Final Results for the year ended 30 September 2012

 

 

Blue Star Capital plc

 

("Blue Star Capital" or "the Company")

 

Final Results for the year ended 30 September 2012

 

I am pleased to report Blue Star Capital Plc's ("Blue Star Capital" or "the Company") results for the year ended 30 September 2012.

On 1 February 2012 the Company announced that it has conditionally raised £245,000 before expenses (approximately £232,000 net of expenses) via the issue of 12,250,000 new Ordinary Shares at a price of 2 pence per share to new and existing investors. The proceeds were to be used to make a secured loan of £150,000 to Overtis Limited ("Overtis"). The purpose of the loan was to provide Overtis with working capital and to secure a period of exclusivity as part of a process which the Company expected, subject to due diligence, further fund raising and shareholder approvals, to lead to the full acquisition of the issued share capital of Overtis in line with the Company's stated investment policy. Overtis specialised in information protection and compliance which the Company believed had significant potential in the cybersecurity and data security space. The balance of funds raised of £100,000 was to be used by the Company for general working capital purposes.

Unfortunately in the period post drawdown of the loan, Overtis encountered a number of unforeseen difficulties which culminated in the decision being taken by its Board to seek the appointment of an Administrator on 31 May 2012. Having entered Administration, the assets and business of Overtis were subsequently acquired by Vigilant Applications Limited. In relation to this transaction, £116,998 of the £150,000 secured loan held in Overtis was rolled-over into Vigilant Applications Limited and is secured against the assets of that company. The remaining £33,002 of the loan remains in Overtis and while it may be repaid in whole or in part depending on any subsequent realisations by its Administrator, the Company has fully provided against this debt.

Post the year end, on 7 January 2013 the Company announced the acquisition of one of its investee companies, Visimetrics (UK) Limited ("Visimetrics"), including its subsidiary OmniPerception Limited ("OmniPerception")  by Digital Barriers plc, ("Digital Barriers").

 Under the terms of the Acquisition, Digital Barriers has acquired the entire issued and to be issued share capital of Visimetrics, including OmniPerception, for an initial cash consideration of £3,300,000 (on a debt free, cash free basis), paid to the vendors of Visimetrics upon completion of the Acquisition ("Completion"). Completion took place on 4 January 2013. Dependent upon the successful satisfaction by Visimetrics of certain financial and operational targets in the period from completion of the Acquisition to 31 December 2014, deferred consideration of a further £4,700,000 may be paid by Digital Barriers to the vendors of Visimetrics; the majority of any such deferred consideration will be satisfied through the issue of new ordinary shares in Digital Barriers, with the remainder paid in cash, although the Digital Barriers Board can, at its discretion, elect to pay deferred consideration fully in cash.

Blue Star Capital's fully diluted holding in Visimetrics was valued at £113,336 in its Interim Accounts at 31 March 2012. The initial cash consideration payable to Blue Star Capital before certain retentions by Digital Barriers in relation to working capital adjustments, was approximately £47,000. The maximum effective consideration payable to Blue Star Capital including any deferred consideration payable in shares in Digital Barriers, will be approximately £137,000.

On 4 February 2013, the Company announced that further to the announcement dated 3 January 2013, it had agreed a further extension to the shareholder loan agreement (the "Loan") entered into on 28 April 2011. The original amount of the Loan was £400,000 which, with the accrued interest at 10% per annum, had been due for repayment by 30 September 2012.

Pursuant to the terms of the Loan extension, the terms of the Loan remain unchanged, except that repayment, which had been extended to 31 January 2013, has now been deferred until 31 March 2013 (the "Final Redemption Date"). In addition, with effect from 1 February 2013 and until 28 February 2013, the full amount (including interest and repayment premium) to redeem the Loan became £564,916 (the "Revised Principal") and from 1 March 2013, the Revised Principal will accrue interest on a compound basis at a rate of 2.0% per month, or part month.

As consideration for agreeing to extend the repayment date of the loan as set out above, the Company has further agreed that the warrants issued to the providers of the Loan at the time of the original loan agreement (the "Warrants") will be amended such that the exercise price of the Warrants was to be reduced from 2 pence per ordinary share to 0.6 per ordinary share.

Shareholders will recall that in June 2011, the Company announced the acquisition of one of its investee companies, Zimiti Limited ("Zimiti") by Digital Barriers. Under the terms of that acquisition, Digital Barriers acquired the entire issued share capital of Zimiti on a cash-free, debt-free basis for an initial consideration of £1,500,000 in cash.  Dependent on the successful satisfaction by Zimiti of certain financial and operational targets in the period from completion of the acquisition to 30 September 2013, further deferred consideration up to a maximum total consideration of £10,000,000 was potentially available.  This deferred consideration was to be satisfied by the payment of a maximum of £4,250,000 in cash, with the balance satisfied through the issue of new Ordinary Shares in Digital Barriers.

Blue Star Capital's fully diluted holding in Zimiti totalled 22.85% and the Company's holding was shown in last years' accounts at a value of £800,436 based on a 50% expectation of the NPV of the various earn out criteria being achieved and using a 10% discount rate. The initial deferred consideration targets were not met by Zimiti and as a result the carrying value has been reduced to £436,050 using the same basis as applied above.

Blue Star Capital reported a loss for the year of £1,439,325 (2011: £485,423) principally reflecting the write down in investments and deferred consideration of £633,699 and £444,430 respectively . During the year, administration costs fell to £361,508 (2011: £640,134) reflecting the steps taken by the board to reduce costs.

There have been a number of changes to the Company's portfolio during the year and details are set   out below.  The investment holdings are set out in note 14.

1.       OMNIPERCEPTION LIMITED 

OmniPerception merged with Visimetrics Limited (a UK developer of high performance digital CCTV and Video Surveillance systems), in May 2012 which resulted in the Company's investment in the merged entity being valued at £113,368. Prior to this merger, OmniPerception had sought shareholder support and had undertaken an internal fund raise in which Blue Star Capital invested a further £7,282 in December 2011. However, due to the Company's limited cash resources the Board felt it prudent to preserve its cash and decided therefore not to invest the funds required to maintain its original equity percentage and the Company's holding.

As referred to above, Visimetrics was acquired by Digital Barriers on 7 January 2013.

2.       ESEEKERS LIMITED 

eSeekers Limited is a private company, registered in England and Wales, in which Blue Star has a minority shareholding.  eSeekers is a holding company, with equity holdings in three independent but synergistic Internet businesses: Xen Inc. (www.xen.com), Nektan Limited (www.nektan.com) and VNU Capital LLC (trading through www.venue.com and www.emporium.com).

Blue Star Capital's investment of £300,000 was made in 2007 and its holding is valued at £1.121m, based on a £50m pre-money valuation for eSeekers set at the time of the last external investment.

3.       VIGILANT APPLICATIONS LIMITED (FORMERLY: OVERTIS GROUP LIMITED)

Vigilant Applications is a software development company specialising in security solutions for monitoring and shaping user behaviour at a PC or 'end point'. Its VigilancePro agent software is deployed in the enterprise space in both the public and private sector for monitoring professional standards, securing data and compliance. VigilancePro Retail applies the products unique capabilities to the monitoring of all activity at an Electronic Point of Sale - EPOS. Through its patented technology it is able to integrate with existing security infrastructure (CCTV) to provide irrefutable real-time remote reporting of all transaction activity within a retail environment.

Financials

Blue Star Capital has continued to reduce costs wherever possible, both in its cost base and ongoing investment operations. The Company's cash position at the end of the year was £36,936 (2011: £276,764). and the Company's net assets totalled £1,155,087.

Outlook

The Directors of the Company are continuing to review various strategic options available to the Company and are in discussions with a number of parties regarding opportunities to improve the Company's cash position and provide it with sufficient funds in order to repay the Shareholder Loan; and provide general working capital for the Company. However, the outcome of these discussions is dependent on a number of factors, including the actions of a number of third parties, and are therefore outside of the control of the Company or its Directors and there can be no guarantee as to their success.

The Lord Dear

Chairman

Enquiries:

 

Blue Star Capital plc	Tony Fabrizi	Tel:0777 178 2434
Daniel Stewart & Company plc (Nomad & Joint Broker)	David Hart Director, Corporate Finance Martin Lampshire, Head of Corporate Broking	Tel: 020 7776 6550

Results and dividends

The directors present their report together with the audited financial statements for the year ended 30 September 2012.

The trading results for the year ended 30 September 2012 and the Company's financial position at that date are shown in the attached financial statements.

The directors do not recommend the payment of a dividend for the year (2011: £nil).

Principal activities and review of the business

The principal activity of the Company is to invest in Homeland Security Industry based companies which have dual use products and applications (those inclusive of both defence and civilian markets).  A review of the business is included within the Chairman's Statement.

Directors serving during the year

The Directors who served during the year are shown on page 2.

Directors' Interests

The Directors at the date of these financial statements who served and their interest in the ordinary shares of the Company are as follows:

	Number of Ordinary Shares
Lord Dear	3,048,652
Anthony Fabrizi	3,226,203
Noel Lyons	2,054,328
Peter Varnish	1,913,480
General Sir Michael Wilkes	2,410,824

                                                        

Investing Policy

Assets or Companies in which the Company can invest

The principal activity of the Company is to invest in Homeland Security Industry based companies which have dual use products and applications (those inclusive of both defence and civilian markets). These include:

·     Security & Surveillance - including overt/covert autonomous face and voice recognition;

·     Explosives Detection Systems;

·     Surveillance, Border & Perimeter Security Systems;

·     Bio-Terror: Detection, Diagnostics and Treatment;

·     Training & Simulation Systems;

·     Access Control/Biometrics;

·     People Screening;

·     Cyber Security and Data Security;

·     Container Screening;

·     Emergency Planning and Integrated Response Systems.

 

The Company also holds a small number of investments in investee companies in other sectors.

The Company's geographical range is mainly UK companies but considers opportunities in the mainland EU and will actively co-invest in larger deals.

The Company can take positions in investee companies by way of equity, debt or convertible or hybrid securities.

Whether investments will be active or passive investments

The Company's investments are passive in nature, but may be actively managed. The Company may be represented on, or observe, the boards of its investee companies.

Holding period for investments

The Company's investments are likely to be illiquid and consequently are to be held for the medium to long term.

Spread of investments and maximum exposure limits, Policy in relation to cross-holdings and Investing Restrictions

The Company does not have any maximum exposure limits, limits on cross-holdings or other investing restrictions. It is the Directors intention not to invest more than 10% of the Company's gross assets in any individual company (calculated at the time of investment).

Policy in relation to gearing

The Directors may exercise the powers of the Company to borrow money and to give security over its assets. The Company may also be indirectly exposed to the effects of gearing to the extent that investee companies have outstanding borrowings.

Returns and Distribution Policy

It is anticipated that returns from the Company's investment portfolio will arise upon realisation or sale of its investee companies, rather than from dividends received. Whilst it is not possible to determine the timing of exits, the Board will seek to return capital to shareholders when appropriate.

Life of the Company

The Company has an indefinite life dependent on obtaining sufficient funding.

Future Developments

The Company is continuing to develop an investment portfolio in the Homeland Security sector with a focus on prevention, protection, reaction and recovery. 

Principal risks and uncertainties

The Company is focussed in Homeland Security, which embraces a number of application sectors rather than being a vertical and undifferentiated narrow sector of itself.  It seeks investments in late stage dual usage opportunities, which by their very nature allow a diverse portfolio of investments with different application sectors and geographic locations whilst maintaining the overarching Homeland Security focus.  The risk is loss or impairment of investments.

This is mitigated by careful management of the investment and in particular, only continuing to support those investments which demonstrate potential to achieve a positive exit and decisively determining those which do not.   Portfolio and capital management techniques are fully applied according to industry standard practice.

It will be necessary to raise additional funds in the future by a further issue of new Ordinary Shares or by other means.  However the ability to fund future investments and overheads in Blue Star Capital Plc as well as the ability of investments to return suitable profit cannot be guaranteed, particularly in the current economic climate. 

The Company may not be able to identify suitable investment opportunities and there is no guarantee that investment opportunities will be available and the Company may incur costs in conducting due diligence into potential investment opportunities that may not result in an investment being made.

The value of publicly traded companies similar to those in Blue Star Capital's portfolio and in particular those at an early stage of development, can be highly volatile. The price at which investments are made, and the price which the Company may realise for its investment, will be influenced by a large number of factors, some specific to the Company and its operations and some which may affect the sector.

Significant shareholders

As at 21 February 2012 so far as the directors are aware, the parties (other than the interests held by Directors) who are directly or indirectly interested in 3% or more of the nominal value of the Company's share capital is as follows:

	Number of Ordinary Shares	Percentage of issued share capital
Blue Square Equity Investments Limited Nigel Robertson Cloverleaf Holdings Ltd Highland Fund Management Ltd SPDV Holdings Ltd	49,700,409 33,788,886 8,653,046 7,409,696 6,166,346	28.33% 19.26% 4.93% 4.22% 3.51%

General 

The Company has third party Directors and Officers indemnity insurance in place.

Related party transactions

The Company has entered into certain related party transactions and these are disclosed in note 22.

Events after the reporting date 

Events subsequent to the balance sheet date are detailed in note 20 to the financial statements

Policy and practice on the payment of creditors

The Company has no formal code or standard, which deals specifically with the payment of suppliers. However, the Company's policy on the payment of all creditors is to ensure that the terms of payment, as specified and agreed with the supplier, are not exceeded. At the year end, trade creditors represented 241 days purchases (2011: 77 days).

Donations

There were no charitable or political donations during the current or prior year.

Auditors

In so far as each of the Directors is aware:

·       there is no relevant audit information of which the Company's auditors are unaware; and

·       the Directors have taken all steps that they ought to have taken to make themselves aware of any relevant audit information and to establish that the auditors are aware of that information. 

 

Adler Shine LLP has indicated 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 of directors

 

 

Anthony Fabrizi

Chief Executive Officer

 

Directors' responsibilities

The directors are responsible for preparing the Directors' 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. The directors have chosen to prepare the company financial statements in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union. 

International Accounting Standard 1 requires that financial statements present fairly for each financial year the company's financial performance and cash flows. This requires the faithful representation of the effects of transactions, other events and conditions in accordance with the definitions and recognition criteria for assets, liabilities, income and expenses set out in the International Standards Board's 'Framework for the preparation and presentation of financial statements'. In virtually all circumstances, a fair presentation will be achieved by compliance with all applicable IFRSs. A fair presentation also requires the directors to:

·       consistently select and apply appropriate accounting policies;

·       present information, including accounting policies, in a manner that provides relevant, reliable, comparable and understandable information; and

·       provide additional disclosures when compliance with the specific requirements in IFRSs is insufficient to enable users understand the impact of particular transactions, other events and conditions on the entity's financial position and financial performance.

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

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.

We have audited the financial statements of Blue Star Capital Plc for the year ended 30 September 2012, which comprise the Statement of Comprehensive Income, the Statement of Financial Position, the Statement of Changes in Equity, the Cash Flow Statement and the related notes.  The financial reporting framework that has been applied in their preparation is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union.

This report is made solely to the Company's members, as a body, in accordance with 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 set out on page 10, 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 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

An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or error.  This includes an assessment of: whether the accounting policies are appropriate to the Company's circumstances and have been consistently applied and adequately disclosed; the reasonableness of significant accounting estimates made by the directors; and the overall presentation of the financial statements. In addition, we read all the financial and non-financial information in the annual report to identify material inconsistencies with the audited financial statements. If we become aware of any apparent material misstatements or inconsistencies we consider the implications for our report.

Opinion on financial statements

In our opinion the financial statements:

·      give a true and fair view of the state of the Company's affairs as at 30 September 2012 and of the company's loss for the year then ended;

·      have been properly prepared in accordance with IFRSs as adopted by the European Union; and

·      have been prepared in accordance with the requirements of the Companies Act 2006.

Emphasis of matter - Going concern

In forming our opinion, which is not qualified, we have considered the adequacy of the disclosures made in note 1 to the financial statements concerning the Company's ability to continue as a going concern. The going concern assumption is predicated on one of two scenarios, either the receipt of funds from the sale of certain investments in order to fund working capital and the repayment of the shareholder loan or a restructuring and subsequent equity investment to fund working capital and the repayment of the shareholder loan. The receipt of these funds is not yet certain. These conditions indicate the existence of a material uncertainty which may cast significant doubt about the Company's ability to continue as a going concern. The financial statements do not include the adjustments that would result if the Company 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 Company, or returns adequate for our audit have not been received from branches not visited by us; or

·      the 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.

 

Christopher Taylor (Senior Statutory Auditor)

For and on behalf of Adler Shine LLP, statutory auditor

Aston House

Cornwall Avenue

London N3 1LF

 

 

Adler Shine LLP is a limited liability partnership registered in England and Wales (with registered number OC301724).

 

Blue Star Capital Plc

Statement of Comprehensive Income

for the year ended 30 September 2012

 

	Notes		2012 £	2011 £
Profit/(loss) arising from investments held at fair value through profit or loss:
Other investments	14		(633,699)	(152,688)
Deferred consideration	15		(444,430)	-
Profit on disposal of other investments			-	314,064
			(1,078,129)	161,376
Investments held for trading			-	-
Other income			3,128	9,572
Administrative expenses			(361,508)	(640,134)
Operating loss	5		(1,436,509)	(469,186)
Finance income	6		80,137	90
Finance costs	7		(82,953)	(16,327)
Loss before and after taxation and total comprehensive loss for the year			(1,439,325)	(485,423)

 

Loss per ordinary share:
Basic and diluted loss per share on loss for the year		12			(0.90)p	(0.32)p

 

Blue Star Capital Plc

Statement of Financial Position

for the year ended 30 September 2012

 

 

	Notes	2012 £	2011 £
Non-current assets
Property, plant & equipment	13	-	-
Other investments	14	1,188,607	1,822,306
Trade and other receivables	15	-	540,777
		1,188,607	2,363,083
Current assets
Trade and other receivables	15	564,863	345,606
Cash and cash equivalents	16	36,936	276,764
Total current assets		601,799	622,370
Total assets		1,790,406	2,985,453
Current liabilities
Trade and other payables	17	151,590	318,579
Borrowings	18	483,729	-
Total current liabilities		635,319	318,579
Non-current liabilities
Borrowings	18	-	413,714
Total non-current liabilities		-	413,714
Total liabilities		635,319	732,293
Net assets		1,155,087	2,253,160
Shareholder equity
Share capital	19	168,020	150,261
Share premium account		6,772,770	6,464,876
Retained earnings		(5,785,703)	(4,361,977)
Total shareholders' equity		1,155,087	2,253,160

 

Blue Star Capital Plc

Statement of Changes in Equity

for the year ended 30 September 2012

 

	Share capital	Share premium	Retained earnings	Total
	£	£	£	£
Year ended 30 September 2011
At 1 October 2010	150,261	6,464,876	(3,983,694)	2,631,443
Loss for the year and total comprehensive income and expense	-	-	(485,423)	(485,423)
Share based payment	-	-	107,140	107,140
At 30 September 2011	150,261	6,464,876	(4,361,977)	2,253,160
Year ended 30 September 2012
At 1 October 2011	150,261	6,464,876	(4,361,977)	2,253,160
Loss for the year and total comprehensive income and expense	-	-	(1,439,325)	(1,439,325)
Shares issued in year	17,759	320,144	-	337,903
Share issue costs	-	(12,250)	-	(12,250)
Share based payment	-	-	15,599	15,599
At 30 September 2012	168,020	6,772,770	(5,785,703)	1,155,087

Share capital                             

Share capital represents the nominal value on the issue of the Company's equity share capital, comprising £0.001 ordinary shares.

Share premium

Share premium represents the amount subscribed for the Company's equity share capital in excess of nominal value.

Retained earnings

Retained earnings represent the cumulative net income and losses of the Company recognised through the statement of comprehensive income along with the fair value of the equity settled share based payments.

 

		2012		2011
	Note	£		£
Operating activities
Loss for the year		(1,439,325)		(485,423)
Adjustments:
Finance income		(80,137)		(90)
Finance costs		82,953		16,327
Fair value losses/(gains)		633,699		(161,376)
Depreciation		-		6,779
Shares issued in lieu of salary		92,904		-
Share based payment	8	15,599		107,140
Working capital adjustments
Increase in trade and other receivables		401,563		(18,701)
(Decrease)/increase in trade and other payables		(179,927)		134,610
Net cash used in operating activities		(472,671)		(400,734)
Investing activities
Interest received		93		90
Proceeds from sale of property, plant and equipment		-		653
Proceeds from sale of investments		-		249,690
Proceeds from long term loan notes		-		400,000
Net cash generated from investing activities		93		650,433
Financing activities
Proceeds from issue of equity shares		245,000		-
Share issue costs		(12,250)		-
Net cash generated from financing activities		232,750		-
Net (decrease)/increase in cash and cash equivalents		(239,828)		249,699
Cash and cash equivalents at start of the year	16	276,764		27,065
Cash and cash equivalents at end of the year	16	36,936		276,764

 

 

1.     Accounting policies

General information

Blue Star Capital Plc (the Company) invests principally in Homeland Security Industry based companies which have products and applications in both the defence industry and civilian markets.

The Company is a public limited company incorporated and domiciled in the United Kingdom. The address of its registered office is Griffin House, 135 High Street, Crawley RH10 1DQ.

The Company is listed on the London Stock Exchange's AIM.

Basis of preparation

The principal accounting policies adopted in the preparation of the financial statements are set out below. The policies have been consistently applied to all the years presented, unless otherwise stated.

These financial statements have been prepared in accordance with International Financial Reporting Standards, International Accounting Standards and Interpretations (collectively IFRS) issued by the International Accounting Standards Board (IASB) as adopted by the European Union ("adopted IFRSs") and with those parts of the Companies Act 2006 applicable to companies reporting under IFRS.

The historical cost convention has been applied as modified by the revaluation of assets and liabilities held at fair value.

Going concern

The financial statements have been prepared on the going concern basis, which assumes that the company will be able to meet its liabilities as they fall due.

As at 4 February 2013, the Company has agreed a further extension to the shareholder loan agreement (the "Loan") entered into on 28 April 2011, and thereafter extended on 1 June 2012, 12 October 2012 and 3 January 2013.  The original amount of the Loan was £400,000 which, with the accrued interest at 10% per annum, had been due for repayment by 30 September 2012.

The terms of the Loan remain unchanged, except that repayment, which had been extended to 31 January 2013, has now been deferred until 31 March 2013 (the "Final Redemption Date"). With effect from 1 February 2013 and until 28 February 2013, the full amount (including interest and repayment premium) to redeem the Loan is £564,916 (the "Revised Principal").  From 1^st March 2013, the Revised Principal will accrue interest on a compound basis at a rate of 2.0% per month, or part month.

The Company is seeking to progress the sale of certain investments or a restructuring and subsequent equity issue. However, this is not certain and the amount realised may or may not provide sufficient funds to cover the repayment of the Loan and the on-going working capital needs of the Company. Should these expected transactions not take place, the Company would need to obtain alternative finance. There can be no certainty that further financing will be available.

These conditions constitute a material uncertainty that may cast doubt about the Company's ability to continue as a going concern. The financial statements do not contain the adjustments that would result if the Company were unable to continue as a going concern.

 

Property, plant and equipment 

Property, plant and equipment are stated at cost less accumulated depreciation and any impairment losses.

Depreciation is calculated to write off the cost of property, plant and equipment less estimated residual values over their expected useful lives as follows:

Plant and machinery                                          25% per annum, straight line

Fixture and fittings                                             25% per annum, straight line

Motor vehicles                                                   25% per annum, straight line

Impairment provisions are made if the carrying value of an asset exceeds the recoverable amount.

Financial assets

The Company classifies its financial assets into one of the categories discussed below, depending on the purpose for which the asset was acquired. The Company has not classified any of its financial assets as held to maturity or available for sale.

The Company's accounting policy for each category is as follows;

Fair value through profit or loss

Financial assets at fair value through profit or loss are either financial assets held for trading or other investments that have been designated at fair value through profit or loss on initial recognition.