VPC Venture Prod.

+------------------------------+--------------------+---------------+--------------+ 
 
 
All subsidiary undertakings are consolidated in the Group financial statements. 
In the financial statements of the Company, shares in subsidiary undertakings 
are stated at cost. 
 
 
13.    Share-Based Payments 
 
 
The Group currently has various share-based payment schemes for its employees, 
details of which are given in the Directors' Remuneration Report. 
 
 
The charge in the Group income statement for these schemes are as follows: 
 
 
+------------------------------------------------+-------------+------------+ 
|                                                |        2008 |       2007 | 
+------------------------------------------------+-------------+------------+ 
|                                                |     GBP'000 |    GBP'000 | 
+------------------------------------------------+-------------+------------+ 
|   Long Term Share Incentive Plans              |       1,667 |      1,338 | 
+------------------------------------------------+-------------+------------+ 
|   Bonus Plans and Share Incentive Plans        |       2,261 |      3,643 | 
+------------------------------------------------+-------------+------------+ 
|                                                |       3,928 |      4,981 | 
+------------------------------------------------+-------------+------------+ 
 
 
2006 Long Term Share Incentive Plan 
 
 
2006 Provisional Award 
 
 
The performance conditions set for the 2006 provisional award, covering the 
performance period 1 January 2006 to 31 December 2008, have not been met 
therefore no awards will vest under this scheme. Under IFRS 2, fair values set 
at the start of the scheme include consideration for market related performance 
conditions. This element of the fair value is not revisited regardless of 
changes in non market performance conditions. 
 
 
There were 12 employees participating in this scheme at 31 December 2008. These 
awards were due to vest on 31 December 2010. In 2006, 828,323 shares were 
awarded under the 2006 provisional award with an average fair value of GBP5.03. 
At 31 December 2008, the average fair value was GBP2.93. 
 
 
2007 Provisional Award 
 
 
It is currently considered that the award made in 2007, covering the performance 
period 1 January 2007 to 31 December 2009, is unlikely to meet its performance 
conditions. This will be formally determined in early 2010. As with the 2006 
award, market related performance conditions set at the start of the scheme have 
not been revisited. 
 
 
There are currently 15 employees participating in this scheme. Awards are 
provisional because they are dependent on the performance targets being met and 
also on continuing employment of the participants. All outstanding awards under 
the LTIP will vest after 31 December 2011, subject to all performance targets 
being met and the individuals remaining in employment. 
 
 
In 2007, 627,624 shares were awarded under the 2007 provisional award with an 
average fair value of GBP5.06. At 31 December 2008, the average fair value was 
GBP2.79. 
 
 
2008 Long Term Share Incentive Plan 
 
 
There are currently 27 employees participating in this scheme. For the purposes 
of calculating the fair value of the awards, subject to market-based performance 
conditions, a binomial pricing model has been used. The share price volatility 
of 47% is based on the historical data of the Group. All outstanding awards 
under the LTIP will vest after 31 December 2012, subject to all performance 
targets being met and the individuals remaining in employment. 
 
 
The risk free rate of return of 5.5% is based on the implied yield available on 
zero coupon gilts, with a term remaining equal to the expected lifetime of the 
awards. A dividend yield of 1.3% is used in the calculation. 
 
 
In 2008, 8,321,250 shares were awarded under the 2008 LTIP with an average fair 
value of GBP4.47. 
 
 
Employee Annual Bonus Plan 
 
 
From 1 January 2008, all staff including Executive Directors and senior managers 
have been eligible to participate in the EABP and there will no longer be a 
separate ADSBP. Previously, staff excluded from participation in the ADSBP were 
eligible to participate in the EABP. The scheme comprises both share and cash 
awards, as individuals awarded bonuses under the EABP can elect to take a 
proportion of the bonus in cash and the remaining bonus as deferred shares. 
 
 
Shares in respect of the 2008 award will be released on 1 January 2011 (2007: 1 
January 2010). The estimated proportion of awards to be taken as shares and cash 
are 65% and 35% respectively (2007: 50% shares and 50% cash). 
 
 
For the purposes of calculating the fair value of the share-based awards, a 
binomial pricing model has been used. The share price volatility used of 47% 
(2007: 34%), the risk free rate of return of 4.5% (2007: 5.6%) and the dividend 
yield of 1.3% (2007: 0%) are derived in a consistent manner to those used for 
the 2007 LTIP. The charge for awards to be taken in shares is calculated using a 
fair value of GBP102 per GBP100 of bonus to be taken as shares (2007: GBP103 per 
GBP100 of bonus). 
 
 
Annual Deferred Share Bonus Plan 
 
 
Within the ADSBP 2007, there were 16 Executive Directors and senior manager. The 
ADSBP was first introduced in 2005. The scheme comprised both share and cash 
awards as individuals awarded bonuses under the ADSBP could elect to take a 
proportion of the bonus in cash and the remaining bonus as deferred shares. From 
1 January 2008, all staff including Executive Directors and senior managers have 
been eligible to participate in the EABP and there will no longer be a separate 
ADSBP. 
 
 
Other Schemes 
 
 
Details of the Group's other share-based plans are included in the Directors' 
Remuneration Report. 
 
 
In respect of these plans, 71,458 (2007: 61,110) shares were granted during the 
year with a weighted average fair value of GBP6.21. 
 
 
51,805 options were exercised during the year (2007: 2,696,220) and 6,250 
options lapsed during the year (2007: 4,250). The weighted average price of 
options exercised during the year was GBP1.18 (2007: GBP0.74). The number of 
options to subscribe for shares outstanding at 31 December was 144,075 (2007: 
202,130). The range of exercise prices for options outstanding at 31 December 
was GBP0.84 to GBP7.75 (2007: GBP0.44 to GBP5.88). The weighted average 
remaining contractual life of outstanding share options is 4.7 years (2007: 4.5 
years). 
 
 
The charge in the Group income statement for these schemes is GBP115,000 (2007: 
GBP280,000). 
National Insurance credits relating to these schemes totalled GBP196,000 (2007: 
GBP9,000 credits). 
 
 
14.    Inventories 
+-----------------------------------+---------+---------+---------+----------+ 
|                                   |      Group        |      Company       | 
+-----------------------------------+-------------------+--------------------+ 
|                                   |    2008 |    2007 |    2008 |     2007 | 
+-----------------------------------+---------+---------+---------+----------+ 
|                                   | GBP'000 | GBP'000 | GBP'000 |  GBP'000 | 
+-----------------------------------+---------+---------+---------+----------+ 
| Crude oil                         |   3,043 |       - |       - |        - | 
+-----------------------------------+---------+---------+---------+----------+ 
| Materials and supplies            |   1,509 |   1,721 |       - |        - | 
+-----------------------------------+---------+---------+---------+----------+ 
|                                   |   4,552 |   1,721 |       - |        - | 
+-----------------------------------+---------+---------+---------+----------+ 
 
 
15.    Trade and Other Receivables 
 
 
The fair value of trade and other receivables are as follows: 
 
 
+-----------------------------------+---------+---------+---------+----------+ 
|                                   |      Group        |      Company       | 
+-----------------------------------+-------------------+--------------------+ 
|                                   |    2008 |    2007 |    2008 |     2007 | 
|                                   | GBP'000 | GBP'000 | GBP'000 |  GBP'000 | 
+-----------------------------------+---------+---------+---------+----------+ 
|                                   |         |         |         |          | 
+-----------------------------------+---------+---------+---------+----------+ 
| Amounts falling due within one    |         |         |         |          | 
| year:                             |         |         |         |          | 
+-----------------------------------+---------+---------+---------+----------+ 
| Trade receivables - net           |  50,651 |  49,690 |       - |        - | 
+-----------------------------------+---------+---------+---------+----------+ 
| Other debtors and accrued income  |  66,582 |  48,636 |   5,038 |      346 | 
+-----------------------------------+---------+---------+---------+----------+ 
| Prepayments                       |   1,683 |   8,998 |       - |        - | 
+-----------------------------------+---------+---------+---------+----------+ 
| Group relief - due from           |       - |       - |   5,763 |        - | 
| subsidiary undertakings           |         |         |         |          | 
+-----------------------------------+---------+---------+---------+----------+ 
|                                   | 118,916 | 107,324 |  10,801 |      346 | 
+-----------------------------------+---------+---------+---------+----------+ 
|                                   |         |         |         |          | 
+-----------------------------------+---------+---------+---------+----------+ 
| Falling due after one year:       |         |         |         |          | 
+-----------------------------------+---------+---------+---------+----------+ 
| Amounts due from subsidiary       |       - |       - |  42,634 |  153,247 | 
| undertakings                      |         |         |         |          | 

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