Report and Accounts and Notice of AGM

RNS Number : 0125T

Solo Oil Plc

30 November 2011

 



For Immediate Release

30 November 2011

SOLO OIL PLC

("Solo Oil" or "the Company")

Annual Report and Accounts for the year ended 30 June 2011 and Notice of AGM

 

Solo Oil, the AIM listed International Oil and Gas Exploration and Development Company, announces that the Company's audited Annual Report and Accounts for the year ended 30 June 2011 have been posted to Shareholders , together with a Notice of Annual General Meeting ("AGM"), and both documents and a copy of this announcement will be available from the Company's website, www.solooil.co.uk.

The Annual General Meeting will take place at 11.00 am on Friday 16 December 2011 at Suite 3B, Princes House, 38 Jermyn Street, London SW1Y 6DN.

Chairman's Statement

I am very pleased to present the Chairman's report for the year ended 30 June 2011.   The year has seen substantial progress on implementing the program in out two existing assets and that work has been successfully continued through to the date of this report.

Investments

The Company has continued to pursue its investment strategy, as approved by the shareholders in 2009, to develop a diverse portfolio of exploration, development and production oil and gas interests.

During the financial year to June 2011 we have focussed on advancing the investment in the Ruvuma Petroleum Sharing Agreement ("Ruvuma PSA") in Tanzania and on our investment in SW Ontario, Canada with Reef Resources Limited ("Reef").  Substantial progress has been made in both these investments and at the date of this report we have increased our interests in the Ruvuma to 18.75% and have secured a 38.1% working interest in the properties owned and operated by Reef.

The Board is satisfied with the progress of these investments and has also sanctioned considerable effort to research and evaluate additional investment opportunities in East Africa, North America and in Latin America.  Several opportunities remain under evaluation and the Board anticipates announcing further investments in the near future.

Ruvuma PSA

In late June 2010 Solo completed the exercise of its option to obtain a direct 12.5% working interest in the Ruvuma PSA in Tanzania following the successful drilling of the Likonde-1 well.  The Ruvuma PSA lies in the south-east of Tanzania and covers approximately 12,360 square kilometres with some 20% of this area offshore and the balance onshore.  Within the Ruvuma PSA there are two separate licence area known as Lindi in the north and Mtwara in the south.  Mtwara is contiguous with the Mozambique border and both Licence areas run to the coast in Tanzania.

The Likonde-1 well was drilled in the Lindi Block to a total depth of 3647 metres and was plugged and abandoned after discovery of a 250 metre gross interval of sands with residual oil shows and reaching a gas zone close to total depth.  Having confirmed the presence of a working hydrocarbon play system the effort in the year to June was directed to selecting the optimum location for a second commitment well to be drilled in the Ruvuma PSA; specifically in the Mtwara Block.  After reprocessing and reinterpretation of the 2D seismic data a location for a well was selected approximately 14 kilometres south of Likonde-1 at Ntorya.

The Ntorya-1 well is planned to be drilled in late 2011 and will focus on the Tertiary sandstone section identified as having residual oil shows in Likonde-1.  This Eocene interval is geologically analogous to the major offshore discoveries recently made by Anadarko, BG and others in the Mozambique extension of the Ruvuma basin.  The well will be drilled to a depth of 2020 metres and is expected to be completed in early 2012.

Prior to the drilling of Ntorya-1, Tullow Oil plc ("Tullow") has re-assigned a 25% working interest in the Ruvuma PSA to Aminex plc ("Aminex") and Solo in proportion to their existing interests.  Aminex has assumed the role of operator and now holds a 56.25% interest, whilst Solo now holds 18.75%.  Tullow retains a 25% interest in the PSA and the Ntorya-1 well.

Reef Resources Ltd

In 2010 Solo negotiated a CDN$1.65 million participating loan agreement with Reef in order to finance the recommencement of oil and gas production at the Ausable Field in SW Ontario and to increase oil production through gas cycling and the drilling of additional wells.  Production was restarted at Ausable #1 and Ausable #4 in late 2010 and on the 8 February 2011 Reef spudded the Ausable#5 well approximately 300 metres from the productive Ausable #1 well and close to the crest of the Ausable reef.  Ausable #5 was successfully drilled to a total depth of 615 metres and electric logs and cores taken in the well demonstrated a 72 metre net oil column in the Guelph and A2 formations within carbonates reservoir facies.

In July 2011 Ausable #5 was mechanically completed for production and the reservoir formations acidized to increase the production flow rates, and a beam pump was installed to test the well.  After various attempts to achieve a stable flow rate it was determined that a change in pumping technology would be required and field trials of a venturi or jet pumping system were undertaken on Ausable #1 in preparation for fitting venturi pumps to all producing wells.  At the time of this report the venturi pumping system has been proven in Ausable #1 which is producing at in excess of 60 barrels of oil per day and the system is being rolled out to the other wells.

Well Ausable #2 was also worked over during August 2011 to remove an obstruction (fish) left during earlier hydraulic fracturing operations.  The work over was successful in retrieving the majority of the fish and the well is available for production once fitted with a venturi pump.

Following the successful proof of the concept for redeveloping Ausable as a oil producing field Solo negotiated the conversion of its existing loan and a further cash investment of CDN$850,000 to a direct 23.8% working interest in all of Reef's Ontario properties.  A further agreement was made that once Reef had raised in excess of CDN$1.5 million in funds from third parties Solo would increase its stake in the properties to 38.1%.  In November 2011, immediately prior to this report, Reef announced that it had successfully secured external funding.

The next phase of development at Ausable is to increase the quantity of gas being injected into the reservoir so as to maintain the pressure above the bubble point and thereby achieve maximum recovery of oil reserves.  This will be achieved through a combination of injecting gas from the nearby Reef owned South Airport reef and the purchase of gas from a utility pipeline to which the field is already connected.  Additional gas may also be derived from further reefs in the area either through exploration or gas swap transactions.  Initially the target will be the repressurising of the Ausable reef, whilst later phases will involve the drillings of further injection and production wells and the full implementation of gas cycling.

Financial Results

The Group's loss for the year is £0.9 million (2010: £0.9 million) in which it earned sales revenue of nil (2010: £nil).

During the year the Group spent £0.3million (2010: £3.4million) on acquisition and enhancement of intangible assets.  Amortisation of intangible assets for the year, including an impairment charge, is £0.1million (2010: £nil) and the employee and director remuneration costs totalled £252,000 (2009: £341,000).

Outlook

Your Board is confident that the 2 investments made by the Company since it changed its investment strategy in July 2009 are both encouraging and potentially very rewarding. We will look to realise this potential over the future years in addition to contining to reviewe further investment opportunities.

The directors would like to take this opportunity to thank our shareholders, staff and consultants for their continued support.

David Lenigas

Executive Chairman

29 November 2011

 

Solo Oil plc David Lenigas Neil Ritson	[phone]
Beaumont Cornish Limited Nominated Adviser and Joint Broker Roland Cornish	[phone]
Shore Capital Joint Broker Pascal Keane Edward Mansfield	[phone]

Pelham Bell Pottinger                                            [phone]

Financial Public Relations

Mark Antelme

Henry Lerwill

 Directors' Report

The Directors are pleased to present this year's annual report together with the consolidated financial statements for the year ended 30 June 2011.

Principal Activities

The principal activity of the Group is to acquire a diverse portfolio of direct and indirect interests in exploration, development and production oil and gas assets which are based in the Americas, Europe or Africa.

Business Review and future developments

A review of the current and future development of the Group's business is given in the Chairman's Statement on pages 2 to 3.

Results and Dividends

Loss on ordinary activities of the Group after taxation amounted to £0.9 million (2010: £0.9 million). The Directors do not recommend payment of a dividend.

Key Performance Indicators

Given the nature of the business and that the Group has recently adopted a new investing policy and is in the early stages of developing new operations, the directors are of the opinion that analysis using KPI's is not appropriate for an understanding of the development, performance or position of our businesses at this time.

Post Balance Sheet events

At the date these financial statements were approved, being 29 November 2011, the Directors were not aware of any significant post balance sheet events other than those set out in the notes to the financial statements.

Substantial Shareholdings

At 31 October 2011 the following had notified the Company of disclosable interests in 3% or more of the nominal value of the Company's shares:

Shareholder	Number of Shares	% of Issued Capital
HSDL Nominees Limited	400,013,010	17.16%
Barclayshare Nominees Limited	334,673,476	14.36%
TD Waterhouse Nominees (Europe) Limited	302,715,884	12.98%
L R Nominees Limited	153,863,262	6.60%
James Capel (Nominees) Limited	151,998,910	6.52%

Directors

The names of the Directors who served during the year are set out below:

Director                                                                                   Date of Appointment                     Date of Resignation

Executive Directors

David Lenigas

Neil Ritson                                                                            6 December 2010

Non-Executive Directors

Kiran Morzaria

Sandy Barblett

Directors' Remuneration

The Company remunerates the Directors at a level commensurate with the size of the Company and the experience of its Directors. The Remuneration Committee has reviewed the Directors' remuneration and believes it upholds the objectives of the Company with regard to this issue. Details of the Director emoluments and payments made for professional services rendered are set out in Note 5 to the financial statements.

Directors' Interests

The beneficial interests of the serving Directors in the shares and options of the Company during the year to 30 June 2011 were as follows

	At 30 June 2011		At 30 June 2010
Director	Shares	Options	Shares	Options
David Lenigas	2,850,000	77,500,000	2,850,000	77,500,000
Neil Ritson	17,000,000	40,000,000	-	-
Kiran Morzaria	711,428	10,750,000	711,428	10,750,000
Sandy Barblett	600,000	11,250,000	600,000	11,250,000

Corporate Governance

A statement on Corporate Governance is set out -below.

Environmental Responsibility

The Company is aware of the potential impact that its subsidiary companies may have on the environment. The Company ensures that it, and its subsidiaries at a minimum comply with the local regulatory requirements and the revised Equator Principles with regard to the environment.

Employment Policies

The Group will be committed to promoting policies which ensure that high calibre employees are attracted, retained and motivated, to ensure the ongoing success for the business. Employees and those who seek to work within the Group are treated equally regardless of sex, marital status, creed, colour, race or ethnic origin.

Health and Safety

The Group's aim will be to achieve and maintain a high standard of workplace safety. In order to achieve this objective the Group will provide training and support to employees and set demanding standards for workplace safety.

Payment to Suppliers

The Group's policy is to agree terms and conditions with suppliers in advance; payment is then made in accordance with the agreement provided the supplier has met the terms and conditions. Suppliers are typically paid within 30 days of issue of invoice.

Political Contributions and Charitable Donations

During the period the Group did not make any political contributions or charitable donations.

Annual General Meeting ("AGM")

This report and financial statements will be presented to shareholders for their approval at the AGM. The Notice of the AGM will be distributed to shareholders together with the Annual Report.

Statement of disclosure of information to auditors

As at the date of this report the serving directors confirm that:

·      So far as each director is aware, there is no relevant audit information of which the Company's auditors are unaware, and

·      they have taken all the steps that they ought to have taken as directors' in order to make themselves aware of any relevant audit information and to establish that the Company's auditor are aware of that information

Auditors

A resolution to appoint Chapman Davis LLP and to authorise the Directors to fix their remuneration will be proposed at the next Annual General Meeting.

Going Concern

Notwithstanding the loss incurred during the period under review, the Directors are of the opinion that ongoing evaluations of the Company's interests and cash resources, indicate that preparation of the Group's accounts on a going concern basis is appropriate.

Statement of Directors' Responsibilities

The directors prepare financial statements for each financial year which give a true and fair view of the state of affairs of the company and the group and of the profit or loss of the group for that period.  In preparing those financial statements, the directors are required to:

·      select suitable accounting policies and then apply them consistently;

·      make judgments and estimates that are reasonable and prudent;

·      state whether applicable accounting standards have been followed, subject to any material departures disclosed and explained in the financial statements;

·      prepare the financial statements on the going concern basis unless it is inappropriate to presume that the group will continue in business.

The directors are responsible for keeping proper accounting records, for safeguarding the assets of the group and for taking reasonable steps for the prevention and detection of fraud and other irregularities.  They are also responsible for ensuring that the annual report includes information required by the Alternative Investment Market.

Electronic communication

The maintenance and integrity of the Company's website is the responsibility of the directors:  the work carried out by the auditors does not involve consideration of these matters and, accordingly, the auditors accept no responsibility for any changes that may have occurred to the financial statements since they were initially presented on the website.

The Company's website is maintained in accordance with AIM Rule 26.

Legislation in the United Kingdom governing the preparation and dissemination of the financial statements may differ from legislation in other jurisdictions

By order of the Board:

David Lenigas

Executive Chairman

29 November 2011

 

Financial Statements

Group Statement of Comprehensive Income for the year ended 30 June 2011

	Notes	2011		2010
		£000's		£000's
Revenue		-		-
Administrative expenses	3	(760)		(898)
Loss from operations		(760)		(898)
Impairment charge	14	(99)		-
Finance revenue	6	-		-
Loss  before taxation		(859)		(898)
Income tax	5	-		-
Loss for the year		(859)		(898)
Other comprehensive income
Exchange differences on translation of foreign operations		(2)		18
Other comprehensive income for the year net of taxation		(2)		18
Total comprehensive income for the year attributable to equity holders of the parent		(861)		(880)
Loss per share (pence)
Basic	7	(0.04)		(0.06)
Diluted	7	(0.04)		(0.06)

 

Group Statement of Financial Position as at 30 June 2011

	Notes	2011		2010
		£000's		£000's
Assets Non-current assets
Intangible assets	8	3,756		3,512
Trade and other receivables	9	1,256		528
Total non-current assets		5,012		4,040
Current assets
Trade and other receivables	9	445		600
Cash and cash equivalents		2,092		1,007
Total current assets		2,537		1,607
Total assets		7,549		5,647
Liabilities Current liabilities
Trade and other payables	10	(156)		(93)
Total liabilities		(156)		(93)
Net assets		7,393		5,554
Equity
Share capital	11	233		208
Deferred share capital	11	1,831		1,831
Share premium reserve		11,250		8,780
Foreign exchange reserve		143		145
Warrant reserve		33		33
Share-based payments		438		501
Retained loss		(6,535)		(5,944)
		7,393		5,554
The financial statements were approved by the board of directors and authorised for issue on 29 November 2011.  They were signed on its behalf by ;
David Lenigas	Kiran Morzaria
Director	Director

                                                                     

Company Statement of Financial Position as at 30 June 2011

	Notes	2011		2010
		£000's		£000's
Assets Non- current assets
Investment in subsidiaries	13	-		100
Intangible asset	8	3,756		3,412
Trade and other receivables	9	1,256		528
Amounts due from subsidiaries	16	-		50
Total non-current assets		5,012		4,090
Current assets
Trade and other receivables	9	445		600
Cash and cash equivalents		2,091		957
Total current assets		2,536		1,557
Total assets		7,548		5,647
Liabilities Current liabilities
Trade and other payables	10	(156)		(93)
Total liabilities		(156)		(93)
Net assets		7,392		5,554
Equity
Share capital	11	233		208
Deferred share capital	11	1,831		1,831
Share premium		11,250		8,780
Share-based payment reserve		438		501
Warrant reserve		33		33
Retained loss		(6,393)		(5,799)
		7,392		5,554
The financial statements were approved by the board of directors and authorised for issue on 29 November 2011.  They were signed on its behalf by ;
David Lenigas	Kiran Morzaria
Director	Director

Group Statement of Cash Flows for the year ended 30 June 2011

		2011		2010
		£000's		£000's
Cash outflow from operating activities
Operating loss		(760)		(898)
Adjustments for:
Share-based payments		205		271
Decrease/(increase) in receivables		155		(345)
Increase in payables		63		73
Cash used in operating activities		(337)		(899)
Income tax refund/(paid)		-		-
Net cash outflow from operating activities		(337)		(899)
Cash flows from investing activities
Interest received		-		-
Payments to acquire intangible assets		(344)		(3,412)
Loans made to third party		(728)		(528)
Net cash outflow from investing activities		(1,072)		(3,940)
Cash flows from financing activities
Proceeds on issuing of ordinary shares		2,605		6,400
Cost of issue of ordinary shares		(110)		(725)
Net cash inflow from financing activities		2,495		5,675
Net  increase in cash and cash equivalents		1,086		836
Cash and cash equivalents at beginning of year		1,007		153
Foreign exchange differences on translation		(1)		18
Cash and cash equivalents at end of year		2,092		1,007
The above Cash Flow should be read in conjunction with the accompanying notes.

 

Company Statement of Cash Flows for the year ended 30 June 2011

		2011		2010
	Notes	£000's		£000's
Cash outflow from operating activities
Operating loss		(762)		(900)
Adjustments for:
Share-based payments		205		271
Finance income		-		-
Decrease/(increase) in receivables		155		(350)
Increase in payables		63		76
Cash used in operating activities		(339)		(903)
Income tax refund		-		-
Net cash outflow from operating activities		(339)		(903)
Cash flows from investing activities
Interest received		-		-
Payments to acquire intangible assets		(344)		(3,412)
Loan repayment from subsidiaries		50		-
Loans made to third party		(728)		(528)
Net cash outflow from investing activities		(1,022)		(3,940)
Cash flows from financing activities
Proceeds on issuing of ordinary shares		2,605		6,400
Cost of issue of ordinary shares		(110)		(725)
Net cash inflow from financing activities		2,495		5,675
Net increase in cash and cash equivalents		1,134		832
Cash and cash equivalents at beginning of year		957		125
Cash and cash equivalents at end of year		2,091		957

The above Cash Flow should be read in conjunction with the accompanying notes.

 

Statement of Changes in Equity for the year ended 30 June 2011

		Deferred		Share
	Share	share	Share	based	Warrant	Foreign	Accumulated
	capital	capital	premium	payments	reserve	exchange	losses	Total
	£000's	£000's	£000's	£000's	£000's	£000's	£000's	£000's
GROUP
Balance at 30 June 2009	80	1,831	3,388	75	33	127	(5,046)	488
Currency translation differences	-	-	-	-	-	18	-	18
Loss for the period	-	-	-	-	-	-	(898)	(898)
Total comprehensive income	-	-	-	-	-	18	(898)	(880)
Share capital issued	128	-	6,272	-	-	-	-	6,400
Cost of share issue	-	-	(880)	-	-	-	-	(880)
Share-based payment and warrant charge	-	-	-	426	-	-	-	426
Balance at 30 June 2010	208	1,831	8,780	501	33	145	(5,944)	5,554

Currency translation differences	-	-	-	-	-	(2)	-	(2)
Loss for the period	-	-	-	-	-	-	(859)	(859)
Total comprehensive income	-	-	-	-	-	(2)	(859)	(861)
Share capital issued	25	-	2,580	-	-	-	-	2,605
Cost of share issue	-	-	(110)	-	-	-	-	(110)
Share-based payment charge	-	-	-	205	-	-	-	205
Share options exercised and expired	-	-	-	(268)			268	-
Balance at 30 June 2011	233	1,831	11,250	438	33	143	(6,535)	7,393

Statement of Changes in Equity for the year ended 30 June 2011

		Deferred		Share
	Share	share	Share	based	Warrant	Accumulated	Total
	capital	capital	premium	payments	reserve	losses	equity
	£000's	£000's	£000's	£000's	£000's	£000's	£000's
COMPANY

Balance at 30 June 2009	80	1,831	3,388	75	33	(4,899)	508
Loss for the period	-	-	-	-	-	(900)	(900)
Total comprehensive income	-	-	-	-	-	(900)	(900)
Share issue	128	-	6,272	-	-	-	6,400
Cost of share issue	-	-	(880)	-	-	-	(880)
Share-based payment and warrant charge	-	-	-	426	-	-	426
Balance at 30 June 2010	208	1,831	8,780	501	33	(5,799)	5,554

Loss for the period	-	-	-	-	-	(862)	(862)
Total comprehensive income	-	-	-	-	-	(862)	(862)
Share issue	25	-	2,580	-	-	-	2,605
Cost of share issue	-	-	(110)	-	-	-	(110)
Share-based payment charge	-	-	-	205	-	-	205
Share options exercised and expired	-	-	-	(268)	-	268	-
Balance at 30 June 2011	233	1,831	11,250	438	33	(6,393)	7,392

Notes to the financial statements for the year ended 30 June 2011

1		Summary of significant accounting policies
		General information and authorisation of financial statements
		Solo Oil Plc is a public limited Company incorporated in England & Wales.  The address of its registered office is Suite 3B, Princes House, 38 Jermyn Street, London SW1Y 6DN. The Company's ordinary shares are traded on the AIM Market operated by the London Stock Exchange. The Group financial statements of Solo Oil plc for the year ended 30 June 2011 were authorised for issue by the Board on 29 November 2011 and the balance sheets signed on the Board's behalf by Mr. Kiran Morzaria and Mr. David Lenigas.
		Statement of compliance with IFRS
		The Group's financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS). The Company's financial statements have been prepared in accordance with IFRS as adopted by the European Union and as applied in accordance with the provisions of the Companies Act 2006. The principal accounting policies adopted by the Group and Company are set out below.
		New standards and interpretations not applied
		As at the date of authorisation of these financial statements, there were Standards and Interpretations that were in issue but are not yet effective and have not been applied in these financial statements. The Directors anticipate that the adoption of these Standards and Interpretations in future periods will have no material impact on the financial statements of the group or company, except for additional disclosures when the relevant Standards come into effect.
		Basis of preparation
		The consolidated financial statements have been prepared on the historical cost basis, except for the measurement to fair value of assets and financial instruments as described in the accounting policies below, and on a going concern basis.
		The financial report is presented in Pound Sterling (£) and all values are rounded to the nearest thousand pounds (£'000) unless otherwise stated.
		Basis of consolidation
		Where the Company has the power, either directly or indirectly, to govern the financial and operating policies of another entity or business so as to obtain benefits from its activities, it is classified as a subsidiary. The consolidated financial statements present the results of the Company and its subsidiaries ("the Group") as if they formed a single entity. Intercompany transactions and balances between Group companies are therefore eliminated in full.
		Business combinations and goodwill
		On acquisition, the assets and liabilities of a subsidiary are measured at their fair values at the date of acquisition. Any excess of the cost of acquisition over the fair values of the identifiable net assets acquired is recognised as goodwill.
	Revenue recognition
	Revenue is recognised to the extent that the right to consideration is obtained in exchange for performance. Payment received in advance of performance is deferred on the balance sheet as a liability and released as services are performed or products are exchanged as per the agreement with the customer.
	Revenue derived from the license royalties are recognised on notification of payment by the licensee. Revenue derived from the sale of manufactured products and recognised when delivered to the customer in accordance with the specific supply contract terms.
	Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to that asset's net carrying amount.
	Foreign currencies
	Transactions in currencies other than Sterling are recorded at the rates of exchange prevailing on the dates of the transactions. At each balance sheet date, monetary assets and liabilities that are denominated foreign currencies are retranslated at the rates prevailing on the balance sheet date. Gains and losses arising on retranslation are included in the income statement for the period.
	On consolidation, the results of overseas operations are translated into sterling at rates approximating to those ruling when the transactions took place. All assets and liabilities of the overseas operations, including goodwill arising on the acquisition of those operations, are translated at the rate ruling at the balance sheet date. Exchange differences arising on translating the opening net assets at opening rate and the results of overseas operations at actual rate are recognised directly in equity (the "foreign exchange reserve").
	Taxation
	The tax expense represents the sum of the current tax and deferred tax.
	The current tax is based on taxable profit for the period. Taxable profit differs from net profit as reported in the income statement because it excludes items of income or expense that are taxable or deductible in other periods and it further excludes items that are never taxable or deductible. The liability for current tax is calculated by using tax rates that have been enacted or substantively enacted by the balance sheet date.
	Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amount of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the balance sheet liability method. Deferred tax liabilities are recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary difference arises from goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction which affects neither the tax profit nor the accounting profit.
	Deferred tax is calculated at the tax rates that are expected to apply to the period when the asset is realised or the liability is settled. Deferred tax is charged or credited in the income statement, except when it relates to items credited or charged directly to equity, in which case the deferred tax is also dealt with in equity.
	Externally acquired intangible assets
	Externally acquired intangible assets are initially recognised at cost and subsequently amortised on a straight-line basis over their useful economic lives. The amortisation expense is included within the administrative expenses line in the consolidated income statement.
	Intangible assets are recognised on business combinations if they are separable from the acquired entity or give rise to other contractual/legal rights. The amounts ascribed to such intangibles are arrived at by using appropriate valuation techniques.
	Impairment of tangible and intangible assets excluding goodwill
	At each balance sheet date the Group reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If there is such indication then an estimate of the asset's recoverable amount is performed and compared to the carrying amount.
	Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value. Where the asset does not generate cash flows that are independent from other assets, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs.
	If the recoverable amount of an asset is estimated to be less that its carrying amount, the carrying amount of the asset is reduced to its recoverable amount. An impairment loss is recognised as an expense immediately, unless the relevant asset is carried at a re-valued amount, in which case the impairment loss is treated as a revaluation decrease.
	Where an impairment loss subsequently reverses, the carrying amount of the asset is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset in prior periods. A reversal of an impairment loss is recognised as income immediately, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.
	Provisions
	Provisions are recognised for liabilities of uncertain timing or amount that have arisen as a result of past transactions and are discounted at a pre-tax rate reflecting current market assessments of the time value of money and the risks specific to the liability.
	Financial instruments
	Financial assets and financial liabilities are recognised on the balance sheet when the Group has become a party to the contractual provisions of the instrument
	Cash and cash equivalents
	Cash and cash equivalents comprise cash in hand, cash at bank and short term deposits with banks and similar financial institutions.
	Trade and other receivables
	Trade and other receivables do not carry any interest and are stated at their nominal value as reduced by appropriate allowances for estimated irrecoverable amounts.
	Financial liability and equity
	Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the Company after deducting all of its liabilities.
	Trade and other payables
	Trade and other payables are non interest bearing and are stated at their nominal value.
	Equity instruments
	Equity instruments issued by the Company are recorded at the proceeds received, net of direct issue costs.
	Share-based payments
	Where share options are awarded to employees, the fair value of the options at the date of grant is charged to the consolidated income statement over the vesting period. Non-market vesting conditions are taken into account by adjusting the number of equity instruments expected to vest at each balance sheet date so that, ultimately, the cumulative amount recognised over the vesting period is based on the number of options that eventually vest. Market vesting conditions are factored into the fair value of the options granted. As long as all other vesting conditions are satisfied, a charge is made irrespective of whether the market vesting conditions are satisfied. The cumulative expense is not adjusted for failure to achieve a market vesting condition.
	Where the terms and conditions of options are modified before they vest, the increase in the fair value of the options, measured immediately before and after the modification, is also charged to the consolidated income statement over the remaining vesting period.
	Where equity instruments are granted to persons other than employees, the consolidated income statement is charged with the fair value of goods and services received. Equity-settled share-based payments are measured at fair value at the date of grant except if the value of the service can be reliably established. The fair value determined at the grant date of equity-settled share-based payments is expensed on a straight-line basis over the vesting period, based on the Company's estimate of shares that will eventually vest.
	Critical accounting estimates and judgements
	The Group makes estimates and assumptions regarding the future. Estimates and judgements are continually evaluated based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. In the future, actual experience may differ from these estimates and assumptions. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below.
	Impairment of goodwill
	The Group is required to test, on an annual basis, whether goodwill has suffered any impairment. The recoverable amount is determined based on value in use calculations. The use of this method requires the estimation of future cash flows and the choice of a discount rate in order to calculate the present value of the cash flows - actual outcomes may vary. If the carrying amount exceeds the recoverable amount then impairment is made.
	Useful lives of intangible assets and property, plant and equipment
	Intangible assets and property, plant and equipment are amortised or depreciated over their useful lives. Useful lives are based on the management's estimates of the period that the assets will generate revenue, which are based on judgement and experience and periodically reviewed for continued appropriateness. Changes to estimates can result in significant variations in the carrying value and amounts charged to the consolidated income statement in specific periods.
	Share-based payments
	The Group utilised an equity-settled share-based remuneration scheme for employees. Employee services received, and the corresponding increase in equity, are measured by reference to the fair value of the equity instruments at the date of grant, excluding the impact of any non-market vesting conditions. The fair value of share options are estimated by using Black-Scholes valuation method as at the date of grant. The assumptions used in the valuation are described in note 17 and include, among others, the expected volatility, expected life of the options and number of options expected to vest.
	Determination of fair values of intangible assets acquired in business combinations
	The fair value of patents and trademarks acquired in a business combination is based on the discounted estimated royalty payments that would have been avoided as a result of the trademark or a patent being owned. The fair value of other intangible assets is based on the discounted cash flows expected to be derived from the use and eventual sale of the asset.
	Income taxes
	The Group is subject to income tax in several jurisdictions and significant judgement is required in determining the provision for income taxes. During the ordinary course of business, there are transactions and calculations for which the ultimate tax determination is uncertain. As a result, the Group recognises tax liabilities based on estimates of whether additional taxes and interest will be due. The Group believes that its accruals for tax liabilities are adequate for all open audit years based on its assessment of many factors including past experience and interpretations of tax law. This assessment relies on estimates and assumptions and may involve a series of complex judgments about future events. To the extent that the final tax outcome of such matters is different than the amounts recorded, the differences will impact income tax expense in the period in which such determination is made.
	Deferred taxation
	Deferred tax assets are recognised when it is judged more likely than not that they will be recovered.
	Going Concern
	The financial report for the year ended 30 June 2011 has been prepared on a going concern basis.

2	Turnover and segmental analysis
	Segment information is presented in respect of the Group's management and internal reporting structure. As the Group is currently not producing or exploring directly, there is no revenue being generated, and the main business segment is that of a corporate administrative entity. Segment results, assets and liabilities include items directly attributable to a segment as well as those that can be allocated on a reasonable basis. Operating and Geographical segments The Group comprises the following operating segments: Corporate - Parent company administrative costs, and investments, in United Kingdom. Exploration & development - costs in relation to the group's investment in mining operations.
	2011				Corporate	Exploration &	Total
	Business segments					development
	Revenue				£000's	£000's	£000's
	External sales				-	-	-
	Total revenue				-	-	-
	Result
	Segment result				(760)	-	(760)
	Finance income						-
	Impairment charge						(99)
	Loss before tax						(859)
	Income tax expense						-
	Loss for the period						(859)
	Other segment items included in the income statement are as follows:
	Depreciation						-
	Amortisation						-
	Impairment charge				(99)	-	(99)
	Balance sheet
	Segment assets				2,537	5,012	7,549
	Segment liabilities				(156)	-	(156)
	Net assets				2,381	5,012	7,393
					United	Australia	Total
	Geographical segments				Kingdom
	Revenue				£000's	£000's	£000's
	External sales				-	-	-
	Total revenue				-	-	-
	Result
	Segment result				(760)	-	(760)
	Finance income						-
	Impairment charge						(99)
	Loss before tax						(859)
	Income tax expense						-
	Loss for the period						(859)
	Balance sheet
	Segment assets				7,548	1	7,549
	Segment liabilities				(156)	-	(156)
	Net assets				7,392	1	7,393

		2010			Corporate	Product	Product	Total
		Business segments				R&D and	manufacture
						design
		Revenue			£000's	£000's	£000's	£000's
		External sales			-	-	-	-
		Total revenue			-	-	-	-
		Result
		Segment result			(898)	-	-	(898)
		Finance income						-
		Impairment charge						-
		Loss before tax						(898)
		Income tax expense						-
		Loss for the period						(898)
		Other segment items included in the income statement are as follows:
		Depreciation			-	-	-	-
		Amortisation			-	-	-	-
		Impairment charge			-	-	-	-
		Balance sheet
		Segment assets			5,497	100	50	5,647
		Segment liabilities			(93)	-	-	(93)
		Net assets			5,404	100	50	5,554
						United	Australia	Total
		Geographical segments				Kingdom
		Revenue				£000's	£000's	£000's
		External sales				-	-	-
		Total revenue				-	-	-
		Result
		Segment result				(898)	-	(898)
		Finance income						-
		Impairment charge						-
		Loss before tax						(898)
		Income tax expense						-
		Loss for the period						(898)
		Balance sheet
		Segment assets				5,597	50	5,647
		Segment liabilities				(93)	-	(93)
		Net assets				5,504	50	5,554

3	Group operating loss	2011 £000's	2010 £000's
	Loss from operations has been arrived at after charging:
	Directors fees	252	202
	Salaries and wages	39	-
	Audit fees	13	13
	Share-based payments	205	271
	Amounts payable to auditors and their associates in respect of both audit and non-audit services:
	Audit services - group statutory audit - Chapman Davis LLP	13	13
		13	13

4	Employee information and directors emoluments
		2011 £000's	2010 £000's
	Staff information
	The average number of employees (excluding executive directors) was :	1	-
	Their aggregate remuneration comprised :	£000's	£000's
	Wages and salaries	39	-
	Total	39	-
	Directors' remuneration
	Total	252	341

	2011	Salary and fees £000's	Share-based payments £000's	Total £000's
	David Lenigas	60	-	60
	Neil Ritson	41	103	144
	Sandy Barblett	24	-	24
	Kiran Morzaria	24	-	24
		149	103	252

	2010	Salary and fees £000's	Share-based payments £000's	Total £000's
	David Lenigas	92	110	202
	Sandy Barblett	55	15	70
	Kiran Morzaria	55	14	69
		202	139	341

5	Taxation	2011 £000's	2010 £000's
	Current tax expense
	UK corporation tax and income tax of overseas operations on profits for the period	-	-
	Deferred tax expense; Origination and reversal of temporary differences	-	-
	Total income tax expense	-	-
	The reasons for the difference between the actual tax charge for the period and the standard rate of corporation tax in the UK applied to profits for the year are as follows:
	Loss for the period	(859)	(898)
	Standard rate of corporation tax in the UK	26/28%	28%
	Loss on ordinary activities multiplied by the standard rate of corporation tax	(236)	(251)
	Expenses not deductible for tax purposes	84	76
	Future income tax benefit not brought to account	152	175
	Current tax charge for period	-	-
	No deferred tax asset has been recognised because there is uncertainty of the timing of suitable future profits against which they can be recovered.

6	Finance revenue	2011 £000's	2010 £000's
	Bank interest receivable	-	-

7	Loss per share	2011	2010
	The calculation of loss per share is based on the loss after taxation divided by the weighted average number of shares in issue during the year:
	Net loss after taxation (£000's)	(859)	(898)
	Number of shares
	Weighted average number of ordinary shares for the purposes of basic loss per share (millions)	2,156.3	1,519.8
	Basic and diluted loss per share (expressed in pence)	(0.04)	(0.06)
	As inclusion of the potential ordinary shares would result in a decrease in the earnings per share they are considered to be anti-dilutive, as such, a diluted earnings per share is not included.

8
	Group	Intellectual property £000's	Deferred exploration expenditure £000's	Total £000's
	Cost As at 1 July 2010	5,022	3,412	8,434
	Additions	-	344	344
	Disposal	(5,022)	-	(5,022)
	As at 30 June 2011	-	3,756	3,756
	Accumulated amortisation and impairment As at 1 July 2010	4,922	-	4,922
	Amortisation charge for the period	-	-	-
	Impairment charge	99	-	99
	Disposal	(5,021)	-	(5,021)
	Balance at 30 June 2011	-	-	-
	Net book value As at 30 June 2011	-	3,756	3,756
	As at 30 June 2010	100	3,412	3,512

8	Company			Deferred exploration expenditure £000's	Total £000's
	Cost As at 1 July 2010			3,412	3,412
	Additions			344	344
	As at 30 June 2011			3,756	3,756
	Accumulated amortisation and impairment As at 1 July 2010			-	-
	Amortisation charge for the period			-	-
	Impairment charge			-	-
	Balance at 30 June 2011			-	-
	Net book value As at 30 June 2011			3,756	3,756
	As at 30 June 2010			3,412	3,412
	Impairment Review At 30 June 2011, the directors have carried out an impairment review and have considered that no impairment write-down is required (2010: nil). The directors are of the opinion that the carrying value is now stated at fair value.

9	Trade and other receivables	2011		2010
		Group	Company	Group	Company
	Current trade and other receivables	£000's	£000's	£000's	£000's
	Trade debtors	-	-	-	-
	Prepayments	5	5	19	19
	Other debtors	440	440	581	581
		445	445	600	600
	Non - current trade and other receivables
	Loan - other	1,256	1,256	528	528
		1,256	1,256	528	528
	The other loan to Reef Resources Ltd ("Reef"), is secured by way of a security interest and mortgage over Reef's interest in its future cash flow and/or its asset properties.  The loan was initially due to be repaid on 28 April 2012, and was made interest free. On 24 May 2011, the Company announced it  had signed a Heads Of Agreement with Reef Resources Ltd  to convert the loan to a direct working interest in the Ausable Field. This was completed on 11 July 2011 as per Note 20.
	The directors consider that the carrying amount of trade and other receivables approximates their fair value.

10	Trade and other payables	2011		2010
		Group	Company	Group	Company
	Current trade and other payables	£000's	£000's	£000's	£000's
	Trade payables	89	89	69	7
	Accruals	67	67	24	86
		156	156	93	93
	The directors consider that the carrying amount of trade payables approximates to their fair value.

11	Share capital
				Number of shares	Nominal value
					£000's
	a)      Called up, allotted, issued and fully paid:
	1 July 2009			800,324,634	80
	23 November 2009 for cash at 0.5p per share			224,700,000	22
	11 December 2009 for cash at 0.5p per share			1,055,300,000	106
	As at 30 June 2010			2,080,324,634	208
	20 April 2011 for cash at 1.4p per share			150,000,000	15
	22 April 2011 - exercise of options at 0.5p			30,500,000	3
	4 May 2011 - exercise of options at 0.5p			70,500,000	7
	As at 30 June 2011			2,331,324,634	233
	During the year 251 million shares were issued (2010: 1,280 million)
	b)     Deferred shares
	Deferred shares of 0.69 pence each (2010: 265,324,634)			265,324,634	1,831
	Total share options in issue
	During the year, 80 million options were granted (2010: 245 million).
	As at 30 June 2011 the options in issue were:
	Exercise Price	Expiry Date	Options in Issue 30 June 2011
	1.54p	30 April 2018	7,000,000
	0.5p	21 December 2012	224,000,000
			231,000,000
	101 million options were exercised during the year (2010: nil).
	734,489 options lapsed during the year (2010: nil). No options were cancelled during the year (2010: nil)
	Total warrants in issue
	During the period, no warrants were issued (2010: nil).
	As at 30 June 2011 the warrants in issue were;
	Exercise Price	Expiry Date	Warrants in Issue 30 June 2011
	1.5p	14 August 2013	18,550,000
			18,550,000
	No warrants lapsed or were cancelled or exercised during the year (2010: nil).

12	Share based payment
	During the year the Company issued options and warrants to investors as part of equity placements.
			2011			2010
			Weighted	Number		Weighted	Number
			average			average
			exercise price (pence)			exercise price (pence)
	Outstanding at the beginning of the period		0.97	271,284,489		2.05	26,284,489
	Granted during the year - warrants		-	-		-	--
	Granted during the year - options		0.5	80,000,000		0.87	245,000,000
	Forfeited during the year		-	-		-	-
	Cancelled during the year - options		-	-		-	-
	Exercised during the year		0.5	(101,000,000)		-	-
	Lapsed during the year		21.0	(734,489)		-	-
	Outstanding at the end of the year (options and warrants)		0.60	249,550,000		0.97	271,284,489
	The exercise price of options and warrants outstanding at the end of the period ranged between 1.54p and 0.50p and their weighted average contractual life was 3.4 years (2010: 5 years).
	The weighted average fair value of each option granted during the year was 0.5p (2010: options 0.87p).
	The Group used the Black-Scholes model to determine the value of the options and the inputs were as follows:
			Issue 06/12/2010			Issue 05/02/2011
	Share price at grant (pence)		0.51			0.50
	Fair Value price at grant (pence)		0.26			0.26
	Expected volatility (%)		93%			99%
	Expected life (years)		2 years			1.9 years
	Risk free rate (%)		1.50%			1.50%
	Expected dividends (pence)		nil			nil
	Expected volatility was determined by using the volatility rate used by listed companies in similar industries and those companies with similar sizes.
	The total share-based payment expense in the period for the Group was £205,000 expense (2010: £426,000 expense) consisting of: -       £205,000 expense to the income statement (2010: £271,000 expense) , and a charge of £nil to the share premium reserve (2010: £155,000 charge) relating to new options to employees and directors, and consultants. £268,000 credit (2010: nil credit) relating to exercise and expiration of previously issued share options, taken directly to retained earnings.

13	Investment in subsidiaries
		2011	2010
		£000's	£000's
	As at 1 July	100	100
	Additions	-	-
	Write-down of investment	(99)	-
	Disposal	(1)	-
	At 30 June	-	100
	The subsidiaries of Solo Oil Plc, all of which have been included in these consolidated financial statements, are as follows:
	Name	Country of incorporation	Proportion of ownership interest
	Immersion Technology Property Limited (1)	UK	100%
	Immersion Technologies Australia Pty Limited	Australia	100%
	Solo Oil International Limited (2)	UK	100%
	Whise Technologies Pty Limited (3)	Australia	100%
	(1) Subsidiary was disposed of on 30 June 2011, for £1,000. (2) Subsidiary was acquired on incorporation on 21 June 2011. (3) Subsidiary was de-registered on 25 August 2010.

14	Impairment review
	The directors undertook an impairment review of the Group's assets during the year ended 30 June 2011. The format of the review was by assessing the carrying value of assets as at 30 June 2011 in its subsidiary, Immersion Technology Property Ltd. The analysis and resultant impairment charges were considered as follows:

	Category	Net costs capitalised to  30 June 2011	Impairment charge	Net costs carried forward
		£000's	£000's	£000's
	Group
	Intangible assets
	Intellectual property	100	(99)	-
	Total	100	(99)	-
	Company
	Investment in subsidiaries	100	(99)	-

15	Financial instruments
	The Group is exposed through its operations to one or more of the following financial risks:
	· Fair value or cash flow interest rate risk
	· Foreign currency risk
	· Liquidity risk
	· Credit risk
	Policy for managing these risks is set by the Board. The policy for each of the above risks is described in more detail below.
	Fair value and cash flow interest rate risk
	Currently the Group does not have external borrowings. However, the Group has a policy of holding debt at a floating rate. The directors will revisit the appropriateness of this policy should the Group's operations change in size or nature. Operations are not permitted to borrow long-term from external sources locally.
	Foreign currency risk
	Foreign exchange risk arises because the Group has operations located in various parts of the world whose functional currency is not the same as the functional currency in which the Group companies are operating. The Group's net assets are exposed to currency risk giving rise to gains or losses on retranslation into sterling. Only in exceptional circumstances will the Group consider hedging its net investments in overseas operations as generally it does not consider that the reduction in volatility in consolidated net assets warrants the cash flow risk created from such hedging techniques.
	Liquidity risk
	The liquidity risk of each Group entity is managed centrally by the Group treasury function. Each operation has a facility with Group treasury, the amount of the facility being based on budgets. The budgets are set locally and agreed by the board annually in advance, enabling the Group's cash requirements to be anticipated. Where facilities of Group entities need to be increased, approval must be sought from the Group finance director. Where the amount of the facility is above a certain level agreement of the board is needed.
	All surplus cash is held centrally to maximise the returns on deposits through economies of scale. The type of cash instrument used and its maturity date will depend on the Group's forecast cash requirements.
	Credit risk
	The Group is mainly exposed to credit risk from credit sales. It is Group policy, implemented locally, to assess the credit risk of new customers before entering contracts. Such credit ratings are taken into account by local business practices.
	The Group does not enter into complex derivatives to manage credit risk, although in certain isolated cases may take steps to mitigate such risks if it is sufficiently concentrated.

16	Group Related party transactions
	Transactions between the parent and its subsidiaries, which are related parties, have been eliminated on consolidation and are not disclosed in this note.  Details of director's remuneration, being the only key personnel, are given in note 4. There are no other related party transactions during the year.
	Remuneration of Key Management Personnel The remuneration of the directors, and other key management personnel of the Group, is set out below in aggregate for each of the categories specified in IAS24 Related party Disclosures.
		2011	2010
		£'000s	£'000s
	Short-term employee benefits	178	202
	Share-based payments	205	139
		383	341
	Company Related party transactions
	During the period the Company received repayment of a loan to a subsidiary.
		As at	As at
		30 June 2011	30 June 2010
		£'000s	£'000s
	Immersion Technologies Australia Pty Limited	-	50
		-	50
	Net amounts due from subsidiaries	-	50

17	Ultimate controlling party
	In the opinion of the directors there is no controlling party.

18	Retirement benefit scheme
	The Group does not operate either a defined contribution or defined benefit retirement scheme.

19	Commitments
	As at 30 June 2011, the Group has no material commitments.

20

Post balance sheet event

On 11 July 2011, the Company completed the first part of its acquisition of a 38.1% direct working interest in the Ausable Field and surrounding properties in South Western Ontario from Reef Resources Limited. On 8 September 2011, the Company announced it had increased its stake in the Ruvuma Basin PSA from 12.5% t0 18.75%, as a result of the increased interest, the Company will also assume the future obligations on the additional interest. The increased assignment is subject to final Tanzanian Government approval, expected shortly. On 10 November 2011, the Company announced it had secured a 3 year equity line facility of up to £10 million with Dutchess Opportunity Cayman Fund Ltd.

21	Profit and loss account of the parent company As permitted by section 408 of the Companies Act 2006, the profit and loss account of the parent company has not been separately presented in these accounts. The parent company loss for the year was £0.9 million (2010: £0.9 million loss).

Note to the announcement:

The financial information set out in this announcement does not constitute the Company's statutory accounts for the years ended 30 June 2011 or 2010. The financial information for the year ended 30 June 2010 is derived from the statutory accounts for that year. The audit of statutory accounts for the year ended 30 June 2011 is complete. The auditors reported on those accounts, their report was unqualified and did not include references to any matters to which the auditors drew attention to by way of emphasis without qualifying their report.

 

 

END

 

 

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