Final Results

31 December 2013

Concha PLC

("Concha" or "The Group")

Final Results

Concha (AIM: CHA), the AIM quoted investment company focussed on investing in media, communications and technology companies, announces its audited final results for the year ended 30 June 2013.

Enquiries:

Concha plc [email protected]

Chris Akers, Executive Chairman

Strand Hanson Limited (Nominated Adviser and Joint Broker) 020 7409 3494

James Harris

Andrew Emmott

Ritchie Balmer

PeterHouse Corporate Finance (Joint Broker) 020 7926 0935

Jon Levinson

Lucy Williams

OPERATIONS AND FINANCE REVIEW

Operational Review

As at 30 June 2013, Concha's investment portfolio consisted of a 40% equity holding in an unquoted investment, Moshen Limited ("Moshen"), a specialist developer and distributor for digital applications focusing on the sports, games and entertainment sectors, which it acquired in April 2013. On 23 August 2013, the Board of Moshen suspended its Chief Executive Officer, pending an investigation in to a number of apparent financial irregularities pertaining to an undisclosed material contract which pre-dated Concha's investment. On 6 September 2013, a firm of insolvency practitioners was appointed to Moshen in order to assess the potential recovery of value for Concha, Moshen and its creditors and shareholders. Having been subsequently informed by the administrator that any security over the assets of Moshen in connection with the advance of loans to the Moshen business at the time of the original investment would be disregarded, Concha has brought an action against certain legal advisers for professional negligence and the failure to validly register a security interest associated with the loans in a timely manner. As a consequence of the above, full provision of £0.72m has been made against the cost of both the equity investment and loan amounts advanced to the Moshen business.

On 13 March 2012, Concha entered into a loan facility agreement with Churchill Media Limited ("CML") for the sum of £0.75m. On 13 March 2013, the terms of the loan were amended, such that, the loan fell due for payment on or before the 30 September 2013. The loan bears interest at the rate of 6% above LIBOR and is secured against the assets of CML, which comprise investments in a number of TMT and media businesses. At the 30 June 2013 the outstanding balance of the loan totalled £0.75m plus accrued interest of £0.06m. However, as a result of CML failing to repay the outstanding balance and accrued interest relating to this loan by 30 September 2013, a provision of £0.81m has been made in these financial statements against amounts owed by CML.

Financial Review

The Company's financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU.

The loss before tax of £1.85m (2012: £0.81m) includes exceptional items of £1.54m, relating to the loss on investment in Moshen and the full impairment on the loan advance to CML.

At 30 June 2013, Concha's investment portfolio was valued at £0.013m, all of which related to unquoted investments. Cash at bank amounted to £0.084m as at 30 June 2013 and the Company had no debt.

The Board is not recommending the payment of a final dividend to shareholders (2012: £Nil).

The Company's shares traded in the range 0.27p to 0.30p during the year ended 30 June 2013. The closing share price of the Company was 0.30p as at 30 June 2013.

Outlook

The failure of the Moshen business and the CML investment has had a significant impact on the Company's ability to continue with its current strategy. In the near term Concha will seek to conclude matters in relation to both the loan advanced to CML and the action against its advisers in respect of the failure to register a valid security interest in the loan advances made to Moshen.

Russell Backhouse

Director

30 December 2013

DIRECTORS' REPORT

Concha PLC is a public company incorporated in England and Wales, and quoted on AIM.

PRINCIPAL ACTIVITIES

The principal activity of the Group is an "investment vehicle".

BUSINESS REVIEW AND FUTURE DEVELOPMENTS

The Group trading loss for the year, after taxation and minority interests, was £1.85 million (2012: £0.81 million).

Information on future developments is included in the Operations and Finance Review.

The directors are precluded from declaring a dividend for the year (2012: £Nil).

KEY PERFORMANCE INDICATORS

In the opinion of the directors there are no key performance indicators whose disclosure is necessary for an understanding of the development, performance or position of the business.

DIRECTORS

The following directors have held office during the year.

Mark Battles (resigned 28 December 2012)

Marcus Yeoman (resigned 26 December 2013)

Chris Akers (appointed 31 December 2012)

Russell Backhouse (appointed 22 May 2013)

DIRECTORS' INTERESTS IN SHARES

Directors' interests in the shares of the Company, including family interests, were as follows:

* Mark Battles (resigned 28 December 2012)

** Marcus Yeoman (Resigned 26 December 2013)

CREDITOR PAYMENT POLICY

The Group's policy is to agree terms of transactions, including payment terms and to ensure that, in the absence of dispute, all suppliers are dealt with in accordance with its standard payment practice whereby all outstanding trade accounts are settled within the term agreed with the supplier at the time of the supply or otherwise 30 days from receipt of the relevant invoice. The number of days outstanding between receipt of invoices and date of payment calculated by reference to the amount owed to trade creditors at the year end as a proportion of the amounts invoiced by suppliers during the year, was 58 days (2012: 42 days).

POLITICAL AND CHARITABLE CONTRIBUTIONS

No donations for political or charitable purposes have been made by the Group or the Company during the year (2012: £Nil).

EMPLOYEES

The Group continues to give full and fair consideration to applications for employment made by disabled persons, having regard to their respective aptitudes and abilities. The policy includes, where practicable, the continued employment of those who may become disabled during their employment and the provision of training and career development and promotion, where appropriate. The Group has continued its policy of employee involvement by making information available to employees on matters of concern to them.

SUBSTANTIAL SHAREHOLDINGS

As at 19th December 2013, the Company has been notified of the following interests of 3% or more in the issued ordinary share capital of the Company:

STATEMENT AS TO DISCLOSURE OF INFORMATION TO AUDITORS

The directors who were in office on the date of approval of these financial statements have confirmed that, as far as they are aware, there is no relevant audit information of which the auditors are unaware. Each of the directors have confirmed that they have taken all steps that they ought to have taken as directors in order to make themselves aware of any relevant audit information and to establish that it has been communicated to the auditor.

DIRECTORS' INDEMNITY INSURANCE

Directors' and Officers' liability insurance is held by the Group.

POST BALANCE SHEET EVENTS

On 7 August 2013, 182,499,999 0.1p Ordinary shares were issued for a cash consideration of £638,750. In conjunction with the placing of Ordinary shares, the Company issued 45,624,999 warrants, representing 1 warrant for every 4 shares issued, exercisable at a price of 0.35p per share and with an exercise period of 5 years from the date of issue.

On 8th August 2013, the company acquired a 30% holding in The Works, The Complete Design Facility Limited ("The Works"), a leading specialist media design agency focusing on the sports sector, dealing with branding, motion and events for a cash consideration of £400,000.

On 6 September 2013, a firm of insolvency practitioners was appointed to Moshen, a business in which the Company held a 40% equity interest.

On 27 December 2013, 50,000,000 0.1p Ordinary shares were issued for a cash consideration of £100,000. In conjunction with the placing of Ordinary shares, the Company issued 50,000,000 warrants, representing 1 warrant for every share issued, exercisable at the issue price of 0.25p per share and with an exercise period of 5 years from the date of issue. On the same day the Company issued a put and call option over a further 50,000,000 0.1p Ordinary shares exercisable on or before the 14 February 2014. In the event of exercise, the Company will issue a further 50,000,000 warrants, on the same terms as those set out above.

On 26 December 2013, Marcus Yeoman resigned as a director of the Company.

Other than the above and those set out in the notes to these financial statements, at the date these financial statements were approved, being 30 December 2013, the Directors were not aware of any other significant post balance sheet events.

By order of the Board

Russell Backhouse

Director

CORPORATE GOVERNANCE STATEMENT

The policy of the Board is to manage the affairs of the Company in accordance with the principles underlying the UK Corporate Governance Code.

The Board of Directors is accountable to shareholders for the good corporate governance of the Group. The principles of corporate governance and a code of best practice are set out in the Combined Code. Under the rules of AIM market the Group is not required to comply in full with the Code nor to state where it derogates from it. The Board considers that the size and nature of the Group does not warrant compliance with all the Code's requirements. This statement sets out how the principles of the Code are applied to Concha PLC.

BOARD STRUCTURE

During the year the Board comprised two executive directors and one non-executive director.

There are no matters specifically reserved to the Board for its decision, although board meetings are held on a regular basis and effectively no decision of any consequence is made other than by the directors. All directors participate in the key areas of decision-making, including the appointment of new directors.

The Board is responsible to shareholders for the proper management of the Group. A statement of directors' responsibilities in respect of the accounts is set out below.

To enable the Board to discharge its duties, all directors have full and timely access to all relevant information.

There is no agreed formal procedure for the directors to take independent professional advice at the Company's expense.

All directors submit themselves for re-election at the Annual General Meeting at regular intervals. There were no specific terms of appointment for the non-executive director.

The following committees, which have written terms of reference, deal with specific aspects of the Group's affairs.

AUDIT COMMITTEE

The Audit Committee comprises of Chris Akers (Chairman of the committee) and Russell Backhouse. Meetings can also be attended by the external auditors.

The remit of the Committee is to review:

· the appointment and performance of the external auditors

· the independence of the auditors

· remuneration for both audit and non-audit work and nature and scope of the audit with the external auditors

· the interim or final financial report and accounts

· the external auditors management letter and management's responses

· the systems of risk management and internal controls

· operating, financial and accounting policies and practices, and

· to make related recommendations to the Board

The Audit Committee meets once a year.

REMUNERATION COMMITTEE

The Remuneration Committee comprises Chris Akers (Chairman of the committee), and Russell Backhouse and is responsible for making recommendations to the Board on the Company's framework of Executive remuneration and its cost. The Committee determines the contract terms, remuneration and other benefits for the directors.

NOMINATION COMMITTEE

There is no separate Nomination Committee at the moment due to the size of the Board. All directors are subject to re-election at regular intervals.

INTERNAL CONTROL 

The Board acknowledges its responsibility for establishing and monitoring the Company's systems of internal control. Although no system of internal control can provide absolute assurance against material misstatement or loss, the Company's systems are designed to provide the directors with reasonable assurance that problems are identified on a timely basis and dealt with appropriately.

The Group maintains a comprehensive process of financial reporting. The annual budget is reviewed and approved before being formally adopted. Other key procedures that have been established and which are designed to provide effective control are as follows:

• management structure - where the Board meets regularly to discuss all issues affecting the Company; and

· investment appraisal - the Company has a clearly defined framework for investment appraisal and approval is required by the Board where appropriate.

The Board regularly reviews the effectiveness of the systems of internal control and considers the major business risks and the control environment. No significant control deficiencies have come to light during the period and no weakness in internal financial control have resulted in any material losses, contingencies or uncertainties which would require disclosure as recommended by the guidance for directors on reporting on internal financial control.

The Board considers that in light of the control environment described above, there is no current requirement for a separate internal audit function.

RELATIONS WITH SHAREHOLDERS

The chairman is the Company's principal spokesperson with investors, fund managers, the press and other interested parties. At the Annual General Meeting (AGM), private investors are given the opportunity to question the Board.

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

GOING CONCERN

The directors have prepared cash flow projections for the 12 months to 31 December 2014. Having taken into account all known costs and the post balance sheet fund raise referred to above, they are of the opinion that there is sufficient headroom, having incorporated preliminary costs in association with any acquisition, to continue as a going concern for the foreseeable future.

DIRECTORS' REMUNERATION REPORT

Remuneration Committee

The members of the committee are Chris Akers and Russell Backhouse. Details of the remuneration of each director are set out below. Executive remuneration packages are prudently designed to attract, motivate and retain directors of high calibre, who are needed to drive and maintain the Group's position as a market leader and to reward them for enhancing value to the shareholder.

Remuneration Policy

Details of individual remuneration of directors for the year ended 30 June 2013 are set out below.

Warrants

A summary of warrants granted to the directors is set out below and reflected in note 12 to the financial statements.

* - resigned 26 December 2013

** - resigned 28 December 2012

*** - appointed 31 December 2012

**** - appointed 22 May 2013

Pension arrangements

There are no pension arrangements in the Group.

Directors' contracts

It is the Company's policy that the executive director should have a contract with an indefinite term providing for a maximum of six months' notice. In the event of early termination, the directors' contracts provide for compensation, where appropriate, up to a maximum of basic salary for the notice period.

Non-executive directors

The fees of the non-executive director is determined by the Board as a whole having regard to the commitment of time required and the level of fees in similar companies.

Directors' emoluments

APPROVAL

This report was approved by the Board of Directors and authorised for issue on 30 December 2013.

STATEMENT OF DIRECTORS' RESPONSIBILITIES

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

UK Company law requires the directors to prepare Group and Company Financial Statements for each financial year. Under that law the directors are required to prepare Group financial statements in accordance with International Financial Reporting Standards ("IFRS") as adopted by the EU and have elected to prepare the company financial statements in accordance with International Financial Reporting Standards ("IFRS") as adopted by the EU.

The Group financial statements are required by law and IFRS adopted by the EU to present fairly the financial position and performance of the group; the Companies Act 2006 provides in relation to such financial statements that references in the relevant part of that Act to financial statements giving a true and fair view are references to their achieving a fair presentation.

The Company financial statements are required by law to give a true and fair view of the state of affairs of the company.

In preparing each of the group and company financial statements, the directors are required to:

• select suitable accounting policies and then apply them consistently;

• make judgements and estimates that are reasonable and prudent;

• state whether they have been prepared in accordance with IFRSs adopted by the EU;

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

The directors are responsible for keeping proper accounting records which disclose with reasonable accuracy at any time the financial position of the Company and to 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 Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

The directors are also responsible for the maintenance and integrity of the Concha PLC website.

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

INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF CONCHA PLC

We have audited the financial statements of Concha PLC for the year ended 30 June 2013 which comprise the Consolidated Statement of Comprehensive Income, the Consolidated and Parent Company Statement of Financial Position, the Consolidated and Parent Company Statements of Cash Flows, the Consolidated and Parent Company Statements of Changes in Equity and the related notes 1 to 15. 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 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 Directors' Responsibilities Statement set out above 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 Ethical Standards for Auditors.

Scope of the audit

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 group's and the parent 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 Directors' report to identify material inconsistencies with the audited financial statements. If we become aware of any apparent material misstatements or inconsistencies we consider the implication for our report.

Opinion on financial statements

In our opinion:

• the financial statements give a true and fair view of the state of the Group's and of the Parent Company's affairs as at 30 June 2013 and of the Group's loss for the year then ended;

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

• the financial statements have been prepared in accordance with the requirements of the Companies Act 2006 and, as regards the Group financial statements, Article 4 of the IAS Regulation.

Opinion on other matters prescribed by the Companies Act 2006

In our opinion:

• the part of the Directors' Remuneration Report to be audited has been properly prepared in accordance with the Companies Act 2006; and

• 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:

Under the Companies Act 2006 we are required 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 and the part of the Directors' Remuneration Report to be audited 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.

Ian Cliffe (Senior Statutory Auditor)

for and on behalf of haysmacintyre Statutory Auditors

26 Red Lion Square

London

WC1R 4AG

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

FOR THE YEAR ENDED 30 JUNE 2013

The Company's loss for the year ended 30 June 2013 was £1.83 million (2012: £0.81 million loss). The Company is exempt from publishing its own income statement under section 408 of the Companies Act 2006.

CONSOLIDATED AND COMPANY STATEMENT OF FINANCIAL POSITION

The financial statements were approved and authorised for issue by the Board of Directors on 30 December 2013, and were signed below on its behalf by:-

Russell Backhouse

Director

STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 30 JUNE 2013

STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 30 JUNE 2012

CONSOLIDATED AND COMPANY CASH FLOW STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2013

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2013

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

General information and authorisation of financial statements

Concha PLC is a public limited company incorporated and domiciled in England and Wales under the Companies Act 2006. The address of its registered office is Durham House, 1 Durham House Street, London, WC2N 6HG. The Company's ordinary shares are traded on the AIM Market operated by the London Stock Exchange. The Group financial statements of Concha PLC for the year ended 30 June 2013 were authorised for issue by the Board on 30 December 2013 and the balance sheets signed on the Board's behalf by Mr Russell Backhouse.

The nature of the Group's operations and its principal activities are set out in the Operations and Finance Review above.

Going Concern

The directors have prepared cash flow projections for the 12 months to 31 December 2014. Having taken into account all known costs and the post balance sheet fund raise referred to above and in note 16, they are of the opinion that there is sufficient headroom, having incorporated preliminary costs in association with any acquisition, to continue as a going concern for the foreseeable future.

The financial statements do not contain the adjustments that would be required if the company were unable to continue as a going concern.

Statement of compliance with IFRS

The Group's financial statements have been prepared in accordance with International Accounting Standards and interpretations issued by the International Accounting Standards Board as adopted by the European Union. The principal accounting policies adopted by the Group and Company are set out below.

Basis of consolidation

Where the Company has the power, either directly or indirectly, to govern the financial and operating policies of another entity or business so as to obtain benefits from its activities, it is classified as a subsidiary. The consolidated financial statements present the results of the Company and its subsidiaries ("the Group") as if they formed a single entity. Intercompany transactions and balances between Group companies are therefore eliminated in full.

Business combinations and goodwill

On acquisition, the assets and liabilities of a subsidiary are measured at their fair values at the date of acquisition. Any excess of the cost of acquisition over the fair values of the identifiable net assets acquired is recognised as goodwill.

Revenue recognition

Revenue is recognised to the extent that the right to consideration is obtained in exchange for performance. Payment received in advance of performance is deferred on the balance sheet as a liability and released as services are performed or products are exchanged as per the agreement with the customer.

Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to that asset's net carrying amount.

Foreign currencies

Transactions in currencies other than Sterling are recorded at the rates of exchange prevailing on the dates of the transactions. At each balance sheet date, monetary assets and liabilities that are denominated foreign currencies are retranslated at the rates prevailing on the balance sheet date. Gains and losses arising on retranslation are included in the income statement for the period.

Foreign currencies

On consolidation, the results of overseas operations are translated into sterling at rates approximating to those ruling when the transactions took place. All assets and liabilities of the overseas operations, including goodwill arising on the acquisition of those operations, are translated at the rate ruling at the balance sheet date. Exchange differences arising on translating the opening net assets at opening rate and the results of overseas operations at actual rate are recognised directly in equity (the "foreign exchange reserve").

Taxation

The tax expense represents the sum of the current tax and deferred tax.

The current tax is based on taxable profit for the period. Taxable profit differs from net profit as reported in the income statement because it excludes items of income or expense that are taxable or deductible in other periods and it further excludes items that are never taxable or deductible. The liability for current tax is calculated by using tax rates that have been enacted or substantively enacted by the balance sheet date.

Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amount of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the balance sheet liability method. Deferred tax liabilities are recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary difference arises from goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction which affects neither the tax profit nor the accounting profit.

Deferred tax is calculated at the tax rates that are expected to apply to the period when the asset is realised or the liability is settled. Deferred tax is charged or credited in the income statement, except when it relates to items credited or charged directly to equity, in which case the deferred tax is also dealt with in equity.

Property, plant and equipment

Items of property, plant and equipment are initially recognised at cost and subsequently at depreciated cost. As well as the purchase price, cost includes directly attributable costs and the estimated present value of any future costs of dismantling and removing items.

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

Fixtures and fittings 20 - 33.3% per annum straight line

Office equipment 20 - 33.3% per annum straight line

Provisions

Provisions are recognised for liabilities of uncertain timing or amount that have arisen as a result of past transactions and are discounted at a pre-tax rate reflecting current market assessments of the time value of money and the risks specific to the liability.

Financial instruments

Financial assets and financial liabilities are recognised on the balance sheet when the Group has become a party to the contractual provisions of the instrument

Cash and cash equivalents

Cash and cash equivalents comprise cash in hand, cash at bank and short term deposits with banks and similar financial institutions.

Trade and other receivables

Trade and other receivables do not carry any interest and are stated at their nominal value as reduced by appropriate allowances for estimated irrecoverable amounts.

Financial liability and equity

Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the Company after deducting all of its liabilities.

Trade and other payables

Trade and other payables are non interest bearing and are stated at their nominal value.

Equity instruments

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

Share Warrants

Warrants represent subscription rights for ordinary shares in Concha PLC. The warrant reserve represents the fair value of these warrants, determined using the Black-Scholes valuation model, using assumptions consistent with those used in calculating the fair value of share options.

Subject to the Memorandum and Articles of Association the warrant holder shall be entitled to subscribe to ordinary shares in the Company upon exercise of the warrants at subscription price. Warrants may be exercised in whole or in part (and from time to time) prior to the final exercise date. The warrants are non-transferable.

When the warrants are exercised, the company issues new shares. The proceeds received net of any directly attributable transaction costs are credited to share capital (nominal value) and share premium when the warrants are exercised. When warrants lapse, any amounts credited to the warrants reserve are released to the retained earnings reserve.

Share-based payments

Where share options and warrants are awarded to employees, the fair value of the instruments at the date of grant is charged to the consolidated income statement over the vesting period. Non-market vesting conditions are taken into account by adjusting the number of equity instruments expected to vest at each balance sheet date so that, ultimately, the cumulative amount recognised over the vesting period is based on the number of equity instruments that eventually vest. Market vesting conditions are factored into the fair value of the equity instruments 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 equity instruments are modified before they vest, the increase in the fair value of the equity instruments, measured immediately before and after the modification, is also charged to the consolidated income statement over the remaining vesting period.

When the equity instruments are exercised, the company issues new shares. The proceeds received net of any directly attributable transaction costs are credited to share capital (nominal value) and share premium when the equity instruments are exercised.

When equity instruments lapse, any amounts credited to the warrants reserve are released to the retained earnings reserve.

3. EXCEPTIONAL COSTS

Exceptional costs comprise the following:-

4. STAFF COSTS

The average monthly number of employees (including executive directors) for the year for each of the Group's principal divisions was as follows:

The highest paid director received £45,000 (2012: £102,865) and no directors received any pension contributions during the year (2012: £Nil).

7. DIVIDEND

The directors are precluded from declaring a dividend for the year (2012: £Nil).

8. LOSS PER SHARE

The calculation of the basic and diluted earnings per share is based on the following data:

The denominator for the purpose of calculating the basic earnings per share has been adjusted to reflect all capital raisings.