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Group conducts business, including an Anti-Bribery, Anti-Corruption, Gifts and Entertainment Policy, which was
adopted by the Issuer on 20 July 2013.
Dividend Policy
The Issuer has previously declared and paid dividends in 2011 and 2012. The Board believes that payment of dividends
represents good financial discipline, reflects the strength of the business and serves the interests of shareholders.
Although the Group does not currently plan to pay cash dividends on the Ordinary Shares due to restrictions on paying
dividends under certain of the Group’s financing agreements, once such restrictions cease to apply, the Board will
thereafter determine when and whether a dividend should be paid based on the Issuer’s financial strength, anticipated
growth and re-investment requirements and any other factors considered to be relevant by the Board. Subject to Jersey
Companies Law, payment of a dividend will ultimately be decided by the general meeting of shareholders.
Legal and arbitration proceedings
Except as set out below, no member of the Group is or has been engaged in nor, so far as the Issuer is aware, has pending
or threatened, any governmental, legal or arbitration proceedings which may have, or have had in the recent past
(covering at least the 12 months preceding the date of this document), a significant effect on the Issuer’s and/or Group’s
financial position or profitability.
Ukrnafta arbitration
Carpatsky Petroleum Corporation (“
CPC
”), a member of the Group, and Ukrnafta entered into Joint Activity Agreement
#410/95 (“
JAA
”) on 14 September 1995 for exploration and development of the Rudivsky-Chervonozavodsky gas
condensate field. Over thirty supplemental, amendment and addendum agreements to the JAA were executed by CPC
and Ukrnafta. CPC’s interest in the RC Field was reduced from 50% to 14.91% as a result of non-payment of costs due
under the JAA. CPC claimed it was entitled to restore its share in the JAA to 50% by paying CPC’s unpaid costs.
Ukrnafta refused to allow CPC to make such payments to restore CPC’s share of the JAA.
CPC commenced arbitration proceedings in the Arbitration Institute of the Stockholm Chamber of Commerce (the
Arbitral Tribunal) in accordance with the JAA’s arbitration clause to (i) recover CPC’s damages in the amount of CPC’s
actual share in the JAA from Ukrnafta and to (ii) terminate the JAA.
In response to CPC filing for arbitration under the JAA, the state prosecutor of Ukraine filed an action in Ukraine to
terminate the JAA and enjoin CPC and CPC’s parent from further involvement in the JAA.
On 24 September 2010, the Arbitral Tribunal issued an award in favour of CPC and ordered Ukrnafta to pay $146.9
million in costs and damages to CPC. Ukrnafta lost two challenges to the Arbitral Tribunal’s jurisdiction in the local
state courts of Sweden and Ukrnafta’s subsequent appeals were ultimately denied by the Supreme Court of Sweden.
Ukrnafta also lost a challenge to the award in the local Swedish courts and has appealed this decision. The final hearing
on Ukrnafta’s final appeal is scheduled for February 2015.
The Group and CPC are pursuing enforcement of the Arbitral Tribunal’s award through both legal process and
commercial discussions. The Group anticipates that its position will be ultimately vindicated.
The Group’s interest in the outcome of the Ukrnafta arbitration remains with the Group after disposal of its Ukrainian
subsidiaries.
Texas counterclaim
In 2009, following the commencement of the above-mentioned arbitration by CPC, Ukrnafta initiated proceedings in
Texas state court in 2009 against CPC and the former owners of CPC pleading, inter alia, fraud and tortious interference
and seeking approximately $80 million in damages. Shortly after being served with notice, CPC filed to remove the
proceedings to the federal district court. The federal district court stayed the proceedings pending conclusion of the
arbitration and subsequently extended this stay until resolution of Ukrnafta’s claims in the Swedish courts. The Group
expects that the federal district court will dismiss this action once Ukrnafta has exhausted all appeals in Sweden.
