the share-based payment cannot be reliablyestimated, the fair value is measured by use of an appropriatevaluation model. The expected life used in the model isadjusted, based on management’s best estimate, for theeffects of non-transferability, exercise restrictions andbehavioural considerations.

(xvi) Employee Share Ownership Plan (“ESOP”)The Victoria Oil & Gas ESOP Trust was established on22 February 2006 to hold ordinary shares purchased to satisfyshare scheme awards made to the employees of the Group.Shares are transferred to the members of the scheme on grantdate which is also the relevant vesting date.

The Trust is consolidated in the financial statements inaccordance with SIC 12 Special Purpose Entities. When theTrust purchases shares from the Company, the Companyrecognises an increase in Share Capital. From the perspectiveof the consolidated financial statements, the shares of theCompany held by the Trust are treasury shares and arededucted from equity in accordance with IAS 32 FinancialInstruments: Presentation, until the shares are transferred bythe Trust to members.

If the transfer to members is a cost of the Company, theCompany recognises an expense in its accounts. If the costrelates to a subsidiary, upon transfer of the shares to members,the Company recognises an increase in intercompanyreceivables and the subsidiary recognises the expense, or, ifcapital, the subsidiary recognises the increase in its assets. Thecorresponding credits are to the Share-Based PaymentReserve in the Company, and, as the grant date is also therelevant vesting date, the credits are immediately transferredto Retained Earnings/Accumulated Deficit.

(xvii) WarrantsThe Company settles certain transaction costs by the issue ofwarrants. Each warrant entitles the holder to purchase anordinary share in the Company at a specific price and within acertain time frame. The warrants are fair valued using anappropriate pricing model. Where the transaction relates toequity issue costs, the fair value of the warrants is credited toShare-Based Payment Reserve with a corresponding debit toShare Premium. For all other transactions, the fair value of thewarrants is credited to Share-Based Payment Reserve with acorresponding debit to the Income Statement. If warrantsremain unexercised at expiry, the value of the expired warrantsis transferred from the Share-Based Payment Reserve toRetained Earnings/Accumulated Deficit. For information onwarrants outstanding and pricing assumptions, see Note 30Share-Based Payments.

(xviii) Critical Accounting Judgements and Key Sourcesof Estimation UncertaintyCritical judgements in applying the Group’s accountingpolicies In the process of applying the Group’s accounting policiesabove, management has made the following judgements thathave the most significant effect on the amounts recognised inthe financial statements (apart from those involvingestimations, which are dealt with below).

Going concernThe assessment of the Group’s ability to execute its strategyby funding future working capital requirements involvesjudgement.

The Directors monitor future cash requirements and areconfident that the Group is able to continue as a goingconcern and no adjustment is required to the financialstatements. Further information regarding going concern isoutlined in Note 3 Going Concern.





As part of the assessment, management reviewed budgetsand cash flow forecasts and compared the requirements toavailable resources, existing funding facilities and potentialsources of additional funds.

Unit-of-production depreciation methodThe Group’s policy is to use the unit-of-production method ofdepreciation based on proved developed reserves fordepreciation and amortisation of its oil and gas assets. Thesecalculations require the use of estimates and assumptions andsignificant judgement is required in assessing the amount ofestimated reserves. Estimates of oil and gas reserves areinherently imprecise, require the application of judgement andare subject to future revision. Changes in proved developedreserves will prospectively affect the unit-of-productiondepreciation charges to the Income Statement. Proveddeveloped reserves used in the calculation of unit-of-production depreciation were 24.6bcf (2014: 24.6bcf) in theLogbaba field. The unit-of-production depreciation charged tothe Income Statement for the year ended 31 May 2015 whichwas calculated based on these reserves was $6.7 million(2014: $3.6 million). If the reserves were to vary by plus 10%,the unit-of-production depreciation for the year would havedecreased by $0.5 million and if they were to vary by minus10% the unit-of-production depreciation for the year wouldhave increased by $0.6 million.

Deferred tax assetsThe assessment of availability of future taxable profits involvesjudgement. A deferred tax asset is recognised to the extentthat it is probable that taxable profits will be available againstwhich deductible temporary differences and the carry forwardof unused tax credits and unused tax losses can be utilised.In the event that all tax losses could be utilised, a deferred taxasset of $15.4 million (2014: $12.2 million) would berecognised in the financial statements. A deferred tax asset of$3.6 million has been recognised in the year in relation to theGroup’s operations in Cameroon as it is considered likely thatthe operations will generate future taxable profit against whichthe unused tax losses will be able to be applied. No deferredtax asset has been recognised in the year in relation to theGroup’s other operations due to the unpredictability of futureprofit streams in the companies that have accrued tax losses.

Key sources of estimation uncertaintyThe preparation of financial statements requires managementto make estimates and assumptions that affect the amountsreported for assets and liabilities as at the Balance Sheet dateand the amounts reported for revenues and expenses duringthe year. The nature of estimation means that actual outcomescould differ from those estimates. The key sources ofestimation uncertainty that have a significant risk of causingmaterial adjustment to the carrying amounts of assets andliabilities within the next financial year are discussed below.

Operating in Cameroon, Russia and KazakhstanThe Group’s activities are conducted through its investmentsand subsidiaries operating in the oil and gas industry. Theseoperations are subject to political, economic and regulatoryuncertainties prevailing in these countries.

The legislation regarding taxation and foreign exchangetransactions is constantly evolving and many new laws andregulations are not always clearly written and theirinterpretation is subject to the opinions of local inspectors.

It is not possible to quantify the potential impact of changesin the above on these financial statements as there are toomany possible variables and outcomes, but the Directorsbelieve that the Group has adequately recorded its assets andliabilities in the context of these uncertainties.

Decommissioning and rehabilitation (“D&R”) provisionThe amount of provisions in respect of D&R costs of$1.7 million (2014: $1.7 million) is based on legal requirementscurrently enacted or substantially enacted, assumptionsregarding the life of certain exploration, development andproduction assets, expected site restoration costs, currentprices for similar activities and the discount rate.

The laws and regulations concerning environmentalassessments and site rehabilitation continue to evolve and,accordingly, the Group may be liable to substantial costs inthe future relating to past and current operations.

Refer to Note 25 Provisions for further details on the D&Rprovisions recognised in the current year.

Fair value measurements and valuation processesIn estimating the fair value of an asset or a liability, the Groupuses market-observable data to the extent that it is available.Where Level 1 inputs are not available, the Group engagesthird-party qualified valuers to perform the valuation. Seniormanagement works closely with the qualified external valuersto establish the appropriate valuation techniques and inputsto the model.

Information about the valuation techniques and inputs used indetermining fair values are disclosed in Note 29 Financial RiskManagement and Note 30 Share-Based Payments.

The Directors do not expect the key sources of estimationuncertainty to be resolved in the next twelve months.



2. ADOPTION OF NEW AND REVISED STANDARDS AND INTERPRETATIONS

Application of new and revised International Financial Reporting Standards (“IFRSs”)In the current year, the Group has adopted the following standards, amendments and interpretations, none of which have had amaterial impact on the Group:• IFRS 10 Consolidated Financial Statements• IFRS 11 Joint Arrangements• IFRS 12 Disclosure of Interests in Other Entities• IAS 27 Separate Financial Statements• IAS 28 Investments in Associates and Joint Ventures• Amendments to IFRS 10, IFRS 12 and IAS 27 in relation to Investment Entities• Amendments to IAS 32 on financial instrument asset and liability offsetting• IAS 36 (Amendment May 2013) Recoverable Amount Disclosures for Non-Financial Assets• IAS 39 (Amendment June 2013) Novation of Derivatives and Continuation of Hedge Accounting

The Group did not adopt any other new IFRSs or Interpretations in the year that had a material impact on the Group’s financialstatements.

Standards and Interpretations in issue but not yet adoptedAt the date of approval of these financial statements, the following Standards and Interpretations which have not been appliedin these financial statements were in issue but not yet mandatorily effective (and in some cases have not yet been adopted bythe EU):• IFRS 9 Financial Instruments• IFRS 14 Regulatory Deferral Accounts• IFRS 15 Revenue from Contracts with Customers• IFRIC 21 Levies• Amendments to IAS 19 Employee Benefits on defined benefit plans• Amendments to IAS 1 Presentation of Financial Statements on the disclosure initiative• Amendments to IFRS 10 and IAS 28 on investment entities applying the consolidation exemption• Amendments to IFRS 10 and IAS 28 on the sale or contribution of assets• Amendments to IAS 27 Separate Financial Statements on the equity method• Amendments to IAS 16 Property, Plant and Equipment and IAS 38 Intangible Assets on depreciation and amortisation• Amendments to IFRS 11 Joint Arrangements on acquisition of an interest in a joint operation

The Directors are currently assessing the impact in relation to the adoption of these Standards and Interpretations for futureperiods of the Group. None are expected to have a material impact.


3. GOING CONCERN

The Directors have given careful consideration to the appropriateness of the going concern basis in the preparation of the financialstatements. The Income Statement reports that the Group incurred a loss of $50.8 million for the year ended 31 May 2015(2014: $1.7 million), of which $49.8 million relates to the impairment of the Russian asset, which is a non-recurring item (refer Note 4 Impairment of Exploration and Evaluation Assets). Revenue for the year was $27.9 million, an increase of 90%compared to the prior year (2014: $14.7 million). The Consolidated Balance Sheet shows that the Group had net current assetsof $12.6 million at the year-end date (2014: $8.1 million).

Net current assets includes current borrowings of $4.7 million (2014: $4.4 million) relating to the Noor Petroleum loan. Subsequentto the end of the financial year, loan notes with face value of $1.5 million were repaid along with the interest accrued to therepayment date. The remaining loan notes with face value of $1.5 million, along with accrued interest on the notes, remainrepayable as at 27 October 2015. Current borrowings also includes $6.0 million (2014: $5.0 million) relating to the BGFI loan (referNote 24 Borrowings), on which monthly repayments continue to be made as they become due.

During the financial year, the Group’s gas production and sales from the Logbaba project increased with the connection of severalnew customers. Most notably, the Group signed a two-year gas sales agreement with ENEO, Cameroon’s power utility company,for the sale of gas for electricity generation. The Group successfully connected ENEO to the pipeline network with gas firstsupplied to the Bassa power station in March 2015 and take-or-pay conditions triggered in April 2015 upon connection of theLogbaba power station. Despite only being fully connected for two months in the year ended 31 May 2015, ENEO was the largestindividual contributor to the Group’s revenue, representing sales of $5.6 million. The effect of the ENEO agreement should bemore discernible in the accounts in the 2016 financial year, which will be the first complete year of supply. The agreementrepresents a minimum $42.1 million of sales over its two-year term at take-or-pay levels and ENEO has indicated that it is eagerto utilise the Group’s gas for electricity generation at other sites, demonstrating that there is scope for further substantial increasesin the Group’s revenue. ENEO has pledged a security bond which the Group may call upon if ENEO fails to pay invoices on time.

At 31 May 2015, the Group had $16.0 million of cash (2014: $17.0 million). At 27 October 2015, the Group had cash of$13.5 million. Based on their forecasts, the Directors expect that the Group will generate enough revenue to fund its operationsfor the 12 month period from the date of approval of these financial statements.

The Directors have also reviewed forecasts in respect of the operating activities and planned work programmes of the Group’sCameroonian and Russian assets. The funds and facilities available, after allowing for funds required for administration anddevelopment costs, are expected to cover the cost of these activities. In the event of a delay in build-up of gas sales or a delaywith securing debt or equity funding, the Group will reschedule the exploration and development expenditure.

On this basis, the Directors have concluded that the Group and Company currently have adequate resources available to maintainthe Group and Company’s base operation and to continue in operational existence for the foreseeable future.

Given the above, the Directors consider it appropriate to prepare the financial statements on a going concern basis. Accordingly,these financial statements do not include any adjustments to the carrying amount and classification of assets and liabilities thatmay arise if the Group was unable to continue as a going concern.

4. IMPAIRMENT OF EXPLORATION AND EVALUATION ASSETS

2015 2014$000 $000

Impairment of carrying value of West Medvezhye licence interest:Intangible assets (Note 16) 49,702 –Property, plant and equipment (Note 17) 52 –Current assets 21 –

49,775 –

For some time, the Directors have been actively engaging with interested parties in an effort to derive value from the Group’sRussian exploration and evaluation asset, West Medvezhye, through farm-out, joint venture or sale. When assessing the assetfor impairment at 30 November 2014, the Directors considered that the political issues in Russia, combined with the weaknessin the world oil price, made deriving value from the asset increasingly difficult, and they took the view that it would be prudent tofully provide against the asset.

Because of the level of uncertainty regarding monetisation of the asset, it was difficult for the Directors to form a view on thevalue that the asset should be held at in the accounts and, as a result, the decision was taken to completely write down theasset. Depending on the outcome of current efforts to divest the asset, there may be an adjustment in future periods, howeverthe situation did not substantially change between 30 November 2014 and 31 May 2015 and as such the asset continues to becarried fully impaired.




5. ADJUSTMENT RESULTING FROM ARBITRATION DECISION

The financial statements for the year ended 31 May 2014 included an adjustment as at 1 June 2013 necessary to reflect theInternational Chamber of Commerce arbitration decision on the participating interests in the Logbaba gas and condensate project.

The adjustment resulted in:• a credit of $6.5 million to the income statement in relation to RSM’s share of prior years’ operating expenses. An analysis ofthese costs which were expensed through the income statements in prior years, is as follows:

2014$000

Cost of salesProduction royalties 222Other cost of sales 2,207

Increase in gross profit 2,429Sales and marketing expenses 165Administrative expenses 3,164Other gains (116)

Increase in operating profit 5,642Finance costs 901

Income statement adjustment 6,543

• the following balance sheet reclassifications to record the transfer to RSM of its participating share of assets and liabilitiesincurred on the project. Previously these assets and liabilities had been accounted for as if they were held 100% by the Group:

2014$000

Assets:Non-current assetsIntangible assets (220)Property, plant and equipment (17,487)

Current assetsInventories (22)Trade and other receivables (862)

Liabilities:Current liabilitiesTrade and other payables 2,423Borrowings 1,550

Non-current liabilitiesBorrowings 107Provisions 854

Balance sheet adjustment at 1 June 2013 (13,657)

• recognition of a receivable from RSM for the balance of the two adjustments above:2014$000

Income statement adjustment (see above) 6,543Balance sheet adjustment (see above) 13,657

Receivable from RSM at 1 June 2013 20,200

Société Nationale des Hydrocarbures, the state-owned national oil and gas company of Cameroon, is entitled to acquire a 5%interest in the Logbaba Concession but has not yet signed a participation agreement. Accordingly, these financial statements,and the financial statements for the comparative year, have been prepared on the basis that the Group and RSM have 60% and40% interests respectively in the Concession.


6. SEGMENTAL ANALYSIS

IFRS 8 Operating Segments requires operating segments to be identified on the basis of internal reports about the Group thatare regularly reviewed by the chief operating decision maker. The Board is deemed the chief operating decision maker within theGroup. The Group has one class of business: oil and gas exploration, development and production and the sale of hydrocarbonsand related activities. This is analysed on a location basis. Only the Cameroon segment is generating revenue, which is from thesale of hydrocarbons. For the purposes of segmental reporting for the year ended 31 May 2015, the Russia and Kazakhstansegments have been combined as the assets of these segments have both been fully impaired. The accounting policies of thereportable segments are the same as the Group’s accounting policies described in Note 1 Principal Accounting Policies.

The following tables present revenue, loss and certain asset and liability information regarding the Group’s business segmentsfor the year ended 31 May 2015 and comparative information for the year ended 31 May 2014:

Russia andCameroon Kazakhstan Corporate Total

Twelve months to 31 May 2015 $000 $000 $000 $000

Revenue 27,931 – – 27,931Production royalties (4,016) – – (4,016)Other cost of sales (14,817) – – (14,817)

Gross profit 9,098 – – 9,098Sales and marketing (206) – – (206)Administrative expenses (5,437) (1,464) (5,440) (12,341)Other gains/(losses) 1,634 (14) (167) 1,453Share of profit of associate – – 1,098 1,098Impairment of exploration and evaluation assets* – (49,775) – (49,775)

Operating profit/(loss) 5,089 (51,253) (4,509) (50,673)Investment income – – 19 19Finance costs (1,203) (21) (303) (1,527)

Profit/(loss) before taxation 3,886 (51,274) (4,793) (52,181)Income tax credit/(expense) 1,522 – (149) 1,373

Profit/(loss) after taxation for the financial year 5,408 (51,274) (4,942) (50,808)

Total assets 138,234 142 19,402 157,778

Total liabilities (27,615) (261) (6,322) (34,198)

* Impairment loss relates to impairment of the Russian asset.

Russia andCameroon Kazakhstan Corporate Total


Revenue 14,729 – – 14,729Production royalties (3,953) – – (3,953)Other cost of sales (6,295) – – (6,295)

Gross profit 4,481 – – 4,481Sales and marketing (620) – – (620)Administrative expenses (4,667) (501) (4,135) (9,303)Other losses (59) (3,155) (753) (3,967)Adjustment resulting from arbitration decision 6,543 – – 6,543

Operating profit/(loss) 5,678 (3,656) (4,888) (2,866)Investment income – – 146 146Finance costs (1,105) (28) (871) (2,004)

Profit/(loss) before taxation 4,573 (3,684) (5,613) (4,724)Income tax credit 3,059 – – 3,059

Profit/(loss) after taxation for the financial year 7,632 (3,684) (5,613) (1,665)

Total assets 147,615 57,718 15,215 220,548

Total liabilities (32,831) (376) (6,044) (39,251)




6. SEGMENTAL ANALYSIS continued

Information about major customersFor the purposes of IFRS, a group of entities known to a reporting entity to be under common control shall be considered a singlecustomer. Under this measure, revenues of $27.9 million (2014: $14.7 million) related to sales of gas and condensate and relatedincidental services to 22 customers. Three customers each contributed 10% or more to the Group’s revenue in 2015, contributing$5.6 million, $5.1 million, and $4.6 million respectively (2014: five customers contributed 10% or more, contributing $3.5 million,$2.3 million, $2.0 million, $1.9 million and $1.6 million respectively).

7. OTHER GAINS/(LOSSES)

2015 2014$000 $000

Foreign exchange gains/(losses) 733 (3,919)Discounts on settlement of debts 722 –Loss on disposal of non-current assets (2) (59)Other income – 11

1,453 (3,967)

8. FINANCE REVENUE

2015 2014$000 $000

Interest income 19 15Fair value gain on embedded derivatives – 131

19 146

9. FINANCE COSTS

2015 2014$000 $000

Loan interest 841 548Unwinding of discount on provisions 662 624Interest on obligations under finance leases 24 156Convertible loan interest – 149Loan finance fees – 331Other interest expense – 196

1,527 2,004


10. LOSS BEFORE TAXATION

The loss before taxation is stated after crediting/(charging):2015 2014$000 $000

Directors’ remuneration (Note 13) 2,725 1,792Fair value gain on embedded derivatives – (131)

The analysis of auditors’ remuneration is as follows:

Fees payable to the Group auditors for the audit of the Group’s annual accounts 235 277Fees paid to the Group auditors for other services 25 –

260 277

$159,000 of the above annual audit fees relate to the Company (2014: $180,000).

Administrative expenses comprise:2015 2014$000 $000

Wages and salaries 5,202 4,229Professional fees 3,559 2,538Office and other administrative expenditure 2,011 1,546Travel 354 342Rent 373 212Depreciation and amortisation 147 240Other 695 196

12,341 9,303

11. INCOME TAX

2015 2014$000 $000

Current tax 643 238Deferred tax (2,016) (3,297)

Income tax credit (1,373) (3,059)

Factors affecting the tax expense/(credit):

Loss on ordinary activities before tax (52,181) (4,724)Tax calculated at average tax rate of 21.0% (2014: 31%) (10,958) (1,464)

Effects of:Effect of impairment losses that are not deductible for tax 10,453 –Effect of share of profit of associate (188) –Effect of income that is exempt from taxation (21) –Effect of expenses not deductible for tax 352 347Effect of non-taxable fair value adjustment on derivatives – (41)Effect of unutilised tax losses 1,479 1,158Net deferred tax asset recognised in respect of tax losses – (3,297)Effect on deferred tax resulting from change in tax rate (943) –Effect of recovery of exploration costs (2,190) –Effect of tax paid by Company on recharges to subsidiary 149 –Effect of tax paid on revenue 494 238

Total income tax credit (1,373) (3,059)




11. INCOME TAX continued

The main rate of UK corporation tax reduced from 21% to 20% effective from 1 April 2015 (substantively enacted on 2 July 2013).From 1 January 2015, income tax in Cameroon is charged at 33% on taxable profits or 2.2% of turnover, whichever is higher(previously 38.5% on taxable profits or 1.1% of turnover, whichever was higher). The corporation tax rates in the other countriesin which the Group operates did not change during the year. The decrease in the effective tax rate for 2015 was due to thereduction in tax rates and the proportionate increase in loss on ordinary activities attributable to Russia (as a result of theimpairment detailed in Note 4 Impairment of Exploration and Evaluation Assets) where the corporate tax rate charged on taxableprofits is 20%.

The operations in Cameroon are in a loss position for taxation purposes, however, as revenue is being earned, the 2.2% tax rateapplies. The effect of this is shown above as ‘Effect of tax paid on revenue’.

2015 2014$000 $000

Deferred tax balancesDeferred tax assets 3,627 3,297Deferred tax liabilities (4,914) (6,599)

(1,287) (3,302)

At the Balance Sheet date, the Group has unused tax losses of $66.6 million (2014: $39.3 million) available for offset againstfuture profit.

Of unused tax losses, $10.9 million relates to the Group’s operations in Cameroon, which are now generating revenue. A deferredtax asset of $3.6 million has been recognised in relation to the tax losses in Cameroon (2014: $3.3 million), as based on the Group’sforecasts it is probable that future taxable profits will be available against which the losses will be able to be utilised. The Grouphas assessed the recoverability and anticipates that the asset will be realised by the end of the tax year ended 31 December 2016.The actual tax results in future periods may differ from the estimate made at the time the deferred taxes are recognised.

No deferred tax asset has been recognised in either year in relation to the Group’s other operations due to the unpredictability offuture profit streams in the companies that have accrued tax losses. Accordingly, at the year-end, deferred tax assets amountingto $11.8 million (2014: $12.2 million) have not been recognised.

The deferred tax liability arose on the acquisition of GDC (formerly Rodeo Development Limited) by Bramlin Limited prior toBramlin Limited becoming part of the Group, and relates to property, plant and equipment in Cameroon. During the year, thedeferred tax liability was released in line with the amortisation of the related acquired assets.

12. EMPLOYEE INFORMATION

The average number of persons employed by the Group during the year was:2015 2014

Number Number

Directors 5 4Technical 75 70Management and administration 90 76

170 150

Staff costs for the above persons were:2015 2014$000 $000

Wages and salaries* 6,752 5,995Social security costs 410 518

7,162 6,513

* Wages and salaries costs includes $0.6 million relating to the exercise of an option to acquire shares from the ESOP Trust.

Included in the above is $2.0 million (2014: $2.3 million) of staff costs which were capitalised within property, plant and equipment.


13. DIRECTORS’ REMUNERATION

Remuneration in respect of the Directors was as follows:2015 2014$000 $000

Directors’ emoluments 2,725 1,792

Further details of individual Directors’ remuneration are shown in the Directors’ Remuneration Report.

14. KEY MANAGEMENT COMPENSATION

The compensation of the Directors and the seven (2014: six) other key management personnel (as defined within IAS 24 RelatedParty Disclosures) was as follows:

2015 2014$000 $000

Wages and salaries 2,060 1,778Employee bonuses 326 464Payments to employees in shares 638 –Professional fees paid to consultants in key management positions 2,453 585Cash bonuses paid to consultants in key management positions 464 –Share bonuses paid to consultants in key management positions 396 –Other non-cash benefits 247 –

6,584 2,827

The Company does not provide a pension scheme or other post-employment benefits to any employees, including Directors.

15. LOSS PER SHARE

Basic earnings or loss per share is computed by dividing the profit or loss after tax for the year available to ordinary shareholdersby the weighted average number of ordinary shares in issue and ranking for dividend during the year, excluding those held by theESOP Trust. Diluted earnings or loss per share is computed by dividing the profit or loss after taxation for the financial year bythe weighted average number of ordinary shares in issue, each adjusted for the effect of all dilutive potential ordinary shares thatwere outstanding during the year.

The following table sets out the computation for basic and diluted loss per share.2015 2014$000 $000

Numerator:Numerator for basic and diluted loss per share – loss for the financial year (50,808) (1,665)

Number Number

Denominator:Denominator for basic and diluted loss per share 105,236,040 105,232,532*

Cents Cents

Loss per share – basic and diluted (48.28) (1.58)*

* Comparative year earnings/(loss) per share has been restated as a result of the Capital Reorganisation detailed in Note 26Called-Up Share Capital.

Basic and diluted loss per share are the same, as the effect of any potential shares is anti-dilutive and is therefore excluded.




16. INTANGIBLE ASSETS

Exploration andevaluationGroup assets Software Total

Twelve months to 31 May 2015 $000 $000 $000

CostOpening balance 91,613 62 91,675Transfer to property, plant and equipment (299) – (299)Additions 276 – 276Disposals – (25) (25)Effect of movements in foreign exchange (8,286) – (8,286)

Closing balance 83,304 37 83,341

Accumulated amortisation and impairmentOpening balance 33,850 28 33,878Transfer to property, plant and equipment (27) – (27)Disposals – (25) (25)Provision for impairment (refer Note 4) 49,702 – 49,702Charge for the year – 12 12Effect of movements in foreign exchange (290) – (290)


Carrying amount 31 May 2015 69 22 91

Exploration andevaluationGroup assets Software Total


CostOpening balance 93,838 104 93,942Adjustment resulting from arbitration decision (refer Note 5) (199) (42) (241)Additions 883 – 883Disposals (172) – (172)Effect of movements in foreign exchange (2,737) – (2,737)


Accumulated amortisation and impairmentOpening balance 33,948 24 33,972Adjustment resulting from arbitration decision (refer Note 5) (11) (10) (21)Charge for the year 10 14 24Effect of movements in foreign exchange (97) – (97)


Carrying amount 31 May 2014 57,763 34 57,797


16. INTANGIBLE ASSETS continued

Segmental Analysis Russia andCameroon Kazakhstan Total


Opening balance 314 57,483 57,797Transfer to property, plant and equipment (272) – (272)Additions 61 215 276Provision for impairment (refer Note 4) – (49,702) (49,702)Charge for the year (12) – (12)Effect of movements in foreign exchange – (7,996) (7,996)

Closing balance 91 – 91

Russia andCameroon Kazakhstan Total


Opening balance 558 59,412 59,970Adjustment resulting from arbitration decision (refer Note 5) (220) – (220)Additions – 883 883Disposals – (172) (172)Charge for the year (24) – (24)Effect of movements in foreign exchange – (2,640) (2,640)

Closing balance 314 57,483 57,797

Having reviewed the exploration and evaluation expenditure, the Directors are confident that the capitalised value of the asset isrecoverable and are satisfied that the value of the asset is not less than its carrying value at 31 May 2015.




17. PROPERTY, PLANT AND EQUIPMENT

Group Assets under Plant and Oil and gas constructionequipment interest at cost Total


CostOpening balance 29,974 98,579 2,865 131,418Additions 974 3,224 4,435 8,633Transfer to plant and equipment – – (6,639) (6,639)Transfer from assets under construction 6,639 – – 6,639Transfer from exploration and evaluation assets – 299 – 299Disposals (4) – – (4)

Closing balance 37,583 102,102 661 140,346

DepreciationOpening balance 1,645 8,001 – 9,646Transfer from exploration and evaluation assets – 27 – 27Disposals (2) – – (2)Charge for the year 1,077 8,193 – 9,270Provision for impairment – 52 – 52

Closing balance 2,720 16,273 – 18,993

Carrying amount31 May 2015 34,863 85,829 661 121,353

The realisation of property, plant and equipment of $121.4 million is dependent on the continued successful development ofeconomic reserves.

Group Assets under Plant and Oil and gas constructionequipment interest at cost Total


CostOpening balance 33,025 102,786 3,093 138,904Adjustment resulting from arbitration decision (refer Note 5) (12,151) (4,966) (1,167) (18,284)Additions 283 759 9,765 10,807Transfer to plant and equipment – – (8,826) (8,826)Transfer from assets under construction 8,826 – – 8,826Disposals (9) – – (9)

Closing balance 29,974 98,579 2,865 131,418

DepreciationOpening balance 1,383 4,483 – 5,866Adjustment resulting from arbitration decision (refer Note 5) (249) (548) – (797)Disposals (7) – – (7)Charge for the year 518 4,066 – 4,584

Closing balance 1,645 8,001 – 9,646

Carrying amount31 May 2014 28,329 90,578 2,865 121,772


17. PROPERTY, PLANT AND EQUIPMENT continued

Segmental Analysis Russia andCameroon Kazakhstan Corporate Total


CostOpening balance 129,038 2,351 29 131,418Additions 8,627 – 6 8,633Transfer from exploration and evaluation assets 299 – – 299Disposals – – (4) (4)

Closing balance 137,964 2,351 31 140,346

DepreciationOpening balance 7,335 2,299 12 9,646Transfer from exploration and evaluation assets 27 – – 27Disposals – – (2) (2)Charge for the year 9,263 – 7 9,270Provision for impairment – 52 – 52

Closing balance 16,625 2,351 17 18,993

Carrying amount31 May 2015 121,339 – 14 121,353

Segmental Analysis Russia andCameroon Kazakhstan Corporate Total


CostOpening balance 136,530 2,351 23 138,904Adjustment resulting from arbitration decision (refer Note 5) (18,284) – – (18,284)Additions 10,792 – 15 10,807Disposals – – (9) (9)

Closing balance 129,038 2,351 29 131,418

DepreciationOpening balance 3,556 2,299 11 5,866Adjustment resulting from arbitration decision (refer Note 5) (797) – – (797)Disposals – – (7) (7)Charge for the year 4,576 – 8 4,584

Closing balance 7,335 2,299 12 9,646

Carrying amount31 May 2014 121,703 52 17 121,772

Assets under construction comprise of expenditure on the uncompleted sections of the pipeline network and surface infrastructureon the Logbaba gas and condensate project in Cameroon.

As at the end of the financial year, the accumulated depreciation charged to oil and gas interests equated to 13.11%.




17. PROPERTY, PLANT AND EQUIPMENT continued

Plant and Plant andequipment equipment

2015 2014Company $000 $000

CostOpening balance 33 27Additions 6 15Disposals (4) (9)

Closing balance 35 33

DepreciationOpening balance 16 15Disposals (2) (7)Charge for the year 7 8

Closing balance 21 16

Carrying amount:Closing balance 14 17

18. INVESTMENT IN CAMEROON HOLDINGS LIMITED

Group Company2015 2014 2015 2014$000 $000 $000 $000

Unlisted investments – 6,600 – 6,600Investment in associate 5,398 – 4,502 –

5,398 6,600 4,502 6,600

In the 2011 financial year, the Company acquired a 35% interest in Cameroon Holdings Limited (“CHL”) along with a receivableloan of $2.1 million for a total cost of $6.6 million. See Note 34 Related Party Transactions for further information regarding CHL.Details of the investment are as follows:

Proportion ownershipinterest and voting power

Company Principal activity Place of incorporation and operation held by the Group

Cameroon Holdings Limited Oil and gas services Guernsey 35%

The interest in CHL was previously carried as an unlisted investment, as the Company did not have significant influence overCHL despite the interest in CHL being over 20%. The Company acquired the investment in CHL as a mechanism to buy backpart of the royalty payable on the Logbaba revenue stream rather than to be an active participant in CHL.

During the current financial year, the Group’s interaction with CHL increased in line with the increasing level of material transactionsbetween the Group and CHL, details of which are outlined in Note 34 Related Party Transactions. In addition, due to the materialityof these and future anticipated transactions, the Directors are now considering taking extra steps to exercise the Company’srights under the shareholders’ agreement to appoint a director to the CHL board and to take a more active role in CHL. As aresult of these changes, CHL has become an associate in the current year and has been accounted for using the equity methodas set out in Note 1(iii) Principal Accounting Policies: Basis of Consolidation.

In the previous year, a loan payable to the Company by CHL of $2.1 million was included in the Unlisted Investment balance.During the current year, part of the loan was repaid. The remaining loan has been reclassified as a current receivable in theseaccounts. Details of the repayments and balance outstanding are provided in Note 34 Related Party Transactions.


18. INVESTMENT IN CAMEROON HOLDINGS LIMITED continued

The carrying value of the investment in CHL which is treated as an investment in an associate at 31 May 2015 is determined asfollows:

Group Company2015 2014 2015 2014$000 $000 $000 $000

Balance at 1 June – – – –Transfer from unlisted investments 4,502 – 4,502 –Share of profit of associate 1,098 – – –Dividends received (202) – – –

5,398 – 4,502 –

CHL’s financial year end date is 31 December. For the purposes of applying the equity method of accounting, CHL’s financialstatements for the year ended 31 December 2014 have been used, and appropriate adjustments have been made for the effectsof transactions between that date and 31 May 2015 and to adjust for differences in accounting policies between the Group andCHL. Summarised financial information for CHL (also prepared on this basis) is set out below.

2015Cameroon Holdings Limited $000

Assets and liabilitiesCurrent assets 158Non-current assets 4,280Current liabilities (264)

Elements of comprehensive incomeRevenue 3,360Profit from continuing operations 2,560Total comprehensive income for the year 2,560

The shares of CHL are not actively traded and their fair value cannot be reliably measured. CHL’s income stream is dependenton a number of variables, including:• the ability to access funding;• the level of proven and probable reserves;• the size of the market for gas and speed of development; and• the medium- to long-term selling price for gas.

As a result of the above, there is a broad range of values that could be ascribed to the investment. In the absence of anyimpairment indicators, the investment is carried in the Consolidated Balance Sheet at cost with adjustments to recognise theGroup’s share of profit or loss of CHL.

Please refer to Note 34 Related Party Transactions for details of the transactions between the Group and CHL during the yearunder review.

19. INVESTMENTS IN SUBSIDIARIES AND ADVANCES

Company2015 2014$000 $000

Investments in subsidiaries 12,400 29,789Advances to subsidiary – 42,849

12,400 72,638

Segmental Analysis of Investments in and Advances to SubsidiariesCompany

2015 2014$000 $000

UnlistedRussian Federation – 60,238Republic of Cameroon 12,400 12,400

Investments in and advances to subsidiaries 12,400 72,638




19. INVESTMENTS IN SUBSIDIARIES AND ADVANCES continued

Investments in SubsidiariesCompany

2015 2014$000 $000

Cost:Cost of investments at beginning of the year 49,764 49,764

Cost of investments at end of the year 49,764 49,764

Impairment:Opening balance (19,975) (19,975)Charge for the year (17,389) –

Closing balance (37,364) (19,975)

Carrying amount:Closing balance 12,400 29,789

The investment in the Company’s Balance Sheet as at 31 May 2015 was $12.4 million in respect of the Logbaba project(2014: $12.4 million).

The realisation of investments in subsidiaries of $12.4 million is dependent on the continued successful development of economicreserves.

Advances to Subsidiary Company2015 2014$000 $000

Opening balance 42,849 41,929Amounts advanced prior to recognition of impairment 233 920Impairment provision (43,082) –

Closing balance – 42,849

The prior year figure of $42.8 million related to the West Medvezhye asset in Russia.

As at 30 November 2014, when an impairment provision was made against the full value of the West Medvezhye asset in Russiain the Group’s accounts (refer Note 4 Impairment of Exploration and Evaluation Assets), the Company made a provision of$17.4 million against its investment in its Russian subsidiary, ZAO SeverGas-Invest and $43.1 million against its advances to thatsubsidiary, leaving a nil investment balance for the asset on the Company’s Balance Sheet (2014: $60.2 million).

Advances to subsidiaries which are recognised by the Company as receivables are included in Note 21 Trade and OtherReceivables.

HoldingsThe holdings of the Group are:

PercentageCompany Country of incorporation Class of shares of capital held Nature of business

Victoria Petroleum Limited England & Wales Ordinary 100% Holding companyVictoria Oil & Gas International Limited British Virgin Islands Ordinary 100% Investment in exploration and

developmentZAO SeverGas-Invest Russia Ordinary 100% ExplorationBramlin Limited Guernsey Ordinary 100% Holding companyGaz du Cameroun S.A. British Virgin Islands Ordinary 100% Exploration and productionVictoria Oil & Gas Central Asia Limited England & Wales Ordinary 100% Holding companyFeax Investments Company Limited Cyprus Ordinary 100% Holding companyVictoria Energy Central Asia UK Limited England & Wales Ordinary 100% Holding companyVictoria Energy Central Asia LLP Kazakhstan Ordinary 100% Representative officeMogol LLP Kazakhstan Ordinary 100% DormantMogol Oil LLP Kazakhstan Ordinary 50% Dormant

The principal activity of these undertakings was exploration for, and development of, oil and gas assets. The investments of theGroup at 31 May 2015 principally represent investments in the Logbaba gas and condensate project in Cameroon, which wasacquired as part of the Bramlin Limited acquisition. Following a review by the Directors of the carrying amounts of its subsidiaryundertakings for impairment, the investment in the Kemerkol asset in Kazakhstan was fully impaired in 2009 and the investmentin the West Medvezhye project in Russia was fully impaired in the current year’s accounts (see Note 4 Impairment of Explorationand Evaluation Assets).


20. INVENTORIES

Group Company2015 2014 2015 2014$000 $000 $000 $000

Condensate and gas inventory 21 38 – –

21. TRADE AND OTHER RECEIVABLES

Group Company2015 2014 2015 2014$000 $000 $000 $000

Amounts due within one year:Trade receivables 7,059 3,787 – –VAT recoverable 100 413 13 130Prepayments 583 238 60 61Amounts due from subsidiaries – – 98,347 113,009Other receivables 3,583 9,588 719 614

11,325 14,026 99,139 113,814

In determining the recoverability of a receivable, the Group considers any change in the credit quality of the receivable from thedate credit was initially granted up to the end of the reporting year.

Trade ReceivablesThe credit period on sales of gas and condensate is typically 30 days. The Group’s largest customer has credit terms of 14 days.No interest is charged on trade receivables for the credit period. Thereafter, management may impose an interest charge at therate stipulated in the sales agreement of 6% per annum.

The Directors review all receivables that are past their agreed terms and assess whether any amounts are irrecoverable, which isdetermined with reference to information from an external credit rating agency on the current financial conditions of the customerand their past payment record.

Trade receivables disclosed above include amounts that are past due at the end of the reporting year for which the Group hasnot recognised an allowance for doubtful debts because there has not been a significant change in credit quality and the amountsare still considered recoverable.

Age of Trade Receivables that are Past Due but not ImpairedGroup

2015 2014$000 $000

31-60 days 453 46261-90 days 143 2191-120 days 74 2121+ days 220 381

Total 890 866

Movement in the Allowance for Doubtful Debts (Trade Receivables)Group

2015 2014$000 $000

Balance at beginning of the year 11 –Additional allowance for the year 162 11

Balance at the end of the year 173 11




21. TRADE AND OTHER RECEIVABLES continued

Amounts Due from SubsidiariesThe value of the amounts due from subsidiaries is dependent on the successful discovery and development of economic reserves.Refer to the Strategic Review for a detailed analysis of the risks involved. Amounts due from subsidiaries are neither past due norimpaired.

Other ReceivablesOther receivables past due but not impaired relate to costs which are reimbursable from gas sales customers. The costs wereincurred for equipment purchases and works at customer premises in order to ensure the customer was able to use the gas soldto it by the Group. In order to hasten the customer connection process, the Group funded such conversions for certain customersand issued customers with payment plans for settlement of the debts.

Movement in the Allowance for Doubtful Debts (Other Receivables)Group

2015 2014$000 $000

Balance at beginning of the year 866 –Amounts considered uncollectible and part of cost of pipeline 155 866Amounts reclassified as unimpaired (402) –Effect of movements in foreign exchange (84) –

Balance at the end of the year 535 866

Receivable from RSMTotal other receivables include $2.2 million due from RSM (2014: $8.6 million). This relates to RSM’s funding obligation for its40% participating interest in the Logbaba Concession. As at the date of signing, RSM has met all funding requests made by theGroup.

22. CASH AND CASH EQUIVALENTS

Group Company2015 2014 2015 2014$000 $000 $000 $000

Cash 15,963 17,018 13,190 14,381

Funds are held in US Dollars, Sterling, Central African Francs, Russian Roubles, Kazakh Tenge and Euros in order to enable theGroup to trade and settle its debts in the currency in which they occur and in order to mitigate the Group’s exposure to short-term foreign exchange fluctuations. Cash is also held in floating rate accounts or deposits maturing in three months or less. Allcash held is available on demand.

The carrying amount of these assets approximates to their fair value.Group Company

2015 2014 2015 2014Denomination: $000 $000 $000 $000

US Dollar 12,976 13,930 12,976 13,926Central African Franc 2,630 2,467 – –Euro 117 25 117 17Kazakh Tenge 105 84 – –Sterling 98 443 97 438Russian Rouble 37 69 – –

15,963 17,018 13,190 14,381


23. TRADE AND OTHER PAYABLES

Group Company2015 2014 2015 2014$000 $000 $000 $000

Amounts due within one year:Trade payables 1,975 7,776 441 1,734Taxes and social security costs 1,332 901 438 62Accruals 4,116 3,564 998 224Other creditors 380 211 – –

7,803 12,452 1,877 2,020

It is the Group’s normal practice to agree terms of transactions with suppliers, including payment terms which are typically 30 days from receipt of invoice.

Trade creditor days for the Company for the year ended 31 May 2015 were 60 days (2014: 116 days), based on the ratio ofCompany trade creditors at the end of the year to the amounts invoiced during the year by trade creditors.

The carrying value of these liabilities approximates to their fair value.

24. BORROWINGS

Group Company2015 2014 2015 2014$000 $000 $000 $000

Amounts due within one year:Loans from other entities 6,859 10,464 4,701 5,299Finance lease liabilities 66 99 – –

6,925 10,563 4,701 5,299

Group Company2015 2014 2015 2014$000 $000 $000 $000

Amounts in more than one year but less than five years:Loans from other entities 3,941 – – –Finance lease liabilities 4 86 – –

3,945 86 – –

BGFIBank (“BGFI”)In January 2014, the Group signed a loan agreement with BGFI of Cameroon. The principal facility of XAF 4.0 billion (equivalentto $8.3 million at date of signing) was taken out to fund pipeline extensions, customer connection work, and installation of Gensetsat customer premises. The facility was for an initial term of six months, renewable once on the same terms for a further six monthperiod, with interest payable at a rate of 7.25% per annum. Following the second six month period, the loan converted into athree-year-term loan with the same interest rate, repayable in 36 monthly instalments. The outstanding balance at 31 May 2015was $6.0 million (2014: $5.0 million).

Noor PetroleumIn December 2007, the Company created a $10.0 million unsecured convertible loan note facility with United Arab Emirates basedNoor Petroleum Limited, a company of which former Company Director, Rashed Al Suwaidi, is a director. $2.0 million was drawndown on 29 January 2008 and $1.0 million on 6 January 2009.

Based on the terms of the agreement, the notes were due for repayment on 31 December 2012, and carried interest at the rateof 2.5% per annum, payable twice yearly, and convertible into ordinary shares of the Company at a conversion price of 16.5 pence per ordinary share. The loans remained outstanding at 31 May 2015 but were no longer convertible into ordinaryshares as they were not converted by 31 December 2012. They were payable on demand and accrued interest at 6.5% perannum. The balance owing on the loans as at 31 May 2015 was $4.7 million (2014: $4.4 million). The Directors do not considerthis balance to be materially different from fair value.

Finance Lease LiabilitiesFinance lease liabilities are carried at amortised cost. These borrowings are secured by the assets leased.




25. PROVISIONS

Group2015 2014$000 $000

Decommissioning and rehabilitation provision 1,738 1,737Reserve bonus provision 8,200 7,664Production bonus provision 673 –Other – 150

10,611 9,551

Provision for Decommissioning and Rehabilitation (“D&R”) CostsThe D&R provision represents an internal estimate of the present value of D&R costs relating to the Logbaba gas and condensateproject and the West Medvezhye project based on an estimate of the D&R costs and the year when those costs are likely to beincurred. The provision in respect to the well locations on the West Medvezhye field is expected to be incurred by the end of2017 and in respect to the wells and plant for the Logbaba gas and condensate project over the next 20 years.

Assumptions have been made based on the current economic environment. The Directors believe these assumptions are areasonable basis upon which to estimate the future liability. These estimates are reviewed at least bi-annually to take into accountany material changes to the assumptions. However, actual D&R costs will ultimately depend upon future market prices of thenecessary D&R works at the relevant time.

Group2015 2014$000 $000

Decommissioning and rehabilitation costsAt 1 June 1,737 2,501Adjustment resulting from arbitration decision (refer Note 5) – (854)Effect of movements in foreign exchange (125) (33)Unwinding of discount charged to the Income Statement 126 123

1,738 1,737

Reserve Bonus ProvisionGaz du Cameroun S.A. is liable to pay a bonus determined four years after commencement of hydrocarbon production byreference to the reserves of the field, as assessed at that time, with a maximum amount of $10.0 million payable over a period ofnot less than four years from the date of calculation of the reserves. The Directors have provided for the full amount of the bonusbeing payable based on the expected reserves four years from first production. The provision represents the present value, as atthe Balance Sheet date, of the amounts payable each year discounted at a rate that reflects both the time value of the moneyand the risks inherent in the liability. The Directors have used a discount rate of 7.0% per annum.

Group2015 2014$000 $000

Reserve bonusAt 1 June 7,664 7,163Unwinding of discount charged to the Income Statement 536 501

8,200 7,664

Production Bonus ProvisionUnder the Logbaba Concession Contract, bonuses are payable to the State when certain levels of production are achieved. Theamounts payable are:• $0.5 million when the average gas production from the Concession area is greater than or equal to 500,000 cubic metres perday for a period of 60 consecutive days or, alternatively, when the cumulative gas production reaches 365,000,000 cubicmetres, whichever occurs first, and

• $1.0 million when the average gas production from the Concession area is greater than or equal to 1,000,000 cubic metres perday for a period of 60 consecutive days or, alternatively, when the cumulative gas production reaches 730,000,000 cubicmetres, whichever occurs first.

The Directors have now taken the view during the current financial year that it is likely that these production targets will beachieved, and therefore a provision of $0.7 million has been recognised (2014: no provision). The provision represents the presentvalue, as at the Balance Sheet date, of the amounts payable discounted at a rate that reflects both the time value of the moneyand the risks inherent in the liability. The Directors have used a discount rate of 7.0% per annum.


25. PROVISIONS continued

Group2015 2014$000 $000

Production bonusAt 1 June – –Additional provision in year 673 –

673 –

26. CALLED-UP SHARE CAPITAL

Group and Company

2015 2014Allotted Called-Up and Fully Paid: Number $000 Number $000

Ordinary shares of 0.5p each – – 4,348,552,329 34,240New ordinary shares of 0.5p each 108,713,809 856 – –New deferred shares of 19.5p each 108,713,809 33,384 – –

34,240 34,240

Shares issued are translated at the exchange rate prevailing at the date of issue.

The only changes in share capital during the year were as a consequence of the resolutions passed at the Annual General Meetingheld on 26 November 2014 regarding a capital reorganisation of the Company. As a result of this capital reorganisation, shareholdersreceived one consolidated ordinary share of 20 pence for every 40 ordinary shares of 0.5 pence (“Consolidation”). Immediatelyfollowing the Consolidation, each consolidated ordinary share was subdivided into one new ordinary share of 0.5 pence and onenew deferred share of 19.5 pence. The new ordinary shares were admitted to trading on AIM on 27 November 2014.

Prior to the capital reorganisation, the Company’s ordinary share capital consisted of 4,348,552,329 ordinary shares of 0.5 pence,and subsequent to the Capital Reorganisation, the Company’s ordinary share capital consists of 108,713,809 ordinary shares of0.5 pence with voting rights listed on AIM and 108,713,809 deferred shares of 19.5 pence with no voting rights.

The new ordinary shares have the same rights and benefits as the ordinary shares which existed before the consolidation, includingvoting, dividend and other rights.

The new deferred shares do not have any commercial value, are not tradable, and do not have any entitlement to voting ordividend rights. Shareholder certificates were not issued for the new deferred shares.

The Directors of the Company continue to be limited as to the number of shares they can allot at any time and remain subject tothe allotment authority granted by the shareholders pursuant to section 551 of the Companies Act 2006.

Shares held by ESOP TrustAt 31 May 2015, there were 2,868,625 new ordinary shares and 3,481,125 new deferred shares held by the ESOP Trust (2014: 139,245,000 ordinary shares). Refer to Note 27 ESOP Trust Reserve for more information about the ESOP Trust.

27. ESOP TRUST RESERVE

The Victoria Oil & Gas ESOP Trust is consolidated in these accounts as if it were a subsidiary undertaking in accordance withSIC 12. The ESOP Trust Reserve eliminates the cost of the shares in the Company held by the ESOP Trust, by treating these astreasury shares.

The balance of the reserve is analysed separately in the Consolidated Statement of Changes in Equity and reflects the subscriptionfor new shares by the ESOP Trust.




28. OTHER RESERVE

Group and Company2015 2014$000 $000

At 1 June 4,197 4,583Share-based payments 638 315Transfer of vested shares to retained earnings (638) –Transfer of expired warrants to retained earnings (876) (701)

3,321 4,197

Other reserve includes an amount of $2.9 million in respect of settlement of an embedded derivative following the early redemptionof an associated convertible loan note and a reserve for share-based payments. The amount of the reserve brought forward andattributable to warrants that expired in the year was transferred to retained earnings during the year. Further details of share-based payments in the year are given in Note 30 Share-Based Payments.

29. FINANCIAL RISK MANAGEMENT

The Group’s financial instruments comprise cash balances and various items such as trade receivables and trade payables whicharise directly from trading operations.

Except for embedded derivatives contained in hybrid financial instruments, the Group does not enter into any derivative transactionsand it is the Group’s policy that no trading in derivatives shall be undertaken. The issue of hybrid financial instruments has formedpart of the Group’s funding of working capital and the associated risks are considered by the Board at that time.

The main financial risks arising from the Group’s financial instruments are as follows:

Credit RiskCredit risk is the risk that the Group’s counterparties will cause the Group financial loss by failing to honour their obligations. TheGroup’s receivables relate primarily to cash and cash equivalents, trade receivables, prepayments, and reimbursable customerconversion costs. The Group manages credit risk by pre-assessing the creditworthiness of counterparties and obtaining sufficientcollateral, where appropriate, as a means of mitigating the risk of financial loss from defaults. Credit exposure is controlled bycounterparty limits that are reviewed and approved by the Directors from time to time.

Trade receivables consist of 17 customers from the Logbaba project in Douala, Cameroon with operations in various industriesincluding electricity generators, food processors, breweries, foundries and chemical companies, and the refinery in Limbe, towhich the Group sells the condensate produced from the project.

Trade receivables neither past due nor impaired are comprised of:• 44% amounts due from subsidiaries of multinational companies with State participation;• 21% amounts due from subsidiaries of multinational companies;• 17% amounts due from Cameroonian companies with State participation; and• 18% amounts due from other Cameroonian companies.

The Group rates the credit quality of the first three groups as high (making up 82% of trade receivables). The credit quality ofother local Cameroonian companies is lower, but the Group mitigates this risk by implementing the safeguards outlined above,in Note 21 Trade and Other Receivables, and in the Strategic Report.

The Group has policies in place to ensure that sales are made to customers with adequate creditworthiness and where appropriatecredit insurance cover is purchased. After the initial evaluation and acceptance the Group subsequently monitors customer creditquality and imposes credit limits to limit its exposure on all accounts receivable.

The credit risk of the Company relates to cash and cash equivalents, and to amounts due from subsidiaries in respect toexploration, evaluation and development expenditure.

The credit risk on liquid funds is limited because the Group holds the majority of its funds with banks with investment grade creditratings. The credit risk on receivables from subsidiaries is significant and relates to the discovery and successful development ofeconomic reserves by the subsidiary undertakings. Given the nature of exploration and development and the need to fundoperations through to commercialisation of the field the Directors manage the risk by reviewing business plans and budgets ofthe subsidiary undertakings with a view to ensure expenditure is value enhancing and therefore that the amounts receivable willbe recoverable subject to successful implementation of those plans. Low-credit-quality receivables are managed such that, inthe opinion of the Directors, the Group’s credit risk is at acceptable levels.

There is no difference between the carrying amount of trade and other receivables and the maximum credit risk exposure.


29. FINANCIAL RISK MANAGEMENT continued

Liquidity RiskThe Group’s liquidity exposure is confined to meeting obligations under short-term trade payables agreements and under longerterm borrowing arrangements. The needs are monitored by regular forecasting of operational cash flows and financialcommitments. The exposure is considered significant. The risk is managed by managing the level of commitments at any pointin time and agreeing extended payment terms with suppliers. When negotiating longer term borrowings, the Group endeavoursto secure terms that allow conversion to new shares.

The Group’s commitments have been fully met during the year from cash flows generated from sales revenue from the Logbaba gasand condensate project and debt funding. The Directors are confident of financing future exploration and development operationsfrom internally generated funds, existing facilities and access to debt and equity. Controls over expenditure are carefully managed.

The Group does not have any derivative financial liabilities at the end of the year. The Company’s and the Group’s contractualmaturity for its non-current financial liabilities is more than one year but not more than five years.

Foreign Currency RiskAlthough the Company is based in the UK, it has significant investments in overseas subsidiaries, and particularly in GDC whichoperates in Cameroon. Overseas operations are funded primarily in US Dollars, which is converted to local currency to fundoperations. The Group holds surplus cash in US Dollars, Sterling, Euros and Central African Francs, and buys other currenciesas required, at the most advantageous rates available, to meet short-term creditor obligations and fund other expenditure.

The Group is exposed at any point in time to exchange rate fluctuations.

The Group seeks to minimise its exposure to currency risk by closely monitoring exchange rates and restricting the buying andselling of currencies to predetermined exchange rates within specified bands.

The functional currency of the majority of the Group’s operations is US Dollars, and the reporting currency is US Dollars. Thecarrying amounts of the Group’s significant foreign currency denominated monetary assets and liabilities at the reporting datesare as follows:

Monetary Assets Monetary Liabilities2015 2014 2015 2014

Group $000 $000 $000 $000

Central African Franc 10,894 7,613 8,416 8,847Sterling 636 760 1,712 1,905Euro 216 25 371 294Russian Rouble 37 87 270 362Kazakh Tenge 105 84 2 12

11,888 8,569 10,771 11,420

US Dollar 15,400 22,475 18,513 27,831

27,288 31,044 29,284 39,251

Monetary Assets Monetary Liabilities2015 2014 2015 2014

Company $000 $000 $000 $000

Sterling 1,773 1,986 1,479 1,767Euro 117 17 159 187

1,890 2,003 1,638 1,954

US Dollar 110,439 126,192 4,940 5,365

112,329 128,195 6,578 7,319

The Group does not utilise swaps or forward contracts to manage its currency exposures.

Foreign currency sensitivity analysisIf the US Dollar had gained/lost 5% against all currencies significant to the Group at 31 May 2015, the loss would have been lessthan $0.1 million lower/higher (2014: $0.1 million) and the net equity would have been less than $0.1 million higher/lower(2014: $1.4 million). Accordingly, the impact on the Company’s Income Statement and net equity would be immaterial.





Commodity Price RiskCommodity price risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changesin market prices (other than those arising from interest rate risk or currency risk), whether those changes are caused by factorsspecific to the individual financial instrument or its issuer or factors affecting similar financial instruments traded in the market.This risk principally relates to sale of gas and condensate and is included in the analysis of financial risk factors in the StrategicReport. For sales of gas, the risk is substantially reduced by entering into five-year, fixed-price gas contracts with the majority ofgas sales customers, and a two-year, fixed-price agreement with ENEO. The contracted condensate sales price in the year wasa discount of $1.50 to Brent Crude. For the year ended 31 May 2015, it is estimated that a general weakening of one percentagepoint in Brent would decrease the Group’s profit before tax by less than $0.1 million (2014: less than $0.1 million).

Interest Rate RiskThe Company manages its interest rate exposure principally by borrowing at fixed rates of interest. At year end, the Group hadthe following outstanding borrowings: • $6.0 million from BGFI with interest payable at a fixed rate of 7.25% per annum; and• $4.7 million from Noor Petroleum and associated loans with interest payable at a fixed rate of 6.5% per annum.

Refer to Note 24 Borrowings for more information regarding these loans. As these are fixed rate loans, there would be no impactfrom a change in base rates.

Capital ManagementThe objective of managing capital is to maximise shareholder value. The capital structure of the Group and Company consists ofequity attributable to equity holders of the Parent Company, comprising issued capital, reserves and retained earnings.

The Group meets its capital management objectives by reviewing the capital structure from time to time during the year in relationto its future capital expenditure requirements based on forecasts prepared by management. When required, the Board decideson the mix and level of capital to raise in order to enable it to achieve the Group strategy. As part of this review, the Board considersthe cost of capital and the risks associated with each class of capital.

Gearing ratioThe Board considers the level of debt taking in to consideration the status of projects in the development cycle and their abilityto service any debt. It monitors capital on the basis of the net debt ratio, that is, the ratio of net debt to equity. The gearing ratioat the end of the reporting year was as follows:

Group Company2015 2014 2015 2014$000 $000 $000 $000

Debt (10,870) (10,649) (4,701) (5,299)Cash and cash equivalents 15,963 17,018 13,190 14,381

Net funds 5,093 6,369 8,489 9,082

Equity 123,580 181,297 122,667 200,131

Gearing ratio 4.12% 3.51% 6.92% 4.54%

In relation to the above, debt is defined as long- and short-term borrowings as described in Note 24 Borrowings and equityincludes all capital and reserves.

Categories of Financial InstrumentsGroup Company

2015 2014 2015 2014$000 $000 $000 $000

Financial assetsUnlisted investments – 6,600 – 6,600Investment in associate – – 4,502 –Investments in subsidiaries and advances – – 12,400 72,638Cash and cash equivalents 15,963 17,018 13,190 14,381Loans and receivables 11,325 14,026 99,139 113,009

Financial liabilitiesLoans and payables 18,673 23,101 6,578 7,319

The Directors consider that the fair value of the Group’s financial assets and liabilities are not materially different from their carryingvalues. All of the above financial assets are unimpaired.



Significant Accounting PoliciesDetails of the significant accounting policies and methods adopted, including the criteria for recognition, the basis of measurementand the basis on which income and expenses are recognised, in respect of each material class of financial asset, financial liabilityand equity instrument are disclosed in Note 1 Principal Accounting Policies.

There were no financial instruments carried at fair value in 2015.

30. SHARE-BASED PAYMENTS

Other than as disclosed below, no grants of warrants or options were made in the current or prior year.

Warrants to Subscribe for Ordinary SharesDetails of warrants outstanding during the year are as follows (monetary amounts are denominated in pence Sterling, this beingthe currency in which the shares are quoted):

2015 2014Weighted Weighted

Number of average Number of averagewarrants exercise price warrants exercise price

000s Pence 000s Pence

Outstanding at 1 June 64,557 3.2 45,633 4.4Granted during the year – – 30,000 1.6Expired (6,669) 3.2 (11,076) 3.8

Outstanding at 27 November 57,888 3.2Restated after capital reorganisation 1,447 129.6Expired (566) 218.9

Outstanding at 31 May 881 72.3 64,557 3.2

No warrants were issued or exercised during the year ended 31 May 2015.

Each warrant entitles the holder to purchase an ordinary share in the Company. The warrants have been fair valued using a Black-Scholes option pricing model. The inputs into the Black-Scholes model in the prior year were as follows:

2014

Number of warrants 30,000,000Weighted average share price – pence Sterling 1.6Option term – years 2.5Share exercise price – pence Sterling 1.6Risk-free rate 0.44%% expected volatility 96%Expected dividend yield Nil

The expected volatility was determined based on the historical movement in the Company’s share price over a period equivalentto the option period. The total fair value of the warrants issued in the prior year of $315,000 was charged to Finance Costs witha corresponding credit to Share-Based Payment Reserve.

The total number of warrants exercisable at the year end is 881,250 (2014: 64,556,247). The aggregate of the estimated weightedaverage fair values of these options is $0.5 million (2014: $1.3 million).

Shares Granted Through ESOP TrustDuring the year, the ESOP Trust, which is consolidated as part of the Group, transferred 612,500 shares (2014: no sharestransferred), vesting at the date of grant, to one of the Company’s former Directors. The fair value of the award was calculatedby reference to market value at date of grant. An expense equal to the fair value of the equity instruments granted of $0.6 millionwas charged to the Income Statement during the year. The corresponding credit was to the Share-Based Payment Reserve, andwas transferred to Accumulated Deficit when the shares were issued to the former Director. The weighted average price of sharesissued was 67.2 pence (2014: no shares issued).




31. NON-CASH TRANSACTIONS

During the 2015 financial year, the Group entered into the following non-cash transaction, which is reflected as a non-cash itemin the statement of cash flows:• Market value of shares transferred to Directors from the ESOP Trust on exercise of options of $0.6 million (2014: no sharestransferred).

The comparative numbers for the 2014 financial year include the following non-cash transactions which are not reflected in thestatement of cash flows:• Warrants issued in settlement of loan finance fees of $0.3 million.

32. ROYALTY OBLIGATIONS AND CONTINGENT LIABILITIES

Royalty ObligationsThe Group has certain royalty obligations in respect of the Logbaba gas and condensate project. The royalties and relatedexpenses are as follows:• 8% of gas production to the State of Cameroon as provided by the Concession Contract. The royalty will become payableafter recovery of Petroleum Costs, being defined as exploration costs, development costs, exploitation costs, constructioncosts and general overhead costs. Provision for this royalty was made in 2013 and 2014, but this has been reversed in thecurrent year as, following further research, the Group’s view is now that Petroleum Costs have not yet been recovered and sothe royalty is not yet payable. The provision released in 2015 was $1.0 million (2014: charge of $0.7 million). The State ofCameroon has not formally agreed to the Group’s interpretation of the basis of recovery of Petroleum Costs. Should the Group’sinterpretation prove incorrect and the 8% royalty be payable on all gas production without recovery of Petroleum Costs, thetotal liability at 31 May 2015 would be $2.2 million;

• Sliding scale production royalty to CHL ranging from 0-15% of GDC revenue from the Logbaba project for the life of theLogbaba field (0% up to $30 million of cumulative GDC revenue from the Logbaba project; 15% of cumulative revenue greaterthan $30 million up to $240 million; 6% of cumulative revenues in excess of $240 million). All royalty payments are subject to15% withholding tax in Cameroon. The Company has a 35% interest in CHL. See Note 18 Investment in Cameroon HoldingsLimited and Note 34 Related Party Transactions for further information on CHL. The royalty expense relating to CHL in 2015was $2.9 million (2014: Nil);

• 2.5% of the Company’s working interest in sales of hydrocarbons, which arose under commercial contracts for services. Theroyalty expense recorded in 2015 was $0.4 million (2014: $0.2 million);

• 1.2% of the value of oil and gas produced, net of certain deductions, which was assumed on acquisition of Bramlin Limited.The royalty expense recorded in 2015 was $0.3 million (2014: $0.1 million); and

• 0.8% of total production to RSM until RSM becomes entitled to its participating interest share of revenue (after the Group hasrecovered all of its costs and expenses incurred during the exploration phase). The royalty expense recorded in 2015 was $0.2 million (2014: $0.1 million).

Other Contingent LiabilitiesGroup Company

2015 2014 2015 2014$000 $000 $000 $000

Contingent liabilities 805 995 – –

In January 2014, the Group as Operator of the Logbaba Concession obtained a customs bond of XAF 800 million ($1.7 million)from BGFI of Cameroon in support of the temporary import of Gensets. The portion of the bond which was attributable to theGroup as at 31 May 2015 was $0.8 million (2014: $1.0 million).

33. PARENT COMPANY INCOME STATEMENT

As permitted by section 408 of the Companies Act 2006, the Parent Company’s Income Statement has not been presented inthis document. The loss after taxation of the Parent Company for the year is $78.1 million (2014 $5.0 million).


34. RELATED PARTY TRANSACTIONS

The consolidated financial statements include the financial statements of the Company and the subsidiaries listed in Note 19Investments in Subsidiaries and Advances. The Company is the ultimate parent entity of the Group.

Related parties include key management personnel. Payments (including share-based payments) to Directors and other keymanagement are set out in Note 13 Directors’ Remuneration and Note 14 Key Management Personnel.

The following table provides details of transactions entered into by the Company with its subsidiaries and other transactionsentered into by the Group with related parties:

Company Directors’ Keytransactions other management

with subsidiaries interests personnel12 months to 31 May 2015 $000 $000 $000

BalanceInvestments in subsidiaries 12,400 – –Amounts due from related parties 98,347 – –TransactionsRecharges to/(purchases from) related parties 446 (4) (547)Cash advances from related parties (4,437) – –Provision against amounts due from related parties (10,563) – –Foreign exchange (108) – –

12 months to 31 May 2014

BalanceInvestments in subsidiaries 27,789 – –Advances to subsidiaries 42,849 – –Amounts due from related parties 113,009 – –TransactionsRecharges to/(purchases from) related parties 1,342 (5) (432)Cash advances (from)/to related parties (7,983) 13 –

Amounts due from subsidiaries are non-interest bearing loans repayable on demand. Of the $98.3 million, $1.1 million is Sterling-denominated and $96.9 million US Dollar-denominated (2014: $1.2 million Sterling-denominated and $111.8 million US Dollar-denominated).

The balance at 31 May 2015 is stated net of an allowance against the amount due from Victoria Energy Central Asia LLP of$17.7 million (2014: $17.6 million), from Victoria Oil and Gas Central Asia Limited of $4.5 million (2014: $4.4 million) and fromZAO SeverGas-Invest of $43.8 million (2014: no allowance).

There was no intergroup trading or transactions between Group subsidiaries.

DirectorsRobert Palmer is a Director of the Company and a member of The Gallagher Partnership LLP, an accountancy practice. Theseaccounts include $4,000 (2014: $5,000) in relation to general accountancy services provided by The Gallagher Partnership LLPto the Company.

Kevin Foo and certain members of his family are the potential beneficiaries of a discretionary trust that owns HJ ResourcesLimited (“HJR”). HJR is a shareholder of Highcountry Investments Limited, which owed the Company $30,000 as at 31 May 2015(2014: Nil). HJR is also a shareholder in Logbaba Projects Limited. Logbaba Projects Limited owed the Company $32,000 at 31 May 2015 (2014: Nil). Both amounts due were fully repaid after 31 May 2015.

Ahmet Dik is a Director of the Company and a Director of Blackwood General Trading LLC (“Blackwood”), a general tradingcompany. During the 2015 financial year, the Group entered into transactions to purchase capital equipment on normal arm’slength terms to the value of $0.5 million through Blackwood (2014: no purchases from Blackwood).




34. RELATED PARTY TRANSACTIONS continued

Cameroon Holdings Limited (“CHL”)On 9 July 2009, through its subsidiary GDC, the Group signed agreements with a private company, CHL, to provide drillingservices and emergency funding to enable the Group to meet its commitments with respect to the work obligations for theLogbaba Concession. Part of the consideration was a royalty over the Group’s share of the revenues from the LogbabaConcession (see Note 32 Royalty Obligations and Contingent Liabilities). There was also an obligation to pay 15% of the first$30 million of cumulative GDC revenue from the Logbaba project to meet mobilisation and demobilisation costs of the drillingrig. All drilling services were completed before 31 May 2010.

As per Note 18 Investment in Cameroon Holdings Limited, the Company acquired a 35% interest in CHL from an unrelated partyduring the 2011 financial year. The remaining 65% of CHL is owned by Logbaba Projects Limited.

HJR (refer ‘Directors’ section above) has an indirect 43.4% shareholding in CHL due to its 67% interest in Logbaba ProjectsLimited, the controlling entity of CHL. However, Kevin Foo is excluded from the Board discussions and decisions in respect ofthe Company’s investment in CHL and does not discuss CHL decisions with the Board nor seek the Board’s view on CHL-relatedissues.

The following transactions took place between CHL and the Group during the year ended 31 May 2015:• An expense of $1.2 million was recorded relating to the reimbursement to CHL by GDC for mobilisation and demobilisationcosts of the drilling rig (2014: $2.8 million).

• Royalties of $2.9 million relating to CHL were expensed during the year (2014: Nil).• A $0.9 million payment from the Group to CHL for amounts outstanding at 31 May 2014. There is no balance outstanding at31 May 2015 (2014: $0.9 million outstanding).

• CHL made repayments of $1.8 million to VOG on the loan acquired by VOG when it purchased its interest in CHL (2014: norepayments) (refer Note 18 Investment in Cameroon Holdings Limited), leaving a loan balance of $0.3 million at 31 May 2015(31 May 2014: loan balance $2.1 million).

• CHL paid dividends of $0.2 million to VOG (2014: no dividends paid).

The only transactions between the Group and CHL since the company acquired its interest in CHL have been payment of royalties,payments related to mobilisation and demobilisation costs, dividends, and the repayment of loans.

Key Management PersonnelSam Metcalfe is included in key management personnel due to his position as Subsurface Manager of GDC, and he is also aDirector of Blackwatch Petroleum Services Limited (“Blackwatch”), a firm of upstream oil and gas consultants. Radwan Hadi waspreviously included as key management personnel due to his position as Chief Operating Officer of the Company, and is also aDirector of Blackwatch. Professional fees of $0.6 million (2014: $0.4 million) were charged to the Group in relation to oil and gastechnical services provided by Blackwatch to the Group.

Employee Share Ownership Plan (“ESOP”)The Victoria Oil & Gas ESOP Trust purchases and holds ordinary shares in the Company to satisfy scheme awards made to theemployees of the Group. The Trust did not purchase any shares in the 2015 financial year (2014: no shares purchased), andtransferred 612,500 shares to a Director (2014: no shares transferred to employees).

At the year end, the Trust owed the Company $1.1 million (2014: $1.2 million) for shares subscribed for but not yet paid. Note 30 Share-Based Payments provides details of the value of shares transferred from the ESOP Trust during the year.

35. SUBSEQUENT EVENTS

Ahmet Dik was appointed as a Director of the Company on 27 October 2015.

There were no other significant events after the balance sheet date that would have a material impact on the consolidated financialstatements.


Notice is hereby given that the Annual General Meeting of Victoria Oil & Gas Plc (the “Company”) will be held on Monday30 November 2015, at 11.00 a.m. at Coin Street Neighbourhood Centre, South Bank Room 1, 108 Stamford Street, South Bank,London SE1 9NH, to consider and if thought fit to pass the following Resolutions, of which Resolutions 1 to 6 (inclusive) will beproposed as Ordinary Resolutions and Resolution 7 will be proposed as a Special Resolution.

Ordinary Business:As Ordinary Resolutions:1. To receive and consider the Company’s annual accounts for the financial year ended 31 May 2015 together with the Directors’

reports and the Auditors’ report on those accounts.

2. To re-elect Kevin Foo as a Director of the Company.

3. To elect John Bryant as a Director of the Company.

4. To elect Ahmet Dik as a Director of the Company.

5. To re-appoint Deloitte as Auditors of the Company and to authorise the Directors to fix their remuneration.

Special Business:As an Ordinary Resolution:6. THAT the Directors be and they are hereby generally and unconditionally authorised for the purposes of Section 551 of the

Act to exercise all the powers of the Company to allot relevant securities (within the meaning of section 560(1) of the Act):

(a) up to an aggregate nominal amount of £181,922; and

(b) up to a further aggregate nominal amount of £181,922 provided that (i) they are equity securities (within the meaning ofsection 560(1) of the Companies Act 2006) and (ii) they are offered by way of a rights issue to holders of ordinary shareson the register of members at such record date as the Directors may determine where the equity securities respectivelyattributable to the interests of the ordinary shareholders are proportionate (as nearly as may be practicable) to therespective numbers of ordinary shares held by them on any such record date and to other holders of equity securitiesentitled to participate therein, subject to such exclusions or other arrangements as the Directors may deem necessary orexpedient to deal with treasury shares, fractional entitlements or legal or practical problems arising under the laws of anyoverseas territory or the requirements of any regulatory body or stock exchange or by virtue of shares being representedby depositary receipts or any other matter,

provided that such authority shall expire at the commencement of the Annual General Meeting next held after the passing ofthis resolution save that the Company may pursuant to the authority make offers or agreements before the expiry of theauthority which would or might require relevant securities to be allotted after such expiry, and the Directors may allot relevantsecurities in pursuance of such offers or agreements as if the power conferred thereby had not expired.

As Special Resolution:7. THAT subject to the passing of Resolution 6 the Directors be and are hereby empowered pursuant to Section 570 and 573 of

the Act to allot equity securities (within the meaning of Section 561(1) of the Act) wholly for cash pursuant to the authorityconferred by Resolution 6 as if Section 561(1) of the Act did not apply to any such allotment, and this power shall be limitedto the allotment of equity securities:

(a) in connection with an offer of such securities by way of rights (including without limitation, under a rights issue, open offeror similar arrangement) to holders of equity securities in proportion (as nearly as may be practicable) to their respectiveholdings of such securities, but subject to such exclusions or other arrangements as the Directors may deem necessaryor expedient to deal with fractional entitlements, record dates or any other legal or practical problems under the laws ofany territory, or the requirements of any regulatory body or stock exchange; and

(b) otherwise than pursuant to the resolution referred to in 7(a) above of up to an aggregate nominal amount equal to ten percent of the issued ordinary share capital of the Company from time to time;

provided that (unless renewed)

(i) the authority contained in this resolution shall expire at the commencement of the Annual General Meeting held nextafter the passing of this Resolution, and

(ii) the Company may before such expiry make such offers or agreements which would or might require equity securitiesto be allotted after such expiry and the Directors may allot equity securities in pursuance of any such offer or agreementnotwithstanding that the power conferred hereby has expired.

By Order of the Board

Leena Nagrecha Victoria Oil & Gas PlcCompany Secretary Hatfield House

52/54 Stamford Street27 October 2015 London

SE1 9LX

Victoria Oil & Gas Plc Annual Report 2015 75

Notice of Annual General Meeting


Appointment of proxies1. As a member of the Company, you are entitled to appoint

a proxy to exercise all or any of your rights to attend, speakand vote at the meeting and you should have received aproxy form with this notice of meeting. You can onlyappoint a proxy using the procedures set out in thesenotes and the notes to the proxy form.

2. A proxy does not need to be a member of the Companybut must attend the meeting to represent you. Details ofhow to appoint the Chairman of the meeting or anotherperson as your proxy using the proxy form are set out inthe notes to the proxy form. If you wish your proxy tospeak on your behalf at the meeting you must appoint yourown choice of proxy (not the Chairman) and give yourinstructions directly to the relevant person.

3. You may appoint more than one proxy provided eachproxy is appointed to exercise rights attached to differentshares. You may not appoint more than one proxy toexercise rights attached to any one share. To appoint morethan one proxy, you must complete a separate proxy formfor each proxy and specify against the proxy’s name thenumber of shares over which the proxy has rights. If youare in any doubt as to the procedure to be followed for thepurpose of appointing more than one proxy you mustspeak with the Company Secretary. If you fail to specifythe number of shares to which each proxy relates, orspecify a number of shares greater than that held by youon the record date, proxy appointments will be invalid.

4. If you do not indicate to your proxy how to vote on anyresolution, your proxy will vote or abstain from voting athis discretion. Your proxy will vote (or abstain from voting)as they think fit in relation to any other matter which is putbefore the meeting

Proxy voting using hard copy proxy form5. The notes to the proxy form explain how to direct your

proxy to vote on each resolution or withhold his vote.

6. To appoint a proxy using the proxy form, it must be:6.1 completed and signed;6.2 sent or delivered to Registrar at Computershare

Investor Services PLC, The Pavilions, BridgwaterRoad, Bristol, BS99 6ZY; and

6.3 received by the Registrar no later than 11.00 a.m. on 26 November 2015.

7. In the case of a member which is a company, the proxyform must be executed under its common seal or signedon its behalf by an officer of the company or an attorneyfor the company.

8. Any power of attorney or any other authority under whichthe proxy form is signed (or a duly certified copy of suchpower or authority) must be included with the proxy form.

Electronic proxy voting through the internet9. You are able to appoint a proxy online by visiting

www.eproxyappointment.com. You will be required toenter your control number, shareholder reference numberand PIN which can be found either on your proxy form orwithin the email notifying you of the AGM. The proxyappointment and instructions must be received by theRegistrar no later than 11.00 a.m. on 26 November 2015.

Electronic proxy voting through CREST10. CREST members will be able to cast their vote using

CREST electronic proxy voting using the proceduresdescribed in the CREST Manual (available viawww.euroclear.com/CREST). To appoint one or moreproxies or to give an instruction to a proxy (whetherpreviously appointed or otherwise) via the CREST system,CREST messages must be received by the Registrar (IDnumber 3RA50) not later than 11.00 a.m. on 26 November2015.

Appointment of proxy by joint members11. In the case of joint holders of shares, where more than one

of the joint holders purports to appoint a proxy, only theappointment submitted by the most senior holder (beingthe first named holder in respect of the shares in theCompany’s register of members) will be accepted.

Changing proxy instructions12. To change your proxy instructions simply submit a new

proxy appointment using the method set out in paragraphs5 to 9 above. Note that the cut off time for receipt of proxyappointments specified in those paragraphs also appliesin relation to amended instructions. Any amended proxyappointment received after the specified cut off time willbe disregarded.

13. If you submit more than one valid proxy appointment, theappointment received last before the latest time for thereceipt of proxies will take precedence.

Termination of proxy appointments14. In order to revoke a proxy instruction you will need to

inform the Company by sending a signed hard copy noticeclearly stating your intention to revoke your proxyappointment to Registrar at Computershare InvestorServices PLC, The Pavilions, Bridgwater Road, Bristol,BS99 6ZY. In the case of a member which is a company,the revocation notice must be executed under its commonseal or signed on its behalf by an officer of the companyor an attorney for the company. Any power of attorney orany other authority under which the revocation notice issigned (or a duly certified copy of such power or authority)must be included with the revocation notice.

15. The revocation notice must be received by the Registrarno later than 11.00 a.m. on 26 November 2015.

16. If you attempt to revoke your proxy appointment but therevocation is received after the time specified then, yourproxy appointment will remain valid.

17. Appointment of a proxy does not preclude you fromattending the meeting and voting in person. If you haveappointed a proxy and attend the meeting in person, yourproxy appointment will automatically be terminated.

Notes to the Notice of Annual General Meeting

“AGM” Annual General Meeting“AIM” Alternative Investment Market, a sub-market of the London Stock Exchange“Altaaqa” Altaaqa Alternative Solutions Projects DWC-LLC, equipment partner and genset supplier“API gravity” American Petroleum Institute gravity is a measure of how heavy or light a petroleum is

compared to water“bbl(s)” Barrel(s), or 42 US gallons“bcf” Billion cubic feet; 1 bcf = 0.83 million tonnes of oil equivalent“BGFI” BGFIBank an African bank with operations in Cameroon“Blackwatch” Blackwatch Petroleum Limited, a firm of upstream oil and gas consultants“CEO” Chief Executive Officer“CHL” Cameroon Holdings Limited of which the Company owns a 35% interest“CNG” Compressed Natural Gas“the Code” UK Corporate Governance Code September 2015“the Company” Victoria Oil & Gas Plc“E&P” Exploration and production“EBITDA” Earnings before interest, taxes, depreciation and amortisation“ENEO” ENEO Cameroon“ESOP” Employee Share Ownership Plan“GDC” Gaz du Cameroun S.A.“Gensets” Electricity generation sets“the Group” Victoria Oil & Gas Plc and its subsidiaries“HFO” Heavy Fuel Oil“IFRS” International Financial Reporting Standards“KPI” Key Performance Indicators“LTIFR” Lost time incidents frequency rate“mmscf/d” Million standard cubic feet per day“MMTPA” Million metric tonne per annum“Numis” Numis Securities Limited a leading UK independent institutional stockbroker“Petroleum Costs” Defined term in Concession Contract, includes exploration, development, exploitation,

construction and general overhead costs“Possible” or “3P” Reserves which at present cannot be regarded as ‘probable’ but are estimated to have a

significant but less than 50% chance of being technically and economically producible“Probable” or “2P” Reserves which are not yet proven but which are estimated to have a better than 50%

chance of being technically and economically producible“Prospect” A potential accumulation that is sufficiently well defined to represent a viable drilling target“Proven”, “Proved” or “1P” Reserves which on the available evidence are virtually certain to be technically and economically

producible. For the purpose of this definition it has a better than 90% chance of being produced“RSM” RSM Productions Corporation“VOG” Victoria Oil & Gas Plc“West Medvezhye” Our 100%-owned West Medvezhye field“XAF” Central African Francs currency

Victoria Oil & Gas Annual Report 2015

Definitions, Abbreviations & Glossary

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www.victoriaoilandgas.com

Victoria Oil & Gas PlcHatfield House52/54 Stamford StreetLondonSE1 9LX

Tel: +44 20 7921 8820Fax: +44 20 7921 8821Email: [email protected]

Company Registration No. 5139892(England and Wales)

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