30 Sep 2008 07:00
ViaLogy plc
Final results for the year ended 31 March 2008
London, 30 September, 2008: Vialogy PLC (AIM: VIY), the AiM-listed technology company, is pleased to report its final results for the year ended 31 March 2008.
Chairman's Statement
I am pleased to present the financial results for your Company for the year ending 31 March 2008 and to comment on progress during the year. It was a time of transformation for ViaLogy, as we moved from an organisation devoted exclusively to the research and development of our technology to a company where the emphasis of our work focussed on adapting the technology to provide products that suit customers' specific requirements. Inevitably this move towards commercialisation was costly in terms of time, manpower and money. The financial facts contained in the accounts for the year show minimal income and a net loss of £4.9 million.
Our Products
During the year our scientists completed work on ViaLogy's first product, Sensor Policy Manager (SPM™). SPM is a remarkable enhancement in the world of safety and security, a technology that can adapt any kind of sensor to perform more efficiently and - most importantly - enable complete interoperability between sensors from different manufacturers. SPM transforms a collection of disparate sensors performing a variety of different tasks into an integrated, cohesive security system. Our second product, MicroSPM™, adds strength and distance to video sensor coverage.
To market the SPM products efficiently we decided to partner with a range of global and national commercial companies. ViaLogy's sales and technical teams have spent several months introducing and demonstrating the products to our potential partners. Because we are dealing with prestigious 'names', international businesses with envied reputations to protect, these partners insist on rigorous and prolonged testing of our products. This is an onerous and expensive process that is nevertheless essential if we are to be an accepted part of any major security installation. In each case ViaLogy has satisfactorily completed these proof-of-concept demonstrations.
In addition to the SPM products the ViaLogy team has refined our patented weak signal detection technology, Quantum Resonance Interferometry (QRI™), for two most exciting and potentially lucrative commercial applications. As you will read in the reports of Dr. Robert W. Dean, our Chief Executive Officer, and Dr. Sandeep Gulati, our Chief Technology Officer, we are working closely with companies in the oil and gas industry in two key areas. In Texas, field trials have commenced using ViaLogy technology aimed at vastly improving the strike rate of oil exploration drilling. Using another derivative of our QRI technology, proof-of-concept flights will be taking place to detect and plot the location and condition of buried oil and natural gas pipelines. Success of these pilot efforts should produce substantial and near-term cash flow for the Company.
Funding
The worldwide economic woes that prevailed during the year provided a difficult background to the Company's commercial activities. So, while our technology has been validated and approved for incorporation into a gratifying number of projects, a general reticence by customers to embark on capital expenditures and expansion has lead to cash flow pressures for us.
In June 2007 the Company raised £4.4 million (£4.316 million net of costs) by way of a placing of 55 million new ordinary shares at a placing price of 8 pence per share. In addition the participants received one warrant for every two shares purchased in the placing. Each warrant entitles the holder to purchase an additional share at 10 pence per share at any time before October 2009. In August 2008 the Company raised a further £1.8 million (£1.739 million net of costs) by way of a placing of 45 million new ordinary shares at a placing price of 4 pence per share. In addition, subject to shareholder approval at the Annual General Meeting, the participants will receive one warrant for each share purchased in the placing. Each warrant will entitle the holder to purchase an additional ordinary share at 5 pence per share at any time before October 2011.
Acrobot
ViaLogy directors have again decided to retain the Company's holding in The Acrobot Company. During the year Acrobot launched its first two products, a Planner and a Navigator, with the capability to perform orthopedic procedures including unicondylar knee replacement and total hip replacement. To date well over 100 surgical procedures have been successfully undertaken using these products. A distribution strategy is now in place in the UK and arrangements are being made for launches in Europe and the US.
My thanks
I want to record my sincere thanks to the ViaLogy team, the 35 men and women in our Pasadena, California, offices who have worked long hours, often including weekends, to transform our unique technology into real products. They are a brilliant bunch of people. In particular I want to thank Bob Dean, who took over the reins of the Company at a critical time and is guiding us towards success.
Terry Bond
Chairman
29 September 2008
Chief Executive Officer's Report
The year ending 31 March 2008 marked the full productisation of ViaLogy's flagship product, SPM. Having completed some of the lengthy, but necessary, certifications required for insertion into US Government programs, ViaLogy has now deployed SPM and is actively pursuing contracts with key partner firms Cisco Systems, Axia Supernet, Coleman Technologies, Scientific Applications International Corporation (SAIC) and others. Three "permanent" demonstrations are up and running at Cisco's Washington, DC, Center of Excellence; at three Axia sites in Alberta (preparatory to a major joint bid to the Alberta government for an automated air quality monitoring system); and in Los Angeles County as a key element in a proposed Department of Homeland Security radiation warning and management system. Such pilot programs are a necessary phase in market acceptance and in any sale of our software products for operational use in enterprise grade applications. Our progress in building an effective front-end sales effort has not been as rapid as we would have wished but we now have in place a ten-person national sales network that should show real results in the coming months. Key tasks are to keep our software products' development moving forward with our markets, which calls for continuing research and development (R&D) investment, and establishing sales and subcontractor relationships with other large system integrators. I want to stress that in SPM and its planned future versions the Company has what we believe to be a singularly capable, core sensor integration capability in the growing Physical Security Information Management (PSIM) market.
Beginning this year, ViaLogy also launched major efforts in two additional key markets, energy and life sciences, to productise its core, unique and proprietary signal processing technology, QRI. Perhaps the most exciting energy application is in the oil discovery area where we have introduced QuantumRD™, an oil reservoir discovery technology that interprets seismic data and can more accurately locate and define the capacity of oil and gas deposits, and maximize extraction. We have partnered with Texas-based Atascosa Exploration. On the basis of ViaLogy's analysis of raw 2D and 3D seismic data Atascosa has repositioned planned drill sites, acknowledged ViaLogy's discovery of a major unknown oil reservoir located on one of their existing leases, and granted ViaLogy a 5% working interest as payment in two wells going forward. Subject to the accuracy of ViaLogy's predictions and the price of oil, revenue from these two sites could total $8 million for your company over the period of extraction. The results from the first "ViaLogy well" are due in October 2008, and should provide the basis for market acceptance and accelerate the growth of this part of our business.
The second effort underway to bring another QRI-based product to a high-demand energy market is QSUB™, a technology to analyse data from airborne synthetic aperture radar (SAR), and light detection and ranging (LIDAR) sensors to precisely geolocate and monitor the health of buried gas and oil pipelines. There are almost 3 million kilometres of buried pipeline in the US alone; current methods for accurately locating pipelines are largely manual and costly. ViaLogy has teamed with Advanced Spatial Technologies Field Services (ASTFS), a Texas pipeline consulting firm with critical domain expertise, to conduct aerial flyover pilot missions this autumn. We have commitments from three major pipeline companies for future buys of data following successful proof-of-concept demonstrations. We anticipate cash flow from this business line in the next ViaLogy fiscal year. Assuming the pilot results are successful our agreement with ASTFS guarantees us a minimum of $1 million in the first year of use of QSUB, and $26 million minimum over the five year life of the agreement.
In the medical devices market ViaLogy has teamed with Sensovation, a German firm that develops and produces medical diagnostic devices, to introduce an application of QRI to the pathology market. QRI can simplify the design of such devices, thereby lowering the cost and price point to enable broader market penetration, and thus permit use of devices at the point of care. ViaLogy has now accomplished a proof-of-concept demonstration of this technology and is developing its go-to-market strategy.
ViaLogy is now single-mindedly focused on bringing its technologies to market as high-demand products. We are positioned in three market areas, PSIM, energy, and life sciences. While these markets are not immune to current financial, business and customer uncertainties, they are certainly more resistant than other consumer-dependent markets. Nevertheless, while these markets are likely to remain healthy in a period of downturn, gaining credibility for new products takes some time and requires that certain industry standards be demonstrated. We are well along in these processes, and I believe we will have a number of successes to report to you in the coming months.
Dr. Robert W Dean
Chief Executive Officer
29 September 2008
Chief Technology Officer's Review
During the fiscal year, we matured, upgraded and branded our products, completed pilots, demonstrated value-proposition to our customers, and we now are moving to operational deployments. The Company launched market-focused SPM, QuantumRD and QSUB product and service offerings with strategic partners in three high growth vertical markets.
Physical Security Information Management
PSIM is the rapidly growing technology market that integrates physical security infrastructure, unified communications (voice, video and sensors), mobility and operations with emergent enterprise IT architectures. It is a system-of-systems solution that incorporates products from more than one manufacturer to address the breadth and depth of functionality required by customers.
SPM is a scaleable, open, standards-based software and service platform for cost-effective large-scale sensor integration, aggregation, and interoperability within PSIM. SPM software is sensor agnostic; it combines input from multiple networked sensors to provide complete, real-time actionable assessment and policy-based responses. Remote monitoring, assessment, training, warning and response design are at the core of PSIM. SPM's powerful built-in policy engine and toolkit for enterprise users to rapidly design, test, and deploy sensor-based policies should accelerate ViaLogy's selection as partner of choice for PSIM integrators.
SPM is a core sensor integration and fusion engine for Cisco Open Platform for Safety and Security (COPSS), launched in the US in April 2008 and in Europe in June 2008. Cisco is positioning COPSS as a one-stop solution that combines video, voice, sensor and mobility for all safety and security operations and business continuity applications in federal, enterprise and public sectors.
Coleman Technologies has selected SPM for the Coleman Incident Response System (CIRS) platform targeted at state and local agencies for public safety and PSIM applications.
ViaLogy is certified by Lenel Systems International Inc, a United Technologies Fire and Security Division's Open Alliance partner, to integrate sensors into Lenel's enterprise video management and access control platform.
Canada-based Axia NetMedia Corporation has selected SPM as a managed services delivery partner for offering sensor-based services over its Alberta province-wide broadband network, SuperNet. ViaLogy and Axia recently installed a pilot system for 24/7 air-quality monitoring as a first offering for public agencies.
MicroSPM®
First-stage development is complete on this is high-performance, small form factor hardware platform for fully autonomous sensor processing at the network edge. MicroSPM's first PSIM offering is real-time surveillance using high definition (HD) digital video cameras. The MicroSPM platform addresses three major trends within the global surveillance industry: increasing adoption of network addressable digital video camera and thermal imagers; the need for real-time autonomous processing by moving the policy execution and the intelligence to the network edge; and the accelerated migration to Internet Protocol version 6 (IPv6).
ViaLogy is currently piloting MicroSPM at Cisco's Center of Excellence in Herndon, Virginia, as a COPSS building-block for real-time video surveillance.
ObjectVideo and ViaLogy announced a collaboration to deploy OVServer video analytics software on MicroSPM.
Energy
ViaLogy is launching two applications in the Energy market: QuantumRD services for oil and gas reservoir discovery, sizing and development; and QSUB aerial survey services for buried oil and gas pipeline accurate geolocation and condition assessment. These applications will be implemented with strategic partners who offer significant domain expertise, customer relationships and operational depth.
QuantumRD is computational technology, now in operational pilot use, to fundamentally improve the petroleum industry's ability to accurately locate, characterise and measure hydrocarbon deposits. This is a breakthrough computational software platform for detecting, predicting and monitoring hydrocarbons based on a systematic fusion of geoseismic data, well logs, production history and reservoir flow model. QuantumRD delivers operational cost-savings by:
identifying and positioning hydrocarbon deposits
permitting oil recovery using the minimum number of wells
optimising infill well locations
QuantumRD works with existing 2D, 3D and 4D geoseismic datasets to identify and predict heterogeneity, lithology and fluid types (oil, gas and water). For reservoir discovery, QuantumRD fuses seismic, electroseismic and geological datasets from existing sensors, to characterise reservoir boundaries, fluid sizing and porosity. QuantumRD is derived from the Company's patented weak signal detection technology QRI. It enables prediction and quantitation of porosity (a key reservoir indicator) by exploiting subtle changes in seismic noise across the underlying lithology. Over the last 20 years the geoseismic industry has spent large sums developing migration, seismic inversion and stacking algorithms that cancel or average out seismic noise. While this may suffice for large hydrocarbon traps it misses and mischaracterises small hydrocarbon-rich formations. QuantumRD is geology agnostic, and applicable to both on-shore and off-shore prospects. To optimize recovery, ViaLogy can characterise changes in seismic response between multiple seismic surveys in response to production, and map these seismic changes to variations in saturation.
In June 2008 ViaLogy announced that it had entered into an agreement with a Texas-based oil and gas exploration and production company, Atascosa Exploration LLC, of San Antonio, to apply QuantumRD to analyse three reservoir prospects at varying depths and lithology to more accurately define the extent and porosity prior to the commencement of drilling. Recently, ViaLogy and Atascosa disclosed that with reference to the first prospective Texas drilling site, the QuantumRD analysis confirmed the location of an oil trap, and mapped its size, shape, and predicted porosity. Drilling will be completed in October 2008.
QSUB services platform offers a globally deployable, end-to-end aerial field service for buried oil and gas pipeline geolocation and degradation assessment. In addition to deploying the most advanced commercially available aerial sensors, QRI technology is the underlying computational engine for the platform. QSUB delivers smart fusion of airborne electromagnetic data from:
ground-penetrating synthetic aperture radar (SAR);
high frequency light detection and ranging sensor (LIDAR);
magnetic sensor; and
orthophotography.
This will determine energy pipeline depth, extent of ground cover and geolocation coordinates. QSUB aims to provide pipeline condition and identify potential leaks by exploitation of wideband electro-optical sensors from a height of 2,000 to 10,000 feet above ground level.
In a departure from traditional energy infrastructure aerial survey offerings which are focused on data acquisition and best-efforts processing, ViaLogy intends to provide quantitative data quality and accuracy guarantees. Results will be delivered to the pipeline companies in the industry-standard Geographic Information Systems (GIS) and engineering formats so that they can be directly incorporated in operations and maintenance planning systems.
To date, survey companies have been unable to exploit SAR and LIDAR to offer standoff detection for pipeline buried between one and three metres below ground. They have been limited to aerial photography for assessing construction in the proximity of pipelines and any significant ground cover movements. SAR performance has been limited by requiring multiple ground conductivity measurements to compensate for soil moisture variability. ViaLogy signal processing aims to eliminate the need for multiple expensive ground-based conductivity measurements.
ViaLogy has partnered with Texas-based Advanced Spatial Technologies Field Services to pilot and market the service in North America. A proof of concept flight is planned for October when QSUB will be fully tested. Pilot success will open the possibility for broad ranging applications that include inspection of thousands of miles of narrow bore sub-sea oil gathering and transportation lines, underground petrochemical storage tanks, and the integrity of transportation infrastructure (subway tunnels).
Dr. Sandeep Gulati
Vice President and Chief Technology Officer
ViaLogy PLC
29 September 2008
Consolidated income statement for the year ended 31 March 2008
| Notes | 2008 | 2007 | |
| £ | £ | ||
| Revenue | 31,485 | 273,478 | |
| Cost of sales | 407 | 8,410 | |
| -------- | -------- | ||
| Gross profit | 31,078 | 265,068 | |
| Administrative expenses | 5,409,444 | 1,848,450 | |
| -------- | -------- | ||
| Loss from Operations | (5,378,366) | (1,583,382) | |
| Finance costs | - | (353) | |
| Finance income | 119,985 | 106,373 | |
| Share of losses of associate | - | (526,481) | |
| -------- | -------- | ||
| Loss for the year before taxation | (5,258,381) | (2,003,843) | |
| -------- | -------- | ||
| Taxation | 3 | 389,454 | 171,524 |
| -------- | -------- | ||
| Loss for the year attributable to equity | |||
| holders of the parent company | (4,868,927) | (1,832,319) | |
| -------- | -------- | ||
| Loss per share | |||
| Basic and diluted | 4 | (1.091)p | (0.523)p |
Consolidated statement of changes in equity for year ended 31 March 2008
Statement of changes in equity for 2007
| Share | Share | Warrant | Foreign | Retained | Total | |
| capital | premium | reserve | exchange | earnings | ||
| account | reserve | |||||
| ₤ | ₤ | ₤ | ₤ | ₤ | ₤ | |
| At 1 April 2006 | 3,112,222 | 7,639,013 | - | - | (5,107,858) | 5,643,377 |
| Loss for year | - | - | - | - | (1,832,319) | (1,832,319) |
| Reversal of previously | ||||||
| equity accounted losses | - | - | - | - | 2,467,890 | 2,467,890 |
| Exchange differences arising on | ||||||
| translation of foreign operations | - | - | - | 20,075 | - | 20,075 |
| -------- | -------- | -------- | -------- | -------- | -------- | |
| Total income and expense | ||||||
| recognised for the year | - | - | - | 20,075 | 635,571 | 655,646 |
| Arising on issue of shares | 919,033 | 3,331,495 | - | - | - | 4,250,528 |
| Share options expense | - | - | - | - | 126,970 | 126,970 |
| -------- | -------- | -------- | -------- | -------- | -------- | |
| Balance at 31 March 2007 | 4,031,255 | 10,970,508 | - | 20,075 | (4,345,317) | 10,676,521 |
| -------- | -------- | -------- | -------- | -------- | -------- |
Statement of changes in equity for 2008
| Share | Share | Warrant | Foreign | Retained | Total | |
| capital | premium | reserve | exchange | earnings | ||
| account | reserve | |||||
| ₤ | ₤ | ₤ | ₤ | ₤ | ₤ | |
| At 1 April 2007 | 4,031,255 | 10,970,508 | - | 20,075 | (4,345,317) | 10,676,521 |
| Loss for year | - | - | - | - | (4,868,927) | (4,868,927) |
| Exchange differences arising on | ||||||
| translation of foreign operations | - | - | - | (456,469) | - | (456,469) |
| -------- | -------- | -------- | -------- | -------- | -------- | |
| Total income and expense | ||||||
| recognised for the year | - | - | - | (456,469) | (4,868,927) | (5,325,396) |
| Arising on issue of shares | 556,481 | 3,511,341 | - | - | - | 4,067,822 |
| Arising on issue of warrants | - | - | 275,000 | - | - | 275,000 |
| Share options expense | - | 29,853 | - | - | 777,141 | 806,994 |
| -------- | -------- | -------- | -------- | -------- | -------- | |
| Balance at 31 March 2008 | 4,587,736 | 14,511,702 | 275,000 | (436,394) | (8,437,103) | 10,500,941 |
| -------- | -------- | -------- | -------- | -------- | -------- | |
Consolidated Balance Sheet as at 31 March 2008
| 2008 | 2007 | ||
| £ | £ | ||
| Assets | |||
| Non current assets | |||
| Property, plant and equipment | 99,343 | 51,730 | |
| Intangible Assets | 10,148,333 | 11,649,759 | |
| Financial Assets | 200,000 | 200,000 | |
| -------- | -------- | ||
| 10,447,676 | 11,901,489 | ||
| -------- | -------- | ||
| Current assets | |||
| Inventories | 10,515 | 1,965 | |
| Trade and other receivables | 29,116 | 43,332 | |
| Cash and cash equivalents | 2,190,050 | 1,197,855 | |
| -------- | -------- | ||
| 2,229,681 | 1,243,152 | ||
| -------- | -------- | ||
| Total Assets | 12,677,357 | 13,144,641 | |
| -------- | -------- | ||
| Liabilities | |||
| Current liabilities | |||
| Trade and other payables | 380,246 | 169,695 | |
| Non-current liabilities | |||
| Deferred tax liability | 1,796,170 | 2,298,425 | |
| -------- | -------- | ||
| Total liabilities | 2,176,416 | 2,468,120 | |
| Capital and reserves attributable to equity | |||
| holders of the Company | |||
| Share capital | 4,587,736 | 4,031,255 | |
| Warrant Reserve | 275,000 | - | |
| Share premium account | 14,511,702 | 10,970,508 | |
| Foreign Exchange translation reserve | (436,394) | 20,075 | |
| Retained Earnings | (8,437,103) | (4,345,317) | |
| -------- | -------- | ||
| Shareholders' funds | 10,500,941 | 10,676,521 | |
| -------- | -------- | ||
| Total equity and liabilities | 12,677,357 | 13,144,641 | |
| -------- | -------- |
Consolidated cash flow statement for the year ended 31 March 2008
| 2008 | 2007 | |
| £ | £ | |
| Operating activities | ||
| Loss before tax | (5,258,381) | (2,003,843) |
| Adjustments for :- | ||
| Share of associate | - | 526,481 |
| Finance income | (119,985) | (106,373) |
| Finance cost | - | 353 |
| Depreciation | 43,623 | 17,492 |
| Amortisation | 2,181,438 | 869,385 |
| Share option expense | 806,994 | 126,970 |
| Foreign exchange movements | (4,076) | 26,426 |
| -------- | -------- | |
| Cash from operating activities before changes in working capital | (2,350,387) | (543,109) |
| Reduction in trade and other receivables | 14,216 | 1,023 |
| Increase in inventories | (8,550) | (1,965) |
| Increase/(Reduction) in trade and other payables | 210,551 | (91,975) |
| Interest received | 119,985 | 106,373 |
| Interest paid | - | (353) |
| -------- | -------- | |
| Cash generated from operations | (2,014,185) | (530,006) |
| Investing activities | ||
| Acquisition of subsidiary, net of cash acquired | - | (685,174) |
| Internally generated intangible asset | (1,245,207) | (350,286) |
| Acquisition of tangible fixed assets | (91,236) | (50,237) |
| -------- | -------- | |
| (3,350,628) | (1,615,703) | |
| Financing Activities | ||
| Cash inflow from issue of new shares | 4,427,143 | - |
| Share issue costs | (84,320) | - |
| -------- | -------- | |
| 4,342,823 | - | |
| Decrease in cash and cash equivalents | 992,195 | (1,615,703) |
| Cash and cash equivalents at beginning of year | 1,197,855 | 2,813,558 |
| -------- | -------- | |
| Cash and cash equivalents at end of year | 2,190,050 | 1,197,855 |
| -------- | -------- |
Notes forming part of the consolidated financial statements for the year ended 31 March 2008
1. Basis of preparation
These financial statements have been prepared in accordance with International Financial Reporting Standards (collectively IFRS) issued by the International Accounting Standards Board (IASB) as adopted by the European Union ("adopted IFRSs"), and are in accordance with the IFRS as issued by the IASB.
The financial statements have been prepared on a going concern basis as the Board believe the Group have adequate resources to continue in operational existence for the foreseeable future.
2. Segmental analysis
The Group's primary and secondary formats for reporting segment information are shown below. The primary operations segment is based in the USA; the head office primary segment is based in the UK. The differing geographical locations being the secondary segment overlap completely with the differing nature of the business segments.
| 2008 Business Segments | Operations | Head Office | Unallocated | Consolidated |
| £ | £ | £ | £ | |
| Revenue | 31,485 | - | - | 31,485 |
| -------- | -------- | -------- | -------- | |
| Gross Profit | 31,078 | - | - | 31,078 |
| Net Finance Income | - | - | 119,985 | 119,985 |
| Net Tax Credit | - | - | 389,454 | 389,454 |
| Net loss for the year | (3,954,573) | (1,423,793) | 509,439 | (4,868,927) |
| Segment assets | 8,488,295 | 2,392,892 | 1,796,170 | 12,677,357 |
| Segment liabilities | 297,186 | 83,060 | 1,796,170 | 2,176,416 |
| -------- | -------- | -------- | -------- | |
| Costs to acquire plant property and equipment | 91,236 | - | - | 91,236 |
| Costs to acquire intangible assets | 1,245,207 | - | - | 1,245,207 |
| Depreciation and amortisation | 2,223,949 | 1,112 | - | 2,225,061 |
| Share based payments charged | - | 806,994 | - | 806,994 |
| -------- | -------- | -------- | -------- | |
All sales were to external customers.
| 2007 Business Segments | Operations | Head Office | Unallocated | Consolidated |
| £ | £ | £ | £ | |
| Revenue | 269,804 | 3,674 | - | 273,478 |
| -------- | -------- | -------- | -------- | |
| Gross Profit | 261,394 | 3,674 | - | 265,068 |
| Net Finance Income | - | - | 106,373 | 106,373 |
| Net Tax Credit | - | - | 171,524 | 171,524 |
| Net loss for the year | (879,850) | (1,230,366) | 277,897 | (1,832,319) |
| Segment assets | 8,022,101 | 2,824,115 | 2,298,425 | 13,144,641 |
| Segment liabilities | 95,102 | 74,593 | 2,298,425 | 2,468,120 |
| -------- | -------- | -------- | -------- | |
| Costs to acquire plant property and equipment | 48,694 | 1,543 | - | 50,237 |
| Costs to acquire intangible assets | 350,286 | - | - | 350,286 |
| Depreciation and amortisation | 885,996 | 882 | - | 886,877 |
| Share based payments charged | - | 126,970 | - | 126,970 |
| -------- | -------- | -------- | -------- |
All sales were to external customers.
3. Taxation on profits from ordinary activities
| 2008 | 2007 | |||
| £ | £ | |||
| Current tax credit | ||||
| UK corporation tax and income tax of overseas operations on profits for the year | - | - | ||
| Adjustments for under/(over) provision in prior periods. | - | - | ||
| ________ | ________ | |||
| Deferred tax credit | ||||
| Release of provision | (389,454) | (171,524) | ||
| ________ | ________ | |||
| Total tax credit | (389,454) | (171,524) | ||
| ________ | ________ | |||
| 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 profits for the year are as follows | ||||
| 2008 | 2007 | |||
| £ | £ | |||
| Loss before tax | 5,258,381 | 2,003,843 | ||
| Expected tax charge based on the standard rate of corporation tax in the UK of 30% (2007 - 30%) | (1,577,514) | (601,153) | ||
| Expenses not deductible for tax purposes | 768,108 | 245,632 | ||
| Capital allowances for year in deficit/(excess) of depreciation | (74) | (74) | ||
| Exercise of share options | - | |||
| Increase in carried forward | 809,480 | 355,592 | ||
| Deferred tax release | (389,454) | (171,524) | ||
| ________ | ________ | |||
| Total tax credit for the year | (389,454) | (171,524) | ||
| ________ | ________ | |||
The Group is required to estimate the income tax in each of the jurisdictions in which it operates. This requires an estimation of the current tax liability together with an assessment of the temporary differences which arise as a consequence of different accounting and tax treatments. These temporary differences result in deferred tax assets or liabilities which are included within the balance sheet. Deferred tax assets and liabilities are measured using substantially enacted tax rates expected to apply when the temporary differences reverse. Management judgement is required to determine the total provision for income tax. Amounts accrued are based on management's interpretation of country specific tax law and the likelihood of settlement.
Factors that may affect future tax charges
Deferred tax assets relating to UK revenue losses and UK capital losses of £1,875,540 and £1,934,399 respectively (2007: £1,437,457 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 £1,042,762 (2007: £364,854) 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 million, however this is subject to an annual limitation which is estimated at $250,000 per year. At the balance sheet date the accrued potential losses claimable are estimated at $500,000 (2007 - $250,000).
4. Loss per share
Basic
The calculation of earnings per share is based on the loss for the year of £4,868,927 (2007: loss £1,832,319) and on 446,268,077 (2007: 350,501,448) ordinary shares, being the weighted average number of ordinary shares in issue during the year.
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. 65,580,702 options (2007: 35,553,804) and 31,193,654 (2007: 3,693,654) warrants have been excluded from this calculation as this would reduce the loss per share.
5. Post Balance Sheet Events
The Group raised £1.8 million (£1.749 million net of expenses), via a private placing of 45 million shares at 4 pence per share on 19 August 2008.
6. Report and accounts
The Company's report and accounts for the year ended 31 March 2008 will be available on www.Vialogy.com today and will be posted to shareholders on 30 September 2008. Photocopies of the report and accounts for the year ended 31 March 2008 are available from the Company's registered address.
Further information from:
ViaLogy
Robert W Dean, President & CEO - US +1 626-296-6337 (mobile: +1 703-589-3807)
Terry Bond, Chairman - UK & Europe +44 (0) 1235-834734
Nominated Advisor (Seymour Pierce)
Mark Percy +44 (0) 20-7107-8000
Stockbroker - St. Helen's Capital PLC +44 (0) 20-7628 5582
PR Consultants - Redleaf Communications
Emma Kane / Samantha Robbins +44 (0) 20-7822-0200