Final Results

Tricor plc

("Tricor", the "Group" or the "Company")

Final results for the year ended 31 March 2011

Chairman's statement

The Group made a trading loss of £2,648,000, against £484,000 loss in 2010. This was due to the project development in Cambodia and the increased activity in making progress to achieve the Group's strategic objectives.

We continue to be encouraged that the longstanding debtor with regard to our VAT claim will be concluded satisfactorily in the next 12 months.

The Company continues to be in discussions with certain parties relating to the Cambodian forestry project and hopes that those discussions will conclude soon.

The Company has been through significant transition during the current period and following the joint venture transaction concluded recently has proposed an investing policy, details of which have been sent to shareholders (the "Investing Policy"). The board of directors of Tricor (the "Board") intends to develop a strategy in line with the approved Investing Policy, with a view to enhancing shareholder value in the medium to long term.

Messrs Case and Knifton resigned from the Board at the end of March this year, to pursue other activities. Messrs van Kampen-Brooks and Rajpal resigned from the Board on 27 September 2011 following the management buyout/joint venture transaction. We thank them for all their efforts over the years, which have enabled us to make the progress that we have made to date.

Chan Fook Meng

Chairman

27 September 2011

For further information please contact:

For more information, please visit: www.tricor-plc.com

TRICOR PLC

DIRECTORS' REPORT

FOR THE YEAR ENDED 31 MARCH 2011

The directors present their report with the financial statements of the company and the group for the year ended 31 March 2011.

Principal activities

The principal activity of the group in the period under review was that of the export and import of mobile telephones and other electrical equipment and the development of a carbon credit business.

Key performance indicators

Management assesses the cash inflow position on a regular basis by comparison against the cash flow forecasts.

Key risks and uncertainties

Risk is intrinsic to the business both in the nature of the underlying activities over the period and the regulatory environment. The financial risks are discussed in note 3 to the financial statements. Over the period the Group gradually reduced its trading business of selling electronic equipment.

Going forward, the key risks affecting the group would be those relating to the carbon market. Tricor has entered into an exclusive licensing agreement with First Carbon Trust Limited, which has established a trading platform that will service the needs of small and medium-sized enterprises as well as retail investors in the rapidly growing global regulated and voluntary emissions market.

Tricor is seeking to build up businesses or alternatively acquire quoted or unquoted companies in the electronics, carbon and mining/minerals sectors.

The date for the VAT Tribunal has been set in January 2012, and Tricor's legal advisors who are handling the claim remain positive on the prospects for success for Tricor. If Tricor were to lose the claim, then it would have to pay a VAT assessment for approximately £648,000 plus costs.

Review of business and future developments

The results for the period and financial position of the company and the group are as shown in the annexed financial statements. For more information please refer to the Chairman's Statement.

Results and dividends

The consolidated losses for the year are £2,648,000 on routine activities (2010: loss £484,000), which have been allocated against reserves. No dividends will be distributed for the year ended 31 March 2011.

TRICOR PLC

DIRECTORS' REPORT (CONTINUED)

FOR THE YEAR ENDED 31 MARCH 2011

Directors

The directors during the year under review were:

All the directors who are eligible offer themselves for re-election at the forthcoming annual general meeting.

The beneficial interests of the directors holding office at 31 March 2011 in the ordinary shares of the company, according to the register of directors' interests, were as follows:

JW Case had 50,000,000 options outstanding at 31 March 2011.

Substantial shareholders

As at 15 September 2011, the company had been notified of the following beneficial interests in three per cent. or more of the issued share capital:

DIRECTORS' REPORT (CONTINUED)

FOR THE YEAR ENDED 31 MARCH 2011

Directors' remuneration

Remuneration for the directors for the year is summarised as follows:-

Publication of accounts on company website

Financial statements are published on the company's website. The maintenance and integrity of the website is the responsibility of the directors. The directors' responsibility also extends to the financial statements contained therein.

Indemnity of officers

The group may purchase and maintain, for any director or officer, insurance against any liability and the group does maintain appropriate insurance cover against legal action brought against its directors and officers.

Group's policy on payment of creditors

It is the group's normal practice to make payments to suppliers in accordance with agreed terms provided that the supplier has performed in accordance with the relevant terms and conditions.

Employee involvement

The group places considerable value on the involvement of the employees and has continued to keep them informed on matters affecting the group. This is achieved through formal and informal meetings.

Going concern

After making appropriate enquiries, the directors consider that the group has adequate resources to continue in operational existence for the foreseeable future. For this reason they continue to adopt the going concern basis in preparing the financial statements. This is reflected in note 2.1 to the financial statements.

Events after the reporting period

The post balance sheet disclosures required by IAS10 Events after the Reporting Period are disclosed in Note 25.

TRICOR PLC

DIRECTORS' REPORT (CONTINUED)

FOR THE YEAR ENDED 31 MARCH 2011

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. Under that law the directors have, as required by the AIM Rules of London Stock Exchange, elected to prepare the group and parent financial statements in accordance with International Financial Reporting Standards as adopted for use in the European Union. Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the company and group and of the profit or loss of the group for that period. In preparing these financial statements, the directors are required to:

• select suitable accounting policies and then apply them consistently;

• make judgments and estimates that are reasonable and prudent;

• state whether the group and parent company financial statements have been prepared in accordance with IFRSs as adopted by the European Union subject to any material departures disclosed and explained in the financial statements; and

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

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

STATEMENT AS TO DISCLOSURE OF INFORMATION TO AUDITORS

So far as the directors are aware, there is no relevant audit information (as defined by Section 418 of the Companies Act 2006) of which the company's auditors are unaware and each director has taken all the steps that he ought to have taken as a director in order to make himself aware of any relevant audit information and to establish that the company's auditors are aware of that information

AUDITORS

A resolution to reappoint Jeffreys Henry LLP as auditors of the Company will be put to shareholders at the forthcoming annual general meeting.

On behalf of the board

Chan Fook Meng

Director

27 September 2011

The financial statements were approved and authorised for issue by the board of directors on 27 September 2011 and were signed on its behalf by:

Chan Fook Meng

Director

Share capital (deferred and ordinary) is the amount subscribed for shares at nominal value.

Share premium represents the excess of the amount subscribed for share capital over the nominal value of the respective shares net of share issue expenses.

Other reserves represent a merger reserve and the equity portion of non-interest bearing loans.

Share based payments reserve is described in detail in Note 22 to the accounts.

Retained loss represents the cumulative loss of the group attributable to owners of the parent company.

The comparatives have been restated for the reclassification of the equity portion of the convertible loan notes from creditors due after one year to capital and reserves.

The financial statements were approved and authorised for issue by the board of directors on 27 September 2011 and were signed on its behalf by:

Chan Fook Meng

Director

Share capital (deferred and ordinary) is the amount subscribed for shares at nominal value.

Share premium represents the excess of the amount subscribed for share capital over the nominal value of the respective shares net of share issue expenses.

Other reserves represent a merger reserve and the equity portion of non-interest bearing loans.

Share based payment reserve is described in detail in Note 22 to the accounts.

Retained loss represents the cumulative losses of the Company attributable to owners of the Company.

The comparatives have been restated for the reclassification of the equity portion of the convertible loan notes from creditors due after one year to capital and reserves.

1. GENERAL INFORMATION

Tricor is a company incorporated in England and Wales and quoted on AIM market of the London Stock Exchange. The address of the registered office is Finsgate, 5-7 Cranwood Street, London EC1V 9EE. The principal activity of the Group in the period under review was that of the export and import of mobile telephones and other electrical equipment and the development of a carbon credit business.

2. ACCOUNTING POLICIES

2.1 Going concern

The financial statements have been prepared on the assumption that the Group is a going concern. When assessing the foreseeable future, the directors have looked at a period of 12 months from the date of approval of this report.

The group's business activities, together with the factors likely to affect its future development, performance and position are set out in the Business Review on page 3. In addition note 3 to the financial statements includes the Group's objectives, policies and processes for managing its capital; its financial risk management objectives; and its exposures to credit risk and liquidity risk.

On the basis of the cash balance held at the date of the report and the planned activities in the next 12 months and after making enquiries, the directors have a reasonable expectation that the company and group have adequate resources to continue in operational existence for the foreseeable future. Accordingly, they continue to adopt the going concern basis in preparing the annual report and financial statements.

2.2 Basis of preparation

These financial statements have been prepared in accordance with International Financial Reporting Standards and IFRIC interpretations issued by the International Accounting Standards Board (IASB) as adopted by the European Union and with those parts of the Companies Act 2006 applicable to companies reporting under IFRS. The financial statements have been prepared under the historical cost convention.

The following new standards and amendments to standards are mandatory for the first time for the financial year beginning 1 April 2010.

Ø IFRS 3 (revised), 'Business combinations' and consequential amendments to IAS 27, 'Consolidated and separate financial statements', IAS 28, 'Investments in associates' and IAS 31, 'Interests in joint ventures', effective prospectively to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after 1 July 2009. Management is assessing the impact of the new requirements regarding acquisition accounting, consolidation and associates on the group. The group does not have any joint ventures.

2. ACCOUNTING POLICIES (continued)

2.2 Basis of preparation (continued...)

Ø The revised standard continues to apply the acquisition method to business combinations, with some significant changes. For example, all payments to purchase a business are to be recorded at fair value at the acquisition date, with contingent payments classified as debt subsequently re-measured through the statement of comprehensive income. There is a choice on an acquisition-by-acquisition basis to measure the minority interest in the acquiree either at fair value or at the minority interest's proportionate share of the acquiree's net assets. All acquisition-related costs should be expensed. The Group has applied IFRS 3 (revised) to all business combinations from 1 April 2010.

Ø IAS 27 (revised), 'Consolidated and separate financial statements'(effective from 1 July 2009). The revised standard requires the effects of all transactions with non controlling interests to be recorded in equity if there is no change in control and these transactions will no longer result in goodwill or gains and losses. The standard also specifies the accounting when control is lost. Any remaining interest in the entity is remeasured to fair value and a gain or loss is recognised in profit or loss. The Group has applied IAS 27 (revised) prospectively to transactions with non-controlling interests from 1 April 2010.

Ø IAS 38 (amendment), 'Intangible Assets'. The amendment is part of the IASB's annual improvements project published in April 2009 and the Group will apply IAS 38 (amendment) from the date IFRS 3 (revised) is adopted. The amendment clarifies guidance in measuring the fair value of an intangible asset acquired in a business combination and it permits the grouping of intangible assets as a single asset if each asset has a similar useful economic life. The amendment will not result in a material impact on the Group's financial statements.

Ø IFRIC 17, 'Distributions of non-cash assets to owners', effective for annual periods beginning on or after 1 July 2009. This is not currently applicable to the group, as it has not made any non-cash distributions.

Ø IFRIC 18, 'Transfers of assets from customers', effective for transfers of assets received on or after 1 July 2009. This is not relevant to the group, as it has not received any assets from customers.

The following new standards, amendments to standards and interpretations are mandatory for the first time for the financial year beginning 1 April 2010, but are not currently relevant for the group:

Ø IFRC9 'Reassessment of embedded derivatives and IAS39 'Financial instruments: Recognition and measurement'.

Ø IAS36 (amendments), 'Impairment of assets'.

Ø IFRIC 16, 'Hedges of a net investment in a foreign operation'.

Ø IFRS2 (amendment), 'Group cash-settled share-based payment transactions'.

Ø IFRS 5 (amendment); 'Non-current assets held for sale and discontinued operations'.

Ø IAS32 (amendment) 'Classification of rights issues'.

2. ACCOUNTING POLICIES (continued)

2.2 Basis of preparation (continued...)

The following new standards and amendments to standards and interpretations have been issued, but are not effective for the financial year beginning 1 April 2010 and have not been early adopted:

The group's and parent entity's assessment of the impact of these new standards and interpretations is set out below.

Ø IFRS9 'Financial instruments', issued in November 2009. This standard is the first step in the process to replace IAS39, 'Financial instruments, recognition and measurement'. IFRS9 introduces new requirements for classifying and measuring financial assets and is likely to affect the group's accounting for its financial assets. The standard is not applicable until 1 January 2013 but is available for early adoption. However, the standard has not yet been endorsed by the EU.

Ø IAS24 (revised), 'Related party disclosures', issued in November 2009. It supersedes IAS24, issued in 2003. IAS24 (revised) is mandatory for periods beginning on or after 1 January 2011.

Ø IFRIC19, 'Extinguishing financial liabilities with equity instruments', effective 1 July 2010. The interpretation clarifies the accounting by an entity when the terms of a financial liability are renegotiated and result in the entity issuing equity instruments to a creditor of the entity to extinguish all or part of the financial liability. The group will apply the interpretation from 1 April 2011.

2.3 Consolidation

2.3.1 Subsidiaries

Subsidiaries are all entities over which Tricor has the power to govern the financial and operating policies generally accompanying a shareholding of more than one half of the voting rights. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the group controls another entity. Subsidiaries are fully consolidated from the date on which control is transferred to Tricor. They are de-consolidated from the date that control ceases.

The purchase method of accounting is used to account for the acquisition of subsidiaries by the group. The cost of an acquisition is measured as the fair value of the assets given, equity instruments issued and liabilities incurred or assumed at the date of exchange, plus costs directly attributable to the acquisition. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date, irrespective of the extent of any minority interest. The excess of the cost of acquisition over the fair value of the group's share of the identifiable net assets acquired is recorded as goodwill. If the cost of acquisition is less than the fair value of the net assets of the subsidiary acquired, the difference is recognised directly in the income statement.

Inter-company transactions, balances and unrealised gains on transactions between group companies are eliminated. Unrealised losses are also eliminated but considered an impairment indicator of the asset transferred. Accounting policies of subsidiaries have been changed or adjusted upon consolidation where necessary to ensure consistency with the policies adopted by the Group.

2. ACCOUNTING POLICIES (continued)

2.3.2 Intangibles

Licence

Separately acquired licences are shown at historical cost. Licences have a finite useful life and are carried at cost less accumulated amortisation. Amortisation is calculated using the straight line method to allocate the cost of the licence over its estimated useful life of five years. The licence has not been amortised in the current year as revenue from the licence was generated after the reporting period.

2.4 Impairment of non-financial assets

Assets that have an indefinite useful life, for example goodwill, are not subject to amortisation and are tested annually for impairment. Assets that are subject to amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset's carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset's fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units). Non-financial assets other than goodwill that suffered impairment are reviewed for possible reversal of the impairment at each reporting date.

2.5 Investments

Fixed assets investment is carried at cost less provision for diminution in value. The carrying value is calculated based on the fair value and expected recoverability of the investments.

2.6 Property, plant and equipment

Tangible non-current assets are stated at historical cost less depreciation. Historical cost includes expenditure that is directly attributable to the acquisition of the items.

Subsequent costs are included in the asset's carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the group and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognised. All other repairs and maintenance are charged to the income statement during the financial year in which they are incurred. Depreciation is provided at rates calculated to write off the cost less estimated residual value of each asset over its estimated useful life, at rates between 15% and 33.3% on reducing balances.

The asset's residual values and useful economic lives are reviewed, and adjusted if appropriate, at each balance sheet date. An asset's carrying amount is written down immediately to its recoverable amount if the asset's carrying amount is greater than its estimated recoverable value.

Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised within other losses or gains in the income statement. When revalued assets are sold, the amounts included in other reserves are transferred to retained earnings.

2. ACCOUNTING POLICIES (continued)

2.7 Revenue recognition

Revenue comprises the fair value of the consideration received or receivable for the sale of mobile telephones and electrical equipment in the ordinary course of the group's activities. Revenue is recognised upon receipt of the goods by the customers. Revenue is shown net of value-added tax, returns, rebates and discounts and after eliminating sales within the group.

2.8 Taxation

The tax expense represents the sum of the tax currently payable and deferred tax. The tax currently payable is based on the taxable profit for the year. Taxable profit differed from net profit as reported in the income statement because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The entity's liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the balance sheet date.

2.9 Deferred tax

Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. However, the deferred income tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the balance sheet date and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled.

Deferred income tax assets are recognised to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised.

2.10 Operating leases

Assets held under finance leases are initially recognised as assets of the group at their fair value at the inception of the lease or, if lower, at the present value of the minimum lease payments. The corresponding liability to the lessor is included in the statement of financial position as a finance lease obligation. Lease payments are treated as reduction of the lease obligation on the remaining balance of the liability. Finance expenses are recognised immediately in profit or loss, unless they are directly attributable to qualifying assets, in which case they are capitalised in accordance with the Group's general policy on borrowing costs (see below). Contingent rentals are recognised as expenses in the periods in which they are incurred.

Rental leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments made under operating leases (net of any incentives received from the lessor) are charged to the income statement.

2. ACCOUNTING POLICIES (continued)

2.11 Segment reporting

The Company has adopted IFRS 8, Operating Segments. IFRS 8 requires operating segments to be identified on the basis of internal reports about components of the Company that are regularly reviewed by the chief operating decision maker in order to allocate resources to the segments and to assess their performance. In contrast, the predecessor standard (IAS 14, Segment Reporting) required an entity to identify two sets of segments (business and geographical), using a risks and returns approach, with the entity's 'system of internal financial reporting to key management personnel' serving only as the starting point for the identification of such segments. Following the adoption of IFRS 8, the identification of the Group's reportable segments has not changed (details in Note 5).

2.12 Cash and cash equivalents

Cash and cash equivalents include cash in hand, deposits held on call with banks, other short-term highly liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities on the balance sheet.

2.13 Trade receivables

Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less provision for impairment. A provision for impairment is established when there is objective evidence that the group will not be able to collect all amounts due according to the original terms of the receivables. Significant financial difficulties of the debtor, probability that the debtor will enter bankruptcy or financial reorganisation and default or delinquency in payments are considered indicators that the trade receivable is impaired.

2.14 Trade payables

Trade payables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method.

2.15 Borrowings

Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently stated at amortised cost; any difference between the proceeds (net of transaction costs) and the redemption value is recognised in the income statement over the year of the borrowings using the effective interest method.

Borrowings are classified as current liabilities unless the group has an unconditional right to defer settlement of the liability for at least 12 months after the balance sheet date.

2.16 Financial instruments

Non-derivative financial instruments comprise investments in equity and debt securities, trade and other receivables, cash and cash equivalents, loans and borrowings and trade and other payables.

Non-derivative financial instruments are recognised initially at fair values, plus, for instruments not at fair value through profit or loss, any directly attributable transaction costs, except as described below. Subsequent to initial recognition non-derivative financial instruments are measured as described below.

2. ACCOUNTING POLICIES (continued)

2.16 Financial instruments (continued…)

A financial instrument is recognised when the group becomes a party to the contractual provisions of the instrument. Financial assets are derecognised if the group's contractual rights to the cash flows from the financial assets expire or if the group transfers the financial assets to another party without retaining control or substantially all risks and rewards of the asset. Regular purchases and sales of financial assets are accounted for at trade date, i.e. the date that the group commits itself to purchase or sell the asset. Financial liabilities are derecognised if the group's obligations specified in the contract expire or are discharged or cancelled.

2.17 Fair values

The carrying amounts of the financial assets and liabilities such as cash and cash equivalents, receivables and payables of the group at the balance sheet date approximated their fair values, due to the relatively short term nature of these financial instruments.

The company provides financial guarantees to licensed banks for credit facilities extended to subsidiary companies. The fair value of such financial guarantees is not expected to be significantly different as the probability of the subsidiary company defaulting on the credit lines is remote.

2.18 Share-based compensation

The fair value of the employees', directors' and suppliers' services received in exchange for the grant of the options and warrants are recognised as an expense. The total amount to be expensed over the vesting year is determined by reference to the fair value of the options granted, excluding the impact of any non-market vesting conditions (for example, profitability and sales growth targets). Non-market vesting conditions are included in assumptions about the number of options that are expected to vest. At each balance sheet date, the entity revises its estimates of the number of options that are expected to vest. It recognises the impact of the revision to original estimates, if any, in the income statement, with a corresponding adjustment to equity.

The proceeds received net of any directly attributable transaction costs are credited to share capital (nominal value) and share premium when the options and warrants are exercised.

2.19 Share capital

Ordinary and deferred shares are classified as equity.

Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds.

2. ACCOUNTING POLICIES (continued)

2.20 Functional currency translation

i) Functional and presentation currency

The financial statements are presented in pounds sterling (£), which is both the Group's presentation and functional currency.

ii) Transactions and balances

Foreign currency transactions are translated into the presentational currency using exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the income statement.

2.21 Critical accounting estimates and judgements

The preparation of consolidated financial statements requires the group to make estimates and assumptions that affect the application of policies and reported amounts. Estimates and judgements are continually evaluated and are based on historical experience and other factors including expectations of future events that are believed to be reasonable under the circumstances. Actual results may differ from these estimates. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities are discussed below:

(a) Impairment of intangibles (other than goodwill)

Intangible assets are reviewed for impairment if events or changes in circumstances indicate that the carrying amount may not be recoverable. When a review for impairment is conducted, the recoverable amount is determined based on value in use calculations prepared on the basis of management's assumptions and estimates.

(b) Share-based compensation

The fair value of options and warrants are determined by reference to the fair value of the options granted, excluding the impact of any non-market vesting conditions (for example, profitability and sales growth targets). Non-market vesting conditions are included in assumptions about the number of options that are expected to vest. At each balance sheet date, the entity revises its estimates of the number of options that are expected to vest. It recognises the impact of the revision to original estimates, if any, in the income statement, with a corresponding adjustment to equity.

3. FINANCIAL RISK MANAGEMENT

General objectives, policies and processes

The board has overall responsibility for the determination of the group and company's risk management objectives and policies and, whilst retaining ultimate responsibility for them, it has delegated the authority for designing and operating processes that ensure the effective implementation of the objectives and policies to the group's finance function. The board receives regular reports from the group chief financial officer through which it reviews the effectiveness of the processes put in place and the appropriateness of the objectives and policies it sets.

The group is exposed through its operations to the following financial risks:

• Liquidity risk;

• Credit risk;

• Interest rate risk; and

• Market risk.

The overall objective of the board is to set policies that seek to reduce risk as far as possible without unduly affecting the group and company's competitiveness and flexibility. There have been no substantive changes in the Group's and company's exposure to financial instrument risks, their objectives, policies and processes for managing those risks or the methods used to measure them from previous periods unless otherwise stated in this note. Further details regarding these policies are set out below:

Principal financial instruments

The principal financial instruments used by the group and company, from which financial instrument risk arises are as follows:

• Trade and other receivables;

• Cash and cash equivalents;

• Trade and other payables; and

• Short and long term loans.

Liquidity risk

The group's and company's policy is to ensure that it will always have sufficient cash to allow it to meet its liabilities when they become due. To achieve this aim, they seek to maintain readily available cash balances to meet expected requirements for a period of at least 60 days. The group currently has a good working capital cycle. The business is mainly funded from the long term convertible loan notes of approximately £4.1m, Most of the convertible loan notes are converted into ordinary shares in the year and after the reporting period.

Rolling cash forecasts identifying the liquidity requirements of the group and company are produced frequently. These are reviewed regularly by management and the board to ensure that sufficient financial headroom exists for at least a 12 month period.

Credit risk

The credit risk on liquid funds is limited because the counterparties are banks with investment grade credit ratings assigned by international credit rating agencies.

3. FINANCIAL RISK MANAGEMENT (continued...)

Interest rate risk

The group does not have formal policies on interest rate risk. However, the group's exposure in this area (as at the balance sheet date) was minimal.

The Group's unsecured convertible loan notes totalling £4,110,000 do not carry any interest.

Market risk

The market may not grow as rapidly as anticipated. The group may lose customers to its competitors. The group's major competitors may have significantly greater financial resources than those available to the company. There is no certainty that the group will be able to achieve its projected levels of sales or profitability.

Capital risk management

The Group's objectives when managing capital are to safeguard the group's ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital.

In order to maintain or adjust capital structure, the group may adjust the amount of issuing new shares or sell assets to reduce debt.

The group monitors capital on the basis of the gearing ratio, the ratio; is calculated as net debt divided by total capital. The gearing ratio has increased to 366% from 93% in 2010; the directors are consistently striving to reduce the gearing ratio by converting the convertible loan notes into share capital in the immediate future. The gearing ratios were as follows:

The average monthly number of employees during the period was as follows:

Details of the directors' emoluments:

LEV Knifton charged £45,000 (2010 - £Nil) for management services through his management consultancy company.

For details of share options granted to directors, please see Note 22.

5. Segmental analysis

The group operated in no other geographical location other than the United Kingdom. There is also no segmental area of operations.

The analysis of administrative expenses in the consolidated income statement by nature of expense is as follows:

During the year the Company had entered into a conditional agreement that would result in a reverse takeover of Green Glory Limited, a company registered in the Cayman Islands. The Company had paid £1.3M (USD 2M) as a non-refundable deposit and the acquisition was under conditional agreement to proceed. Events after the year end resulted in the investment not going ahead and the deposit has been written off, but the board continues to work with the vendors of Green Glory Limited with a view to restructuring the transaction, although this will not result in a reverse takeover of the Company.