RNS Number : 8108J
Immersion Technologies Intl PLC
09 December 2008
FOR IMMEDIATE RELEASE 9 December
2008
Immersion Technologies International plc
("Immersion" or "Company")
ANNUAL AUDITED RESULTS ANNNOUNCEMENT
FOR THE YEAR TO 30 JUNE 2008
The Company is pleased to announce the audited results of the Company for the year ended 30 June 2008. These results will be posted to
shareholders by 19th December 2008. Extracts of the audited results are set out below.
Chairman's Statement
The Company has had mixed success over the last 12 months in its progress. The setback for the Company was when Nakamichi Corporation
Limited ("Nakamichi") failed to take product pursuant to its Supply Agreement with the Company. As a result the Company's strategy has
evolved from supplying complete built units to supplying components. There has been some continued interest in the Company's technology from
leading consumer electronics companies when the Company displayed its products recently at the IFA Show in Berlin and the Korean Audio Show.
In order to minimise the cash burn the Company has streamlined its head count and closed its operations in Singapore and China.
FINANCIAL RESULTS
The Group's loss for the year is �2,468,816 (period from 2 March 2006 to 30 June 2007 was �2,627,005), in which it earned sales revenue
of �18,703, license revenue and interest income of �46,666 and �42,061 respectively. During the year the Group spent �73,017 on research and
development and building a broad product range. Amortisation of intangible assets, such as intellectual property, is �245,800 (prior period
was �234,941) for the year and the employee and director remuneration costs totalled �951,489 (prior period was �567,850).
REVIEW OF OPERATIONS
The Technology
The Company has made progress in the evolution of the technology as follows:
Electrostatic Loudspeakers (ESL)
The product development strategy has moved from the manufacturer of complete built units to providing components for customers to add
into their product range as necessary. This strategy has the added value of enabling customers to specify the components which the Company
can then design and supply in reduced lead times.
Conventional Cone Speakers (CCS)
The CCS technology has evolved from large, standalone sub-woofa products to developing smaller complete units for the consumer
electronic industry. In particular the Company has developed a sound bar for use in flat panel TVs. The experience gained from supplying the
CCS technology into the automotive industry has enabled small components to be developed producing audiofile quality sound.
Trade Shows
During the year, the Company exhibited its products at trade shows in Germany and Korea where positive interest was shown for our
Company products. The Company continues to produce sample and prototypes for potential customers in order to obtain a volume order for its
products.
Overseas Facilities
As a result of Nakamichi failing to take manufactured product from the Company, we have decided to shut the manufacturing facility in
China. The Company has however retained a small prototype development centre where its sample and prototypes can be produced cost
efficiently.
Our Singapore sales and account management office for Nakamichi was closed. Headcount across the Group has been reduced to focus on
development of core products.
Nakamichi
The Company signed and executed a design, development and manufacturing contract with Nakamichi dated 22 December 2006 ('the Supply
Agreement') for the supply of the Dragon� Hybrid ESL loudspeakers which was due to have the first shipment in December 2007. This contract
with Nakamichi for supply of products was worth approximately US$12.1 over a two year period with a minimum commitment for US$5.1m.
The Company completed production of more than 100 pairs of the Dragon� Hybrid ESL loudspeakers for Nakamichi pursuant to the Supply
Agreement The first consignment of product was available for collection by Nakamichi on 10 December 2007. However, since that time Nakamichi
has failed to collect and pay the balance for the consignment and has failed to issue further purchase orders as required under the Supply
Agreement. The Company has placed Nakamichi on notice of this contravention and has reserved all its rights. The Company continues to
resolve the matter commercially, failing which it may be required to issue legal proceedings in order to enforce its rights and safeguard
the interests of shareholders.
OUTLOOK
The Company continues to look for ways in which it can exploit the technology. Nakamichi was a setback but the Company is working with
other consumer electronic companies in order to solve their audio issues.
The Company will look at other opportunities in order to preserve shareholder value within the Company and in the meantime we will
actively conserve our cash as much as possible. The directors would like to take this opportunity to thank our shareholders for their
continued support.
David Lenigas
Non Executive Chairman
9 December 2008
Directors' Report
The Directors are pleased to present this year's annual report together with the consolidated financial statements for the period ended
30 June 2008.
Principal Activities
The principal activity of the Group is the product development, design and manufacture of unique and high performance audio solutions.
Business Review and future developments
A review of the current and future development of the Group's business is given in the Chairman's Statement on page 3.
Results and Dividends
Loss on ordinary activities of the Group after taxation amounted to �2.47 million. The Directors do not recommend payment of a
dividend.
Key Performance Indicators
Given the nature of the business and that the Group is in the development phase of operations, the directors are of the opinion that
analysis using KPI's is not appropriate for an understanding of the development, performance or position of our businesses at this time.
Post Balance Sheet events
At the date these financial statements were approved, being 9 December 2008, the Directors were not aware of any significant post
balance sheet events other than those set out in the notes to the financial statements.
Substantial Shareholdings
At 9 December 2008 the following had notified the Company of disclosable interests in 3% or more of the nominal value of the Company's
shares:
Shareholder Number of Shares % of Issued Capital
E D Evans Pty Limited 38,050,000 16.67
Security Transfer Registrars Pty 26,143,749 11.46
CIPAF SA 15,000,000 6.57
Miami Properties Plc 12,000,000 5.26
CIM Special Situations Fund Limited 10,614,285 4.65
Lindsay Alfred Champion 8,150,000 3.57
Vidacos Nominees Limited 7,975,000 3.49
Directors
The names of the Directors who served during the year are set out below:
Director Date of Appointment Date of Resignation
Executive Directors
Kiran Morzaria - Executive Director
Craig Evans - Executive Director 29 January 2008
Non-Executive Directors
David Lenigas- Non-executive Chairman 29 January 2008
Gregory Turnidge -Former Non-executive Chairman 29 January 2008
Alexander Barblett - Non-executive Director
Vincent Fodera - Executive Director 7 July 2008
Blair Snowball - Executive Director 31 January 2008
Directors' Remuneration
The Company remunerates the Directors at a level commensurate with the size of the Company and the experience of its Directors. The
Remuneration Committee has reviewed the Directors' remuneration and believes it upholds the objectives of the Company with regard to this
issue. Details of the Director emoluments and payments made for professional services rendered are set out in Note 5 to the financial
statements.
Directors' Interests
The beneficial interests of the serving Directors in the shares and options of the Company during the period to 30 June 2008 were as
follows:
At 30 June 2008 At 30 June 2007 At 30 June 2008 At 30 June 2007
Beneficial and non-beneficial Number of Shares % Number of Shares % Number of Options Number of Options
David Lenigas - - - - 2,500,000 -
Kiran Morzaria (1) 711,428 0.31 711,428 0.32 750,000 -
Alexander John Barblett (3) 600,000 0.26 600,000 0.27 1,250,000 1,500,000
Vincent David Fodera (2) 2,787,384 1.22 1,560,000 0.69 2,500,000 2,750,000
- - - - - -
Blair Snowball
Craig Evans - - - - - -
Gregory Turnidge - - - - - -
1) Of which 571,428 of the current shareholding are held on account with TD Waterhouse Nominees (Europe) Limited and 40,000 shares are
held by Cornell De Beer Morzaria who is a related party to Kiran Caldas Morzaria.
2) All shares are beneficially held through Security Transfer Registrars Pty Ltd.
3) Of which 400,000 shares are registered in a third party company, (Entopia Consulting Limited), over which Mr Barblett has an option
to acquire the whole or part of the issued share capital therein, and 200,000 are held by Lisa Mitchell who is a related party to the
Director.
Corporate Governance
A statement on Corporate Governance is set out on pages 8 - 9.
Environmental Responsibility
The Company is aware of the potential impact that its subsidiary companies may have on the environment. The Company ensures that it, and
its subsidiaries at a minimum comply with the local regulatory requirements and the revised Equator Principles with regard to the
environment.
Employment Policies
The Group will be committed to promoting policies which ensure that high calibre employees are attracted, retained and motivated, to
ensure the ongoing success for the business. Employees and those who seek to work within the Group are treated equally regardless of sex,
marital status, creed, colour, race or ethnic origin.
Health and Safety
The Group's aim will be to achieve and maintain a high standard of workplace safety. In order to achieve this objective the Group will
provide training and support to employees and set demanding standards for workplace safety.
Payment to Suppliers
The Group's policy is to agree terms and conditions with suppliers in advance; payment is then made in accordance with the agreement
provided the supplier has met the terms and conditions. There are no material trade payables as at 30 June 2008.
Political Contributions and Charitable Donations
During the period the Group did not make any political contributions or charitable donations.
Annual General Meeting ("AGM")
This report and financial statements will be presented to shareholders for their approval at the AGM. The Notice of the AGM will be
distributed to shareholders together with the Annual Report.
Statement of disclosure of information to auditors
As at the date of this report the serving directors confirm that:
* So far as each director is aware, there is no relevant audit information of which the Company's auditors are unaware, and
* they have taken all the steps that they ought to have taken as directors' in order to make themselves aware of any relevant audit
information and to establish that the Company's auditor are aware of that information
Auditors
A resolution to appoint Chapman Davis LLP and to authorise the Directors to fix their remuneration will be proposed at the next Annual
General Meeting.
Going Concern
Notwithstanding the loss incurred during the period under review, the Directors are of the opinion that ongoing evaluations of the
Company's interests and cash resources, indicate that preparation of the Group's accounts on a going concern basis is appropriate.
Statement of Directors' Responsibilities
The directors prepare financial statements for each financial year which give a true and fair view of the state of affairs of the
company and the group and of the profit or loss of the group for that period. In preparing those 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 applicable accounting standards have been followed, subject to any material departures disclosed and explained in
the financial statements;
* prepare the financial statements on the going concern basis unless it is inappropriate to presume that the group will continue in
business.
The directors are responsible for keeping proper accounting records, for safeguarding the assets of the group and for taking reasonable
steps for the prevention and detection of fraud and other irregularities. They are also responsible for ensuring that the annual report
includes information required by the Alternative Investment Market.
Electronic communication
The maintenance and integrity of the Company's website is the responsibility of the directors: the work carried out by the auditors does
not involve consideration of these matters and, accordingly, the auditors accept no responsibility for any changes that may have occurred to
the financial statements since they were initially presented on the website.
The Company's website is maintained in accordance with AIM Rule 26.
Legislation in the United Kingdom governing the preparation and dissemination of the financial statements may differ from legislation in
other jurisdictions
By order of Board:
Kiran Morzaria
Director
9 December 2008
Group Income Statement for the year ended 30 June 2008
Year Period
Notes ended 2 March 2006 to
30 June 2008 30 June 2007
� �
Revenue 3 68,501 17,971
Cost of Sales (270,758) (592)
Gross (Loss)/Profit (202,257) 17,379
Administrative expenses 4 (2,308,620) (2,613,438)
(Loss) from operations (2,510,877) (2,596,059)
Finance Income 7 42,061 38,278
(Loss) before tax (2,468,816) (2,557,781)
Tax expense 6 - (69,224)
(Loss) for the period attributable to (2,468,816) (2,627,005)
shareholders
Year Period
LOSS PER SHARE Notes ended 2 March 2006 to
30 June 2008 30 June 2007
Basic 8 1.08 pence 1.80 pence
Diluted 8 1.08 pence 1.80 pence
Group Balance Sheet as at 30 June 2008
As at As at
Notes 30 June 2008 30 June 2007
� �
Non-current assets
Intangible assets 9 800,000 6,683,505
Plant and equipment 10 - 68,758
800,000 6,752,263
Current assets
Trade and other receivables 11 49,588 260,136
Cash and cash equivalents 272,113 2,121,858
321,701 2,381,994
Total assets 1,121,701 9,134,257
Current liabilities
Trade and other payables 13 273,204 360,221
Provisions 1,949 -
Corporation tax liability - 11,771
Total liabilities 275,153 371,992
Net assets 846,548 8,762,265
Equity
Share capital 16 1,597,573 1,574,087
Share premium reserve 2,868,959 2,824,117
Unissued share capital 185,000 -
Foreign exchange reserve 60,240 51,288
Other reserves - 5,933,629
Share-based payments 80,360 1,006,149
Accumulated loss (3,945,584) (2,627,005)
846,548 8,762,265
The financial statements were approved by the board of directors and authorised for issue on 9 December 2008. They were signed on
its behalf by ;
Kiran Mozaria David Lenigas
Director Director
Company Balance Sheet as at 30 June 2008
As at As at
30 June 2008 30 June 2007
Notes � �
Non-Current assets
Investment in subsidiaries 18 2,433,213 18,683,895
Amounts due from subsidiaries 21 885,585 763,688
3,318,798 19,447,583
Current assets
Trade and other receivables 12 31,675 114,865
Cash and cash equivalents 197,305 1,999,166
228,980 2,114,031
Total assets 3,547,778 21,561,614
Current liabilities
Trade and other payables 14 93,315 186,050
Corporation tax liability - 11,771
Amounts payable to 21 466,669
subsidiaries
Total liabilities 93,315 664,490
Net assets 3,454,463 20,897,124
Equity
Share capital 16 1,597,573 1,574,087
Share premium 2,868,959 2,824,117
Unissued share capital 185,000 -
Share-based payment reserve 80,360 59,801
Other reserves - 16,798,801
Accumulated loss (1,277,429) (359,682)
3,454,463 20,897,124
The financial statements were approved by the board of directors and authorised for issue on 9 December 2008. They were signed
on its behalf by ;
Kiran Morzaria David Lenigas
Finance Director Director
Group Cash Flow Statement for the year ended 30 June 2008
Period
Year ended 2 March 2006 to
30 June 2008 30 June 2007
OPERATING ACTIVITIES
Loss after tax for the period (2,468,816) (2,627,005)
Adjustments for:
Depreciation 171,541 2,784
Amortisation 245,800 234,941
Loss on disposal of assets (4,726) -
Share-based payments 45,559 1,019,302
Finance income (42,061) (38,278)
Income tax expense - 69,224
Increase in provisions 1,949 -
Decrease in receivables 210,548 111,541
(Decrease)/ Increase in (87,017) 90,116
payables
CASH USED IN OPERATING (1,927,223) (1,137,375)
ACTIVITIES
Income tax paid (11,771) -
NET CASH USED IN OPERATING (1,938,994) (1,137,375)
ACTIVITIES
INVESTING ACTIVITIES
Interest received 42,061 38,278
Cash acquired from business - 3,434,766
combinations
Proceeds from disposal of 4,704 -
assets
Purchase of patents (44,416) (509,652)
Purchase of plant and (112,172) (63,864)
equipment
NET CASH USED IN INVESTING (109,823) 2,899,528
ACTIVITIES
FINANCING ACTIVITIES
Proceeds on issuing of 43,328 1,015,000
ordinary shares
Proceeds on share capital-un 185,000 -
issued
Cost of issue of ordinary - (604,007)
shares
NET CASH FROM FINANCING 228,328 410,993
ACTIVITIES
NET DECREASE IN CASH AND CASH (1,820,489) 2,173,146
EQUIVALENTS
CASH AND CASH EQUIVALENTS AT 2,121,858 -
BEGINNING OF PERIOD
Exchange loss on cash and cash (29,256) (51,288)
equivalents
CASH AND CASH EQUIVALENTS AT 272,113 2,121,858
END OF PERIOD
The above Cash Flow should be read in conjunction with the accompanying notes.
Company Cash Flow Statement for the year ended 30 June 2008
Period
Year ended 1 September 2006
30 June 2008 to 30 June 2007
Notes � �
OPERATING ACTIVITIES
Loss after tax for the period (917,748) (274,985)
Adjustments for:
Depreciation 2,973 -
Share-based payments 45,559 6,618
Finance income (40,893) (132,078)
Income tax expense - 11,771
Decrease / (Increase) in receivables 83,190 (80,661)
(Decrease) / Increase in payables (92,735) 133,821
CASH USED IN OPERATING ACTIVITIES (919,654) (335,514)
Income tax paid (11,771) -
NET CASH USED IN OPERATING ACTIVITIES (931,425) (335,514)
INVESTING ACTIVITIES
Interest received 40,893 132,078
Purchase of plant and equipment (2,973) -
Loans to subsidiaries (331,443) (763,687)
Loans from subsidiaries (257,122) -
Investment in Subsidiaries (548,119) (187,100)
NET CASH (USED IN) / FROM INVESTING (1,098,764) (818,709)
ACTIVITIES
FINANCING ACTIVITIES
Proceeds on issuing of ordinary shares 43,328 -
Proceeds on share capital-unissued 185,000 -
Cost of issue of ordinary shares - (575,290)
NET CASH (USED IN) / FROM FINANCING 228,328 (575,290)
ACTIVITIES
NET (DECREASE) / INCREASE IN CASH AND (1,801,861) (1,729,513)
CASH EQUIVALENTS
CASH AND CASH EQUIVALENTS AT BEGINNING 1,999,166 3,728,679
OF PERIOD
CASH AND CASH EQUIVALENTS AT END OF 197,305 1,999,166
PERIOD
The above Cash Flow should be read in conjunction with the accompanying notes.
Statement of Changes in Equity for the year ended 30 June 2008
Group
Unissued Share
Share Share Share Based Foreign Other Accumulated
Capital Premium Capital Payments Exchange Reserves Losses Total
� � � � � � � �
Balance at 2 March 2006 - - - - - - - -
Foreign translation - - - - 51,288 - - 51,288
differences
Loss for the period - - - - - - (2,627,005) (2,627,005)
Total recognised income and - - - - 51,288 - (2,627,005) (2,575,717)
expense for the period
Share issue 175,904 5,743,257 - (13,153) - - - 5,906,008
Cost of share issue - (28,717) - - - - - (28,717)
Value of reverse acquisition 1,398,183 - - - 5,933,629 - 4,441,389
(2,890,423)
Share-based payments - - - 1,019,302 - - - 1,019,302
Balance at 30 June 2007 1,574,087 2,824,117 - 1,006,149 51,288 5,933,629 (2,627,005) 8,762,265
Cancelled share based payment - - - 53,183 - (53,183) - -
Cancelled share based payment - - - (999,530) - - 999,530 -
Foreign translation - - - - - (150,707) 150,707 -
differences
Balance at 30 June 2007 1,574,087 2,824,117 - 59,802 51,288 5,864,739 (1,476,768) 8,762,265
Foreign translation - - - - 8,952 - - 8,952
differences
Loss for the period - - - - - - (2,468,816) (2,468,816)
Total recognised income and - - - - 8,952 - (2,468,816) (2,459,864)
expense for the period
Share issue 23,486 44,842 185,000 - - - - 253,328
Share-based payments - - - 27,177 - - - 27,177
Cancelled share based payment - - - (6,619) - - - (6,619)
Impairment charge - - - - - (5,682,119) - (5,682,119)
Foreign translation (47,620) (47,620)
differences
Balance at 30 June 2008 1,597,573 2,868,959 185,000 80,360 60,240 - (3,945,584) 846,548
Statement of Changes in Equity for the year ended 30 June 2008
(continued) Company
Unissued Share
Share Share Share Based Foreign Other Accumulated
Capital Premium Capital Payments Exchange Reserves Losses Total Equity
� � � � � � � �
Balance at 31 August 2006 342,762 3,399,407 - 53,183 - - (84,698) 3,710,654
Loss for the period - - - - - - (274,985) (274,985)
Total recognised income and - - - - - - (274,985) (274,985)
expense for the period
Share issue 1,231,326 - - - - - - 1,231,326
Value of reverse acquisition - - - - - 16,798,801 - 16,798,801
Cost of share issue - (575,290) - - - - - (575,290)
Share-based payment - - 6,618 - - - 6,618
Balance at 30 June 2007 1,574,087 2,824,117 - 59,801 - 16,798,801 (359,682) 20,987,124
Loss for the period - - - - - - (917,747) (917,747)
Total recognised income and - - - - - - (917,747) (917,747)
expense for the period
Share issue 23,486 44,842 185,000 - - - - 253,328
Share-based payment - - - 27,177 - - - 27,177
Cancelled share based payment (6,618) (6,618)
Impairment charge - - - - - (16,798,801) - (16,798,801)
Balance at 30 June 2008 1,597,573 2,868,959 185,000 80,360 - - (1,277,429) 3,454,463
1 SIGNIFICANT ACCOUNTING POLICIES
The following account policies are those of the Group and apply to the
consolidated financial statements.
Authorisation of financial statements
The Group financial statements of Immersion Technologies International Plc
for the year ended 30 June 2008 were authorised for issue by the Board on 9
December 2008 and the balance sheets signed on the Board's behalf by Mr.
Kiran Morzaria and Mr. David Lenigas. The Company is a public limited
Company incorporated in England & Wales under the Companies Act 1985. The
Company's ordinary shares are traded on the AIM Market operated by the
London Stock Exchange.
Statement of compliance with IFRS
The Group's financial statements have been prepared in accordance with
International Financial Reporting Standards (IFRS). The Company's financial
statements have been prepared in accordance with IFRS as adopted by the
European Union and as applied in accordance with the provisions of the
Companies Act 1985. The principal accounting policies adopted by the Group
and Company are set out below.
Adoption of standards and interpretations
As at the date of authorisation of these financial statements, there were
Standards and Interpretations that were in issue but are not yet effective
and have not been applied in these financial statements. The Directors
anticipate that the adoption of these Standards and Interpretations in
future periods will have no material impact on the financial statements of
the group or company, except for additional disclosures when the relevant
Standards come into effect.
Basis of preparation
The principal accounting policies adopted in the preparation of the
financial statements are set out below. The policies have been consistently
applied to all the periods presented, unless otherwise stated.
The financial statements have been prepared in accordance with and comply
with International Financial Reporting Standards (IFRS) issued by the
International Accounting Standards Board (IASB) and with those parts of the
Companies Act 1985 applicable to companies preparing their accounts under
IFRS.
These financial statements are presented in Sterling since that is the
currency in which the majority of the Company's transactions are
denominated. The measurement basis used in the preparation of the financial
statements is historical cost, except for financial instruments, which are
measured at fair value.
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.
Revenue derived from the license royalties are recognised on notification of
payment by the licensee. Revenue derived from the sale of manufactured
products and recognised when delivered to the customer in accordance with the
specific supply contract terms.
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.
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.
Internally-generated Intangible Assets - Research and Development Expenditure
Expenditure on internally developed products is capitalised if it can be
demonstrated that:
� it is technically feasible to develop the product for it to be sold;
� adequate resources are available to complete the development;
� there is an intention to complete and sell the product;
� the Group is able to sell the product;
� sale of the product will generate future economic benefits; and
� expenditure on the project can be measured reliably.
Capitalised development costs are amortised over the periods the Group
expects to benefit from selling the products developed. The amortisation
expense is included within the administrative expenses in the consolidated
income statement.
Development expenditure not satisfying the above criteria and expenditure on
the research phase of internal projects are recognised in the consolidated
income statement as incurred.
Externally acquired intangible assets
Externally acquired intangible assets are initially recognised at cost and
subsequently amortised on a straight-line basis over their useful economic
lives. The amortisation expense is included within the administrative
expenses line in the consolidated income statement.
Intangible assets are recognised on business combinations if they are
separable from the acquired entity or give rise to other contractual/legal
rights. The amounts ascribed to such intangibles are arrived at by using
appropriate valuation techniques.
The significant intangibles recognised by the Group, their useful economic
lives and the methods used to determine the cost of intangibles acquired in a
business combination are as follows:
Intangible asset Useful economic life Valuation method
Intellectual property Patent life (20 years) Estimated royalty stream if the
rights were to be licensed
Licenses 10 years Estimated discounted cash flow
Impairment of tangible and intangible assets excluding goodwill
At each balance sheet date the Group reviews the carrying amounts of its
tangible and intangible assets to determine whether there is any indication
that those assets have suffered an impairment loss. If there is such
indication then an estimate of the asset's recoverable amount is performed
and compared to the carrying amount.
Recoverable amount is the higher of fair value less costs to sell and value
in use. In assessing value in use, the estimated future cash flows are
discounted to their present value. Where the asset does not generate cash
flows that are independent from other assets, the Group estimates the
recoverable amount of the cash-generating unit to which the asset belongs.
If the recoverable amount of an asset is estimated to be less that its
carrying amount, the carrying amount of the asset is reduced to its
recoverable amount. An impairment loss is recognised as an expense
immediately, unless the relevant asset is carried at a re-valued amount, in
which case the impairment loss is treated as a revaluation decrease.
Where an impairment loss subsequently reverses, the carrying amount of the
asset is increased to the revised estimate of its recoverable amount, but so
that the increased carrying amount does not exceed the carrying amount that
would have been determined had no impairment loss been recognised for the
asset in prior periods. A reversal of an impairment loss is recognised as
income immediately, unless the relevant asset is carried at a revalued
amount, in which case the reversal of the impairment loss is treated as a
revaluation increase.
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. The corresponding liability
is recognised within provisions.
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:
Plant and equipment - 15%-25% per annum straight line
Office equipment - 20%-25% per annum straight line
Inventories
Inventories are initially recognised at cost, and subsequently at the lower
of cost and net realisable value. Cost comprises all costs of purchase, cost
of conversion and other costs incurred in bringing the inventories to their
present location and condition,
Weighted average cost is used to determine the cost of ordinarily
interchangeable items.
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-based payments
Where share options are awarded to employees, the fair value of the options
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 options that eventually vest. Market
vesting conditions are factored into the fair value of the options 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 options are modified before they vest, the
increase in the fair value of the options, measured immediately before and
after the modification, is also charged to the consolidated income statement
over the remaining vesting period.
Where equity instruments are granted to persons other than employees, the
consolidated income statement is charged with the fair value of goods and
services received. Equity-settled share-based payments are measured at fair
value at the date of grant except if the value of the service can be reliably
established. The fair value determined at the grant date of equity-settled
share-based payments is expensed on a straight-line basis over the vesting
period, based on the Company's estimate of shares that will eventually vest.
Critical accounting estimates and judgements
The Group makes estimates and assumptions regarding the future. Estimates and
judgements are continually evaluated based on historical experience and other
factors, including expectations of future events that are believed to be
reasonable under the circumstances. In the future, actual experience may
differ from these estimates and assumptions. The estimates and assumptions
that have a significant risk of causing a material adjustment to the carrying
amounts of assets and liabilities within the next financial year are
discussed below.
Impairment of goodwill
The Group is required to test, on an annual basis, whether goodwill has
suffered any impairment. The recoverable amount is determined based on value
in use calculations. The use of this method requires the estimation of future
cash flows and the choice of a discount rate in order to calculate the
present value of the cash flows - actual outcomes may vary. If the carrying
amount exceeds the recoverable amount then an impairment is made.
Useful lives of intangible assets and property, plant and equipment
Intangible assets and property, plant and equipment are amortised or
depreciated over their useful lives. Useful lives are based on the
management's estimates of the period that the assets will generate revenue,
which are based on judgement and experience and periodically reviewed for
continued appropriateness. Changes to estimates can result in significant
variations in the carrying value and amounts charged to the consolidated
income statement in specific periods.
Share-based payments
The Group utilised an equity-settled share-based remuneration scheme for
employees. Employee services received, and the corresponding increase in
equity, are measured by reference to the fair value of the equity instruments
at the date of grant, excluding the impact of any non-market vesting
conditions. The fair value of share options are estimated by using
Black-Scholes valuation method as at the date of grant. The assumptions used
in the valuation are described in note 17 and include, among others, the
expected volatility, expected life of the options and number of options
expected to vest.
Warranty claims
The Group may offer warranties on its products. The Group estimates the
amount and cost of future warranty claims for its salesto be 10% of the sales
price. 10% accrued warranty provisions for product shipments are provided.
Factors that impact the estimated claim information include the success of
the Group's productivity and quality initiatives, as well as parts and labour
costs.
Identifying the acquirer in business combinations
IFRS 3 defines the acquirer in a business combination as being the entity
that obtains control of the other combining entities and defines control as
being held by the combining entity that has the power to govern the financial
and operating policies of the other entity so as to obtain benefits from its
activities. The Group considers all relevant facts and circumstances to
determine which of the combining entities has control, including the voting
rights of shareholders, composition of combined entities board and
management.
Determination of fair values of intangible assets acquired in business
combinations
The fair value of patents and trademarks acquired in a business combination
is based on the discounted estimated royalty payments that would have been
avoided as a result of the trademark or a patent being owned. The fair value
of other intangible assets is based on the discounted cash flows expected to
be derived from the use and eventual sale of the asset.
Income taxes
The Group is subject to income tax in several jurisdictions and significant
judgement is required in determining the provision for income taxes. During
the ordinary course of business, there are transactions and calculations for
which the ultimate tax determination is uncertain. As a result, the Group
recognises tax liabilities based on estimates of whether additional taxes and
interest will be due. The Group believes that its accruals for tax
liabilities are adequate for all open audit years based on its assessment of
many factors including past experience and interpretations of tax law. This
assessment relies on estimates and assumptions and may involve a series of
complex judgments about future events. To the extent that the final tax
outcome of such matters is different than the amounts recorded, the
differences will impact income tax expense in the period in which such
determination is made.
Deferred taxation
Deferred tax assets are recognised when it is judged more likely than not
that they will be recovered.
Going Concern
The financial report for the year ended 30 June 2008 has been prepared on a
going concern basis.
2 SEGMENT REPORTING
For management purposes the Group is organised into 4 operating divisions: Corporate; Product Research, Development and Design; Product
Manufacture,
and; Sales. These divisions are the basis on which the Group reports its primary segment information. Secondary segment information is
presented on a
geographic basis. The primary segment information corresponds closely to geographical segments as operational segments reside in
distinct locations of
the United Kingdom, Australia and Asia.
For the year ended Corporate Product Product Sales Unallocated
Total
30 June 2008
Business segments R&D and Manufacture or
Design Eliminated
Revenue � � � � �
�
External sales 5,642 44,799 - 18,060 -
68,501
Total revenue from 5,642 44,798 - 18,060 -
68,501
continuing
operations
Result
Segment result from (1,178,168) (795,387) (192,163) (345,159) -
(2,510,877)
continuing
operations
Finance income
42,061
Loss before tax
(2,468,816)
Income tax expense
-
Loss for the period from continuing
(2,468,816)
operations
Other segment items included in the income statement are as
follows:
Depreciation 3,409 55,133 78,469 34,530 -
171,541
Amortisation 245,800
245,800
Balance sheet
Segment assets 3,468,816 16,406 37,267 32,426 (2,433,214)
1,121,701
Segment liabilities (94,246) (65,772) (20,336) (94,799) -
(275,153)
Net assets 3,374,570 (49,366) 16,931 (62,373) (2,433,214)
846,548
For the year ended United Australia Asia Unallocated
Total
30 June 2008
Geographical Kingdom
segments
Revenue � � � �
�
External sales 5,642 44,799 18,060
68,501
Total revenue from 5,642 44,799 18,060
68,501
continuing
operations
Result
Segment result from (1,259,881) (587,657) (663,339) -
(2,510,877)
continuing
operations
Finance income
42,061
Loss before tax
(2,468,816)
Income tax expense
-
Loss for the period from continuing
(2,468,816)
operations
Balance sheet
Segment assets 3,468,816 16,406 69,693 (2,433,214)
1,121,701
Segment liabilities (94,246) (65,772) (115,135) -
(275,153)
Net assets 3,374,570 (49,366) (45,442) (2,433,214)
846,548
Inter-segment transfers are priced along the same lines as sales to external customers, except that an appropriate discount is applied
to encourage use
of group resources at a rate accepted to local tax authorities.
For the period ended Corporate Product Product Sales Unallocated
Total
30 June 2007
Business segments R&D and Manufacture or
Design Eliminated
� � � � �
�
Revenue
External sales - 17,971 - - -
17,971
Total revenue from - 17,971 - - -
17,971
continuing
operations
Result
Segment result from (1,079,804) (1,258,405) (62,272) 2,244 (197,822)
(2,596,059)
continuing
operations
Finance income
38,278
Loss before tax
(2,557,781)
Income tax expense
(69,224)
Loss for the period from continuing
(2,627,005)
operations
Other segment items included in the income statement are as
follows:
Depreciation 781 2,003 - - -
2,784
Amortisation 220,423 14,518 - - -
234,941
Balance sheet
Segment assets 10,224,965 92,200 152,811 117,994 (1,453,713)
9,134,257
Segment liabilities (1,418,232) (594,632) (49,792) (81,530) 1,772,194
(371,992)
Net assets 8,806,733 (502,432) 103,019 36,464 318,481
8,762,265
For the period ended United Australia Asia Unallocated
Total
30 June 2007
Geographical Kingdom
segments
� � � �
�
Revenue
External sales - 17,971 - -
17,971
Total revenue from - 17,971 - -
17,971
continuing
operations
Result
Segment result from (1,079,804) (1,258,405) (60,028) (197,822)
(2,596,059)
continuing
operations
Finance income
38,278
Loss before tax
(2,557,781)
Income tax expense
(69,224)
Loss for the period from continuing
(2,627,005)
operations
Balance sheet
Segment assets 10,224,965 92,200 270,805 (1,453,713)
9,134,257
Segment liabilities (1,418,232) (594,632) (131,322) 1,772,194
(371,992)
Net assets 8,806,733 (502,432) 139,483 318,481
8,762,265
Inter-segment transfers are priced along the same lines as sales to external customers, except that an appropriate discount is applied to
encourage use
of group resources at a rate accepted to local tax authorities.
3 CONSOLIDATED REVENUE Year ended Period
30 June 2008 2 March 2006 to
30 June 2007
� �
Revenue arises from:
Sale of goods 18,703 -
Royalties 46,666 10,036
Other Income 3,132 7,935
68,501 17,971
4 CONSOLIDATED LOSS FROM OPERATIONS
Loss from operations has been arrived at
after charging:
Directors fees 463,859 441,000
Salaries and wages 469,210 126,850
Consultancy costs 129,350 82,470
Audit fees 68,651 84,135
Other professional fees 77,151 22,555
Amortisation of intangible assets 245,800 234,941
Depreciation 171,541 2,784
Research and development 73,017 188,668
Net Equity settled share-based payments 45,558 1,019,302
Foreign exchange loss 8,314 (5,029)
Other expenses 556,169 410,733
2,308,620 2,613,438
Amounts payable to BDO Stoy Hayward LLP and
Chapman Davis LLP and their associates in
respect of both audit and non-audit services:
Audit services - group statutory audit (prior 64,651 36,000
year)
Other services - company statutory audits - 25,000
Other services - tax review - 6,000
Other services - interim audit review 2,500 -
Other services - interim audit review and CT 1,500 -
advice
Amounts payable to previous auditors MRI
Moores Rowland LLP and their associates in
respect of both audit and non-audit services:
Other services - interim audit review - 4,120
Due diligence on acquisition of Whise - 9,232
Acoustics Limited
Amounts payable to previous auditors of Whise
Acoustics Limited, Leydin Freyer Corporate
Pty Ltd:
Other services - interim audit review and CT - 3,783
advice
68,651 84,135
5 STAFF COSTS and DIRECTORS REMUNERATION
Consolidated
Period
Year ended 2 March 2006 to
30 June 2008 30 June 2007
� �
The average number of employees (including executive 65 19
directors) was :
Their aggregate remuneration comprised :
Wages and salaries 951,489 508,898
Share-based payments 26,862 21,010
978,351 529,908
Consolidated Salary & fees Bonus Share-based payments Total
Directors' and Key
Management
emoluments for the
year ending 30 June
2008
� � � �
Vincent 120,040 - 13,871 133,911
Fodera-resigned
7/7/2008
Sandy Barblett 28,575 - 1,936 30,511
Kiran Morzaria 11,500 - 3,871 15,371
David Lenigas - - - 3,871 3,871
appointed 29/1/2008
Gregory 27,140 - 4,936 32,076
Turnidge-resigned
29/1/2008
Craig Evans-resigned 142,940 - 1,936 144,876
29/1/2008
Blair 66,164 - 12,000 78,164
Snowball-resigned
29/1/2008
Arie van der Broek- 67,500 - 3,871 71,371
CEO appointed
15/9/2007
463,859 46,292 510,151
-
Consolidated Salary & fees Bonus Share-based payments Total
Directors'
emoluments for the
period ending 30
June 2007
� � � �
Vincent Fodera 99,000 15,000 4,988 118,988
Sandy Barblett 33,000 15,000 2,721 50,721
Kiran Morzaria 1,500 - - 1,500
Gregory Turnidge 19,500 10,000 2,721 32,221
Christopher Lambert 9,000 - - 9,000
Craig Evans 121,000 15,000 5,443 141,443
Blair Snowball 88,000 15,000 4,988 107,988
371,000 70,000 20,861 461,861
6 CONSOLIDATED INCOME
TAX EXPENSE
Period
Year ended 2 March 2006 to
30 June 2008 30 June 2007
� �
Current tax expense
UK corporation tax - 69,224
and income tax of
overseas operations
on profits for the
period
Deferred tax expense
Origination and - -
reversal of
temporary
differences
Total income tax - 69,224
expense
The reasons for the
difference between
the actual tax
charge for the
period and the
standard rate of
corporation tax in
the UK applied to
profits for the year
are as follows:
Loss for the period (2,468,816) (2,557,781)
Expected tax gain (728,301) (767,334)
based on the
standard rate of
corporation tax in
the UK of 30%
Expenses not 22,055 57,804
deductible for tax
purposes
Capital items - (64,738)
expensed
Share based payments 8,017 7,936
Losses unutilised 84,749 574,238
Utilisation of - 261,318
previously
unrecognised tax
losses
Different tax rates -
applied in overseas
jurisdictions
Total tax (gain) (613,480) 69,224
expense
Tax gain of �613,480
is not recognised as
a deferred tax asset
The Group also has a potential deferred tax asset in respect of
losses carried forward of �874,257. This has not been recognised
due to uncertainty over the amount and timing of future taxable
profits against which the asset could be recovered.
7 CONSOLIDATED FINANCE INCOME
Period
Year ended 2 March 2006 to
30 June 2008 30 June 2007
� �
Interest on bank deposits 42,061 38,278
8 LOSS PER SHARE
The calculation of Year ended Period ended
the basic and
diluted loss per
share is based on
the following data:
30 June 2008 30 June 2007
� �
Loss
Loss for the (2,468,816) (2,627,005)
purposes of basic
and diluted loss per
share
Number of shares
Weighted average 228,220,186 145,569,036
number of ordinary
shares for the
purposes of basic
and diluted loss per
share
Basic and diluted 1.08 pence 1.80 pence
loss per share
The diluted loss per share is equal to the basic loss per share
because all of the 18,284,489 options (weighted average being
14,273,530 on issue were considered not potentially dilutive.
That is, all options have an exercise price far greater than the
weighted average share price during the year (ie they are out-of
the-money) and therefore would not be advantageous for the
holders to exercise those options.
9 CONSOLIDATED
INTANGIBLE ASSETS
Intellectual
Goodwill Property Licences Total
� � � �
Balance at 1 July 1,768,417 4,978,173 171,856 6,918,446
2007
Additions - 44,416 - 44,416
Balance at 30 June 1,768,417 5,022,589 171,856 6,962,862
2008
Accumulated
amortisation and
impairment
Balance at 1 July - 223,484 11,457 234,941
2007
Amortisation charge - 228,614 17,186 245,800
for the period
Impairment charge 1,768,417 3,770,491 143,213 5,682,121
Balance at 30 June 1,768,417 4,222,589 171,856 6,162,862
2008
Net book value
Balance at 30 June - 800,000 - 800,000
2008
Goodwill was acquired during the prior period through two separate business combinations. Intellectual
property consists of acquired patents, for which amortisation commenced from the date of acquisition. All
but three patents have an average remaining useful life of approximately 20 years.
Impairment Review
At 30 June 2008, the directors have carried out an impairment review and have subsequently written down the
value of the Goodwill, Intellectual Property and the Licences by approximately �5.7 million (see Note 19).
The directors are of the opinion that the carrying value is now stated at fair value.
10 CONSOLIDATED PLANT AND
EQUIPMENT
Plant and Office Leasehold
equipment equipment improvements Total
Cost � � � �
Balance at 1 July 2007 68,319 3,223 - 71,542
Additions 51,284 34,747 26,141 112,172
Disposals (4,417) (6,664) - (11,081)
Balance at 30 June 2008 115,186 31,306 26,141 172,633
Accumulated depreciation and
impairment
Balance at 1 July 2007 2,197 587 - 2,784
Depreciation for the period 112,989 32,411 26,141 171,541
Disposals - (1,692) - (1,692)
Balance at 30 June 2008 115,186 31,306 26,141 172,633
Net book value
Balance at 30 June 2008 - - - -
Cost
Balance at 2 March 2006 - - - -
Additions 68,319 71,542
3,223 -
Balance at 30 June 2007 68,319 3,223 - 71,542
Accumulated depreciation and impairment
Balance at 2 March 2006 - - - -
Depreciation for the period 2,197 2,784
587 -
Balance at 30 June 2007 2,197 2,784
587 -
Net book value
Balance at 30 June 2007 66,122 2,636 - 68,758
11 CONSOLIDATED TRADE
AND OTHER RECEIVABLES
30 June 2008 30 June 2007
Current trade and � �
other receivables
Trade debtors 17,913 304
Prepayments 25,194 95,647
Tax receivable - 141,692
Other debtors 6,481 22,493
49,588 260,136
The directors consider that the carrying amount of trade and other receivables
approximates their fair value.
12 COMPANY TRADE AND OTHER RECEIVABLES
30 June 2008 30 June 2007
Current trade and other receivables � �
Prepayments 25,194 13,384
Other debtors 6,481 101,481
31,675 114,865
13 CONSOLIDATED TRADE AND
OTHER PAYABLES
30 June 2008 30 June 2007
Current trade and other � �
payables
Trade payables 69,699 117,583
Accruals 111,099 161,108
Deferred income 92,406 81,530
273,204 360,221
The directors consider that the carrying amount of trade payables approximates to their fair
value.
14 COMPANY TRADE AND OTHER PAYABLES
30 June 2008 30 June 2007
Current trade and other payables � �
Trade payables 7,781 46,366
Accruals 85,534 139,684
93,315 186,050
15 FINANCIAL INSTRUMENTS - RISK MANAGEMENT
The Group is exposed through its operations to one or more of the
following financial risks:
� Fair value or cash flow interest rate risk
� Foreign currency risk
� Liquidity risk
� Credit risk
Policy for managing these risks is set by the Board following
recommendations from the Finance Director. Certain risks are managed
centrally, while others are managed locally following guidelines
communicated from the centre. The policy for each of the above risks is
described in more detail below.
Fair value and cash flow interest rate risk
Currently the Group does not have external borrowings. However, the Group
has a policy of holding debt at a floating rate. The directors will
revisit the appropriateness of this policy should the Group's operations
change in size or nature. Operations are not permitted to borrow
long-term from external sources locally.
Foreign currency risk
Foreign exchange risk arises because the Group has operations located in
various parts of the world whose functional currency is not the same as
the functional currency in which the Group companies are operating. The
Group's net assets are exposed to currency risk giving rise to gains or
losses on retranslation into sterling. Only in exceptional circumstances
will the Group consider hedging its net investments in overseas
operations as generally it does not consider that the reduction in
volatility in consolidated net assets warrants the cash flow risk created
from such hedging techniques.
Foreign exchange risk also arises when individual Group operations enter
into transactions denominated in a currency other than their functional
currency. It is Group policy that where the risk to the Group is considered
significant, Group treasury will enter into a forward contract with a
reputable bank.
Liquidity risk
The liquidity risk of each Group entity is managed centrally by the Group
treasury function. Each operation has a facility with Group treasury, the
amount of the facility being based on budgets. The budgets are set locally
and agreed by the board annually in advance, enabling the Group's cash
requirements to be anticipated. Where facilities of Group entities need to
be increased, approval must be sought from the Group finance director.
Where the amount of the facility is above a certain level agreement of the
board is needed.
All surplus cash is held centrally to maximise the returns on deposits
through economies of scale. The type of cash instrument used and its
maturity date will depend on the Group's forecast cash requirements.
Credit risk
The Group is mainly exposed to credit risk from credit sales. It is Group
policy, implemented locally, to assess the credit risk of new customers
before entering contracts. Such credit ratings are taken into account by
local business practices.
The Group does not enter into complex derivatives to manage credit risk,
although in certain isolated cases may take steps to mitigate such risks if
it is sufficiently concentrated.
16 SHARE CAPITAL
Consolidated and Company
Consolidated and Company
Year ended
Year ended
30 June 2008
30 June 2007
Number �
Number �
Authorised:
Ordinary shares of �0.007 each 1,000,000,000 7,000,000
1,000,000,000 7,000,000
Issued and Fully Paid:
At the beginning of the period 224,869,614 1,574,087
342,761,601 342,762
Consolidation of share capital - -
(293,795,658) -
Issued ordinary shares of �0.007 each 1,731,645 12,122
- -
Issued ordinary shares of �0.007 each 1,623,375 11,364
175,903,671 1,231,325
At the end of the period 228,224,634 1,597,573
224,869,614 1,574,087
At the beginning and the end of the period there were no shares issued that were not fully paid.
The following share capital was issued in the period to 30 June 2008;
(1) On 1 July 2007, 1,731,645 shares in Immersion Technology International Limited (representing 0.97% of its issued share capital),
were issued to two shareholders who, as described in the Company's Admission Document (12 April 2007) did
not waive their rights to compensation shares under the Whise Acoustics Share Purchase Agreement and thus became entitled to the shares
on this date. On 11 December 2007 the Group negotiated the purchase of the minority interest by issuing
one Immersion Technologies International plc share in exchange for each Immersion Technology International Limited share.
(2) On 6 May 2008 the Company issued 1,623,375 ordinary shares at �0.0154 per share in lieu of cash settlements to current and former
directors.
17 SHARE-BASED PAYMENTS
During the period the Company issued options to key management and employees
Year ended 30 June 2008 Period ended 30 June 2007
Weighted Number Weighted Number
average average
exercise price exercise price
Outstanding at the �0.13 13,484,489 �0.21 734,489
beginning of the
period
Granted during the �0.0154 17,550,000 �0.125 12,750,000
year
Forfeited during the
year
Cancelled during the �0.125 (12,750,000) - -
year
Exercised during the - - - -
year
Lapsed during the - - - -
year
Outstanding at the �0.0232 18,284,489 �0.13 13,484,489
end of the year
The exercise price of options outstanding at the end of the period ranged between 21p and 1.54p and their weighted average
contractual life was 9.8 years.
The weighted average fair value of each option granted during the year was 0.93p.
The Group used the Black-Scholes model to determine the value of the options and the inputs were as follows:
Year ended Period ended
30 June 2008 30 June 2007
Weighted average �0.015 �0.051
share price
Weighted average �0.232 �0.125
exercise price
Expected volatility 54% 30%
Expected life 5 years 5 years
Risk free rate 5.00% 5.00%
Expected dividends �nil �nil
Expected volatility was determined by using the volatility rate used by listed companies in similar industries and those companies
with similar sizes.
On 6 May 2008 Immersion Technology International Limited also issued 1,623,375 shares as compensation payment to a Director and
former Directors. The total share-based payment charge for the compensations shares is �25,000, which was valued at the date
grant based on a valuation of 1.54 pence per share.
The total share-based payment expense in the period for the Group was �52,176, of which �27,176 pertained to new options to
employees and directors which were in relation to options that were issued last year and cancelled and reissued. The cancellation
of the charge for previously issued share options was �6,618, and �25,000 of compensation shares as mentioned above, resulting in
a net charge of �45,558 in the income statement.
18 INVESTMENT IN
SUBSIDIARIES
30 June 2008 30 June 2007
� �
As at 1 July 18,683,895 -
Additions during the 548,119 18,683,895
year
Write-down of (16,798,801) -
investment
At 30 June 2,433,213 18,683,895
The subsidiaries of Immersion Technologies International plc,
all of which have been included in these consolidated financial
statements, are as follows:
Name Country of Proportion of
incorporation ownership interest
Immersion UK 100%
Technologies UK
Limited
Immersion Technology UK 100%
Property Limited
Immersion Technology UK 100%
International
Limited
Immersion Singapore 100%
Technologies
(Singapore) Pte
Limited
Immersion Technology China 100%
(Nanjing) Co.
Limited
Immersion Australia 100%
Technologies
Australia Pty
Limited
Whise Acoustics Australia 100%
Limited
Whise Technologies Australia 100%
Pty Limited
19. IMPAIRMENT REVIEW
The directors undertook an impairment review of the Group's assets as at 30 June 2008 in view of subsequent events to this date
regarding the closure of the operations in Singapore and China. The format of the review was by assessing the carrying value of assets as at
30 June 2008 by country and sector of origin. The analysis and resultant impairment charges were considered as follows:
Category Net Costs Impairment charge Net costs carried
capitalised to 30 forward
June 2008
� � �
GROUP
Intangible assets
Goodwill 1,768,417 (1,768,417) -
Intellectual property 4,570,491 (3,770,491) 800,000
Licences 143,213 (143,213) -
Total 6,482,121 (5,682,121) 800,000
Tangible assets
Plant and equipment 103,757 (103,757) -
Office equipment 23,386 (23,386) -
Leasehold improvements 17,681 (17,681) -
Total 144,824 (144,824) -
COMPANY
Investment in subsidiaries 19,232,014 (16,798,801) 2,433,213
20 GROUP RELATED PARTY TRANSACTIONS
Transactions between the parent and its subsidiaries, which are
related parties, have been eliminated on consolidation and are
not disclosed in this note. Transactions between the Group and
its associates are disclosed below. Details of directors
remuneration, being the only key personnel, are given in note 5.
Directors transactions
During the period, the Group incurred rent payable to ED Evans
Holdings Pty Limited, a company owned by ED Evans the father of
Craig Evans a former director (resigned 29 January 2008). The
total paid for the year was � 20,395.
Remuneration of Key Management Personnel
The remuneration of the directors, and other key management
personnel of the Group, is set out below in aggregate for each
of the categories specified in IAS24 Related party Disclosures.
2008 2007
� �
Short-term employee 463,859 441,000
benefits
Share-based payments 25,000 20,861
488,859 461,861
21 COMPANY RELATED PARTY TRANSACTIONS
During the period the Company made loans to the following subsidiaries. The loans provide necessary funds
for the subsidiaries to invest in setting up operations. The Company will continue to fund the subsidiaries,
in this way, through the set up phase. The Directors believe the loans are fully recoverable but do not
expect to make repayment calls within the next reporting period, however these loans are repayable on
demand:
As at As at
30 June 2008 30 June 2007
� �
Immersion Technology International Limited - 627,482
Immersion Technologies (Singapore) Pte Limited 18,933 -
Immersion Technologies Australia Pty 1,076,199 136,206
Limited
1,095,132 763,688
During the period the Company entered into transactions which resulted in loans payable to the following
subsidiaries:
As at As at
30 June 2008 30 June 2007
� �
Immersion Technology International Limited 209,347 466,469
Immersion Technology Property Limited 100 100
Immersion Technologies UK Limited 100 100
209,547 466,669
Net amounts due from subsidiaries 885,585 297,019
22 ULTIMATE CONTROLLING PARTY
In the opinion of the directors there is no controlling party.
23 OPERATING LEASES
The Group leases all of its properties. The terms of property
leases vary from country to country, although the majority are
tenant repairing with rent reviews every 3 years and many have
break clauses.
The total future of
minimum lease
payments are due as
follows:
Year ended Period ended
30 June 2008 30 June 2007
� �
Not later than one 37,204 64,456
year
Later than one year - 108,889
and not later than
five years
Later than five - -
years
37,204 173,345
24 RETIREMENT BENEFIT SCHEME
The Group does not operate either a defined contribution or defined
benefit retirement scheme.
25 COMMITMENTS
The Company has a commitment to make an equity investment of US$1,500,000
into its Chinese subsidiary, Immersion Technology (Nanjing) Co. Limited,
by the end of April 2009. This commitment is required by rules for
establishing a Foreign Controlled Company in Nanjing, China. If the
Company ceases to require a subsidiary in Nanjing prior to April 2009
then it does not have an obligation to complete the investment. As at the
date of publishing the financial statements the Company has invested
US$1,300,000 (US$300,000 as at 30 June 2007) and therefore is expected to
have a further commitment of US$200,000 to be made up to April 2009.
The Company is in the process of filing action against Nakamichi
Corporation for breach of contract in failing to purchase its
manufactured goods for which the Nanjin facility was set up. The
financial cost attributable to this action, can not be estimated at this
time.
26 POST BALANCE SHEET EVENTS
On 7 July 2008, Mr Vincent Fodera resigned as a director of the Company.
On 22 July 2008 the Company placed 18,500,000 ordinary shares of 0.7p
each in the capital of the Company at a price of 1p per ordinary share
("Placing Shares") with certain investors (the "Placing") rising
�185,000. Pursuant to the Placing, participants have additionally been
granted one warrant to subscribe for an additional ordinary share in
Immersion Technologies for every two new ordinary shares subscribed in
the Placing. These warrants are exercisable at 1.5p per share for a
period of five years from the date of admission of the Placing Shares to
trading on AIM.
On 18 August 2008, the Company placed 17,500,000 ordinary shares of 0.7p
each in the capital of the Company at a price of 1p per ordinary share
raising �175,000. Pursuant to the Placing, participants have additionally
been granted one warrant to subscribe for an additional ordinary share in
Immersion Technologies for every two new ordinary shares subscribed in
the Placing. These warrants are exercisable at 1.5p per share for a
period of five years from the date of admission of the Placing Shares to
trading on AIM.
The Company has also issued a further 1,100,000 ordinary shares of 0.7p
each, in lieu of fees related to the Placing (the "Fee Shares"). The
recipients of the Fee Shares have been granted Warrants on the same basis
as the participants in the Placing, as described above.
27 Profit and loss account of the parent company
As permitted by section 230 of the Companies Act 1985, the profit and
loss account of the parent company has not been separately presented in
these accounts. The parent company loss for the year was �917,748
(2007:loss �274,985).
Additional Notes:
The above financial information comprises non-statutory accounts within the meaning of section 240 of the Companies Act 1985. The
financial information for the year ended 30 June 2008 has been extracted from published accounts for the year ended June 2008 that have been
delivered to the Registrar of Companies and on which the report of the auditors was unqualified and did not contain statements under s237
(2) or (3) of the Companies Act 1985.
The Report and Accounts will be posted to shareholders by Friday 19th December 2008. Copies may be obtained during normal office hours
from the Company's registered office, Level 5, 22 Arlington Street, London, SW1A 1RD or from the company's website, www.iti-plc.com.
Contacts:
Immersion Technologies
International plc
David Lenigas/Kiran Morzaria +44 207 016 5100
Beaumont Cornish - Nominated
Adviser
Roland Cornish/Michael Cornish +44 (0) 207 628 3396
Pelham Public Relations
Archie Berens +44 (0) 20 7743 6679 / +44 (0) 7802 442 486
This information is provided by RNS
The company news service from the London Stock Exchange
END
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