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ViaLogy PLC (VIY)

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Friday 29 June, 2012

ViaLogy PLC

Final Results

RNS Number : 4254G
ViaLogy PLC
29 June 2012
 



ViaLogy PLC ("ViaLogy" or "the Company")

 

Final Results for the year ended 31 March 2012

 

Pasadena, June 29 2012. ViaLogy PLC (AIM: VIY), a provider of reservoir characterization, geophysical imaging and hydrocarbon sizing services to global oil and gas Exploration and Production companies based on proprietary, patented active signal processing technology, is pleased to announce its audited final results for the year ended 31 March 2012.

 

 

 

Chairmans Statement

 

I am pleased to present the annual report and the financial report for your company for the Fiscal Year ending 31 March 2012. Detailed and comprehensive information on the Fiscal Year activities is contained in the report and we consider it is also relevant to include information about the months since March, a period when ViaLogy has made considerable and significant business progress. So, as well as the audited financial details, you will find comprehensive reviews of the company's achievements during this recent period from our CEO, Robert Dean, and our founder and CTO, Sandeep Gulati. 

 

I am pleased to say we have achieved a number of major milestones, the result of many months of effort. In the CEO's review you will see that we have signed commercially based contracts with the supermajor energy company, Chevron, the Indian national oil company, ONGC, and a second household-name Supermajor which, at their request, will remain anonymous. These are prestigious awards from international businesses that have carried out detailed examination of our technology, QuantumRD. They are sufficiently satisfied to place their trust in us and we are proud to be working with their scientists and other technical suppliers.

 

These large clients have exacting criteria for using new technologies. Not surprisingly, the path to the first sales has been an extended one. Going forward, contracted project work should increase as should revenues and operating cash flows. Our plan for the business is measured in operating throughput, a process we believe can be made progressively more automated to deliver higher margins.

 

In addition to the three clients we have secured in recent months, we are engaged in business talks with other Oil Exploration and Production giants. ViaLogy's current phase brings its own challenges. The mission now is to gear our organisation to deliver contracted seismic analysis results on schedule - the deadlines demanded by each of our clients are stringent - and to cope with what we anticipate will be an escalating demand for our services. Our  revenue model is based on the increasing and automated throughput of properly conditioned seismic data, and this in turn depends upon further development of our QuantumRD software platform. Both execution and development work will involve additional skilled technical personnel.

 

 

 

 

FINANCES

 

For the year ending 31 March 2012 the ViaLogy consolidated financial statements accounts show a net loss of £4.9 million (2011: loss £5.8 million). The loss after tax and after adding back the non-cash items, depreciation and amortisation charge and share based payment expense was £1.52 million (2011: loss £2.01 million).

 

ViaLogy is a high-tech research and development company and it is the Board's responsibility to ensure that the business is adequately funded during its formative years. Our strategy has always been to avoid company debt and to raise capital by the issue of new equity, sufficient to cover expenditure for the medium term. To date we have achieved this mainly by private placings which is a most cost effective method and, we believe, is in the best interests of investors. We will continue to examine the most appropriate ways to fund the future development of the company.

 

During the year to the end of March 2012 the company raised £177,500 before expenses via a private placing of 17,750,000 shares at 1p on 11 October, 2011. The company also raised £1,050,000 via a private placing of 100,000,000 shares on 18 January 2012.

 

Since the company's year end we have arranged two further fundings. The company raised £1,045,000 via a  private placing of 38,000,000 shares at 2.75p on 23 May, 2012. On 15 June 2012  £1,000,000 was raised via a  private placing of 36,363,637 shares at 2.75p

 

THE FUTURE

 

It is obvious that ViaLogy has reached a tipping point in its development. A number of the upstream Exploration and Production industry's biggest players are utilising our QuantumRD technology and we are confident that more will follow. We have a conservative business plan in place and  will continue to discuss and consider all the opportunities our technology presents.

 

Thank you for your continued support.

 

 

Terry Bond

Chairman

 28 June 2012


 

 

 

 

For further information:

 

ViaLogy PLC

 

Terry Bond, Chairman - UK & Europe +44 (0) 1235 834 734

 

Nominated Advisor to ViaLogy PLC (Seymour Pierce)

 

Mark Percy / Catherine Leftley  Corporate Finance +44 (0) 207 107 8000

 

Katie Ratner                             Corporate Broking +44 (0) 207 107 8000


Chief Executive Officer's Report

 

In the last Annual Report I said we were close to doing business with a number of large, important clients. We have delivered, and this blue-chip market penetration puts us closer to our goals of becoming a key piece of the industry-wide seismic analysis toolkit, making QuantumRD a mainstay of our customers' success, and achieving substantial revenue growth through expanded follow-on business. In each case we are attempting to solve core reservoir development problems for our clients. Keep in mind ViaLogy's powerful value proposition-- that our technology can over time create efficiencies and lower costs in the upstream E&P industry by drilling fewer development wells and avoiding dry wells, mapping deviated wells optimally, and by increasing reserves because of additional reserves discovered. The technology is also versatile in that it can be utilized in virtually any geography as long as the data is of sufficient quality. Our current contracts take QuantumRD technology to South Asia, and to major US development areas.

 

In the twelve months prior to ViaLogy's July 2012 AGM we count a number of pivotal achievements that mark major strategic progress toward establishing QuantumRD as a unique tool in the upstream energy industry and toward building substantial revenues.

 

·     In March 2012 we successfully completed our initial contract with Chevron and now we have begun work under a second contract. In the first commission ViaLogy's analysis located a major oil/gas subsurface carbonate porosity trend that Chevron had been unable to discern using other techniques; the ground truth of our work was validated by wells previously drilled on this extensive field but unknown to ViaLogy. If the ViaLogy analysis had been available originally to assist in the development of the field numerous wells would probably not have been drilled - amounting to substantial cost savings. ViaLogy's findings were presented at a worldwide Chevron technical meeting in May and will be featured in a presentation at September's international meeting of the American Association of Petroleum Geologists in Singapore. The goal of ViaLogy's second Chevron contract is to deliver accurate quantitative estimates across a large prospect, not only of porosity, but of fluid presence and lithologies as well.

 

·     In April 2012, we executed a sole-source contract with India's largest energy company, the Oil and Natural Gas Corporation. Focused on the country's largest known offshore field, and confronting some of India's toughest offshore development problems, ViaLogy's work is being watched closely at senior levels and has the potential to have a large impact on many future ONGC projects.

 

·     In April 2012, we were awarded a contract by a second Supermajor to apply QuantumRD analysis to 3D data associated with one of their most important fields. An internal Supermajor project team has been established to monitor results and to assess the technology's suitability for incorporation into the client's global best practices workflow.

 

·     We completed work for client Samson that successfully mapped porosity in five different carbonate formations in a Permian field. 

 

·     We have made progress in developing our proprietary QuantumRD software by completing additional code that will further automate the analysis process.

ViaLogy's revenue model foresees the throughput of increasing levels of automated QuantumRD processed seismic data. The company's value proposition - lower exploration and production costs through better predictive outcomes in the data's analysis - should enable growth of our customer base, as well as larger projects. Offshore fields are expansive, often extending to thousands of square kilometres; processing needs to be implemented on very large areas to ensure that trends are identified, even though actual drilling zones may be limited in size. Fundamentally, the marginal cost of expanding the business to accommodate ever larger units of sale (ie, larger geographic areas) is low, that is revenues can increase at a much higher ratio than cost of sales, and deliver very positive margins. Business execution has its own challenges; for example, we are often obliged to work with seismic data that is not of sufficient quality to produce the results of which QuantumRD is capable. But in general the key requisites for expanding the business are skilled personnel and further development of the software.

 

Your Board, management team, and staff take pride in what has been accomplished in difficult economic times and in a risk-averse, stay-with-what-you-know industry and, it deserves to be mentioned, with limited company resources. Our attention in the coming months will be given to contract performance, building client relationships, expanded business and revenues, and keeping the technology moving forward. We face challenges on all fronts and we must increase our staff capabilities. Our strong preference would be to release to shareholders more fulsome news reports, but the confidentiality that is typically imposed by clients is something we must respect. In conclusion I want to thank you, our shareholders, for your continuing confidence and support.

 

 

Dr. Robert W Dean

 

Chief Executive Officer

 

28 June 2012




 

Chief Technology Officer's Review

 

The past year has been very busy for ViaLogy. Building on our onshore and offshore pilot project successes over three years of development, the software team implemented techniques to scale our workflows for hydrocarbon reservoir discovery, development, and resource estimation. We are now delivering complex geophysical analysis based on our patented quantum algorithms and weak signal processing technology to support our customers' exploration and development drilling programs at various locations around the world 

 

QuantumRD, ViaLogy's software-based signal processing platform, is capable of extracting reservoir properties from ultra-weak seismic amplitudes that have traditionally been discarded and filtered away as 'noise'. Some of this discarded data, previously considered 'random and meaningless' in conventional seismic processing, is actually useful signal. Our work, amplifying complex subsurface channels and porous zones in tight carbonates and sandstones, has demonstrated that subsurface strata reflect signals of complexity and subtlety that can be effectively characterized by transforming the seismic data into the quantum domain. To accomplish this QuantumRD utilizes a synthetic noise source (that is, a representation suitable for exploitation by quantum resonance algorithms) derived from known rock-physics and well log data. This synthetic noise is then used to probe the transformed seismic data sets in order to detect, amplify and characterize changes in weak amplitudes in low and high frequencies that are indicative of the presence of pre-specified levels of porosity, shale and fluid presence. Subtle changes in rock and fluid properties are detected as emergent computational resonances in the quantum domain. As part of the analysis process, QuantumRD deconstructs conventionally processed seismic datasets into smaller volume cells (or voxels).  These voxels are focused on individual formations of interest. Each voxel is analyzed individually in the quantum domain, to detect porosity, shale, and fluid presence, and then reassembled to build reservoir models from the bottom up. In the last twelve months we have made significant progress in extending our software capability to automate this process.

 

Customers are starting to recognize QuantumRD as a relatively low-cost, high-payoff augmentation to their seismic processing toolkit.  Increasing worldwide demand for oil has intensified the search for new plays, production from deeper, difficult targets, and for the extension/redevelopment of mature producing fields. Exploration and Production companies are also paying increasing attention to reducing operating costs and improving efficiencies in recovery by relying on better located horizontal wells and multi-zone vertical and deviated wells.  In addition, many new reservoirs are likely to be smaller and deeper, which means an increase in capital risk. E&P firms want to do everything possible to reduce risk prior to drilling or committing to full-scale field development. As we explain below, each ongoing commercial project moves QuantumRD to another level of complexity and performance, extending the overall reach of the technology and our prospects for business growth based on technical successes.

 

Here are some highlights from key commercial projects we have recently undertaken:

 

Positioning horizontal drilling trajectories in West Texas. . This project follows a recent success for the same Supermajor that demonstrated QuantumRD's unique capabilities in finding high porosity trends in tight Permian dolomites. In this project numerous offset wells that had been drilled using standard grid patterns - attempting to increase recovery by maximizing statistical coverage of the acreage - could have been avoided. This customer has now contracted with ViaLogy to map out the best subsurface corridors for placing horizontal wells in excess of ten thousand feet. Mapping porosity, interference from shale, and fluid presence could potentially save drilling several tens of vertical wells. The initial phase of this project has been prioritized from a survey covering over 2000sq km , with the potential for expanding to several prospects the entire area.

·     Mapping offshore carbonates and reservoir compartmentalization for a national oil company in a geologically complex Miocene setting that holds promise for large oil finds, but to date has shown a chequered production profile.  As focus shifts to increasing production from satellite and marginal fields to extend the life of aging brown fields, this client's need for accurately mapping the subsurface becomes even more important as a pre-requisite to committing large development resources. With frequent changes in subsea geology, complex overburden, high faulting and unexpectedly high levels of produced water seen in test wells, this project acreage has challenged conventional seismic and electromagnetic processing to date, resulting in a high number of test wells and commensurate costs. The total basin, with over 100,000sq km seismic data, represents several structural provinces that could significantly benefit from QuantumRD's lithology, fracture and fluid presence discrimination.     

 

·     Discovery and mapping of near-arctic sandstone reservoirs. QuantumRD is being utilized to determine the locations of thin pay hydrocarbon assets, to discover new and bypassed oil pools in highly compartmentalized reservoirs which are extremely difficult to image and below several thousand feet of permafrost. Even with high quality seismic acquisition and, best practice AVO and inversion processing, these unconsolidated sandstone reservoirs below the seismic resolution have been difficult to characterize. While the end objective of the project for the Supermajor client is to increase the success rate of drilling and hydrocarbon recovery, results will have major implications in filling performance gaps in AVO, as most seismic exploitation today relies heavily on it.

 

·     Multi-zone Permian mapping. QuantumRD analysis provided porosity prediction on a 50sq. km Permian field in Texas. This is a complex hybrid reservoir with separate resource plays in Clear Fork, Leonard Limestone, Devonian, Wolfcamp and Strawn formations. Each formation was analyzed individually, mapping porosity and generating drilling targets. ViaLogy's development team extended the QuantumRD workflow capabilities to automatically deconstruct conventionally processed seismic datasets into smaller volume cells (voxels) over individual sandstone and carbonate zones for each subsurface formation of interest. The individual voxels were then analyzed, within their rock physics contexts, for porosity, fluids and other rock properties, and then reassembled to build net-pay reservoir models from the bottomup. This is an important advance in automated analysis and interpretation. Comparison of ViaLogy's results with double blind legacy wells and also with new recently drilled wells showed success, and validated QuantumRD as a cost-effective de-risking technology that can be applied to high-grade marginal prospects where additional areal and vertical resolution of hydrocarbon bearing geobodies is important and where higher confidence on lithology and porosity predictions can maximize recovery via multi-zone wells.

 

What makes QuantumRD so valuable as a seismic processing technology is its predictive accuracy and its ability to process massive volumes of seismic data rapidly. The software deconstructs digital seismic data sets into hundreds of millions of small 3D cubes or voxels, uniquely transforms the seismic data spectrum into the quantum domain to render it searchable for weak signal, and precisely analyses each voxel for high and low frequency amplitudes indicative of reservoir attributes - porosity, Vshale, and fluid presence. An overall picture of the reservoir formation can then be assembled. The QuantumRD process is a major improvement over conventional techniques based on full-waveform processing and ray tracing which are both limited in resolution. Further development of the QuantumRD software "engine" is important to increase data throughput. The engine is now optimized to process one seismic voxel per second on an Intel CPU. The company's business model is based on an in-house service calculated in terms of data throughput. The computational technology - and future improvements in it - should enable increasing automation of the process and business scaling to accommodate very large geographical areas.

 

In summary, it should be said that seismic data analysis for reservoir characterization is not a one-size-fits-all discipline, and QuantumRD must be developed and adapted to, and shown to work in, a variety of subsurface formations. The company's success to date, in demonstrating QuantumRD's effectiveness to sophisticated customers in a number of formation types, both onshore and offshore, holds great promise for the future. Bear in mind also that seismic data analysis is not about certainty, and neither professionals in the field nor clients expect certainty. What they do expect is value over time, measured at the end of the day in reducing the aggregate costs of exploration and development.

 

 

 

 

Dr. Sandeep Gulati

Vice President and Chief Technology Officer

ViaLogy PLC

 

28 June  2012




Report of the Directors

 

The directors present their report together with the audited financial statements for the year ended 31 March 2012.

 

Results and dividends

 

The statement of comprehensive loss is set out on page 17 and shows the loss for the year.

 

The directors do not recommend a final ordinary dividend for the year (2011 - £Nil).

 

Principal activities, trading review and future developments

 

A detailed review of the business, post reporting date events and likely future developments is given in the Chairman's Statement and the executive reports on pages 2 to 8

 

Key performance indicators

 

The Directors consider the Group's key performance indicators during the fiscal year were the completion of successful demonstrations of ViaLogy's QuantumRD technology to major oil and gas companies. This belief has been validated by the fact that since the end of the year these demonstrations have resulted in commercial contracts with at least three global organisations.

During the year, the loss after tax and after adding back the depreciation and amortisation charge and share based payment expense was £1.52 million (2011: loss £2.01 million). 

 

Financial instruments

 

Details and required disclosure of the financial instruments used by the Group are contained in note 15 of the financial statements.

 

Payments to suppliers

 

The Group agrees terms and conditions under which business transactions with suppliers are conducted.  It is Group policy that, provided a supplier is complying with the relevant terms and conditions, including the prompt and complete submission of all specified documentation, payment will be made within a reasonable period of the invoice being received and in any case within the agreed payment period.  The number of days purchases remained outstanding at 31 March 2012 for the Group was 6 days (2011: 5 days).

 

Events after reporting date

 

Significant events that have occurred since the reporting date are detailed in the Chairman's Statement on page 2

 

Risks and uncertainties

 

The main business risk facing the Group is that its technology cannot be viably developed both economically and technically and that competitors emerge which erode the Group's competitive advantage.  The Directors continue to monitor developments within the ViaLogy product markets to ensure ViaLogy retains the competitive advantage.

 

The directors of the company are fully aware that, as a small research and development company, unforeseen circumstances affecting one or more key employees could cause a hiatus in the progress of the business. To mitigate this risk the Group has arranged a life insurance policy on the founder of the company and is ensuring that senior personnel are trained to utilise and further develop ViaLogy's products

 

Donations and political contributions

 

The Group made no donations or political contributions in the current or prior year.

 

Going concern

 

Following the signing of three significant contracts with international companies since the year end the directors are confident that the Group's pipeline of sales from current clients and potential new customers will help to fund the Group's development and working capital requirements. However additional funding will be required in order to support the Group until we begin to see the benefits from this pipeline of contracts. There can be no certainty that additional funding will be available given the current economic climate and the risks associated with the oil and gas industry. While the directors are confident that additional funding can be raised in order to meet its development and working capital requirements, and ViaLogy's capital development history demonstrates that this confidence is well founded, a significant uncertainty exists given the absence of any committed funding at the date of approval of these financial statements. This condition indicates the existence of a material uncertainty which may cast doubt on the Group's ability to continue as a going concern.

 

 

Accordingly the financial statements set out on pages 16 to 50 have been prepared on a going concern basis.

 

       Executive Directors

 

       Terry Bond, (74), Executive Chairman

 

During the 1960s Terry Bond was Managing Director of a public relations consultancy. Throughout the 1970s he was Sir Chay Blyth's business partner and Managing Director of Chay Blyth Supersail. In 1980 Terry was appointed Managing Director of International Property Marketing Limited ('IPM') and in 1987 he was appointed Sales and Marketing Director for Wimpey Leisure. During the 1990s he was a director of ProShare (UK) Ltd, responsible for building up the British investment club movement to 12,000 clubs. Terry is also a director of Sector Investment Managers, which is investment adviser to Junior Oils Unit Trust and Junior Gold.

 

Dr. Robert Dean, (69), Chief Executive Officer

 

Until September 2007 Robert Dean was  Senior Vice President, Corporate Market Development, with Science Applications International Corporation (SAIC). Previously he has held senior executive positions in the aerospace industry at Boeing, Lockheed Martin, and Ball Aerospace Corporation. Bob also served in senior executive positions in the US Government at the Central Intelligence Agency, the State Department, and at the White House as Special Assistant to the President during Ronald Reagan's presidency. He is a graduate of Brandeis University, Harvard University, and received his Ph.D. from the University of Denver.

 

Dr. Sandeep Gulati, (49), Chief Technology Officer

 

Dr. Sandeep Gulati is a co-founder, Chief Technology Officer and Vice President, Product Development for ViaLogy LLC. Previously, he headed the Ultracomputing Technologies Group at NASA's Jet Propulsion Lab (JPL) in Pasadena, California. During his 12 year tenure at JPL, he led computational advances in spacecraft autonomy, autonomous diagnostics and prognostics of complex systems, sensor fusion, neural networks, signal processing, command decision modelling and intelligence analysis. At JPL he was a Principal Scientist on a number of programs of national relevance such as the Department of Defence's Joint Strike Fighter, NASA's Reusable Launch Vehicle, the oil industry's DEEPLOOK Consortium, predictive intelligence capability for Army's All-Source Analysis System, and subsurface imaging for cleanup of formerly used contaminated defence sites. He collaborated on strategic programs with Lockheed Martin, Boeing, Northrop Grumman, McDonnell Douglas, Rockwell, Pratt & Whitney, and NASA Center.

       Non-executive director

 

Peter Reynolds, (74), Non-Executive Director

Peter Reynolds is an international businessman and investor based in London.  He has been involved in directing the growth of several private and publicly-quoted businesses and specialises in assisting research and development companies to maximise their commercial potential.

 

Directors' responsibilities

 

The directors are responsible for preparing the annual report and the financial statements in accordance with applicable law and regulations.

 

Company law requires the directors to prepare financial statements for each financial year.  Under that law the directors have prepared the group financial statements in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union and elected to prepare the company financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law).  Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the group and company and of the profit or loss of the group for that period.  The directors are also required to prepare financial statements in accordance with the rules of the London Stock Exchange for companies trading securities on the AIM market. 

 

In preparing these financial statements, the directors are required to:

 

·    select suitable accounting policies and then apply them consistently;

 

·    make judgements and accounting estimates that are reasonable and prudent;

 

·    state whether they have been prepared in accordance with IFRSs as adopted by the European Union, 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 company will continue in business.

 

The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company's transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the financial statements comply with the requirements of the Companies Act 2006.  They are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

 

Website publication

 

The directors are responsible for ensuring the annual report and the financial statements are made available on a website.  Financial statements are published on the company's website in accordance with legislation in the United Kingdom governing the preparation and dissemination of financial statements, which may vary from legislation in other jurisdictions.  The maintenance and integrity of the company's website is the responsibility of the directors.  The directors' responsibility also extends to the ongoing integrity of the financial statements contained therein.

 

      

 

Auditors

 

All of the current directors have taken all the steps necessary to make themselves aware of any information needed by the Group's auditors for the purposes of their audit and to establish that the auditors are aware of that information. The directors are not aware of any relevant audit information of which the auditors are unaware.

 

BDO LLP have expressed their willingness to continue in office and a resolution to re-appoint them will be proposed at the annual general meeting.

 

 

On behalf of the Board

 

Terry Bond

 

 

Chairman

 

28 June 2012

 


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

INDEPENDENT AUDITORS REPORT TO THE MEMBERS OF VIALOGY PLC

 

We have audited the financial statements of ViaLogy Plc for the year ended 31 March 2012 which comprise the consolidated income statement, consolidated statement of comprehensive loss, the consolidated statement of changes in equity, the consolidated statement of financial position, the consolidated statement of cash flows, the company balance sheet and the related notes.  The financial reporting framework that has been applied in the preparation of the group financial statements is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union.  The financial reporting framework that has been applied in preparation of the parent company financial statements is applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice).

 

This report is made solely to the company's members, as a body, in accordance with sections Chapter 3 of Part 16 of the Companies Act 2006.  Our audit work has been undertaken so that we might state to the company's members those matters we are required to state to them in an auditor's report and for no other purpose.  To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company's members as a body, for our audit work, for this report, or for the opinions we have formed.

 

Respective responsibilities of directors and auditors

As explained more fully in the statement of directors' responsibilities, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view.  Our responsibility is to audit and express an opinion on the financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland).  Those standards require us to comply with the Auditing Practices Board's (APB's) Ethical Standards for Auditors.

Scope of the audit of the financial statements

A description of the scope of an audit of financial statements is provided on the APB's website at www.frc.org.uk/apb/scope/private.cfm.

 

Opinion on financial statements

In our opinion:

•           the financial statements give a true and fair view of the state of the group's and the parent company's affairs as at 31 March 2012 and of the group's loss for the year then ended;

•           the group financial statements have been properly prepared in accordance with IFRSs as adopted by the European Union;

•           the parent company's financial statements have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and

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

 

Emphasis of matter - going concern

In forming our opinion on the financial statements which is not modified we have considered the adequacy of the disclosures made in Note 1 of the financial statements concerning the Group's ability to continue as a going concern.

The Group's current pipeline of sales from existing clients and potential customers will generate cash inflows but in order to continue to develop the Group's assets and fully fund its working capital requirements additional funding will be needed. While the directors are confident that additional funding can be raised there is no committed funding at the date of approval of the financial statements. This condition indicates the existence of a material uncertainty which may cast significant doubt on the Group's ability to continue as a going concern.

The financial statements do not include the adjustments that would result if the Group was unable to continue as a going concern.

Opinion on other matters prescribed by the Companies Act 2006

In our opinion the information given in the directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements.

Matters on which we are required to report by exception

We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion:

•           adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received from branches not visited by us; or

•           the parent company financial statements are not in agreement with the accounting records and returns; or

•           certain disclosures of directors' remuneration specified by law are not made; or

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

 

 

Anne Sayers (senior statutory auditor)

For and on behalf of BDO LLP, statutory auditor

55 Baker Street

London

Date: 28 June 2012

 

 

BDO LLP is a limited liability partnership registered in England and Wales (with registered number OC305127).

 


 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consolidated income statement for the year ended 31 March 2012

 

Notes

 

2012

2011

 

 

 

 

£

£

Revenue

 

 

51,256

58,365

Cost of  sales

 

 

437,298

535,645

 

 

 

--------

--------

Gross loss

 

 

(386,042)

(477,280)

 

 

 

 

 

 

 

 

 

 

Share based payments

18

 

195,285

575,306

Depreciation and amortisation

9, 10

 

3,184,910

3,239,218

Other administrative expenses

 

 

1,627,134

2,066,625

 

 

 

 

 

 

 

 

 

 

Total  administrative expenses

 

 

5,007,329

5,881,149

 

 

 

--------

--------

Loss from operations

 

 

(5,393,371)

(6,358,429)

 

 

 

 

 

Finance income

 

 

342

969

 

 

 

 

 

 

 

 

--------

--------

Loss for the year before  taxation

3

 

(5,393,029)

(6,357,460)

 

 

 

--------

--------

 

 

 

 

 

Taxation

7

 

489,634

532,116

 

 

 

 

 

 

 

 

 

 

 

 

 

--------

--------

Loss for the year attributable to equity

 

 

 

 

holders of the parent company

 

 

(4,903,395)

(5,825,344)

 

 

 

--------

--------

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss per share

 

 

 

 

Basic  and diluted (pence)

8

 

(0.643)

(0.834)

 

 

The notes on pages 21 to 44 form part of these financial statements.

 

 

 

 

 

 

 

 

Consolidated statement of comprehensive loss for the year ended 31 March 2012


 

 

 

2012

2011

 

 

 

£

£

Loss after taxation

 

 

(4,903,395)

(5,825,344)

 

Other comprehensive income/ (loss)

  Exchange differences on translating foreign operations

 

 

 

 

8,512

 

 

(394,365)

 

 

 

--------

--------

Total other comprehensive income/ (loss) for the year

 

 

8,512

(394,365)

 

 

 

--------

--------

Total comprehensive loss for the year

attributable to the equity holders of the

parent company

 

 

(4,894,883)

(6,219,709)

 

 

 

--------

--------

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The notes on pages 21 to 44 form part of these financial statements.

 

 

Consolidated statement of changes in equity for the year ended 31 March 2012


 

Share

Share

Foreign

Retained

Total

 

capital

premium

exchange

deficit

 

 

 

account

translation

 

 

 

 

 

reserve

 

 

 

 

 

 

 

 

 

At 1 April 2011

7,341,027

21,438,079

1,606,422

(23,510,012)

6,875,516

 

 

 

 

 

 

Total comprehensive  loss  

 

 

 

 

 

recognised for the year

-

-

8,512

(4,903,395)

(4,894,883)

Issue of shares

1,178,524

52,021

-

-

1,230,545

Share issue expenses

-

(14,595)

-

-

(14,595)

Share options expense

-

-

-

195,285

195,285

 

 

 

 

 

 

 

--------

--------

--------

--------

--------

Balance at 31 March 2012

8,519,551

21,475,505

1,614,934

(28,218,122)

3,391,868

 

--------

--------

--------

--------

--------

 

 

 

 

 

 

 

 

Share

Share

Foreign

Retained

Total

 

capital

premium

exchange

deficit

 

 

 

account

translation

 

 

 

 

 

reserve

 

 

 

 

 

 

 

 

 

At 1 April 2010

6,904,753

20,665,231

2,000,787

(18,259,974)

11,310,797

 

 

 

 

 

 

Total comprehensive  loss  

 

 

 

 

 

recognised for the year

-

-

(394,365)

(5,825,344)

(6,219,709)

Issue of shares

436,274

872,848

-

-

1,309,122

Share issue expenses

-

(100,000)

-

-

(100,000)

Share options expense

-

-

-

575,306

575,306

 

 

 

 

 

 

 

--------

--------

--------

--------

--------

Balance at 31 March 2011

7,341,027

21,438,079

1,606,422

(23,510,012)

6,875,516

 

--------

--------

--------

--------

--------

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The notes on pages 21 to 44 form part of these financial statements.

 

 

 

Consolidated statement of financial position as at 31 March 2012


Company number 3971582

Notes

 

2012

2011

 

 

 

£

£

Assets

 

 

 

 

 

 

 

 

 

Non current assets

 

 

 

 

   Intangible assets

10

 

2,775,501

5,473,599

   Property, plant and equipment

9

 

393,619

461,805

 

 

 

--------

--------

 

 

 

3,169,120

5,935,404

 

 

 

--------

--------

Current assets

 

 

 

 

   Trade and other receivables

12

 

157,131

268,102

   Cash and cash equivalents

 

 

555,367

1,624,130

 

 

 

--------

--------

 

 

 

712,498

1,892,232

 

 

 

--------

--------

Total assets

 

 

3,881,618

7,827,636

 

 

 

--------

--------

Liabilities

 

 

 

 

Current liabilities

 

 

 

 

   Trade and other payables

13

 

204,508

180,043

 

 

 

--------

--------

 

 

 

204,508

180,043

 

 

 

 

 

Non-current liabilities

 

 

 

 

   Deferred tax liability

14

 

285,242

772,077

 

 

 

--------

--------

Total liabilities

 

 

489,750

952,120

 

 

 

 

 

Capital and reserves attributable to equity

 

 

 

 

holders of the parent company

 

 

 

 

   Share capital

16

 

8,519,551

7,341,027

   Share premium

17

 

21,475,505

21,438,079

   Foreign exchange translation reserve

17

 

1,614,934

1,606,422

   Retained deficit

17

 

(28,218,122)

(23,510,012)

 

 

 

 

 

 

 

 

--------

--------

Total equity

 

 

3,391,868

6,875,516

 

 

 

--------

--------

Total equity and liabilities

 

 

3,881,618

7,827,636

 

 

 

--------

--------

The financial statements on pages 16 to 44 were approved by the Board of Directors and authorised for issue on 28 June 2012 and were signed on its behalf by:

 

 

Terry Bond

 Chairman

The notes on pages 21 to 44 form part of these financial statements.

 

 

Notes forming part of the consolidated financial statements for the year ended 31 March 2012


 

 

 

2012

2011

 

 

 

£

£

Cash flow from operating activities

 

 

 

 

  Loss  before tax

 

 

(5,393,029)

(6,357,460)

 

 

 

 

 

  Adjustments for :

 

 

 

 

          Finance income

 

 

(342)

(969)

          Depreciation

3

 

96,025

133,072

          Amortisation

3

 

3,088,885

3,106,146

          Share option expense

3

 

195,285

575,306

          Foreign exchange movements

3

 

23,975

(242,297)

          Director's fees prepaid

 

 

110,624

125,997

 

 

 

--------

--------

Cash flow from operating activities before changes in working capital

 

 

(1,878,577)

(2,660,205)

 

 

 

 

 

  Decrease/(increase) in trade and other receivables

 

 

347

27,780

  Increase in trade and other payables

 

 

24,465

18,113

 

 

 

--------

--------

Cash generated from operations

 

 

(1,853,765)

(2,614,312)

 

 

 

 

 

Tax recovered

 

 

-

23,388

 

 

 

--------

--------

Net cash flows from operating activities

 

 

(1,853,765)

(2,590,924)

 

 

 

 

 

Investing activities

 

 

 

 

   Internally generated intangible asset

10

 

(371,456)

(451,115)

   Purchase of property, plant and equipment

9

 

(25,586)

(136,321)

   Payment for non compete services

 

 

-

(331,873)

  Interest received

 

 

342

969

 

 

 

--------

--------

Net cash used in investing activities

 

 

(396,700)

(918,340)

 

 

 

 

 

Financing Activities

 

 

 

 

    Cash inflow from issue of new shares

16

 

1,230,545

1,309,122

    Share issue costs

 

 

(14,595)

(100,000)

 

 

 

--------

--------

Net cash from financing activities

 

 

1,215,950

1,209,122

 

 

 

 

 

Decrease in cash and cash equivalents

 

 

(1,034,515)

(2,300,142)

  Foreign exchange differences on translation of cash and cash equivalents

 

 

(34,248)

226,406

  Cash and cash equivalents at beginning of  year

 

 

1,624,130

3,697,866

 

 

 

--------

--------

Cash and cash equivalents at end of year

 

 

555,367

1,624,130

 

 

 

--------

--------

 

 

 

The notes on pages 21 to 44 form part of these financial statements.

 



 

 

ViaLogy PLC ('the Company') is a public limited company incorporated and domiciled in the United Kingdom.  The address of its registered office is Ashcome Court, Woolsack Way Godalming, Surrey, GU7 1LQ. The consolidated financial statements of the Company as at and for the year ended 31 March 2012 comprise the Company and its subsidiaries (together referred to as 'the Group'). The principal accounting policies applied in the preparation of these consolidated financial statements are set out below.  These policies have been consistently applied to all the years presented, unless otherwise stated.

 

Basis of preparation

The consolidated financial statements for the year ended 31 March 2012 have been prepared in accordance with International Financial Reporting Standards, International Accounting Standards and Interpretations (collectively IFRSs) issued by the International Accounting Standards Board (IASB) as adopted by the European Union.  

 

The consolidated financial statements have been drawn up on the basis of accounting policies consistent with those applied in the financial statements for the year to 31 March 2011. 

 

Standards adopted for the first time in 2012

 

The International Accounting Standards Board (IASB) issued various amendments and revisions to International Financial Reporting Standards and IFRIC interpretations. The amendments and revisions were applicable for the year ended 31 March 2012 but did not result in any material changes to the financial statements of the Group.

 

The presentation of these financial statements incorporates changes arising from adoption of these standards, interpretations and amendments.

 

The IASB have issued the following standards and interpretations which are effective for reporting periods beginning after the date of these financial statements, and which the Group is not early adopting:

 

International Accounting Standards (IAS/IFRS)

Effective date

 

IAS 1*

Amendment - Presentation of items of other comprehensive income

1 July 2012

 

IFRS 10*

Consolidated financial statements

1 January 2013

 

IFRS 12*

Disclosure of interest in other entities

1 January 2013

 

IFRS 13*

Fair value measurement

1 January 2013

 

IAS 27*

Amendment - Separate financial statements

1 January 2013

 

IFRS 7 *

Amendment - Disclosures - offsetting financial assets and financial liabilities

1 January 2013

 

IAS 32*

Amendment - Offsetting financial assets and financial liabilities

1 January 2014

 

IFRS 9 *

Financial instruments

1 January 2015

 

Items marked * had not yet been endorsed by the European Union at the date of these financial statements.

 

Going concern

 

Following the signing of three significant contracts with international companies since the year end the directors are confident that the Group's pipeline of sales from current clients and potential new customers will help to fund the Group's development and working capital requirements. However additional funding will be required in order to support the Group until the Group begins to see the benefits from this pipeline of contracts. There can be no certainty that additional funding will be available given the current economic climate and the risks associated with the oil and gas industry. The directors are confident that additional funding can be raised in order to meet its development and working capital and ViaLogy's capital development history demonstrates that this confidence is well founded. For this reason they continue to adopt the going concern basis in preparing the financial statements.  However, a significant uncertainty exists given the absence of any committed funding at the date of approval of these financial statements. This condition indicates the existence of a material uncertainty which may cast doubt on the Group's ability to continue as a going concern. The financial statements do not include the adjustments that would result if the Group was unable to continue as a going concern.

 

Revenue

 

Service fees arising from analytical surveys using ViaLogy's patented computational software products are recognised once the report is delivered to the customer. 

 

Service fees arising from government contracts are billed at the end of each month based on man hours worked on the project.

 

Revenue arising from sales of ViaLogy's direct entitlement of oil and gas production is recognised by reference to the quantity and price of oil sold by the customer into the market at the date of transfer of the risk and reward.

 

Operating segments

 

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The chief operating decision maker has been identified as Dr Robert Dean, Chief Executive Officer.

 

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 form a single entity. Inter-company transactions and balances between Group companies are therefore eliminated in full.

 

Critical accounting estimates and judgments

The preparation of consolidated financial statements under IFRS requires the Group to make estimates and judgments that effect the application of policies and reported amounts. In applying these policies the directors are required to make estimates and subjective judgements that may affect the reported amounts of assets and liabilities at the reporting date and reported profit or loss for the year. Although the directors base these on combination of past experience and any other evidence that is relevant to the particular circumstance, the actual results could ultimately differ from those estimates.

Included in the note are accounting policies which cover areas that the directors consider require estimates and assumptions which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities within the next financial year. These policies together with references to the related notes to the financial statements can be found below:


Intangible assets and amortisation Note 10

 

 The group capitalises development costs based on the recognition criteria identified in IAS 38.  Internally generated intangible assets are amortised over a period of six years on a straight line basis. The key judgement relates to the demonstrability of the capitalisation criteria for these costs which are dependent upon the belief of management in the feasibility of the product.


Share based payments Note 18

 

The fair value is measured by use of a Black-Scholes model which takes into account conditions attached to the vesting and exercise of the equity instruments.  The expected life used in the model is adjusted, based on management's best estimate, for the effects of non-transferability, exercise restrictions and behavioural considerations. Management are also required to apply their judgement in assessing a reasonable volatility figure to be applied in the model.

Impairment of property, plant and equipment and intangible assets

Property, plant and equipment and identifiable intangibles are reviewed for impairment at the reporting date in addition to whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.  If the expected discounted future cash flow from the use of the assets and their eventual disposition is less than the carrying amount of the assets, an impairment loss is recognised and measured using the asset's fair value or discounted cash flows.

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 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 are arrived at by using appropriate valuation techniques.

In-process research and development programmes acquired in such combinations are recognised as an asset even if subsequent expenditure is written off because the criteria specified in the policy for research and development costs above are not met.

The significant intangible asset recognised by the Group and its useful economic life is shown in the table below:

 

Intangible assets

Useful economic life

 

Intellectual Property

 

6 years

 

Internally generated intangible assets (research and development costs)

Expenditure on internally developed products is capitalised if it can be demonstrated that:

·     it is technically feasible to develop the product to be sold;

·     adequate resources are available to complete the development;

·     there is an intention to complete and sell the product;

·     the Group is able to sell the product;

·     sale of the product will generate future economic benefits; and

·     expenditure on the project can be measured reliably.

 

Capitalised development costs are amortised on a straight line basis over the periods the Group expects to benefit from selling the products developed. The amortisation expense is included within administrative expenses in the income statement.

Development expenditure not satisfying the above criteria and expenditure on the research phase of internal projects are recognised in the income statement as incurred.

 

Intangible assets

Useful economic life

 

 

Development

 

6 years

 

 

Property, plant and equipment

Items of property, plant and equipment are initially recognised at cost.

Depreciation is provided on all items of property, plant and equipment to write off the carrying value of items over their expected useful lives. Depreciation is applied at the following rates:

Office equipment                            20% per annum reducing balance

Computer equipment                       33.3% per annum reducing balance

Motor vehicles                               33.3% per annum reducing balance

Furniture                                        20% per annum reducing balance

 

Oil and gas assets

 

ViaLogy follows a successful efforts based accounting policy for oil and gas assets.

 

Interests acquired in successful production wells are initially recognised at cost within property, plant and equipment.  Where interests in such wells are acquired as the success fee element of the revenue from an analytical contract, no cost is initially recognised.

 

Subsequent expenditure is capitalised only where it enhances the economic benefits of the producing asset.

 

Depletion

 

ViaLogy depletes oil and gas assets on a unit of production basis, based on proved and probable reserves on a field by field basis.

 

Impairment

 

Impairment reviews on Oil and Gas assets are carried out on each cash-generating unit. ViaLogy's cash generating units are those assets which generate largely independent cash flows and are normally, but not always, single development areas.

 

Inventories

 

Inventories are initially recognised at cost, and subsequently at the lower of cost and net realisable value. Cost comprises all costs of purchase and other costs incurred in bringing the inventories to their present location and condition.

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 statement of comprehensive income over the vesting period.  Non-market vesting conditions are taken into account by adjusting the number of equity instruments expected to vest at each reporting 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 income statement over the remaining vesting period.

 

Where equity instruments are granted to persons other than employees, the income statement is charged with the fair value of goods and services received.

 

Tax

The major components of income tax on the profit or loss from ordinary activities include current and deferred tax.

Current tax is based on the profit or loss from ordinary activities adjusted for items that are non-assessable or disallowed and is calculated using tax rates that have been enacted or substantively enacted by the year end date.

Income tax is charged or credited to the income statement, except when the tax relates to items credited or charged directly to equity, in which case the tax is also dealt with in equity.

Deferred taxation

 

Deferred tax assets and liabilities are recognised where the carrying amount of an asset or liability in the statement of financial position differs to its tax base, except for differences arising on:

 

·     the initial recognition of goodwill;

·     goodwill for which amortisation is not tax deductible;

·     the initial recognition of an asset or liability which is not a business combination and at the time of the transaction affects neither accounting or taxable profit; and

·     investments in subsidiaries and jointly controlled entities where the Group is able to control the timing of the reversal of the difference and it is probable that the difference will not reverse in the foreseeable future.

 

Recognition of deferred tax assets is restricted to those instances where it is probable that the taxable profit will be available against which the differences can be utilised.

 

The amount of the asset or liability is determined using tax rates that have been enacted or substantially enacted by the reporting date and are expected to apply when the deferred tax liabilities/(assets) are settled/(recovered). Deferred tax balances are not discounted.

 

Foreign currency

 

The functional currency of the parent entity is pounds sterling. The functional currency of the subsidiary is US dollars. Transactions entered into by Group entities in a currency other than the reporting currency are recorded at the rates ruling when the transaction occur. Foreign currency monetary assets and liabilities are translated at the rates ruling at the statement of financial position date. Exchange differences arising on the re-translation of the unsettled monetary assets and liabilities are similarly recognised in the income statement.

 

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 overseas operations are translated at the rate ruling at the reporting date.

 

 

 

Presentation currency

 

These accounts have been presented in Sterling as the directors consider this to be most useful form of presentation to the shareholders.

 

Financial assets

 

The Group classifies its financial assets into one of the following categories, depending on the purpose for which the asset was acquired. The Group accounting policy for each category is as follows:

 

Loans and receivables: These assets are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They arise principally through the provision of goods and services to customers (trade receivables), but also incorporate other types of contractual monetary asset. They are carried at cost less any provision for impairment.

 

Financial liabilities and equity

 

Financial liabilities and equity instruments issued by the Group are classified according to the substance of the contractual arrangements entered into and the definitions of a financial liability and an equity instrument. A financial liability is a contractual obligation to either deliver cash or another financial asset to another entity or to exchange a financial asset or financial liability with another entity, including obligations which may be settled by the Group using its equity instruments. An equity instrument is any contract that evidences a residual interest in the assets of the Group after deducting all of its liabilities. The accounting policies adopted for specific financial liabilities and equity instruments are set out below.

 

Financial liabilities

 

At initial recognition, financial liabilities (trade and other payables), are measured at their fair value plus, if appropriate, any transaction costs that are directly attributable to the issue of the financial liability. These financial liabilities are subsequently carried at amortised cost.

 

Equity instruments

 

Equity instruments issued by the Group are recorded at the proceeds received net of direct issue costs.

 

2     Segmental analysis

·    

·    

2 Segmental analysis continued

2012  Reportable segment analysis

 

Operations

Head office

Consolidated

 

 

£

£

£

 

 

 

 

 

Revenue from external customers

 

51,256

-

51,256

 

 

--------

--------

--------

Gross loss

 

(386,042)

-

(386,042)

Finance income

 

-

342

342

Tax credit

 

489,634

-

489,634

 

 

--------

--------

--------

Loss for the year after taxation

 

(4,253,514)

(649,881)

(4,903,395)

 

 

 

 

 

Segment assets

 

3,344,675

536,943

3,881,618

Segment liabilities

 

416,801

72,949

489,750

 

 

--------

--------

--------

Costs to acquire plant, property and equipment

 

20,620

4,966

25,586

Costs to acquire intangible assets

 

371,456

-

371,456

Depreciation and amortisation

 

3,180,407

4,503

3,184,910

Share based payments charged

 

116,489

78,796

195,285

 

 

--------

--------

--------

 

 

 

 

 

2011 Reportable segment analysis

 

Operations

Head office

Consolidated

 

 

£

£

£

 

 

 

 

 

Revenue from external customers

 

58,365

-

58,365

 

 

--------

--------

--------

Gross loss

 

(477,280)

-

(477,280)

Finance income

 

-

969

969

Tax credit

 

502,440

29,676

532,116

 

 

--------

--------

--------

Loss for the year after taxation

 

(4,373,079)

(1,452,265)

(5,825,344)

 

 

 

 

 

Segment assets

 

6,331,689

1,495,947

7,827,636

Segment liabilities

 

867,340

84,780

952,120

 

 

--------

--------

--------

Costs to acquire plant, property and equipment

 

130,313

6,008

136,321

Costs to acquire intangible assets

 

451,115

-

451,115

Depreciation and amortisation

 

3,234,992

4,226

3,239,218

Share based payments charged

 

511,781

63,525

575,306

 

 

--------

--------

--------

2  Segmental analysis continued

Revenues by product / service

 

2012

2011

 

 

 

£

£

 

 

 

 

 

 

Oil and gas revenues

 

6,983

10,437

 

Revenues from analytical surveys

 

44,273

47,928

 

 

 

 

 

 

 

 

--------

--------

 

 

 

51,256

58,365

 

 

 

--------

--------

 

3     Loss for the year before taxation

 

 

2012

2011

 

 

 

£

£

This is arrived at after charging:

 

 

 

Staff costs  (see note 5)

 

1,123,904

1,227,072

Share option expense (see note 18)

 

195,285

575,306

Depreciation of property, plant and equipment

 

96,025

133,072

Amortisation of intangible fixed assets

 

3,088,885

3,106,146

Foreign exchange differences

 

23,975

(242,297)

Plant, property and equipment operating lease expense

 

85,200

107,091

Auditors remuneration for :

 

 

 

   Audit of financial statements of the Group

 

27,000

27,000

   Audit of the financial statements of the parent

   company

 

 

3,000

 

3,000

   Taxation services

 

10,000

10,000

 

 

 

 

 

 

--------

--------

 

 

 

 

4         Company profit and loss  account 

ViaLogy PLC has taken advantage of section 408 of the Companies Act 2006 and has not included its own profit and loss account in these accounts. The Company's loss after tax was £649,881 (2011 - Loss £1,452,265) which is dealt with in the financial statements of the parent company.

 

 

 

 

 

 

 

5     Staff costs

 

 

2012

2011

 

 

 

Number

Number

Research and development

 

5

7

Sales and marketing

 

1

1

Administration

 

6

7

 

 

--------

--------

 

 

12

15

 

 

--------

--------

 

 

2012

2011

 

 

£

£

Wages and salaries

 

1,403,951

1,572,533

Share based payment charge

 

195,285

575,306

Pension Contributions

 

5,518

6,372

Employers national insurance contributions and

Similar taxes

 

91,409

105,654

 

 

--------

--------

 

 

1,696,163

2,259,865

 

 

--------

--------

 

 

2012

2011

 

 

£

£

Wages,  salaries and benefits capitalised

 

343,934

420,056

Employers national insurance contributions and

similar taxes capitalised

 

27,522

31,059

 

 

--------

--------

 

 

371,456

451,115

 

 

--------

--------

 

 

 

 

6   Directors

  

 

2012

2011

 

 

£

£

Directors emoluments 

 

607,371

952,516

Share based payment charge

 

140,165

495,037

 

 

 

 

 

 

--------

--------

Total emoluments

 

747,536

1,447,553

 

 

--------

--------

 

Salaries

Fees

Non cash

Benefits in kind

Total

Total

 

 

 

benefit

 

2012

2011

 

 

 

 

 

 

 

 

Terry Bond

100,000

-

4,135

-

104,135

105,952

Robert Dean

219,184

-

8,492

4,901

232,577

239,255

Sandeep Gulati

233,031

-

128

-

233,159

572,309

Peter Reynolds

-

37,500

-

-

37,500

35,000

 

--------

--------

--------

--------

--------

--------

 

552,215

37,500

12,755

4,901

607,371

952,516

 

--------

--------

--------

--------

--------

--------

 

 

 

 

 

 

 

 

7   Taxation on profits from ordinary activities

 

 

2012

 

2011

 

 

 

£

£

Current tax

 

 

 

 

 

 

 

UK corporation tax and income tax of overseas operations on profits for the year

 

-

(29,676)

 

 

________

________

 

 

-

(29,676)

Deferred tax credit

 

 

 

 

 

 

 

 Release of provision

 

(489,634)

(502,440)

 

 



 

 

________

________

Total tax credit

 

(489,634)

(532,116)

 

 

________

________

 

 

 

 

The reason for the difference between the actual tax credit for the year and the standard rate of

 corporation tax in the UK applied to losses for the year are as follows:

 

 

 

 

 

 

2012

2011

 

 

£

£

Loss before tax

 

(5,393,029)

(6,357,460)

 

 

 

 

Expected tax (recovery)/charge based on the standard rate of corporation tax in the UK of 26% (2011 - 28%)

 

(1,402,188)

(1,780,089)

Amortisation of intangibles not deductible for tax purposes

 

803,110

858,600

Expenses not deductible for tax purposes

 

112,579

204,402

 

 

 

 

Increase in carried-forward losses

 

486,499

717,087

Adjustment relating to prior years

 

-

(29,676)

Deferred tax release

 

(489,634)

(502,440)

 

 

________

________

 

 

 

 

Total tax credit for the year

 

(489,634)

(532,116)

 

 

 

 

 

 

     _______

__  ______

.

7   Taxation on losses from ordinary activities continued

Factors that may affect future tax charges

Deferred tax assets relating to UK revenue losses and UK capital losses of £3,849,755 and £1,934,399 respectively (2011: £3,333,211 and £1,934,399) have not been recognised as these losses can only be offset against future taxable profits and at present there is insufficient evidence to justify recognition.

Deferred tax assets relating to US revenue losses of £5,156,537 (2011: £3,906,773) have not been recognised as these losses can only be offset against future taxable profits and at present there is insufficient evidence to justify recognition. In addition ViaLogy LLC may be entitled to further tax losses. The maximum amount of losses available is $6,000,000, however this is subject to an annual limitation which is estimated at $250,000 per year. At the reporting date the accrued potential losses claimable are estimated at $1,500,000 (2011 - $1,250,000). The losses disclosed in relation to the US have not been agreed with the US taxation authorities and thus are the best estimate of management as at 31 March 2012.

 

8     Loss per share

Basic

 

Basic loss per share is calculated by dividing the loss after tax attributable to the equity holders of the parent company for the year of £4,903,395 (2011: loss £5,825,344) by the weighted average number of ordinary shares in issue during the year 762,556,327 (2011: 698,322,321).

 

Diluted

 

Diluted earnings per share dilute the basic earnings per share to take into account share options and warrants.  The calculation includes the weighted average number of ordinary shares that would have been issued on the conversion of all the dilutive share operations and warrants into ordinary shares.  96,162,368 options (2011: 108,152,274) and 1,193,654 (2011: 1,193,654) warrants have been excluded from this calculation as the effect would be anti-dilutive.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

9     Plant, property and equipment

 

Office

equipment

 

Furniture

Computer equipment

 Motor

vehicles

Oil and gas

assets

 

Total

 

£

£

£

£

£

£

Cost

 

 

 

 

 

 

At 1 April 2010

13,368

22,291

434,916

6,904

203,568

681,047

 

 

 

 

 

 

 

Additions

-

10,226

120,387

5,708

-

136,321

Foreign exchange movements

(267)

(1,236)

(20,956)

-

-

(22,459)

 

--------

--------

--------

--------

--------

--------

At 1 April 2011

13,101

31,281

534,347

12,612

203,568

794,909

 

--------

--------

--------

--------

--------

--------

Additions

-

631

19,989

4,966

-

25,586

Foreign exchange movements

18

83

1,435

-

-

1,536

 

--------

--------

--------

--------

--------

--------

At 31 March 2012

13,119

31,995

555,771

17,578

203,568

822,031

 

--------

--------

--------

--------

--------

--------

Depreciation

 

 

 

 

 

 

At 1 April 2010

8,406

10,378

188,126

2,279

4,794

213,983

 

 

 

 

 

 

 

Charge for the year

808

4,860

120,976

3,411

3,017

133,072

Foreign exchange movements

(186)

(734)

(13,031)

-

-

(13,951)

 

--------

--------

--------

--------

--------

--------

At 1 April 2011

9,028

14,504

296,071

5,690

7,811

333,104

 

--------

--------

--------

--------

--------

--------

Charge for the year

635

3,916

85,545

3,924

2,005

96,025

Foreign exchange movements

(7)

(39)

(671)

-

-

(717)

 

--------

--------

--------

--------

--------

--------

At 31 March  2012

9,656

18,381

380,945

9,614

9,816

428,412

 

--------

--------

--------

--------

--------

--------

Net book value

 

 

 

 

 

 

At 31 March 2012

3,463

13,614

174,826

7,964

193,752

393,619

 

--------

--------

--------

--------

--------

--------

At 31 March 2011

4,073

16,777

238,276

6,922

195,757

461,805

 

--------

--------

--------

--------

--------

--------

At 31 March 2010

4,962

11,913

246,790

4,625

198,774

467,064

 

--------

--------

--------

--------

--------

--------

 

 

 

 

 

 

 

 

 

 

 

 

 

 

10   Intangible assets

 

 

Intellectual

Research

Total

 

 

property

and development

 

 

 

£

£

£

Cost

 

 

 

 

At 1 April 2010

 

13,350,587

3,054,775

16,405,362

 

 

 

 

 

Additions

 

 

 

 

- Internally developed

 

-

451,115

451,115

Foreign exchange movements

 

(104,962)

(26,846)

(131,808)

 

 

 

 

 

 

 

--------

--------

--------

At 1 April 2011

 

13,245,625

3,479,044

16,724,669

 

 

 

 

 

Additions

 

 

 

 

- Internally developed

 

-

371,456

371,456

Foreign exchange movements

 

2,254

632

2,886

 

 

 

 

 

 

 

--------

--------

--------

At 31 March 2012

 

13,247,879

3,851,132

17,099,011

 

 

--------

--------

--------

Amortisation

 

 

 

 

At 1 April 2010

 

6,696,231

1,144,944

7,841,175

Charge for the year

 

2,473,501

632,645

3,106,146

Foreign exchange movements

 

241,883

61,866

303,749

 

 

 

 

 

 

 

--------

--------

--------

At 1 April 2011

 

9,411,615

1,839,455

11,251,070

Charge for the year

 

2,406,666

682,219

3,088,885

Foreign exchange movements

 

(3,600)

(12,845)

(16,445)

 

 

--------

--------

--------

At 31 March  2012

 

11,814,681

2,508,829

14,323,510

 

 

--------

--------

--------

 

 

 

 

 

Net book value

 

 

 

 

At 31 March 2012

 

1,433,198

1,342,303

2,775,501

 

 

--------

--------

--------

At 31 March 2011

 

3,834,010

1,639,589

5,473,599

 

 

--------

--------

--------

At 31 March 2010

 

6,654,356

1,909,831

8,564,187

 

 

--------

--------

--------

 

 

In accordance with IAS 36, the Group regularly monitors the carrying value of its intangible assets.

 

 

 

 

11 Subsidiaries

Name

Country of

Country of

Proportion of

 

incorporation

operation

ownership interest

 

 

 

 and share capital held

 

 

 

 

ViaLogy LLC

USA

USA

100%

 

 

 

 

12   Trade and other receivables

 

 

2012

2011

 

 

 

 

£

£

 

 

Trade receivables

 

-

1,609

 

 

Other receivables

 

11,922

10,075

 

 

Prepayments and accrued income

 

145,209

256,418

 

 

 

 

--------

--------

 

 

 

 

157,131

268,102

 

 

 

 

--------

--------

 

 

Aged receivable summary

 

 

 

 

 

Current

 

-

1,609

 

 

Over 30 days old

 

-

-

 

 

 

 

 

 

 

 

 

 

--------

--------

 

 

 

 

-

1,609

 

 

 

 

--------

--------

 

 

There has been no provision made for doubtful receivables, as the Board consider all receivables to be recoverable.

The book values of trade and other receivables approximate to the fair values.

13   Trade and other payables

 

 

 

2012

2011

 

 

 

£

£

Trade  payables

 

 

55,944

59,675

Accruals and deferred income

 

 

148,564

120,368

 

 

 

--------

--------

 

 

 

204,508

180,043

 

 

 

--------

--------

 

 

 

 

 

 

 

 

 

14   Deferred tax

 

 

 

 

 

 

 

2012

2011

 

 

 

 

£

£

At 1 April

 

 

772,077

1,340,108

 

 

 

 

 

Exchange rate adjustment

 

 

2,799

(65,591)

Release for the year

 

 

(489,634)

(502,440)

 

 

 

 

 

 

 

 

--------

--------

At 31 March

 

 

285,242

772,077

 

 

 

--------

--------

 

 

15   Financial instruments

 

Principal financial instruments

 

The principal instruments used by the group, from which the financial instrument risk arises, include cash and cash equivalents, trade receivables and trade payables.

 

Risk and sensitivity analysis

 

There have been no substantive changes in the Group's exposure to financial instrument risks, its objectives policies and processes for managing those risks or the methods used to measure them from previous periods unless otherwise stated in this note.

 

The Group and Company are exposed through their operations to one or more of the following financial risks: foreign currency risk, liquidity risk, credit risk and investment risk. The policy for managing these risks is set by the Board and all such risks are managed at a Group level within the organisation.  There have been no changes in the way the Group and Company manages risks from previous years. The policies for these risks are described further below:

 

 

 

 

 

 

 

 

15 Financial instruments continued

 

Foreign currency risk


Foreign currency risk arises because the Group has operations located in the USA whose functional currency is not the same as the parent company's functional currency (sterling). The net assets from such overseas operations are exposed to currency risk giving rise to gains or losses on retranslation to sterling for the purposes of the consolidated financial statements.  In the future it is planned that the foreign exchange risk will be mitigated by sales in US dollars.

 

A US$0.25 increase in the value of the US dollar against sterling will result in a fall in pre-tax losses by £555,384 (2011: decrease in loss of £ 857,540 )

 

The table below shows the split between currency that balances are denominated in.

 

2012

US$

GBP£

Total

 

 

 

GBP£

Trade and other receivables

11,083

839

11,922

Cash and cash equivalents

101,754

453,613

555,367

Trade and other payables

35,024

20,920

55,944


__________

__________

__________

`

2011

US$

GBP£

Total

 

 

 

GBP£

Trade and other receivables

4,812

6,872

11,684

Cash and cash equivalents

539,214

1,084,916

1,624,130

Trade and other payables

34,508

25,167

59,675


__________

__________

__________

 

Liquidity risk

 

Liquidity risk is the risk that the company fails to have sufficient funds to meet its debts as they become due. The liquidity risk of the Group is managed centrally. The Group holds funds in short-term bank deposits so that they are available when required. 

 

Maturity analysis of financial liabilities

 

All financial liabilities (trade and other payables) are due for payment within one year as follows

 

 

 

 

 

2012

2011

 

 

 

 

£

£

Due:-

 

 

 

 

 

 

 

 

 

Current

 

 

55,944

59,675

 

 

 

--------

--------

 

 

 

55,944

59,675

 

 

 

--------

--------

The Board believe the current level of financial liabilities to be in line with expectations. The level of cash balances and trade and other receivables is sufficient to discharge the Group's financial liabilities.

 

 

 

 

15 Financial instruments continued

 

Credit Risk

 

During the year, the Group's credit risk was primarily attributable to its cash balances, and its trade receivables.  Credit risk, is the risk that the counterparty fails to discharge its obligation in respect of the instrument.  The credit risk on liquid funds is limited as the funds are held at banks with high credit ratings.  The risk to the Group of trade receivables going bad is low due to the low levels of trade receivables.  There were no allowances for debt recovery as at 31 March 2012 or 31 March 2011.

 

The Group's maximum exposure to credit risk by class of financial instruments amounts to their carrying value of £567,289 (2011 £1,635,827). The Group deems that entities from whom credit exposure arises are of adequately strong credit quality and will therefore be able to pay the amounts due when they arise.

 

            Investment risk

 

Investment risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in interest rates (interest rate risk), foreign exchange rates (currency risk) or other market factors (other price risk).

 

The Group is exposed to interest rate risk from its interest-earning financial assets.  The floating rate assets are held in a money market account earning interest at Bank of England base rate less 0.3 %.  The interest rate risk is mitigated by the fact cash is held in short-term deposits allowing rapid transfer of funds to alternative commercial banks to obtain improved interest rates.  There are no financial assets earning interest at fixed rates.

 

A summary of the financial instruments held by category is shown below:

 

Categories of financial assets

 

 

2012

2011

 

£

£

Current financial assets

 

 

Loans and  receivables

11,922

11,684

Cash and other equivalents

555,367

1,624,130

 

--------

--------

Total current financial assets

567,289

1,635,814

 

--------

--------

 

Categories of financial liabilities

 

 

2012

2011

 

£

£

Current financial liabilities

 

 

Trade and other payables

55,944

59,675

 

--------

--------

Total other financial liabilities

55,944

59,675

 

--------

--------

 

 

 

 

 

 

 

 

Capital

 

As described in note 16 the Group considers its capital to comprise its ordinary share capital, share premium and accumulated retained deficit as its capital reserves. In managing its capital the Group's primary objective is to ensure its continued ability to provide a consistent return for its equity shareholders through capital growth. In order to achieve this objective, the Group seeks to commercialise the development which has been undertaken to date, through major sales in a number of markets.

 

There have been no other significant changes to the Group's capital management objectives, policies and processes in the year nor has there been any change in what the Group considers to be its capital.

 

16  Share capital

    

 

Allotted, called up and fully paid

 

2012

2011

2012

2011

 

Number

Number

£

£

Ordinary shares of 1p each

 

 

 

 

 

 

 

 

 

At 1 April

734,102,725

690,475,334

7,341,027

6,904,753

Shares issued

117,852,405

43,627,391

1,178,524

436,274

 

 

 

 

 

 

--------

--------

--------

--------

At 31 March

851,955,130

734,102,725

8,519,551

7,341,027

 

__________

__________

__________

__________

 

The Group raised £177,500 before expenses via a private placing of 17,750,000 shares at 1 pence per share on 11 October 2011.

 

The Group also raised £1.050 million before expenses via a private placing of 100,000,000 shares at 1.05 pence per share on 18 January 2012.

 

Shares issued after 31 March 2012

 

The Group also raised £1.045 million before expenses via a private placing of 38,000,000 shares at 2.75 pence per share on 23 May 2012.

 

The Group also raised £1.0 million before expenses via a private placing of 36,363,637 shares at 2.75 pence per share on 15 June 2012.

 

All shares in issue have equal voting rights.

16 Share capital continued

At 31 March 2012, the following share options were outstanding in respect of Ordinary shares:

 

Number

 

Exercise Period

 

Exercise Price

 

 

 

 

 

14,887,237

 

August 2005 to January 2021

 

1.00p

18,480

 

March 2007 to March 2013

 

1.75p

764,480

 

February 2012 to February 2019

 

1.83p

200,000

 

February 2015 to February 2022

 

2.60p

400,000

 

February 2015 to February 2022

 

2.73p

850,000

 

February 2015 to February 2022

 

2.75p

3,336,111

 

October 2011 to October 2018

 

2.80p

1,854,182

 

November 2011 to November 2018

 

3.00p

500,000

 

May 2014 to May 2021

 

3.55p

18,456,265

 

June 2010 to June 2020

 

3.75p

35,766,668

 

October 2009 to October 2016

 

4.00p

10,115,238

 

June 2007 to August 2016

 

4.50p

2,704,000

 

October 2010 to October 2017

 

5.00p

167,767

 

April 2010 to April 2020

 

5.25p

500,000

 

April 2010 to April 2020

 

5.50p

1,238,440

 

August 2010 to August 2017

 

7.38p

4,403,500

 

October 2010 to October 2017

 

8.38p

           __________

 

 

 

 

96,162,368

 

(note 18)

 

 

__________

 

 

 

 

 

2012

2012

2011

2011

 

Weighted

 

Weighted

 

 

average

 

average

 

 

exercise price

Number

exercise price

Number

 

 

 

 

 

Outstanding at start of year

£0.035

108,152,274

£0.044

72,726,396

Granted during the year

£0.029

1,950,000

£0.012

38,626,576

Forfeited during the year

£0.038

(13,837,501)

£0.043

(1,239,971)

Exercised during the year

£0.029

(102,405)

£0.030

(1,960,727)

 

 

 

 

 

Outstanding at end of year

£0.024

96,162,368

£0.044

108,152,274

 

--------

--------

--------

--------

16  Share capital continued

 

At 1 April 2011

Awarded

Lapsed

At 31 March 2012

Exercise price

Earliest date of exercise

Latest date of exercise

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Terry Bond

 

 

 

 

 

 

 

-Unapproved scheme

6,000,000

-

-

6,000,000

4p

02/12/09

02/12/16

-Unapproved scheme

4,475,408

-

-

4,475,408

1p

22/06/13

22/06/20

-Unapproved scheme

4,475,408

-

-

4,475,408

3.75p

22/06/13

22/06/20

 

 

 

 

 

 

 

 

Robert Dean

 

 

 

 

 

 

 

-Unapproved scheme

403,500

-

-

403,500

4p

31/10/09

31/10/16

-Unapproved scheme

77,000

-

-

77,000

4.5p

26/10/09

26/10/16

-Unapproved scheme

21,133,168

-

-

21,133,168

4p

24/10/10

24/10/17

-Unapproved scheme

3,032,422

-

-

3,032,422

1p

22/06/12

22/06/20

-Unapproved scheme

3,032,421

-

-

3,032,421

3.75p

22/06/12

22/06/20

 

 

 

 

 

 

 

 

Sandeep Gulati

 

 

 

 

 

 

 

-Unapproved scheme

9,004,898

-

-

9,004,898

4.5p

01/03/10

01/03/16

-Unapproved scheme

7,230,000

-

-

7,230,000

4p

31/10/09

31/10/16

-Unapproved scheme

4,000,000

-

-

4,000,000

8.38p

24/10/10

24/10/17

-Unapproved scheme

2,704,000

-

-

2,704,000

5p

24/10/10

24/10/17

-Unapproved scheme

12,343,819

-

-

12,343,819

1p

26/10/10

25/01/21

 

 

 

 

 

 

 

 

Peter Reynolds

 

 

 

 

 

 

 

-Unapproved scheme

403,500

-

-

403,500

8.38p

24/10/10

24/10/17

 

 

 

 

 

 

 

 

16 Share capital continued

 

At 1 April 2010

Awarded

Lapsed

At 31 March 2011

Exercise price

Earliest date of exercise

Latest date of exercise

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Terry Bond

 

 

 

 

 

 

 

-Unapproved scheme

6,000,000

-

-

6,000,000

4p

02/12/09

02/12/16

-Unapproved scheme

-

4,475,408

-

4,475,408

1p

22/06/13

22/06/20

-Unapproved scheme

-

4,475,408

-

4,475,408

3.75p

22/06/13

22/06/20

 

 

 

 

 

 

 

 

Robert Dean

 

 

 

 

 

 

 

-Unapproved scheme

403,500

-

-

403,500

4p

31/10/09

31/10/16

-Unapproved scheme

77,000

-

-

77,000

4.5p

26/10/09

26/10/16

-Unapproved scheme

21,133,168

-

-

21,133,168

4p

24/10/10

24/10/17

-Unapproved scheme

-

3,032,422

-

3,032,422

1p

22/06/12

22/06/20

-Unapproved scheme

-

3,032,421

-

3,032,422

3.75p

22/06/12

22/06/20

 

 

 

 

 

 

 

 

Sandeep Gulati

 

 

 

 

 

 

 

-Unapproved scheme

9,004,898

-

-

9,004,898

4.5p

01/03/10

01/03/16

-Unapproved scheme

7,230,000

-

-

7,230,000

4p

31/10/09

31/10/16

-Unapproved scheme

4,000,000

-

-

4,000,000

8.38p

24/10/10

24/10/17

-Unapproved scheme

2,704,000

-

-

2,704,000

5p

24/10/10

24/10/17

-Unapproved scheme

-

12,343,819

-

12,343,819

1p

26/10/10

25/01/21

 

 

 

 

 

 

 

 

Peter Reynolds

 

 

 

 

 

 

 

-Unapproved scheme

403,500

-

-

403,500

8.38p

24/10/10

24/10/17

 

 

 

 

 

 

 

 

At 31 March 2012 and 31 March 2011, the following warrants were outstanding in respect of Ordinary shares:

Number

 

Exercise Period

 

Exercise Price

 

 

 

 

 

1,193,654

 

March 2010 to March 2016

 

4.50p

 

 

 

 

 

 

 

 

 

 

 

17 Reserves

The following describes the nature and purpose of each reserve within shareholders equity:

18 Share-based payment

Of the total number of options outstanding at the end of the year 88,221,513 (2011: 88,931,169) had vested and were exercisable at the end of the year at a weighted average exercise price of 4.6p.(2011:4.8p)

The weighted average fair value of each option granted during the year was 2.9p  (2011: 2.8p).

The Black-Scholes method was used to calculate the fair value of options at the date of grant. The volatility assumption, measured as the standard deviation of expected share price returns is based on analysis of daily share prices over a three year period. The table below lists the inputs to the model used for options granted during the year.

 

 

2012

2011

 

 

 

 

Weighted average share price

 

2.94p

3.78p

Volatility

 

70%

70%

Dividend Yield

 

0%

0%

Risk- free interest rate

 

0.25%

0.25%

Weighted average exercise Price

 

2.94p

1.18p

Expected option life

 

 

5years

5years

Share based payment expense for the year

 

2012

2011

 

 

£

£

Issued to employees of parent

 

78,796

63,525

Issued to employees of subsidiary

 

116,489

511,781

 

 

        --------

        --------

 

 

195,285

575,306

 

 

        --------

        --------

19   Leases

Operating leases

 

 

2012

2011

 

 

£

£

Not later than one year

 

38,710

74,840

More than one year

 

-

24,947

 

 

--------

--------

20   Related party transactions

21   Events after the reporting period

The Group also raised £1 million before expenses via a private placing of 36,363,637 shares at 2.75 pence per share on 15 June 2012.

 

Parent Company balance sheet as at 31 March 2012

                                                                                                                             Restated         Restated

                                                               Note             2012                2012                2011                2011

                                                                                          £                      £                      £                      £

 

Fixed assets

    Tangible assets                                           4                                    9,530                                        9,067

    Investments                                                5                           12,503,793                                12,387,304

                                                                                                    ________                               ________

                                                                                                                   

                                                                                                  12,513,323                                12,396,371

Current assets

    Debtors due within one year                        6        171,683                                    162,829

    Debtors due in more than one year               6   14,883,221                                13,234,274

    Cash at bank and in hand                                      453,614                                  1,478,873

                                                                            ________                               ________

                                                                                           

                                                                          15,508,518                                14,875,976

Creditors: amounts falling due

within one year                                             7          72,944                                      84,804

                                                                            ________                               ________

 

Net current assets                                                                    15,435,574                                14,791,172

                                                                                                    ________                               ________

 

Total assets less current liabilities                                          27,948,897                                27,187,543

                                                                                                    ________                               ________

 

Capital and reserves

 

    Share capital                                              8, 9                          8,519,551                                  7,341,027

    Share premium                                           9                           21,475,505                                21,438,079

    Profit and loss account                                9                            (2,046,159)                               (1,591,563)

                                                                                                    ________                               ________

 

Shareholders' funds                                                                  27,948,897                                27,187,543

                                                                                                    ________                               ________

 

The financial statements on pages 45 to 50 were approved by the Board of Directors and authorised for issue on 28 June 2012 and were signed on its behalf by:

 

 

 

Terry Bond

Chairman


1.   Accounting policies

The financial statements have been prepared under the historical cost convention and in accordance with the Companies Act 2006 and UK Generally Accepted Accounting Principles (UKGAAP). The following accounting policies have been applied:

Depreciation

Impairment of property, plant and equipment

Property, plant and equipment are reviewed for impairment at the balance sheet date in addition to whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.  If the expected discounted future cash flow from the use of the assets and their eventual disposition is less than the carrying amount of the assets, an impairment loss is recognised and measured using the asset's fair value or discounted cash flows.

Valuation of investments

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 profit and loss account  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 statement of comprehensive income over the remaining vesting period.

 

Where share based options are awarded to employees of subsidiaries the charge in respect to the share based payments is treated as a capital contribution and forms part of the investment in that subsidiary.

 

 

        Foreign currency

 

The functional currency of the Company is Pounds Sterling. Foreign currency transactions are translated at the rates ruling when they occurred.  Foreign currency monetary assets and liabilities are translated at the rates of exchange ruling at the balance sheet dates.  Any differences are taken to the profit and loss account.

 

2.   Company profit and loss account and cash flow statement

The Company has taken advantage of the exemption allowed by FRS1 and section 408 of the Companies Act to not include its own cash flow statement and profit and loss account as its results are included in the Group accounts.  The group consolidated income statement and the consolidated statement of cash flows are shown on pages 16 and 20 respectively.

3.   Staff costs

 

 

2012

2011

 

 

 

Number

Number

Administration

 

2

2

 

 

--------

--------

 

 

2012

2011

 

 

£

£

Wages and salaries

 

153,399

158,399

Share based payment expense

 

78,796

63,525

Pension Contributions

 

5,518

6,372

Employers national insurance contributions and

similar taxes

 

19,216

19,181

 

 

--------

--------

 

 

256,929

247,477

 

 

--------

--------

4.   Tangible fixed assets

 

 

Office     equipment

Motor        Vehicles

 

Total

 

 

 

£

£

£

Cost

 

 

 

 

At 1 April 2011

 

10,474

12,612

23,086

Additions

 

-

4,966

4,966

 

 

 

 

 

 

 

--------

--------

--------

At 31 March 2012

 

10,474

17,578

28,052

 

 

--------

--------

--------

Depreciation

 

 

 

 

At 1 April 2011

 

8,329

5,690

14,019

Charge for the year

 

579

3,924

4,503

 

 

 

 

 

 

 

--------

--------

--------

At 31 March  2012

 

8,908

9,614

18,522

 

 

--------

--------

--------

 

 

 

 

 

Net book value

 

 

 

 

At 31 March 2012

 

1,566

7,964

9,530

 

 

--------

--------

--------

At 31 March 2011

 

2,145

6,922

9,067

 

 

--------

--------

--------

 

 

 

 

 

 

5.   Investments

 

 

Investment in

subsidiary

 

 

£

Cost

 

At 1  April 2011

12,387,304

Share based payment on behalf of subsidiary (see note 10)

116,489

 

--------

At  31 March 2012

12,503,793

 

--------

Provision

 

 

 

At 31 March 2011

-

 

--------

At 31 March 2012

-

 

--------

Net book value

 

At  31 March 2012

12,503,793

 

--------

At  31 March 201

12,387,304

 

--------

 

 

 

6.   Debtors

 

 

2012

As restated

2011

 

 

£

£

Debtors due within one year

 

 

 

Other debtors, prepayments and accrued income

 

171,683

162,829

 

 

 

 

Debtors due in more than one year

 

 

 

Inter-company  debtor

 

14,855,565

13,095,993

Other debtors, prepayments and accrued income

 

27,656

138,281

 

 

--------

--------

 

 

14,883,221

13,234,274

 

 

--------

--------

 

7.   Creditors: amounts falling due within one year

 

 

 

 

2012

2011

 

 

 

£

£

Accounts payable

 

 

20,920

25,169

Accruals and deferred income

 

 

52,000

58,650

Other creditors

 

 

24

985

 

 

 

--------

--------

 

 

 

72,944

84,804

 

 

 

--------

--------

 

8.   Called up share capital

 

For detail of share capital see note 16 of the consolidated financial statements.

9.   Reserves

 

Share

 capital

Share

premium

As restated

Profit and loss

 

 

£

£

£

 

 

 

 

At 1 April 2011

7,341,027

21,438,079

(454,528)

Prior year adjustment (see note 13)

-

-

(1,137,035)

Restated balances at 1 April 2011

7,341,027

21,438,079

(1,591,563)

Arising on issue of  shares

1,178,524

52,021

-

Share issue expenses

-

(14,595)

-

Loss for the year

-

-

(649,881)

Share based payments (see note 10)

-

-

195,285

 

 

 

 

 

          --------

          --------

          --------

At 31 March 2012

8,519,551

21,475,505

(2,046,159)

 

_________

_________

_________

      

10. Share-based payments

11. Related party transactions

12. Ultimate controlling party

13. Prior year adjustment

14. Post balance sheet events

The Company  raised £1.045 million before expenses via a private placing of 38,000,000 shares at 2.75 pence per share on 23 May  2012.

 

The Company also raised £1 million before expenses via a private placing of 36,363,637 shares at 2.75 pence per share on 15 June 2012.

 


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