TIDMINN
RNS Number : 8430N
Innovision Research&Technology PLC
18 June 2010
Innovision Research & Technology plc
(the "Company")
Financial Results for the year ended 31 March 2010
Innovision Research & Technology (AIM: INN.L), a leader in the development of IP
for Near Field Communications, today announces its results for the year ended 31
March 2010.
Financial Highlights
· Revenue approximately GBP2.0 million (to 31 March 2009: approximately
GBP1.2 million).
· Approximately GBP2.3 million spent on direct investment in Near Field
Communications IP (2009: approximately
GBP1.6 million).
· Cash deposits as at 31 March 2010 of approximately GBP4.1 million (31
March 2009: approximately GBP3.5 million).
· Successful placing of 30 million shares raising approximately GBP5.2
million net of expenses.
Operational Highlights
· Focus on the first phase of implementation of several major contracts
with Tier 1 suppliers into the mobile telecoms industry.
· Significant investment in our 1.8volt generation of the Company's Near
Field Communication (NFC) IP (GEM(TM)2).
· Delivered technology to first Chinese customer which has been
incorporated into an initial chip.
· Two major contracts with leading global wireless companies signed since
the year end.
Announced today was a recommended cash offer by Broadcom Corporation for the
entire share capital of the Company at a price of 35p per share.
Enquiries:
+-------------------------------------------+------------------+
| Innovision Research & Technology plc | Tel: 01285 888 |
| | 200 |
+-------------------------------------------+------------------+
| David Wollen, Chief Executive Officer | |
+-------------------------------------------+------------------+
| Brian McKenzie, Finance Director | |
+-------------------------------------------+------------------+
| | |
+-------------------------------------------+------------------+
| KBC Peel Hunt Ltd (Nominated Adviser and | Tel: 020 7418 |
| Broker) | 8900 |
+-------------------------------------------+------------------+
| Jonathan Marren | |
+-------------------------------------------+------------------+
| David Anderson | |
+-------------------------------------------+------------------+
| | |
+-------------------------------------------+------------------+
| ICIS (Financial PR) | Tel: 020 7651 |
| | 8688 |
+-------------------------------------------+------------------+
| Caroline Evans-Jones | |
+-------------------------------------------+------------------+
| Hilary Millar | |
+-------------------------------------------+------------------+
THE CHAIRMAN's AND THE CHIEF EXECUTIVE's REPORT
This year as a whole has been focused on the first phase of implementation of
several major contracts with Tier 1 suppliers into the mobile telecoms industry
and significant investment in our 1.8volt generation of our Near Field
Communication (NFC) IP (GEM(TM)2). This investment has paid off with two major
contracts with leading global wireless companies since the year end. This has
considerably increased the momentum of the business and we are confident that
more contracts will follow during the rest of the year.
The semiconductor industry appears to be recovering having been greatly affected
by the general economic conditions of a year or so ago and although there is an
element of restocking taking up capacity within foundries, we are encouraged
with the overall level of activity. On the design side however uncertainty
remains with many companies affected by mergers, acquisitions, reorganisations
and redundancies.
The NFC market continues to get increasing coverage with positive statements
from the payment processors, mobile network operators and handset manufacturers.
Despite the announced cancellation of the Nokia 6216, we are particularly
pleased to report that a number of manufacturers appear to be close to launching
mainstream handsets incorporating NFC albeit using standalone controller chips.
As a result of our recent successes, we have been approached by a major
semiconductor company regarding a cash offer for the entire share capital of the
company. Taking into consideration the price on offer, our future funding
requirements and the risks associated with the available strategic options, we
have recommended that shareholders should accept the offer for the reasons set
out in the announcement made in respect of the offer.
Near Field Communication
Our existing NFC customer contracts involve the integration of Innovision's
intellectual property (IP) into chips which combine several wireless functions
onto one chip ("combo" chips). We see "combo" chips as the ultimate mass market
offering but we have noted an increase in enquiries about developing a
stand-alone NFC controller based on our IP to fill a perceived gap in the market
for the next few years. The development of GEM(TM)2 has been more involved and
taken longer than planned but is now seen to be delivering results, with two
major new contracts since the year end. Due to the timing of customer
requirements to deliver initial test devices the intensity on their programmes
has been raised and we have responded accordingly. However, the Company remains
on track to generate significant royalties arising from mobile handset shipments
starting in 2012.
Securing our NFC IP into a significant proportion of the NFC handsets shipped
will provide a solid foundation for sales of our tags and peripheral devices to
service the applications that will be developed using the NFC functionality. We
are making progress within the tag business, supplying into relatively small
scale trials for applications such as healthcare, transport ticketing, social
networking and entertainment, which is a very encouraging indicator of future
trends.
China
In China, we have delivered our technology to our first customer, and this has
already been incorporated into an initial chip. Early results from the testing
and evaluation of samples are encouraging. Once qualified, we expect royalties
from product sales to begin in the second half of 2010. Other prospects are in
the pipeline and there is clearly a huge potential to work with local companies
to propagate our designs into the local market.
We have continued to consolidate our position on the supply side in China,
setting up efficient and cost effective subcontracted manufacturing for chips
and complete tags. This is an important step to securing a position in the tag
market over the coming years.
Financing
In July, we completed a successful placing of 30 million shares raising GBP5.2m
net of expenses. This funding is designated to support development of the NFC
IP business prior to royalty flow, and, the development of the NFC product/tag
business. On the back of the contracts won, we increased the engineering team
headcount by 40% with a combination of shorter-term contract staff and planned
permanent employees in order to fulfil the customer commitments and increase the
investment in our market leading NFC IP. To sustain our success in the medium
to longer term in this space, we would expect to raise additional, significant
capital in the short to medium term in order to continue to deliver our business
plan.
Results for the year
The Company is still in the pre-royalty phase and therefore the majority of
revenue again relates only to customer funded development engineering. Even so
we are pleased to report that revenue was significantly higher than the previous
year at GBP2.0m (2009: GBP1.2m) with activity ramping up and major progress made
on the contracts signed in the first half of 2009, This progress has not been
without delays and technical challenges which is reflected in the higher cost of
the development engineering work. Revenue from products forms a larger
proportion of the total during this year due to increased sales of our Jewel
limited use contactless ticketing solution.
Gross profit has, as predicted, been impacted by the incremental engineering
resource required to address the technical and customer specific challenges of
our current contracts. Some of the incremental resource has been from
contractors in order to maintain flexibility though periods of peak activity,
however this has come at a higher effective man day rate.
We continued to invest in our NFC IP with the development of future generations
and new tag products, spending GBP2.3m (2009: GBP1.6m) on direct investment.
This investment, together with our strong design teams, has been a key element
in helping us to secure even more contracts against strong competition.
Although the focus has now shifted to the implementation phases of our customer
contracts, we will continue to further develop our background IP over the coming
years.
As expected, staff costs have increased significantly with a major increase in
headcount in the engineering team in order to support the new business won.
However as a large proportion of these staff costs relate to work done on the
development of our background IP which have been capitalised, administrative
expenses stood at GBP2.5m (2009: GBP3.7m). The loss before tax was comparable
to the prior year at GBP2.9m (2009: GBP2.9m).
At 31 March 2010, we had cash deposits of GBP4.1m (2009: GBP3.5m) and additional
current assets of GBP2.0m (2009: GBP1.5m). Net cash inflow was GBP0.6m which
equates to GBP4.6m outflow excluding GBP5.2m net proceeds from the share placing
(2009: outflow of GBP2.0m). The decline in cash flow is a result of the
increased activity in development engineering which has lead to an increased
head count of both employees and contractors.
Operations Review
Over the period, we have significantly strengthened our IC design capability by
increasing our engineering team from 33 to 44 permanent staff and have also
built up a pool of knowledgeable contractors to call on to meet short and medium
term demands as they arise. We have maintained our position as a leading company
in our field including GBP2.3m investment in developing and transferring our IP
to state of the art technology and manufacturing processes.
The primary focus for our talented design team is the work on existing
development programmes for our major customers and the continued development of
our background IP to meet the market demands for existing and prospective
customers. Good progress has been made in all areas though at the cost of
additional resources.
In the tag area, we have made good progress both on technology development and
production costs. We expect to start production for a specific large customer
in the second half of 2010. The volume of NFC-related tag sales is starting to
increase and we are investing now to take advantage of what we believe will be a
very attractive market in the medium term.
In July, we completed the relocation of the system design facility in Wokingham.
We have identified a cost effective option to move our Cirencester headquarters
to more appropriate premises from which to manage the next stages of the
company's development. We plan to move building over the summer months.
We have strengthened our team involved in the NFC global standards body (see
www.nfc-forum.org) and have taken on key roles in a number of key committees.
Having been recognised last year as one of the leading companies in this market
with our election to the Board of the NFC Forum, alongside such companies as
Nokia, Sony, Samsung, Visa, Mastercard and Microsoft, we are able to stay fully
abreast of and directly influence critical developments in the NFC market moving
forward.
We are members of and have contributed to the European Telecommunications
Standards Institute (ETSI) (see www.etsi.org) in order to influence related
standards within the telecoms arena. In the transport market we are members of
ITSO which provides a specification for secure 'end to end' inter-operable
ticketing transactions, utilising relevant ISO and emerging CEN standards. As
well as being a direct market for our Jewel product, transport ticketing
represents one of the core use cases for NFC.
Current trading and outlook
Our main short-term strategy has been to propagate Innovision IP with major
semiconductor vendors for use in 'combo' and other chips designed for the mobile
handset and consumer device markets. 'Combo' chips are a major growth area in
handsets and combine multiple wireless functions such as Bluetooth, WiFi, FM and
GPS on a single chip.
Over recent years we have secured a number of major contracts with global
semiconductor companies to incorporate our NFC IP into their system devices
targeted primarily at the mobile handset market, including two new contracts in
2010 and four in 2009. All these programmes are in the early stages which
typically involve delivering engineering services for which we receive
development and licence revenues. When these customers eventually reach expected
volume production each of these contracts could generate multi-million pound
royalty revenue streams over several years. The exact timing for this to occur
is hard to predict as it depends on a complex design cycle involving our direct
semiconductor customers, handset manufacturers and mobile operators. Our current
view is that royalties will begin to flow in 2012.
The semiconductor and consumer electronics industry has typically moved at a
very rapid pace with the technologies and industry participants evolving just as
rapidly. The mobile handset and consumer device market is typical of such speed
of development and has seen rapid changes through the evolution of cellular
networks, digital networks, high speed data networks and mobile broadband. The
market relies upon a number of different technologies such as NFC which may or
may not finally be included in end products whose own commercial success depends
on consumer acceptance. To sustain their success in the medium to longer term
in this space, innovative companies like ourselves must access significant
capital and extensive international customer networks, both requiring patience
and persistence. We would expect to raise additional, significant capital in
the short to medium term in order to continue to deliver our business plan.
We remain of the view that the potential for the tag market may ultimately be
greater than the royalty stream from the NFC devices themselves. Each device
will create a market for multiple tags in applications such as smart posters,
business cards, quick texting, staff location, music downloads, easy pairing of
devices, loyalty/top-up cards, anti-counterfeiting and website redirection. The
list is likely to extend rapidly as new applications are conceived and brought
online so we have invested in the development of the EmeraldTM platform designed
to allow us to create optimised tag ICs for individual applications cost
effectively. The adoption of NFC handsets and market penetration is a
pre-requisite to the mass tag market. This is precisely the focus of our NFC IP
contracts and leaves us well placed to respond quickly to new use cases and
attack this market with a series of niche products. Further developments in
this area may include creating tags with additional features such as temperature
or pressure sensors, or extra memory capacity. To prepare for this and build on
our existing position in the developing NFC ecosystem, we recently launched our
retail tag website (www.buynfc.com) eventually to develop into a one-stop-shop
for a burgeoning variety of tags, readers and requisite Apps.
However as referred to above, we have been approached by a major semiconductor
company with a view to making a cash offer for the entire share capital of the
company. Taking into consideration the price on offer, our future funding
requirements and the risks associated with the available strategic options, we
have recommended that shareholders should accept the offer for the reasons set
out in the announcement made in respect of the offer
Malcolm Baggott
David Wollen
Chairman
Chief Executive Officer
17 June 2010
17 June 2010
DIRECTOR'S REPORT
The Directors submit their report and the financial statements of Innovision
Research & Technology plc for the year ended 31 March 2010.
Business of the Company
Innovision Research & Technology plc is a leader in the design of near field
data communications and RFID solutions, focusing on the development and
licensing of custom integrated circuits.
The results of the Company are set out in the statement of comprehensive income.
The loss for the year after taxation was GBP2,366,000. The Directors do not
recommend the payment of a dividend, which leaves the retained loss of
GBP2,366,000 to be transferred to equity.
A review of the Company's business during the year and planned future
developments is set out in the Chairman and Chief Executive's Report.
Key Performance Indicators
The Company's key performance indicators are financial measures relating to
revenue, profitability and cash, and non-financial measures relating to
engineering utilisation. These are detailed in the Chairman and Chief
Executive's Report.
Directors and Directors' Interests
The following Directors have held office since 1 April 2009 and their interests
in the shares of the Company are as follows:
a) Ordinary Shares
+----------------+----------+----------+
| | Ordinary | Ordinary |
| | shares | shares |
| | of 1p | of 1p |
| | each | each |
+----------------+----------+----------+
| | 31 | 1 |
| | March | April |
| | 2010 | 2009 |
+----------------+----------+----------+
| MAW | 79,934 | 38,334 |
| Baggott | | |
+----------------+----------+----------+
| DP | 74,933 | 33,333 |
| Wollen | | |
+----------------+----------+----------+
| BG | 41,600 | - |
| McKenzie | | |
+----------------+----------+----------+
| Dr IM | 72,350 | 30,750 |
| Buckley-Golder | | |
+----------------+----------+----------+
| Dr S | 5,500 | - |
| Morris | | |
+----------------+----------+----------+
b) Share Options
+----------+------------+----------+-----------+----------+-------------------+
| | Scheme | Date | Number | Exercise | Exercise |
| | | of | of | Price | period |
| | | Grant | Share | | From - |
| | | | Options | | To |
+----------+------------+----------+-----------+----------+-------------------+
| DP | EMI | 07/02/06 | 163,934 | 61p | 07/02/09-07/02/16 |
| Wollen | scheme | | | | |
+ +------------+----------+-----------+----------+-------------------+
| | Unapproved | 07/02/06 | 409,836 | 61p | 07/02/09-07/02/16 |
| | scheme | | | | |
+ +------------+----------+-----------+----------+-------------------+
| | Unapproved | 05/08/08 | 1,000,000 | 11.75p | 05/08/11-05/08/18 |
| | scheme | | | | |
+ +------------+----------+-----------+----------+-------------------+
| | LTIP | 19/07/06 | 300,000 | 1p | 24/02/10-19/07/16 |
| | scheme | | | | |
+----------+------------+----------+-----------+----------+-------------------+
| | Unapproved | 21/01/10 | 750,000 | 18.50p | 21/01/13-21/01/20 |
| | scheme | | | | |
+----------+------------+----------+-----------+----------+-------------------+
| BG | EMI | 05/08/08 | 500,000 | 11.75p | 05/08/11-05/08/18 |
| McKenzie | scheme | | | | |
+----------+------------+----------+-----------+----------+-------------------+
| | EMI | 21/01/10 | 222,950 | 18.50p | 21/01/13-21/01/20 |
| | scheme | | | | |
+----------+------------+----------+-----------+----------+-------------------+
| | Unapproved | 21/01/10 | 27,050 | 18.50p | 21/01/13-21/01/20 |
| | scheme | | | | |
+----------+------------+----------+-----------+----------+-------------------+
| Dr S | EMI | 20/01/09 | 500,000 | 11.75p | 20/01/12-20/01/19 |
| Morris | scheme | | | | |
+----------+------------+----------+-----------+----------+-------------------+
During the year none of the Directors exercised any share options and no
Directors' share options lapsed.
The market price of the shares at the close of business on 31 March 2010 was
15.75 pence and the range during the year was 15.75 pence to 32.00 pence.
Payment Policy
The Company does not follow any formal code or standard on payment practice. In
the absence of dispute, amounts due to suppliers are settled as expeditiously as
possible within their terms of payment.
Trade payables at the year-end represented approximately 72 days (2009: 84 days)
of purchases.
Research and Development
Research and Development is an integral part of the Company's activities and
considerable investment was made during the period. GBP2.3m (2009: GBP1.3m) of
development cost has been capitalised as an intangible asset and a further
GBP0.05m (2009: GBP0.24m) has been charged to the statement of comprehensive
income.
Employees
The Company has a policy of involving employees at all levels and keeping them
informed through regular briefing sessions conducted by the Directors.
Health & Safety and the Environment
The Company is committed to upholding the highest standards of health and safety
and environmental protection for the benefit of its employees, the public at
large and the environment.
Charitable and Political Donations
The Company did not make any charitable or political donations during the year.
Risk Management
Given the size of the Company, the Directors have not delegated the
responsibility of monitoring risk management to a sub-committee of the Board and
the full Board formally reviews risk on a quarterly basis. The nature of the
Company's business exposes it to a variety of risks, which are common to similar
businesses. Generally these risks fall within the following categories:
technology and market; contractual; personnel and operations; and financial.
Where significant controllable risks are identified, mitigating action plans are
implemented with a Board member responsible for monitoring and reporting on
progress.
Technology and market risks include the introduction of entirely competing
technologies, competitive offerings within the same technology space, the
feasibility of achieving required performance within the parameters defined by
contracts and Standards Bodies, and infringement of patents. These risks are
considered and whilst they cannot be fully mitigated we regularly review the
market and IP landscape for indications of risk. The analogue, RF and digital
design skills of the engineering team are inherently transferable over a period
of time if we took the decision to focus on a new market area.
The contractual risks are reviewed by the Board when taking on a new contract
and at least quarterly as each contract progresses. We employ formal quality
procedures to deliver on our contractual commitments.
Personnel and operational risks are related to securing and retaining staff with
the key skills required to deliver the strategy. As we increase the size of the
design team the reliance on key individuals is reduced. The quality systems in
the Company require the documentation of work carried out and we have
successfully built up a pool of potential contractors to fill short term skill
gaps and are continuously looking for candidates with core skills to fill
positions as they arise. Operational risks are reviewed with formal contingency
plans in place to deal with a disastrous situation.
The Company's operations expose it to a variety of financial risks. However
with no debt financing and limited exposure to commodity price risk these risks
are minimal. The policies and guidelines set by the Board of Directors are
implemented by the Company's finance department and include liquidity reviews
and credit risk policies that require appropriate credit checks and or Board
review of customers before sales are made. The Company's only interest bearing
assets are its cash balances, which are, held on deposit with major banks or
similar financial institutions.
Full details of financial risk management policies are disclosed in note 2 to
the financial statements.
Substantial Shareholdings
Other than the holdings of the Directors, which are set out above, the Directors
are aware of the following who, as at 20 May 2010, were interested, directly or
indirectly, in 3 percent or more of the Company's share capital:
+----------+-------------------------------+------------+-------------+
| | | |
| | No. of | Percentage |
| | Ordinary | of Issued |
| | Shares of | Share |
| | 1p each | Capital |
+------------------------------------------+------------+-------------+
| | Herald Investment Management | 11,594,438 | 12.66% |
+----------+-------------------------------+------------+-------------+
| | Mr Marc Borrett | 7,700,710 | 8.41% |
+----------+-------------------------------+------------+-------------+
| | Schroder Investment | 7,494,102 | 8.19% |
| | Management | | |
+----------+-------------------------------+------------+-------------+
| | Invesco Asset Management | 6,564,664 | 7.44% |
+----------+-------------------------------+------------+-------------+
| | Octopus Investments | 6,388,889 | 6.98% |
+----------+-------------------------------+------------+-------------+
| | Helium Special Situations | 5,250,000 | 5.73% |
| | Fund | | |
+----------+-------------------------------+------------+-------------+
| | Legal and General | 5,000,000 | 5.46% |
+----------+-------------------------------+------------+-------------+
| | Majedie Asset Management | 4,531,073 | 4.95% |
+----------+-------------------------------+------------+-------------+
| | Gartmore Investment | 4,354,195 | 4.76% |
| | Management | | |
+----------+-------------------------------+------------+-------------+
| | Neue Bank | 3,110,000 | 3.40% |
+----------+-------------------------------+------------+-------------+
| | British Steel Pension Fund | 2,880,555 | 3.15% |
+----------+-------------------------------+------------+-------------+
| | | | |
+----------+-------------------------------+------------+-------------+
Going concern
The Financial Statements have been prepared on the going concern basis. The
Directors have considered future cash forecasts and revenue projections, taking
account of sensitivity to possible changes in trading performance, in their
consideration of going concern. These forecasts and projections are reviewed at
least quarterly by the Board.
The Company's business activities, together with the factors likely to affect
its future development, performance and position are set out in the Chairman's
and Chief Executive's Report. In addition, note 2 to the Financial Statements
includes the Company's objectives, policies and processes for managing its
capital; its financial risk management objectives; and its exposure to credit
risk. The principal risks and uncertainties which could adversely impact the
long term performance of the Company have been considered in detail by the Board
at the Board Strategy sessions. All of these matters have been taken into
account by the Directors in coming to their conclusions on going concern.
Management is currently of the opinion that the Company has adequate financial
resources and a robust policy towards treasury risk and cash flow management.
Cash flows are monitored on a day to day basis within the Company's finance
function, with emphasis on good working capital management. The Directors
believe that the Company is adequately placed to manage its business risks
successfully despite the current uncertain economic outlook and challenging
macro economic conditions.
After making enquiries, the Directors have a reasonable expectation that the
Company has access to adequate resources to continue in operational existence
for at least the next twelve months from the date of approval of these financial
statements. Accordingly, they continue to adopt the going concern basis in
preparing the Annual Report and Financial Statements.
Statement as to disclosure of information to the auditor
The Directors who were in office on the date of approval of these financial
statements have confirmed, as far as they are aware, that there is no relevant
audit information of which the auditor is unaware. Each of the Directors have
confirmed that 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 it has been communicated to the auditor.
Auditor
Baker Tilly UK Audit LLP has indicated its willingness to continue as auditor to
the Company and a resolution to reappoint the auditor will be proposed at the
Annual General Meeting.
By order of the Board
Brian McKenzie
Company Secretary
17 June 2010
CORPORATE GOVERNANCE COMPLIANCE STATEMENT
As a Company quoted on the Alternative Investment Market of the London Stock
Exchange, the Company is not required to comply with the revised Combined Code
(2006). However the Board seeks to comply with the Code wherever practical and
appropriate for a company of its size.
Set out below is a summary of how, at 31 March 2010, the Company was dealing
with key requirements of the Combined Code.
Audit Committee
The Audit Committee comprised the two Non-Executive Directors, one of whom
qualified as a Chartered Accountant and has recent and relevant experience. The
Audit Committee met twice during the year. The Board considers the current
committee appropriate for a company of this size.
Remuneration Committee
The Non-Executive Directors form the Remuneration committee. Its key role is to
make recommendations to the Board, within agreed terms of reference, on the
Company's framework of executive remuneration and its cost and to determine on
behalf of the Board specific remuneration packages for each of the Executive
Directors. The Committee met three times during the year.
Nominations Committee
The appointment of all Directors is a formal process undertaken by a Nominations
committee consisting of the Chairman, the Chief Executive Officer and the Senior
Independent Non-Executive Director.
Directors' Training and Development
Although there is no formal training programme, the Company provides Directors'
training as and when necessary. A programme of induction is provided to all new
Directors on appointment and the Executive Directors have annual appraisals at
which their historic performance and future development needs are assessed.
Senior Independent Director
Dr Ian Buckley-Golder is the Senior Independent Non-Executive Director.
Board Composition
At the year-end, the Board consisted of three Executive and two Non-Executive
Directors. The Board considers all its non-executive directors to be
independent in character and judgement as defined by the Code. Any shareholdings
are not considered material. The Board continues to actively review the need for
the appointment of an additional Independent Non-Executive Director.
The posts of Non-Executive Chairman and Chief Executive Officer are held by
separate individuals and the division of responsibilities is clearly defined.
The Board considers the current Board structure appropriate for the Company.
There are processes in place enabling Directors to take independent advice at
the Company's expense in the furtherance of their duties and to have access to
the advice and services of the Company Secretary.
Internal Audit
The Board considers that there is no necessity at the present time to establish
an independent internal audit function; the need to create one will be
periodically reviewed as the Company grows.
Internal Controls and Risk Management
The Board of Directors is ultimately responsible for the Company's system of
internal controls and reviews its effectiveness by continuous audits of its
quality management system. However, such a system is designed to manage rather
than eliminate the risk of failure to achieve business objectives, and can
provide only reasonable and not absolute assurance against misstatement or loss.
Key aspects of the Company's internal financial control system are:
* The Board is responsible for overall strategy and for approving budgets, major
capital expenditure, forecasts, plans and dividend policy.
* The Directors review the management accounts, together with reports covering
all significant activities monthly.
* The Company has implemented control procedures designed to ensure complete and
accurate accounting for financial transactions and to limit the potential
exposure to loss of assets or fraud.
* Measures taken include physical controls, segregation of duties, reviews by
management and external audit to the extent necessary to arrive at their audit
opinion.
* The Company is committed to the highest standards of business conduct and
seeks to maintain these standards across all of its operations.
* The Company has an appropriateorganisationalstructure for planning, executing,
controlling and monitoring business operations in order to achieve the Company's
objectives. Lines of responsibility and delegations of authority are
documented.
* From time to time sub-committees of the Board, comprising both Executive and
Non-Executive Directors are established to approve the detail of matters tabled
at full Board meetings.
* All Executive Directors are appointed on a rolling contract with not more than
12-month notice periods and the Non-Executives are appointed for fixed terms not
exceeding one year.
* The Non-Executive Directors monitor the Company's performance and the actions
of the Management. In addition the Non-Executives play a major role in the
various committees of the Board. They are kept fully informed of all major
operational and strategic issues.
The process of monitoring and updating internal controls and procedures
continues throughout the year and has been supplemented by the implementation of
an annual risk management review, the focus being to assess existing processes
and practices in order to facilitate effective risk management based on sound
internal controls.
The Company operates a formal ISO 9001 and ISO 13485 accredited Quality System.
Going Concern
After making enquiries, the Directors have a reasonable expectation that the
Company has access to adequate resources to continue in operational existence
for the foreseeable future as detailed in the basis of preparation note. For
this reason, they continue to adopt the going concern basis in preparing the
financial statements.
Relations with shareholders
The Chairman makes himself available to major shareholders on request and
periodically attends meetings with and presentations to shareholders. This is
supplemented by twice yearly feedback to the Board on meetings between
management and investors. The Annual General Meeting is normally attended by all
Directors, and shareholders are invited to ask questions during the meeting and
to meet with Directors after the formal proceedings have ended.
The Company maintains a corporate website (www.innovision-group.com) containing
information of interest to institutional shareholders.
STATEMENT OF DIRECTORS' RESPONSIBILITIES IN THE PREPARATION OF THE FINANCIAL
STATEMENTS
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 elected to prepare the
financial statements of the company in accordance with International Financial
Reporting Standards ("IFRS") as adopted by the European Union ("EU").
The financial statements are required by law and IFRS as adopted by the EU to
present fairly the financial position and performance of the company. The
Companies Act 2006 provides in relation to such financial statements that
references in the relevant part of that Act to financial statements giving a
true and fair view are references to their achieving a fair presentation.
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 of the profit or loss of the company for that period.
In preparing the financial statements, the directors are required to:
a. select suitable accounting policies and then apply them consistently;
b. make judgements and accounting estimates that are reasonable and
prudent;
c. state whether they have been prepared in accordance with IFRS as adopted
by the EU;
d. prepare the financial statements on the going concern basis unless it is
inappropriate to presume that the company 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 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 hence
for taking reasonable steps for the prevention and detection of fraud and other
irregularities.
The directors are responsible for the maintenance and integrity of the corporate
and financial information included on the Innovision Research & Technology plc
website.
Legislation in the United Kingdom governing the preparation and dissemination of
financial statements may differ from legislation in other jurisdictions.
INDEPENDENT AUDITOR'S REPORT FOR THE YEAR ENDED 31 MARCH 2010
Independent Auditor's Report to the Members of Innovision Research & Technology
plc
We have audited the financial statements which comprise the Statement of
Financial Position, the Statement of Comprehensive Income, the Statement of
Changes in Shareholders' Equity and the Statement of Cash Flows and the related
notes. The financial reporting framework that has been applied in their
preparation is applicable law and International Financial Reporting Standards
(IFRSs) as adopted by the European Union.
This report is made solely to the company's members, as a body, in accordance
with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been
undertaken so that we might state to the company's members those matters we are
required to state to them in an auditor's report and for no other purpose. To
the fullest extent permitted by law, we do not accept or assume responsibility
to anyone other than the company and the company's members as a body, for our
audit work, for this report, or for the opinions we have formed.
Respective responsibilities of directors and auditors
As more fully explained in the Directors' Responsibilities Statement, the
Directors are responsible for the preparation of the financial statements and
for being satisfied that they give a true and fair view. Our responsibility is
to audit the financial statements in accordance with applicable law and
International Standards on Auditing (UK and Ireland). Those standards require
us to comply with the Auditing Practices Board's (APB's) Ethical Standards for
Auditors.
Scope of the audit of the financial statements
A description of the scope of an audit of financial statements is provided on
the APB's website at www.frc.org.uk/apb/scope/UKNP.
Opinion on the financial statements
In our opinion the financial statements:
· give a true and fair view of the state of the company's affairs as at 31
March 2010 and of its loss for the year then ended;
· have been properly prepared in accordance with IFRSs as adopted by the
European Union; and
· have been prepared in accordance with the provisions of the Companies Act
2006.
Opinion on other matter prescribed by the Companies Act 2006
In our opinion the information given in the Directors' Report for the financial
year for which the financial statements are prepared is consistent with the
financial statements.
Matters on which we are required to report by exception
We have nothing to report in respect of the following matters where the
Companies Act 2006 requires us to report to you if, in our opinion:
· adequate accounting records have not been kept, or returns adequate for
our audit have not been received from branches not visited by us; or
· the financial statements are not in agreement with the accounting records
and returns; or
· certain disclosures of directors' remuneration specified by law are not
made; or
· we have not received all the information and explanations we require for
our audit.
ANDREW ALLCHIN (Senior Statutory Auditor)
For and on behalf of BAKER TILLY UK AUDIT LLP, Statutory Auditor
Chartered Accountants
Hartwell House
55-61 Victoria Street
Bristol
BS1 6AD
STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 MARCH 2010
+----------------------------------------+-------+---------+----------+
| | Notes | 2010 | 2009 |
| | | GBP'000 | GBP'000 |
+----------------------------------------+-------+---------+----------+
| | | | |
+----------------------------------------+-------+---------+----------+
| Revenue | 3 | 2,011 | 1,192 |
+----------------------------------------+-------+---------+----------+
| | | | |
+----------------------------------------+-------+---------+----------+
| Cost of sales | | (2,511) | (600) |
+----------------------------------------+-------+---------+----------+
| | | | |
+----------------------------------------+-------+---------+----------+
| Gross (loss) / profit | | (500) | 592 |
+----------------------------------------+-------+---------+----------+
| | | | |
+----------------------------------------+-------+---------+----------+
| Administrative expenses | | (2,463) | (3,731) |
+----------------------------------------+-------+---------+----------+
| | | | |
+----------------------------------------+-------+---------+----------+
| OPERATING LOSS | | (2,963) | (3,139) |
+----------------------------------------+-------+---------+----------+
| | | | |
+----------------------------------------+-------+---------+----------+
| Investment Income | 4 | 79 | 216 |
+----------------------------------------+-------+---------+----------+
| | | | |
+----------------------------------------+-------+---------+----------+
| LOSS BEFORE TAXATION | 5 | (2,884) | (2,923) |
+----------------------------------------+-------+---------+----------+
| | | | |
+----------------------------------------+-------+---------+----------+
| Income Tax | 8 | 518 | 334 |
+----------------------------------------+-------+---------+----------+
| | | | |
+----------------------------------------+-------+---------+----------+
| LOSS FOR THE YEAR | | (2,366) | (2,589) |
+----------------------------------------+-------+---------+----------+
| | | | |
+----------------------------------------+-------+---------+----------+
| Other comprehensive income for the | | - | - |
| year | | | |
+----------------------------------------+-------+---------+----------+
| | | | |
+----------------------------------------+-------+---------+----------+
| TOTAL COMPREHENSIVE INCOME FOR THE | | (2,366) | (2,589) |
| YEAR ATTRIBUTABLE TO OWNERS | | | |
+----------------------------------------+-------+---------+----------+
| | | | |
+----------------------------------------+-------+---------+----------+
| | | | |
+----------------------------------------+-------+---------+----------+
| | | | |
+----------------------------------------+-------+---------+----------+
| | | | |
+----------------------------------------+-------+---------+----------+
| | | | |
+----------------------------------------+-------+---------+----------+
| | | | |
+----------------------------------------+-------+---------+----------+
| | | | |
+----------------------------------------+-------+---------+----------+
| LOSS PER SHARE | | Pence | Pence |
| | | per | per |
| | | share | share |
+----------------------------------------+-------+---------+----------+
| | | | |
+----------------------------------------+-------+---------+----------+
| Basic and Diluted | 9 | (2.89) | (4.20) |
+----------------------------------------+-------+---------+----------+
The operating loss for the year arises from the Company's continuing operations.
+----------------------------------------+--------+----------+-----------+
| STATEMENT OF FINANCIAL POSITION AS AT 31 | | |
| MARCH 2010 | | |
| | | |
+-------------------------------------------------+----------+-----------+
| | Notes | 2010 | 2009 |
| | | GBP'000 | GBP'000 |
+----------------------------------------+--------+----------+-----------+
| Non-Current Assets | | | |
+----------------------------------------+--------+----------+-----------+
| Property, plant & equipment | 10 | 254 | 217 |
+----------------------------------------+--------+----------+-----------+
| Intangible assets | 11 | 2,806 | 646 |
+----------------------------------------+--------+----------+-----------+
| Other receivables | 14 | 1 | 2 |
+----------------------------------------+--------+----------+-----------+
| | | | |
+----------------------------------------+--------+----------+-----------+
| | | 3,061 | 865 |
+----------------------------------------+--------+----------+-----------+
| | | | |
+----------------------------------------+--------+----------+-----------+
| Current Assets | | | |
+----------------------------------------+--------+----------+-----------+
| Inventories | 13 | 51 | 80 |
+----------------------------------------+--------+----------+-----------+
| Trade and other receivables | 14 | 1,395 | 1,125 |
+----------------------------------------+--------+----------+-----------+
| Current tax asset | | 517 | 310 |
+----------------------------------------+--------+----------+-----------+
| Cash and cash equivalents | 15 | 4,145 | 3,585 |
+----------------------------------------+--------+----------+-----------+
| | | | |
+----------------------------------------+--------+----------+-----------+
| | | 6,108 | 5,100 |
+----------------------------------------+--------+----------+-----------+
| | | | |
+----------------------------------------+--------+----------+-----------+
| TOTAL ASSETS | | 9,169 | 5,965 |
+----------------------------------------+--------+----------+-----------+
| | | | |
+----------------------------------------+--------+----------+-----------+
| Current Liabilities | | | |
+----------------------------------------+--------+----------+-----------+
| Trade and other payables | 16 | (1,075) | (607) |
+----------------------------------------+--------+----------+-----------+
| Provisions | 17 | - | (99) |
+----------------------------------------+--------+----------+-----------+
| | | | |
+----------------------------------------+--------+----------+-----------+
| TOTAL LIABILITIES | | (1,075) | (706) |
+----------------------------------------+--------+----------+-----------+
| | | | |
+----------------------------------------+--------+----------+-----------+
| | | | |
+----------------------------------------+--------+----------+-----------+
| | | | |
+----------------------------------------+--------+----------+-----------+
| NET ASSETS | | 8,094 | 5,259 |
+----------------------------------------+--------+----------+-----------+
| | | | |
+----------------------------------------+--------+----------+-----------+
| Equity | | | |
+----------------------------------------+--------+----------+-----------+
| Share Capital | 18 | 915 | 615 |
+----------------------------------------+--------+----------+-----------+
| Share Premium Account | | 26,596 | 21,735 |
+----------------------------------------+--------+----------+-----------+
| Retained Earnings | | (19,417) | (17,091) |
+----------------------------------------+--------+----------+-----------+
| | | | |
+----------------------------------------+--------+----------+-----------+
| TOTAL EQUITY ATTRIBUTABLE TO OWNERS | | 8,094 | 5,259 |
+----------------------------------------+--------+----------+-----------+
| OF THE COMPANY | | | |
+----------------------------------------+--------+----------+-----------+
The accompanying notes are an integral part of the financial statements. The
financial statements were approved and authorised for issue by the Board of
Directors on 17 June 2010 and signed on their behalf by:
David Peter Wollen Brian
Godfrey McKenzie
Director
Director
STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY FOR THE YEAR ENDED 31 MARCH 2010
+----------------------------+-------+---------+---------+----------+---------+
| | Notes | Share | Share | Retained | Total |
| | | Capital | Premium | Earnings | |
+----------------------------+-------+---------+---------+----------+---------+
| | | GBP'000 | GBP'000 | GBP'000 | GBP'000 |
| | | | | | |
+----------------------------+-------+---------+---------+----------+---------+
| At 1 April 2008 | | 615 | 21,735 | (14,531) | 7,819 |
+----------------------------+-------+---------+---------+----------+---------+
| | | | | | |
+----------------------------+-------+---------+---------+----------+---------+
| Comprehensive Income | | | | | |
+----------------------------+-------+---------+---------+----------+---------+
| Loss for the year | | - | - | (2,589) | (2,589) |
+----------------------------+-------+---------+---------+----------+---------+
| | | | | | |
+----------------------------+-------+---------+---------+----------+---------+
| Total comprehensive income | | - | - | (2,589) | (2,589) |
| for the year | | | | | |
+----------------------------+-------+---------+---------+----------+---------+
| | | | | | |
+----------------------------+-------+---------+---------+----------+---------+
| Transactions with Owners | | | | | |
+----------------------------+-------+---------+---------+----------+---------+
| Share based payments | 19 | - | - | 29 | 29 |
+----------------------------+-------+---------+---------+----------+---------+
| | | | | | |
+----------------------------+-------+---------+---------+----------+---------+
| | | | | | |
+----------------------------+-------+---------+---------+----------+---------+
| At 31 March 2009 | | 615 | 21,735 | (17,091) | 5,259 |
+----------------------------+-------+---------+---------+----------+---------+
| | | | | | |
+----------------------------+-------+---------+---------+----------+---------+
| Comprehensive Income | | | | | |
+----------------------------+-------+---------+---------+----------+---------+
| Loss for the year | | - | - | (2,366) | (2,366) |
+----------------------------+-------+---------+---------+----------+---------+
| | | | | | |
+----------------------------+-------+---------+---------+----------+---------+
| Total comprehensive income | | - | - | (2,366) | (2,366) |
| for the year | | | | | |
+----------------------------+-------+---------+---------+----------+---------+
| | | | | | |
+----------------------------+-------+---------+---------+----------+---------+
| Transactions with Owners | | | | | |
+----------------------------+-------+---------+---------+----------+---------+
| Issue of share capital | 18 | 300 | 5,100 | - | 5,400 |
+----------------------------+-------+---------+---------+----------+---------+
| Share issue costs | 18 | - | (239) | - | (239) |
+----------------------------+-------+---------+---------+----------+---------+
| Share based payments | 19 | - | - | 40 | 40 |
+----------------------------+-------+---------+---------+----------+---------+
| | | | | | |
+----------------------------+-------+---------+---------+----------+---------+
| Total transactions with | | 300 | 4,861 | 40 | 5,201 |
| Owners | | | | | |
+----------------------------+-------+---------+---------+----------+---------+
| | | | | | |
+----------------------------+-------+---------+---------+----------+---------+
| | | | | | |
+----------------------------+-------+---------+---------+----------+---------+
| | | | | | |
+----------------------------+-------+---------+---------+----------+---------+
| At 31 March 2010 | | 915 | 26,596 | (19,417) | 8,094 |
+----------------------------+-------+---------+---------+----------+---------+
| | | | | | |
+----------------------------+-------+---------+---------+----------+---------+
| | | | | | |
+----------------------------+-------+---------+---------+----------+---------+
There are no gains or losses recognised directly in equity.
STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31 MARCH 2010
+------------------------------------+------+----+---------+---------+
| | | | 2010 | 2009 |
| |Note | | GBP'000 | GBP'000 |
+------------------------------------+------+----+---------+---------+
| | | | | |
+------------------------------------+------+----+---------+---------+
| Operating activities | | | | |
+------------------------------------+------+----+---------+---------+
| Cash used in operations | 21 | | (2,617) | (895) |
+------------------------------------+------+----+---------+---------+
| Tax credit received | | | 311 | 160 |
+------------------------------------+------+----+---------+---------+
| | | | | |
+------------------------------------+------+----+---------+---------+
| Net cash used in operating | | | (2,306) | (735) |
| activities | | | | |
+------------------------------------+------+----+---------+---------+
| | | | | |
+------------------------------------+------+----+---------+---------+
| Investing activities | | | | |
+------------------------------------+------+----+---------+---------+
| Interest received | | | 151 | 209 |
+------------------------------------+------+----+---------+---------+
| Purchases of property, plant & | | | (175) | (143) |
| equipment | | | | |
+------------------------------------+------+----+---------+---------+
| Investment in intangible assets | | | (2,271) | (1,334) |
+------------------------------------+------+----+---------+---------+
| | | | | |
+------------------------------------+------+----+---------+---------+
| Net cash used in investing | | | (2,295) | (1,268) |
| activities | | | | |
+------------------------------------+------+----+---------+---------+
| | | | | |
+------------------------------------+------+----+---------+---------+
| | | | | |
+------------------------------------+------+----+---------+---------+
| Financing activities | | | | |
+------------------------------------+------+----+---------+---------+
| Proceeds on issue of shares | | | 5,400 | - |
+------------------------------------+------+----+---------+---------+
| Share capital issue costs | | | (239) | - |
+------------------------------------+------+----+---------+---------+
| | | | | |
+------------------------------------+------+----+---------+---------+
| Net cash from financing activities | | | 5,161 | - |
+------------------------------------+------+----+---------+---------+
| | | | | |
+------------------------------------+------+----+---------+---------+
| | | | | |
+------------------------------------+------+----+---------+---------+
| Net increase / (decrease) in cash | | | 560 | (2,003) |
| & cash equivalents | | | | |
+------------------------------------+------+----+---------+---------+
| Cash & cash equivalents at the | | | 3,585 | 5,588 |
| beginning of the year | | | | |
+------------------------------------+------+----+---------+---------+
| | | | | |
+------------------------------------+------+----+---------+---------+
| Cash & cash equivalents at the end | | | 4,145 | 3,585 |
| of the year | | | | |
+------------------------------------+------+----+---------+---------+
| | | | | |
+------------------------------------+------+----+---------+---------+
| | | | | |
+------------------------------------+------+----+---------+---------+
ACCOUNTING POLICIES FOR THE YEAR ENDED 31 MARCH 2010
Basis of preparation
Innovision Research & Technology plc is a public limited company incorporated in
the United Kingdom. The Company is domiciled in the United Kingdom and its
ordinary shares are traded on the Alternative Investment Market (AIM).
The financial statements have been prepared in pounds sterling which is the
functional currency of the Company.
The financial statements have been prepared on a going concern basis. The
Directors believe that the going concern basis is appropriate as the Company
will accept the recommended offer made by a major semiconductor company. The
Company will be funded by the new parent group following the acquisition. The
Company's forecasts and financial projections, taking account of reasonably
possible changes in trading performance, show that the Company will be able to
operate within the level of its current cash balances of GBP4.1m at 31 March
2010 until at least the completion of the transaction. The Board reviews the
forecasts and projections on an at least quarterly basis and would take steps to
raise further finance or put facilities in place should these forecasts show a
potential future shortfall.
The Company has a robust policy towards treasury risk and cash flow management.
Cash flows are monitored on a day to day basis within the Company's finance
function, with emphasis on good working capital management. Recent contract wins
mean that the Company is adequately placed to manage its business risks
successfully despite the current uncertain economic outlook and challenging
macro economic conditions.
Basis of accounting
The financial statements have been prepared in accordance with International
Financial Reporting Standards (IFRSs), as adopted by the European Union.
New standards and interpretations
In the current financial year, the Company has adopted IFRS 8 "Operating
Segments", IAS1 "Presentation of Financial Statements" (revised 2007), and
amendments to IFRS7 "Financial Instruments.
The adoption of IFRS 8 requires some further disclosures in note 3 to the
financial statements regarding major customers. IAS1 (revised 2007) has lead to
the primary statements being renamed and the format updated to comply with this
standard.
The Company has not chosen to adopt any standards in advance of their effective
dates.
The following standards have been adopted in the current period however their
adoption has not had any significant impact on the amounts reported in these
financial statements:
IFRS2 (amended) "Share-based payment - vesting conditions and cancellations"
At the date ofauthorisationof these financial statements the IASB and IFRIC have
issued the following standards and interpretations with an effective date
falling after the date of these financial statements and have not been applied
in these financial statements. The Directors anticipate that the adoption of
these standards and interpretations in future periods will not have a material
impact on the financial statements of the Company.
+-----------+-------------------------------------+--------------+
| | | Effective |
| | | from periods |
| | | beginning on |
| | | or after |
+-----------+-------------------------------------+--------------+
| IFRS 2 | Amendment to IFRS 2 - Group | 1 January |
| Amendment | Cash-settled Share-based Payment | 2010 |
| | Transactions | |
+-----------+-------------------------------------+--------------+
| IFRS 9 | Financial Instruments | 1 January |
| | | 2013 |
+-----------+-------------------------------------+--------------+
| IFRIC 17 | Distributions of Non-cash Assets to | 1 July 2009 |
| | Owners | |
+-----------+-------------------------------------+--------------+
New standards and interpretations (continued)
+-----------+-------------------------------------+--------------+
| IFRIC 18 | Transfers of Assets to Customers | 1 July 2009 |
+-----------+-------------------------------------+--------------+
| IAS 24 | Related Party Disclosures | 1 January |
| Revised | | 2011 |
+-----------+-------------------------------------+--------------+
| IAS 32 | Amendment to IAS 32 - Financial | 1 July 2010 |
| Amendment | Instruments: Reclassification of | |
| | Rights Issues | |
+-----------+-------------------------------------+--------------+
| IAS 39 | Amendment to IAS 39 - Financial | 1 July 2009 |
| Amendment | Instruments: Eligible Hedged Items | |
+-----------+-------------------------------------+--------------+
The financial statements have been prepared on the historical cost basis, except
for the revaluation of financial instruments.
The principal accounting policies are set out below.
Basis of consolidation
The Company has taken advantage of Section 405 Companies Act 2006 not to prepare
consolidated accounts as its only subsidiary is dormant and its inclusion is not
material for the purpose of giving a true and fair view. Therefore, these
financial statements present information about the Company as an individual
undertaking and not about its Group.
Revenue
Revenue is recognised when it is probable that economic benefits will flow to
the Company, and is measured at the fair value of the consideration received or
receivable. Revenue represents the amounts receivable for goods, services,
royalties and licence fees provided in the normal course of business, net of
discounts, VAT and other sales related taxes.
Sales of goods are recognised when goods are delivered and title has passed to
the buyer.
The sale of services is generally provided under fixed-price contracts. Revenue
is recognised in accounting periods in which the service is rendered based on a
percentage completion basis. The percentage completion is calculated based on
the man days worked on the project as a percentage of the total man days to
complete the contract.
Licence fees are recognised as income during the period in which the Company has
fulfilled its obligations to the customer in accordance with the terms of the
licence.
Non-refundable advance royalties and guaranteed royalties are recognised as
income when the Company is contractually entitled to the relevant amounts and
has no further obligations to provide services in respect of such royalties.
Cost of Sales
Cost of Sales comprises direct costs of development engineering work and
products sold. The cost of engineering time spent on development projects is
also included within Cost of Sales.
Operating loss
Operating loss is the deficit of revenue after cost of sales and administrative
expenses have been deducted.
Investment Income
Investment income relates to interest income, which is accrued on a time basis,
by reference to the principal outstanding and the effective interest rate
applicable.
Research and development expenditure
Expenditure on research activities is recognised as an expense in the period in
which it is incurred.
An internally generated intangible asset arising from the Company's internal
development activities is recognised only if all of the following conditions are
met:
· An asset is created that can be identified (such as a block of IP);
· The project from which the asset arises meets the Company's criteria for
assessing technical and commercial feasibility;
· It is probable that the asset created will generate future economic
benefits;
· The Company intends to complete the asset and use or sell it;
· The development cost of the asset can be measured reliably; and
· Sufficient resources are available to complete the development and either
sell or use the asset.
Internally generated intangible assets are amortised over their useful lives.
The useful life of an internally generated intangible asset is determined with
reference to the income it will generate. Where no internally generated
intangible asset can be recognised, development expenditure is recognised as an
expense in the period in which it is incurred. See accounting policy on
intangible assets below.
Patents
Expenditure on patents is recognised as an expense in the period in which it is
incurred. Patents are not treated as internally generated intangible assets as
there is uncertainty as to the technical feasibility of the patent at the time
the expenditure is incurred.
Segmental reporting
The Company has adopted IFRS 8 "Operating Segments". Operating segments are
reported in a manner consistent with the internal reporting provided to the
Chief Operating Decision Maker. The Chief Operating Decision Maker, who is
responsible for allocating resources and assessing performance of the operating
segments, has been identified as the Board of Directors.
The Board considers business from both an operating segment and geographical
perspective. The operating segments are Development Engineering, Licence Fees
and Royalties and Product Sales. Although the Licence Fees and Royalties
segment does not meet the quantitative thresholds required by IFRS 8 management
has concluded that this segment should be reported, as it is closely monitored
by the Chief Operating Decision Maker and is expected to materially contribute
to Company revenue in the future.
The geographical areas are UK, Rest of Europe, North America and Asia Pacific.
Property, Plant and Equipment
Plant and equipment are stated at cost less accumulated depreciation and any
recognised impairment losses. Depreciation is charged so as to write off the
cost of the assets, less estimated residual value, over their useful lives,
using the straight line method, on the following basis:
· Fixtures, fittings & equipment - 25% to 50%
Residual value is the estimated amount that the Company would obtain from the
disposal of the asset, after deducting estimated costs of disposal, if the asset
were already of the age and in the condition expected at the end of its useful
life, based on prices prevailing at the reporting date. In general residual
values are zero or negligible, due to the nature of assets held.
Intangible Assets
Intangible assets are stated at cost or fair value, net of amortisation and any
provision for impairment. Amortisation is provided at rates calculated to write
off the cost or fair value, less estimated residual value, of each asset over
its expected useful life, based on the revenue income that the asset is expected
to generate. In general residual values are zero or negligible, due to the
technical and specialised nature of assets held.
Impairment of property, plant & equipment and intangible assets
At each reporting date, the Company reviews the carrying value of its property,
plant & equipment and intangible fixed assets to determine whether there is any
indication that those assets have suffered an impairment loss. If any such
indication exists, the recoverable amount is estimated in order to determine the
extent of the impairment loss (if any). Recoverable amount is the higher of
fair value less costs to sell and value in use. If the recoverable amount is
estimated to be less than the carrying amount, the carrying amount of the asset
is reduced to its recoverable amount. An impairment loss is recognised as an
expense immediately.
Inventories
Inventories are stated at the lower of cost and net realisable value. Cost
comprises direct materials, and where applicable, those overheads that have been
incurred in bringing the inventories to their present location and condition.
Net realisable value represents the estimated selling price less all estimated
costs of completion and costs to be incurred in selling and distribution.
Foreign Currencies
The presentational and functional currency of the Company is pounds sterling.
Transactions in currencies other than pounds sterling are recorded at the rates
of exchange prevailing on the dates of the transactions. At each reporting
date, monetary assets and liabilities that are denominated in foreign currencies
are retranslated at the rates prevailing on the reporting date. Gains and
losses arising on retranslation are included in the statement of comprehensive
income for the period within administrative expenses.
Financial Instruments
Financial assets and financial liabilities are recognised in the Company's
statement of financial position when the Company becomes a party to the
contractual provisions of the instrument.
All financial assets both current and non current are classed as loans and
receivables per the requirements of IFRS7.
Trade receivables do not carry any interest and are initially recognised at
their fair value. They are subsequently measured at their amortised cost less
any provision for impairment. A provision for impairment is made where there is
objective evidence, (including customers with financial difficulties or in
default on payments), that amounts will not be recovered in accordance with the
original terms of the agreement. A provision for impairment is established when
the carrying value of the receivable exceeds the recoverable amount. The
carrying value of the receivable is reduced through the use of an allowance
account and any impairment loss is recognised in the statement of comprehensive
income within administrative expenses.
Trade payables are not interest bearing and are stated at their fair value.
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. Equity instruments issued by the
Company are recorded at the proceeds received, net of direct issue costs.
Liquid resources surplus to immediate requirements are held on short to medium
term deposit. The Company considers all highly-liquid investments with original
maturity dates of three months or less to be cash equivalents.
Taxation
The income tax liability is based on the taxable profit or loss for the year.
Taxable profit or loss differs from net profit or loss reported in the statement
of comprehensive income because it excludes items of income and expense that are
taxable or deductible in other periods and it further excludes items that are
never taxable or deductible. The Company's liability for current tax is
calculated using tax rates that have been enacted or substantively enacted by
the reporting date. The Company also receives a tax credit for its research and
development activities.
Deferred tax liabilities are generally 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, unused carried forward tax losses and unused carried
forward tax credits can be utilised. The carrying amount of deferred tax assets
is reviewed at each reporting date and reduced to the extent that it is no
longer probable that sufficient taxable profits will be available to allow all
or part of the asset to be recovered.
Deferred tax is calculated at the tax rates that are expected to apply in the
period when the liability is settled or the asset is realised. Deferred tax is
charged or credited in the statement of comprehensive income, except where it
relates to items charged directly to equity, in which case the deferred tax is
also dealt with in equity.
Provisions
Provision is made for onerous contracts at the fair value of the minimum
unavoidable lease payments. A provision is recognised when the Company has a
legal or constructive obligation as a result of past events, it is more likely
than not that an outflow of resources will be required to settle the obligation
and the amount has been reliably estimated.
Operating leases
Costs in respect of operating leases are charged on a straight line basis over
the lease term even if payments are not made on such a basis.
The Company also acts as a lessor of assets, with respect to surplus office
space at the systems design facility. Lease income from tenants is recognised
on a straight line basis over the term of the lease and is set off against the
lease rentals paid to the landlord.
Retirement benefit costs
The pension costs charged in the financial statements represent the
contributions payable by the Company during the year to the personal pension
plans of certain directors and employees as part of a group personal pension
plan.
Share-based Payments
IFRS 2, 'Share-based payments', has been applied to all grants of equity
instruments after 7 November 2002 that were unvested as at 1 April 2010.
In accordance with IFRS 2, equity-settled share based payments are measured at
fair value (including the effect of non market-based vesting conditions) at the
date of grant. Fair value is measured by the use of the Black-Scholes pricing
model incorporating an appropriate market price discount based on the volume of
shares. The fair value is recognised on a straight line basis over the vesting
period, based on the Company's estimate of shares that will eventually vest and
adjusted for the effect of non market-based vesting conditions.
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2010
1 Critical accounting judgements and key sources of estimation
uncertainty
The key assumptions concerning the future and other key sources of estimation
uncertainty at the reporting date that have a significant risk of causing a
material misstatement to the carrying amounts of assets and liabilities within
the next financial year are discussed below.
Revenue recognition
The Company uses the percentage completion method in accounting for its
fixed-price contracts to deliver services. Use of the percentage completion
method requires the Company to estimate the services performed to date as a
proportion of the total services to be performed. Were the proportion of
services performed to total services to be performed differ from management's
estimates, the amount of revenue recognised would differ.
Provision for impairment of receivables
Provision for impairment is made against receivables when it is clear that there
is objective evidence (including customers with financial difficulties or in
default on payments) that amounts will not be recovered in accordance with the
original terms of the agreement. In the year ended 31 March 2008, a provision
of GBP700,000 was made against receivables due from one customer. This was
still in place at 31 March 2009 and 31 March 2010.
Intangible assets
The Company capitalises the costs of its research and development activities
under IAS 38. The amount capitalised in each year is the total expenditure on
applicable projects The maximum carrying value of each intangible asset is
calculated with reference to anticipated future income that the intangible asset
will generate including both contracted income and direct potential income where
such income is deemed to be probable by management. Intangible assets are
amortised in line with the income generated and where the amount of income
generated from the intangible assets differs from management's previous
estimates, the amount of amortisation charged would also differ.
2 Financial Risk Management
2.1 Financial Risk Factors
The Company's activities expose it to a variety of risks with financial impacts:
market risk, technology risk, liquidity risk and credit risk. The Company's
overall risk management programme focuses on the unpredictability of key markets
and seeks to minimise potential adverse effects on the Company's financial
performance. Risk management is carried out by the Board.
(a) Market Risk
(i) Foreign exchange risk
The Company transacts internationally and is exposed to foreign exchange risk
arising from various currency exposures, primarily with respect to the US
dollar, Euro and the UK pound. Foreign exchange risk arises from future
commercial transactions, and recognised assets and liabilities. The Company
manages its foreign exchange risk by considering the need to hedge new foreign
denominated long-term contracts as they are entered into.
At 31 March 2010, if the UK Pound had weakened/strengthened by 10% against the
US dollar with all other variables held constant, post-tax loss for the year
would have been GBP17,000 (2009: GBP57,000) higher/lower, mainly as a result of
foreign exchange gains/losses on translation of US dollar-denominated trade
receivables, trade payables and financial assets at fair value through profit or
loss. Profit is less sensitive to movement in UK Pound/US dollar exchange rates
in 2010 than 2009 because of the reduced amount of US-dollar denominated
receivables and cash balances.
2 Financial Risk Management (continued)
At 31 March 2010, if the UK Pound had weakened/strengthened by 10% against the
Euro with all other variables held constant, post-tax loss for the year would
have been GBPnil (2009: GBP107,000) higher/lower, mainly as a result of foreign
exchange gains/losses on translation of euro-denominated trade receivables,
trade payables and financial assets at fair value through profit or loss. Profit
is much less sensitive to movement in UK Pound/Euro exchange rates in 2010 than
2009 because of the reduced amount of Euro denominated receivables and cash
balances.
(ii) Commodity Price risk
The Company is exposed to increases in silicon processing costs directly through
the assessment of the fair value of inventory through profit or loss and the
cost of fulfillment of future orders. The exposure to commodity price risk is
currently immaterial to the results of the Company. There is an indirect risk of
similar factors affecting customers for custom design work.
(b) Technology Risk
The Company operates in an advanced technology area. Developments are often
made ahead of the anticipated market and therefore there is a risk that this
market will never materialise or that the technology developed will not meet the
exact market requirements. The Company is a member of numerous industry bodies
and is constantly in contact with customers and potential customers to gain end
market intelligence. In light of this feedback, the Board reviews and updates
the strategy and focus areas for investment.
(c) Credit risk
Credit risk arises from cash and cash equivalents deposits with banks and
financial institutions, as well as credit exposures to customers, including
outstanding receivables and committed transactions. For banks and financial
institutions, the Company divides its deposits among independently 'A' rated
parties. Before entering a contract, the Company assesses the credit quality of
the customer, taking into account its financial position, past experience and
other factors. The terms and payment profile of the contract are then negotiated
accordingly. Details of the company's maximum credit risk are disclosed in note
14.
The following table presents the group's financial assets and liabilities at 31
March 2010.
+--------------------------------------+---------+---------+
| Financial Assets | 2010 | 2009 |
| | GBP'000 | GBP'000 |
+--------------------------------------+---------+---------+
| Cash and cash equivalents | 4,145 | 3,585 |
+--------------------------------------+---------+---------+
| Available-for-sale | - | - |
+--------------------------------------+---------+---------+
| Loans and receivables | 1,061 | 983 |
+--------------------------------------+---------+---------+
| Derivatives used for hedging | - | - |
+--------------------------------------+---------+---------+
| Total | 5,206 | 4,568 |
+--------------------------------------+---------+---------+
| | | |
+--------------------------------------+---------+---------+
| Current financial liabilities | 2010 | 2009 |
| | GBP'000 | GBP'000 |
+--------------------------------------+---------+---------+
| Trade and other payables | 1,075 | 572 |
+--------------------------------------+---------+---------+
| Bank loans and overdrafts | - | - |
+--------------------------------------+---------+---------+
| Obligations under finance leases | - | - |
+--------------------------------------+---------+---------+
| Other current financial liabilities | - | - |
+--------------------------------------+---------+---------+
| Non-current financial liabilities | | |
+--------------------------------------+---------+---------+
| Bank loans | - | - |
+--------------------------------------+---------+---------+
| Obligations under finance leases | - | - |
+--------------------------------------+---------+---------+
| Convertible loan notes | - | - |
+--------------------------------------+---------+---------+
| Contingent consideration | - | - |
+--------------------------------------+---------+---------+
| Other non-current financial | - | - |
| liabilities | | |
+--------------------------------------+---------+---------+
| Total | 1,075 | 572 |
+--------------------------------------+---------+---------+
(d) Liquidity risk
Management monitors rolling forecasts of the Company's cash reserves on the
basis of expected cash flow. This is generally carried out monthly and reviewed
at the monthly board meeting. If potential future liquidity issues are
identified actions are put in place to mitigate the risk.
The tables below analyse the Company's financial assets held for managing
liquidity risk which are considered to be readily saleable or are expected to
generate cash inflows to meet cash outflows on financial liabilities.
+----------------------------+--------+--------+-------+-------+-------+
| 2010 | | | | | |
+----------------------------+--------+--------+-------+-------+-------+
| | Within | 6 | 1 to | Over | Total |
| | 6 | months | 5 | 5 | |
| | months | - 1 | years | years | |
| | | year | | | |
+----------------------------+--------+--------+-------+-------+-------+
| Cash at bank and on hand | 290 | - | - | - | 290 |
+----------------------------+--------+--------+-------+-------+-------+
| | | | | | |
+----------------------------+--------+--------+-------+-------+-------+
| Short-term deposits | 3,855 | - | - | - | 3,855 |
+----------------------------+--------+--------+-------+-------+-------+
| | | | | | |
+----------------------------+--------+--------+-------+-------+-------+
| Finance lease receivables | - | - | - | - | - |
+----------------------------+--------+--------+-------+-------+-------+
| | | | | | |
+----------------------------+--------+--------+-------+-------+-------+
| Trade receivables | 237 | - | - | - | 237 |
+----------------------------+--------+--------+-------+-------+-------+
| | | | | | |
+----------------------------+--------+--------+-------+-------+-------+
| Available for sale | - | - | - | - | - |
| investments | | | | | |
+----------------------------+--------+--------+-------+-------+-------+
| | | | | | |
+----------------------------+--------+--------+-------+-------+-------+
| Financial instruments held | - | - | - | - | - |
| for trading | | | | | |
+----------------------------+--------+--------+-------+-------+-------+
| | | | | | |
+----------------------------+--------+--------+-------+-------+-------+
| | 4,382 | - | - | - | 4,382 |
+----------------------------+--------+--------+-------+-------+-------+
+----------------------------+--------+--------+-------+-------+-------+
| 2009 | | | | | |
+----------------------------+--------+--------+-------+-------+-------+
| | Within | 6 | 1 to | Over | Total |
| | 6 | months | 5 | 5 | |
| | months | - 1 | years | years | |
| | | year | | | |
+----------------------------+--------+--------+-------+-------+-------+
| Cash at bank and on hand | 1,072 | - | - | - | 1,072 |
+----------------------------+--------+--------+-------+-------+-------+
| | | | | | |
+----------------------------+--------+--------+-------+-------+-------+
| Short-term deposits | 2,513 | - | - | - | 2,513 |
+----------------------------+--------+--------+-------+-------+-------+
| | | | | | |
+----------------------------+--------+--------+-------+-------+-------+
| Finance lease receivables | - | - | - | - | - |
+----------------------------+--------+--------+-------+-------+-------+
| | | | | | |
+----------------------------+--------+--------+-------+-------+-------+
| Trade receivables | 696 | - | - | - | 696 |
+----------------------------+--------+--------+-------+-------+-------+
| | | | | | |
+----------------------------+--------+--------+-------+-------+-------+
| Available for sale | - | - | - | - | - |
| investments | | | | | |
+----------------------------+--------+--------+-------+-------+-------+
| | | | | | |
+----------------------------+--------+--------+-------+-------+-------+
| Financial instruments held | - | - | - | - | - |
| for trading | | | | | |
+----------------------------+--------+--------+-------+-------+-------+
| | | | | | |
+----------------------------+--------+--------+-------+-------+-------+
| | 4,281 | | | | 4,281 |
+----------------------------+--------+--------+-------+-------+-------+
2.2 Capital risk management
The Company'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. Long term forecasts for three
and five years are prepared and reviewed at board meetings to determine the
appropriate capital structure for the Company at each stage in those plans. At
the current time, the board believe is appropriate that the Company is funded
entirely through equity. The level and purpose of funding requirements are
reviewed, at least quarterly, at board meetings and where capital requirements
are identified, market sentiment is judged in discussion with the Company's
NOMAD and broker. Detailed plans are then made to meet the requirement either
from existing shareholders, new investors or strategic partnerships.
2.3 Fair value estimation
The carrying value less impairment provision of trade receivables and payables
are assumed to approximate their fair values. The fair value of long term trade
receivables and payables is estimated by discounting the future contractual cash
flows at the current market interest rate for the underlying currency of the
transaction.
3 Segmental Reporting
Operating Segments
At 31 March 2010 the business was organised into three main operating segments:
· Development Engineering - The provision of custom IC design solutions.
· Licence fees and royalties - Licences and royalties paid to the Company
for use of existing IP and expertise.
· Product sales - Sales of the Company's Jewel, Topaz and other physical
products.
These segments have been identified with reference to the key drivers to the
long term strategy of the Company. There were no inter-segmental sales.
+---+----------------------+-------------+-----------+----------+--------------+---------+
| | Year ended 31 March |Development | Licence |Products |Unallo-cated | Total |
| | 2010 |Engineering | Fees | | | |
| | | | and | | | |
| | | |Royalties | | | |
+---+----------------------+-------------+-----------+----------+--------------+---------+
| | | GBP'000 | GBP'000 | GBP'000 | GBP'000 |GBP'000 |
+---+----------------------+-------------+-----------+----------+--------------+---------+
| | | | | | | |
+---+----------------------+-------------+-----------+----------+--------------+---------+
| | Total segment | 1,576 | 122 | 313 | - | 2,011 |
| | revenue | | | | | |
+---+----------------------+-------------+-----------+----------+--------------+---------+
| | | | | | | |
+---+----------------------+-------------+-----------+----------+--------------+---------+
| | | | | | | |
+---+----------------------+-------------+-----------+----------+--------------+---------+
| | Segment (loss) / | (1,250) | (1,568) | 15 | - | (2,803) |
| | profit before | | | | | |
| | foreign exchange | | | | | |
| | losses, investment | | | | | |
| | income and tax | | | | | |
+---+----------------------+-------------+-----------+----------+--------------+---------+
| | Foreign exchange | - | - | - | (160) | (160) |
| | losses | | | | | |
+---+----------------------+-------------+-----------+----------+--------------+---------+
| | Investment income | - | - | - | 79 | 79 |
+---+----------------------+-------------+-----------+----------+--------------+---------+
| | | | | | | |
+---+----------------------+-------------+-----------+----------+--------------+---------+
| | (Loss)/Profit before | (1,250) | (1,568) | 15 | (81) | (2,884) |
| | tax | | | | | |
+---+----------------------+-------------+-----------+----------+--------------+---------+
| | Tax | - | 497 | 21 | - | 518 |
+---+----------------------+-------------+-----------+----------+--------------+---------+
| | | | | | | |
+---+----------------------+-------------+-----------+----------+--------------+---------+
| | (Loss)/Profit for | (1,250) | (1,071) | 36 | (81) | (2,366) |
| | the year | | | | | |
+---+----------------------+-------------+-----------+----------+--------------+---------+
| | | | | | | |
+---+----------------------+-------------+-----------+----------+--------------+---------+
| | | | | | | |
+---+----------------------+-------------+-----------+----------+--------------+---------+
| | | | | | | |
+---+----------------------+-------------+-----------+----------+--------------+---------+
| | Segment assets | 838 | 3,174 | 557 | - | 4,569 |
+---+----------------------+-------------+-----------+----------+--------------+---------+
| | Unallocated assets | | | | | |
+---+----------------------+-------------+-----------+----------+--------------+---------+
| | - Cash and cash | - | - | - | 4,145 | 4,145 |
| | equivalents | | | | | |
+---+----------------------+-------------+-----------+----------+--------------+---------+
| | - Current tax | - | - | - | 108 | 108 |
| | assets | | | | | |
+---+----------------------+-------------+-----------+----------+--------------+---------+
| | - Corporate prepaid | - | - | - | 335 | 335 |
| | expenses | | | | | |
+---+----------------------+-------------+-----------+----------+--------------+---------+
| | - Other corporate | - | - | - | 12 | 12 |
| | receivables | | | | | |
+---+----------------------+-------------+-----------+----------+--------------+---------+
| | | | | | | |
+---+----------------------+-------------+-----------+----------+--------------+---------+
| | Total assets | 838 | 3,174 | 557 | 4,600 | 9,169 |
+---+----------------------+-------------+-----------+----------+--------------+---------+
| | | | | | | |
+---+----------------------+-------------+-----------+----------+--------------+---------+
| | | | | | | |
+---+----------------------+-------------+-----------+----------+--------------+---------+
| | | | | | | |
+---+----------------------+-------------+-----------+----------+--------------+---------+
3 Segmental Reporting (continued)
+------+----------------------+-------------+-----------+---------+---------+----------+---------+
| | |Development | Licence |Product | Unallo-cated | Total |
| | |Engineering | Fees and | Sales | | |
| | | |Royalties | | | |
+------+----------------------+-------------+-----------+---------+--------------------+---------+
| | | GBP'000 | GBP'000 |GBP'000 | GBP'000 |GBP'000 |
+------+----------------------+-------------+-----------+---------+--------------------+---------+
| | | | | | | |
+------+----------------------+-------------+-----------+---------+--------------------+---------+
| | Segment liabilities | 424 | 292 | 242 | - | 958 |
+------+----------------------+-------------+-----------+---------+--------------------+---------+
| | Unallocated | | | | | |
| | liabilities | | | | | |
+------+----------------------+-------------+-----------+---------+--------------------+---------+
| | - Social security | - | - | - | 117 | 117 |
| | and tax liabilities | | | | | |
+------+----------------------+-------------+-----------+---------+---------+--------------------+
| | | | | | | |
+------+----------------------+-------------+-----------+---------+--------------------+---------+
| | Total liabilities | 424 | 292 | 242 | 117 | 1,075 |
+------+----------------------+-------------+-----------+---------+--------------------+---------+
| | | | | | | |
+------+----------------------+-------------+-----------+---------+--------------------+---------+
| | | | | | | |
+------+----------------------+-------------+-----------+---------+--------------------+---------+
| | Other segment items | | | | | |
+------+----------------------+-------------+-----------+---------+--------------------+---------+
| | Capital expenditure | 69 | 91 | 15 | - | 175 |
+------+----------------------+-------------+-----------+---------+--------------------+---------+
| | Creation of | - | 2,179 | 92 | - | 2,271 |
| | intangible assets | | | | | |
+------+----------------------+-------------+-----------+---------+--------------------+---------+
| | Depreciation | 43 | 57 | 38 | - | 138 |
+------+----------------------+-------------+-----------+---------+--------------------+---------+
| | Amortisation of | - | 111 | - | - | 111 |
| | intangible assets | | | | | |
+------+----------------------+-------------+-----------+---------+--------------------+---------+
| | | | | | | |
+------+----------------------+-------------+-----------+---------+--------------------+---------+
| | | | | | | |
+------+----------------------+-------------+-----------+---------+--------------------+---------+
| | | | | | | | |
+------+----------------------+-------------+-----------+---------+---------+----------+---------+
3 Segmental Reporting (continued)
+-----+----------------------+-------------+-----------+---------+--------------+---------+
| | Year ended 31 March |Development | Licence |Product |Unallo-cated | Total |
| | 2009 |Engineering | Fees | Sales | | |
| | | | and | | | |
| | | |Royalties | | | |
+-----+----------------------+-------------+-----------+---------+--------------+---------+
| | | GBP'000 | GBP'000 |GBP'000 | GBP'000 |GBP'000 |
+-----+----------------------+-------------+-----------+---------+--------------+---------+
| | | | | | | |
+-----+----------------------+-------------+-----------+---------+--------------+---------+
| | Revenue | 906 | 195 | 91 | - | 1,192 |
+-----+----------------------+-------------+-----------+---------+--------------+---------+
| | | | | | | |
+-----+----------------------+-------------+-----------+---------+--------------+---------+
| | | | | | | |
+-----+----------------------+-------------+-----------+---------+--------------+---------+
| | Segment loss before | (397) | (2,257) | (739) | - | (3,393) |
| | foreign exchange | | | | | |
| | gains, investment | | | | | |
| | income and tax | | | | | |
+-----+----------------------+-------------+-----------+---------+--------------+---------+
| | Foreign exchange | - | - | - | 254 | 254 |
| | gains | | | | | |
+-----+----------------------+-------------+-----------+---------+--------------+---------+
| | Investment income | - | - | - | 216 | 216 |
+-----+----------------------+-------------+-----------+---------+--------------+---------+
| | | | | | | |
+-----+----------------------+-------------+-----------+---------+--------------+---------+
| | (Loss)/Profit before | (397) | (2,257) | (739) | 470 | (2,923) |
| | tax | | | | | |
+-----+----------------------+-------------+-----------+---------+--------------+---------+
| | Tax | - | 334 | - | - | 334 |
+-----+----------------------+-------------+-----------+---------+--------------+---------+
| | | | | | | |
+-----+----------------------+-------------+-----------+---------+--------------+---------+
| | (Loss)/Profit for | (397) | (1,923) | (739) | 470 | (2,589) |
| | the year | | | | | |
+-----+----------------------+-------------+-----------+---------+--------------+---------+
| | | | | | | |
+-----+----------------------+-------------+-----------+---------+--------------+---------+
| | | | | | | |
+-----+----------------------+-------------+-----------+---------+--------------+---------+
| | | | | | | |
+-----+----------------------+-------------+-----------+---------+--------------+---------+
| | Segment assets | 415 | 1,222 | 332 | - | 1,969 |
+-----+----------------------+-------------+-----------+---------+--------------+---------+
| | Unallocated assets | | | | | |
+-----+----------------------+-------------+-----------+---------+--------------+---------+
| | - Cash and cash | - | - | - | 3,585 | 3,585 |
| | equivalents | | | | | |
+-----+----------------------+-------------+-----------+---------+--------------+---------+
| | - Current tax | - | - | - | 6 | 6 |
| | assets | | | | | |
+-----+----------------------+-------------+-----------+---------+--------------+---------+
| | - Corporate prepaid | - | - | - | 144 | 144 |
| | expenses | | | | | |
+-----+----------------------+-------------+-----------+---------+--------------+---------+
| | - Other corporate | - | - | - | 261 | 261 |
| | receivables | | | | | |
+-----+----------------------+-------------+-----------+---------+--------------+---------+
| | | | | | | |
+-----+----------------------+-------------+-----------+---------+--------------+---------+
| | Total assets | | | | | |
+-----+----------------------+-------------+-----------+---------+--------------+---------+
| | | 415 | 1,222 | 332 | 3,996 | 5,965 |
+-----+----------------------+-------------+-----------+---------+--------------+---------+
| | | | | | | |
+-----+----------------------+-------------+-----------+---------+--------------+---------+
| | | | | | | |
+-----+----------------------+-------------+-----------+---------+--------------+---------+
| | Segment liabilities | 209 | 233 | 165 | - | 607 |
+-----+----------------------+-------------+-----------+---------+--------------+---------+
| | Unallocated | | | | | |
| | liabilities | | | | | |
+-----+----------------------+-------------+-----------+---------+--------------+---------+
| | - Social security | - | - | - | 99 | 99 |
| | and tax liabilities | | | | | |
+-----+----------------------+-------------+-----------+---------+--------------+---------+
| | | | | | | |
+-----+----------------------+-------------+-----------+---------+--------------+---------+
| | Total liabilities | 209 | 233 | 165 | 99 | 706 |
+-----+----------------------+-------------+-----------+---------+--------------+---------+
| | | | | | | |
+-----+----------------------+-------------+-----------+---------+--------------+---------+
| | Other segment items | | | | | |
+-----+----------------------+-------------+-----------+---------+--------------+---------+
| | Capital expenditure | 15 | 59 | 69 | - | 143 |
+-----+----------------------+-------------+-----------+---------+--------------+---------+
| | Creation of | - | 1,066 | 268 | - | 1,334 |
| | intangible assets | | | | | |
+-----+----------------------+-------------+-----------+---------+--------------+---------+
| | Depreciation | 25 | 78 | 27 | - | 130 |
+-----+----------------------+-------------+-----------+---------+--------------+---------+
| | Amortisation of | - | 634 | 256 | - | 890 |
| | intangible assets | | | | | |
+-----+----------------------+-------------+-----------+---------+--------------+---------+
| | | | | | | |
+-----+----------------------+-------------+-----------+---------+--------------+---------+
| | | | | | | |
+-----+----------------------+-------------+-----------+---------+--------------+---------+
3 Segmental Reporting (continued)
+----+----------------------------------------+-----------------+-----------------+
| | Geographical Information |
+----+----------------------------------------------------------------------------+
| | The Company manages its operating segments on a global |
| | basis. The Company's operations are based in the UK. |
| | The following table provides an analysis of the |
| | Company's sales by geographical market, irrespective of |
| | the origin of the goods and services: |
+----+----------------------------------------------------------------------------+
| | | | |
+----+----------------------------------------+-----------------+-----------------+
| | | 2010 | 2009 |
| | | GBP'000 | GBP'000 |
+----+----------------------------------------+-----------------+-----------------+
| | United Kingdom | 506 | 73 |
+----+----------------------------------------+-----------------+-----------------+
| | Rest of Europe | 962 | 722 |
+----+----------------------------------------+-----------------+-----------------+
| | North America | 421 | 343 |
+----+----------------------------------------+-----------------+-----------------+
| | Asia Pacific | 122 | 54 |
+----+----------------------------------------+-----------------+-----------------+
| | | | |
+----+----------------------------------------+-----------------+-----------------+
| | | 2,011 | 1,192 |
+----+----------------------------------------+-----------------+-----------------+
| | | | |
+----+----------------------------------------+-----------------+-----------------+
| | | | |
+----+----------------------------------------+-----------------+-----------------+
The following is an analysis of the carrying amount of segment assets, and
additions to property, plant & equipment and intangible assets, analysed by the
geographical area in which the assets are located.
+---+---------------------------+---------+---------+---------+---------+
| | | Carrying amount | Additions to |
| | | of segmental | property, plant |
| | | assets | & equipment and |
| | | | intangible |
| | | | assets |
+---+---------------------------+-------------------+-------------------+
| | | 2010 | 2009 | 2010 | 2009 |
| | | GBP'000 | GBP'000 | GBP'000 | GBP'000 |
| | | | | | |
+---+---------------------------+---------+---------+---------+---------+
| | United Kingdom | 8,556 | 5,222 | 2,435 | 1,414 |
+---+---------------------------+---------+---------+---------+---------+
| | Rest of Europe | 201 | 531 | - | 3 |
+---+---------------------------+---------+---------+---------+---------+
| | North America | 391 | 210 | - | - |
+---+---------------------------+---------+---------+---------+---------+
| | Asia Pacific | 21 | 2 | 11 | 60 |
+---+---------------------------+---------+---------+---------+---------+
| | | | | | |
+---+---------------------------+---------+---------+---------+---------+
| | | 9,169 | 5,965 | 2,446 | 1,477 |
+---+---------------------------+---------+---------+---------+---------+
| | | | | | |
+---+---------------------------+---------+---------+---------+---------+
Information About Major Customers
In the year ended 31 March 2010, 72% of revenues related to Development
Engineering with the Company's three largest customers in approximately equal
proportions.
In the year ended 31 March 2009, 55% of revenues related to Development
Engineering with the Company's largest customer in that year. They are not a
major contributor to revenues in the year ended 31 March 2010.
In the year ended 31 March 2010, 14% of revenues related to Products revenue
from one customer. In the year ended March 2009, no customer for Products
accounted for more than 10% of revenues.
+----+----------------------------------------+---------+---------+
| 4 | Investment Income | | |
+----+----------------------------------------+---------+---------+
| | | 2010 | 2009 |
| | | GBP'000 | GBP'000 |
| | | | |
+----+----------------------------------------+---------+---------+
| | Bank interest received on cash | 79 | 216 |
| | balances | | |
+----+----------------------------------------+---------+---------+
| | | | |
+----+----------------------------------------+---------+---------+
| | | 79 | 216 |
+----+----------------------------------------+---------+---------+
| | | | |
+----+----------------------------------------+---------+---------+
| | | | |
+----+----------------------------------------+---------+---------+
+----+----------------------------------------+---------+---------+
| 5a | Nature of expenses | | |
+----+----------------------------------------+---------+---------+
| | The following table analyses the nature of expenses: |
+----+------------------------------------------------------------+
| | | 2010 | 2009 |
| | | GBP'000 | GBP'000 |
+----+----------------------------------------+---------+---------+
| | Staff costs (note 6) | 2,580 | 2,374 |
+----+----------------------------------------+---------+---------+
| | Depreciation and amortisation (see | 248 | 1,020 |
| | notes 10 & 11) | | |
+----+----------------------------------------+---------+---------+
| | Change in inventory | 29 | (74) |
+----+----------------------------------------+---------+---------+
| | Premises cost | 293 | 330 |
+----+----------------------------------------+---------+---------+
| | Transport costs | 159 | 171 |
+----+----------------------------------------+---------+---------+
| | Marketing expenses | 63 | 88 |
+----+----------------------------------------+---------+---------+
| | Professional fees | 438 | 390 |
+----+----------------------------------------+---------+---------+
| | Research & development costs not | 54 | 238 |
| | capitalised | | |
+----+----------------------------------------+---------+---------+
| | Exchange rate loss / (gain) | 160 | (254) |
+----+----------------------------------------+---------+---------+
| | Other expenses | 950 | 48 |
+----+----------------------------------------+---------+---------+
| | | | |
+----+----------------------------------------+---------+---------+
| | Total cost of sales and administrative | 4,974 | 4,331 |
| | expenses | | |
+----+----------------------------------------+---------+---------+
| | | | |
+----+----------------------------------------+---------+---------+
| | | | |
+----+----------------------------------------+---------+---------+
| | Included within cost of sales and | | |
| | administrative expenses are operating | | |
| | lease rentals payable: | | |
+----+----------------------------------------+---------+---------+
| | Land and buildings | 194 | 276 |
+----+----------------------------------------+---------+---------+
| | Plant & machinery | 15 | 15 |
+----+----------------------------------------+---------+---------+
| | Software licences | 385 | 344 |
+----+----------------------------------------+---------+---------+
| | | | |
+----+----------------------------------------+---------+---------+
| | | | |
+----+----------------------------------------+---------+---------+
| | | | |
+----+----------------------------------------+---------+---------+
+----+----------------------------------------+---------+---------+
| 5b | Auditor's remuneration in respect of | 2010 | 2009 |
| | both audit and non-audit services: | GBP'000 | GBP'000 |
+----+----------------------------------------+---------+---------+
| | | | |
+----+----------------------------------------+---------+---------+
| | Fees payable to the Company's auditors | 21 | 21 |
| | for the audit of the Company's annual | | |
| | report | | |
+----+----------------------------------------+---------+---------+
| | | | |
+----+----------------------------------------+---------+---------+
| | Fees payable to the Company's auditors | | |
| | and their associates for other | | |
| | services to the Company | | |
+----+----------------------------------------+---------+---------+
| | Interim review | 5 | 5 |
+----+----------------------------------------+---------+---------+
| | Tax services | 3 | 3 |
+----+----------------------------------------+---------+---------+
| | | | |
+----+----------------------------------------+---------+---------+
| | Total non-audit fees | 8 | 8 |
+----+----------------------------------------+---------+---------+
| | | | |
+----+----------------------------------------+---------+---------+
+----+----------------------------------------+--------+-------+
| 6 | Staff Costs | | |
+----+----------------------------------------+--------+-------+
| | The average monthly number of persons, including |
| | directors, employed by the Company during the year was: |
+----+---------------------------------------------------------+
| | | 2010 | 2009 |
| | | No. | No. |
+----+----------------------------------------+--------+-------+
| | Marketing and administration | 19 | 19 |
+----+----------------------------------------+--------+-------+
| | Research and engineering | 43 | 34 |
+----+----------------------------------------+--------+-------+
| | | | |
+----+----------------------------------------+--------+-------+
| | | 62 | 53 |
+----+----------------------------------------+--------+-------+
| | | | |
+----+----------------------------------------+--------+-------+
+----+----------------------------------------+-----------+-----------+
| | | 2010 | 2009 |
| | | GBP'000 | GBP'000 |
| | | | |
+----+----------------------------------------+-----------+-----------+
| | Aggregate remuneration for the above | | |
| | persons comprised: | | |
+----+----------------------------------------+-----------+-----------+
| | Salaries | 3,222 | 2,624 |
+----+----------------------------------------+-----------+-----------+
| | Social security costs | 368 | 299 |
+----+----------------------------------------+-----------+-----------+
| | Pension contributions | 88 | 75 |
+----+----------------------------------------+-----------+-----------+
| | Share based payments (note 19) | 40 | 29 |
+----+----------------------------------------+-----------+-----------+
| | | _________ | _________ |
| | | | |
+----+----------------------------------------+-----------+-----------+
| | | 3,718 | 3,027 |
+----+----------------------------------------+-----------+-----------+
| | | | |
+----+----------------------------------------+-----------+-----------+
Of the staff costs above GBP503,000 (2009: GBP234,000) is included within cost
of sales and GBP2,077,000 (GBP2,140,000) is included within administrative
expenses in the statement of comprehensive income and a further GBP1,138,000
(2009: GBP653,000) has been capitalised within intangible assets. Included
above are social security costs of GBP58,000 (2009: GBP56,000) that relate to
key management.
7 Directors' emoluments and key management
compensation
The Directors are of the opinion that the key management of the Company
comprises the executive and non-executive directors. These persons have
authority and responsibility for planning, directing and controlling the
activities of the entity, directly or indirectly. At 31 March 2010, key
management comprised 5 people (2009: 5 people). The emoluments of the Directors
for the current and prior year are set out below.
Directors' emoluments 2010
+--------------------+---------+----------+---------+---------+---------+---------+---------+
| | | | | Total | | Share | |
| | Basic | | E'ers | Excl. | | option | Total |
| | Salary |Benefits | NIC |Pension |Pension | gains | 2010 |
| |GBP'000 | GBP'000 |GBP'000 |GBP'000 |GBP'000 |GBP'000 |GBP'000 |
+--------------------+---------+----------+---------+---------+---------+---------+---------+
| Malcolm Baggott | 44 | - | 6 | 50 | - | - | 50 |
+--------------------+---------+----------+---------+---------+---------+---------+---------+
| David Wollen | 190 | 25 | 28 | 243 | 9 | - | 252 |
+--------------------+---------+----------+---------+---------+---------+---------+---------+
| Dr Ian | 22 | - | 3 | 25 | - | - | 25 |
| Buckley-Golder | | | | | | | |
+--------------------+---------+----------+---------+---------+---------+---------+---------+
| Brian McKenzie | 103 | - | 13 | 116 | 9 | - | 125 |
+--------------------+---------+----------+---------+---------+---------+---------+---------+
| Dr Stephen Morris | 90 | 7 | 12 | 109 | 9 | - | 118 |
+--------------------+---------+----------+---------+---------+---------+---------+---------+
| | | | | | | | |
+--------------------+---------+----------+---------+---------+---------+---------+---------+
| | 449 | 32 | 62 | 543 | 27 | - | 570 |
+--------------------+---------+----------+---------+---------+---------+---------+---------+
| | | | | | | | |
+--------------------+---------+----------+---------+---------+---------+---------+---------+
Directors' emoluments 2009
+--------------------+---------+----------+---------+---------+---------+---------+---------+
| | | | | Total | | Share | |
| | Basic | | E'ers | Excl. | | option | Total |
| | Salary |Benefits | NIC |Pension |Pension | gains | 2009 |
| |GBP'000 | GBP'000 |GBP'000 |GBP'000 |GBP'000 |GBP'000 |GBP'000 |
+--------------------+---------+----------+---------+---------+---------+---------+---------+
| Malcolm Baggott | 44 | - | 6 | 50 | - | - | 50 |
+--------------------+---------+----------+---------+---------+---------+---------+---------+
| David Wollen | 190 | 25 | 28 | 243 | 9 | - | 252 |
+--------------------+---------+----------+---------+---------+---------+---------+---------+
| Marc Borrett | 39 | 4 | 6 | 49 | 3 | - | 52 |
| (resigned 8 August | | | | | | | |
| 2008) | | | | | | | |
+--------------------+---------+----------+---------+---------+---------+---------+---------+
| Dr Ian | 22 | - | 3 | 25 | - | - | 25 |
| Buckley-Golder | | | | | | | |
+--------------------+---------+----------+---------+---------+---------+---------+---------+
| Brian McKenzie | 85 | - | 11 | 96 | 7 | - | 103 |
+--------------------+---------+----------+---------+---------+---------+---------+---------+
| Dr Stephen Morris | 32 | 3 | 4 | 39 | 3 | - | 42 |
| (appointed 20 | | | | | | | |
| November 2008) | | | | | | | |
+--------------------+---------+----------+---------+---------+---------+---------+---------+
| | | | | | | | |
+--------------------+---------+----------+---------+---------+---------+---------+---------+
| | 412 | 32 | 58 | 502 | 22 | - | 524 |
+--------------------+---------+----------+---------+---------+---------+---------+---------+
| | | | | | | | |
+--------------------+---------+----------+---------+---------+---------+---------+---------+
The pension figures above include Company contributions to personal pension
plans held by David Wollen, Brian McKenzie and Stephen Morris.
Details of the Directors' interests in share options are shown in the Directors'
Report.
+--------+-----------------+---------+---------+
| 8 | Taxation | 2010 | 2009 |
| | | GBP'000 | GBP'000 |
| | | | |
+--------+-----------------+---------+---------+
| | Based | - | - |
| | on the | | |
| | loss | | |
| | for | | |
| | the | | |
| | year | | |
+--------+-----------------+---------+---------+
| | Research | (517) | (310) |
| | & | | |
| | development | | |
| | tax credit | | |
+--------+-----------------+---------+---------+
| | Adjustment | (1) | (24) |
| | to tax | | |
| | charge in | | |
| | respect of | | |
| | previous | | |
| | years | | |
+--------+-----------------+---------+---------+
| | | ___ | ___ |
| | | | |
+--------+-----------------+---------+---------+
| | | (518) | (334) |
+--------+-----------------+---------+---------+
| | | | |
+--------+-----------------+---------+---------+
| | | | |
+--------+-----------------+---------+---------+
| | | | |
+--------+-----------------+---------+---------+
| | Factors | | |
| | affecting | | |
| | tax | | |
| | charge | | |
| | for the | | |
| | year | | |
+--------+-----------------+---------+---------+
| | The tax assessed for the |
| | year is lower than the |
| | standard rate of |
| | corporation tax for |
| | small companies (21%). |
| | The differences are |
| | explained below: |
+--------+-------------------------------------+
| | | 2010 | 2009 |
| | | GBP'000 | GBP'000 |
| | | | |
+--------+-----------------+---------+---------+
| | Loss | (2,884) | (2,923) |
| | on | | |
| | ordinary | | |
| | activities | | |
| | before tax | | |
+--------+-----------------+---------+---------+
| | | | |
+--------+-----------------+---------+---------+
| | | | |
+--------+-----------------+---------+---------+
| | Loss | (606) | (614) |
| | on | | |
| | ordinary | | |
| | activities | | |
| | multiplied | | |
| | by | | |
| | standard | | |
| | rate of | | |
| | corporation | | |
| | tax of 21% | | |
+--------+-----------------+---------+---------+
| | Effects | | |
| | of: | | |
+--------+-----------------+---------+---------+
| | Expenses | 2 | 1 |
| | not | | |
| | deductible | | |
| | for tax | | |
| | purposes/income | | |
| | not taxable | | |
+--------+-----------------+---------+---------+
| | Temporary | (1) | (2) |
| | differences | | |
+--------+-----------------+---------+---------+
| | Research | (920) | (494) |
| | & | | |
| | development | | |
| | tax relief | | |
+--------+-----------------+---------+---------+
| | Losses | 1,000 | 793 |
| | carried | | |
| | forward | | |
+--------+-----------------+---------+---------+
| | Adjustment | (1) | (24) |
| | to tax | | |
| | charge in | | |
| | respect of | | |
| | previous | | |
| | years | | |
+--------+-----------------+---------+---------+
| | IFRS 2 | 8 | 6 |
| | Share | | |
| | option | | |
| | charge | | |
+--------+-----------------+---------+---------+
| | | | |
+--------+-----------------+---------+---------+
| | Total | (518) | (334) |
| | tax | | |
| | credit | | |
| | for | | |
| | the | | |
| | year | | |
+--------+-----------------+---------+---------+
| | | | |
+--------+-----------------+---------+---------+
The Company had un-utilised tax losses at 31 March 2010 of GBP14,804,000 (2009:
GBP14,355,000) which are available to offset against future taxable profits. No
deferred tax asset has been recognised in respect of these losses as the timing
of their utilisation is uncertain.
+----+----------------------------------------+----------+--------+------------+
| 9 | Loss per share | | |
| | | | |
+----+---------------------------------------------------+--------+------------+
| | Basic and diluted loss per share is calculated by dividing the loss for |
| | the year attributable to ordinary shareholders for by the weighted |
| | average number of shares in issue during the year. At 31 March 2010 |
| | 2,628,000 share options (2009: nil) had an exercise price less than the |
| | current share price. The weighted average number of shares used for |
| | the purpose of calculating diluted earnings per share has not been |
| | adjusted for the potential ordinary shares with the effect that basic |
| | and diluted earnings per share are identical. The potential ordinary |
| | shares are regarded as anti-dilutive because their conversion to |
| | ordinary shares would have the effect of decreasing the loss per share |
| | from continuing operations. |
| | |
+----+-------------------------------------------------------------------------+
| | | 2010 | 2009 |
| | | GBP'000 | GBP'000 |
+----+----------------------------------------+-------------------+------------+
| | Loss for the year | 2,366 | 2,589 |
+----+----------------------------------------+-------------------+------------+
| | | Number of shares | Number of |
| | | | shares |
+----+----------------------------------------+-------------------+------------+
| | Weighted average number of shares | 81,786,575 | 61,556,121 |
+----+----------------------------------------+-------------------+------------+
| | | | | |
+----+----------------------------------------+----------+--------+------------+
+----+---------------------------+--+--+-----------------------+
| 10 | Property, plant and | | | Fixtures, |
| | equipment | | | fittings and |
| | | | | equipment |
| | | | | GBP'000 |
+----+---------------------------+--+--+-----------------------+
| | Cost | | | |
+----+---------------------------+--+--+-----------------------+
| | 1 April 2008 | | | 1,586 |
+----+---------------------------+--+--+-----------------------+
| | Additions | | | 143 |
+----+---------------------------+--+--+-----------------------+
| | Disposals | | | (757) |
+----+---------------------------+--+--+-----------------------+
| | | | | |
+----+---------------------------+--+--+-----------------------+
| | 1 April 2009 | | | 972 |
+----+---------------------------+--+--+-----------------------+
| | Additions | | | 175 |
+----+---------------------------+--+--+-----------------------+
| | | | | |
+----+---------------------------+--+--+-----------------------+
| | 31 March 2010 | | | 1,147 |
+----+---------------------------+--+--+-----------------------+
| | | | | |
+----+---------------------------+--+--+-----------------------+
| | Depreciation | | | |
+----+---------------------------+--+--+-----------------------+
| | 1 April 2008 | | | 1,380 |
+----+---------------------------+--+--+-----------------------+
| | Charge for the year | | | 130 |
+----+---------------------------+--+--+-----------------------+
| | Disposals | | | (755) |
+----+---------------------------+--+--+-----------------------+
| | | | | |
+----+---------------------------+--+--+-----------------------+
| | 1 April 2009 | | | 755 |
+----+---------------------------+--+--+-----------------------+
| | Charge for the year | | | 138 |
+----+---------------------------+--+--+-----------------------+
| | | | | |
+----+---------------------------+--+--+-----------------------+
| | 31 March 2009 | | | 893 |
+----+---------------------------+--+--+-----------------------+
| | | | | |
+----+---------------------------+--+--+-----------------------+
| | Carrying amount | | | |
+----+---------------------------+--+--+-----------------------+
| | | | | |
+----+---------------------------+--+--+-----------------------+
| | At 31 March 2010 | | | 254 |
+----+---------------------------+--+--+-----------------------+
| | | | | |
+----+---------------------------+--+--+-----------------------+
| | At 31 March 2009 | | | 217 |
+----+---------------------------+--+--+-----------------------+
| | | | | |
+----+---------------------------+--+--+-----------------------+
| | At 1 April 2008 | | | 206 |
+----+---------------------------+--+--+-----------------------+
| | | | | |
+----+---------------------------+--+--+-----------------------+
The depreciation charge is included within administrative expenses in the
statement of comprehensive income.
+----+---------------------------+--+--+-----------------------+
| 11 | Intangible Assets | | | Development Projects |
| | | | | GBP'000 |
+----+---------------------------+--+--+-----------------------+
| | Cost | | | |
+----+---------------------------+--+--+-----------------------+
| | 1 April 2008 | | | 1,388 |
+----+---------------------------+--+--+-----------------------+
| | Additions | | | 1,334 |
+----+---------------------------+--+--+-----------------------+
| | | | | |
+----+---------------------------+--+--+-----------------------+
| | 1 April 2009 | | | 2,722 |
+----+---------------------------+--+--+-----------------------+
| | Additions | | | 2,271 |
+----+---------------------------+--+--+-----------------------+
| | | | | |
+----+---------------------------+--+--+-----------------------+
| | 31 March 2010 | | | 4,993 |
+----+---------------------------+--+--+-----------------------+
| | | | | |
+----+---------------------------+--+--+-----------------------+
| | | | | |
+----+---------------------------+--+--+-----------------------+
| | Amortisation | | | |
+----+---------------------------+--+--+-----------------------+
| | 1 April 2008 | | | 1,186 |
+----+---------------------------+--+--+-----------------------+
| | Charge for the year | | | 890 |
+----+---------------------------+--+--+-----------------------+
| | | | | |
+----+---------------------------+--+--+-----------------------+
| | 1 April 2009 | | | 2,076 |
+----+---------------------------+--+--+-----------------------+
| | Charge for the year | | | 111 |
+----+---------------------------+--+--+-----------------------+
| | | | | |
+----+---------------------------+--+--+-----------------------+
| | 31 March 2010 | | | 2,187 |
+----+---------------------------+--+--+-----------------------+
| | | | | |
+----+---------------------------+--+--+-----------------------+
| | | | | |
+----+---------------------------+--+--+-----------------------+
| | Carrying Amount | | | |
+----+---------------------------+--+--+-----------------------+
| | 31 March 2010 | | | 2,806 |
+----+---------------------------+--+--+-----------------------+
| | | | | |
+----+---------------------------+--+--+-----------------------+
| | | | | |
+----+---------------------------+--+--+-----------------------+
| | 31 March 2009 | | | 646 |
+----+---------------------------+--+--+-----------------------+
| | | | | |
+----+---------------------------+--+--+-----------------------+
| | | | | |
+----+---------------------------+--+--+-----------------------+
| | 1 April 2008 | | | 202 |
+----+---------------------------+--+--+-----------------------+
| | | | | |
+----+---------------------------+--+--+-----------------------+
The amortisation charge is included within administrative expense in the
statement of comprehensive income.
+----+--------------------+------+------+------+-------+------+
| | | | | | | |
| 12 | Investments | | | | | |
+----+--------------------+------+------+------+-------+------+
| | The Company's only investment is GBP2,000 in the |
| | shares of its dormant subsidiary undertaking, |
| | Innovision Concepts Limited, a company registered in |
| | England. This investment represents 100% of the issued |
| | ordinary share capital. The capital and reserves of |
| | the subsidiary at the year end amounted to GBP(81,377) |
| | (2009: GBP(81,377)). This deficit represents amounts |
| | due to the Company and is fully provided within the |
| | Company's accounts. |
+----+--------------------+------+------+------+-------+------+
+----+------------------------------------------+---------+---------+
| 13 | Inventories | 2010 | 2009 |
| | | GBP'000 | GBP'000 |
| | | | |
+----+------------------------------------------+---------+---------+
| | | | |
+----+------------------------------------------+---------+---------+
| | Products for resale | 51 | 80 |
+----+------------------------------------------+---------+---------+
| | | | |
+----+------------------------------------------+---------+---------+
The fair value of inventories is assessed at the cost of bringing them to their
current state and location. Any charge related to the movement in the value of
inventories is taken to cost of sales within the statement of comprehensive
income. No provision has been made for an impairment in value of inventories.
+----+----------------------------------------+---------+------------------+
| 14 | Trade and other receivables | 2010 | 2009 |
| | | GBP'000 | GBP'000 |
| | | | |
+----+----------------------------------------+---------+------------------+
| | Amounts falling due within one year: | | |
+----+----------------------------------------+---------+------------------+
| | Trade receivables | 552 | 1,011 |
+----+----------------------------------------+---------+------------------+
| | Less provision for impairment of trade | (315) | (315) |
| | receivables | | |
+----+----------------------------------------+---------+------------------+
| | | | |
+----+----------------------------------------+---------+------------------+
| | Trade receivables - net | 237 | 696 |
+----+----------------------------------------+---------+------------------+
| | Other receivables | 6 | 178 |
+----+----------------------------------------+---------+------------------+
| | VAT | 109 | 6 |
+----+----------------------------------------+---------+------------------+
| | Prepayments and accrued income | 1,043 | 245 |
+----+----------------------------------------+---------+------------------+
| | | | |
+----+----------------------------------------+---------+------------------+
| | | 1,395 | 1,125 |
+----+----------------------------------------+---------+------------------+
| | | | |
+----+----------------------------------------+---------+------------------+
| | Amounts falling due after more than | | |
| | one year: | | |
+----+----------------------------------------+---------+------------------+
| | Other receivables | 1 | 2 |
+----+----------------------------------------+---------+------------------+
| | | | |
+----+----------------------------------------+---------+------------------+
| | | 1 | 2 |
+----+----------------------------------------+---------+------------------+
| | | | |
+----+----------------------------------------+---------+------------------+
| | | 1,396 | 1,127 |
+----+----------------------------------------+---------+------------------+
| | | | |
+----+----------------------------------------+---------+------------------+
In the year ended 31 March 2008 as described in note 1, a provision of
GBP700,000 was made against amounts due from one customer. GBP250,000 of this
provision is included in the provision for impairment of trade receivables and
the remaining GBP450,000 is a provision against accrued income. This provision
remained in place at 31 March 2010.
At 31 March 2010 GBP133,000 of trade receivables (2009: GBP240,000) were fully
performing.
At 31 March 2010 GBP104,000 of trade receivables (2009: GBP456,000) were past
due but not impaired. These relate to a number of customers for whom there is
no recent history of default. The ageing analysis of these trade receivables is
as follows:
+----+--------------------------------------------+---------+---------+
| | | 2010 | 2009 |
| | | GBP'000 | GBP'000 |
| | | | |
+----+--------------------------------------------+---------+---------+
| | | | |
+----+--------------------------------------------+---------+---------+
| | Up to 3 months | 79 | 315 |
+----+--------------------------------------------+---------+---------+
| | 3 to 6 months | 25 | - |
+----+--------------------------------------------+---------+---------+
| | Over 12 months | - | 141 |
+----+--------------------------------------------+---------+---------+
| | | | |
+----+--------------------------------------------+---------+---------+
| | | 104 | 456 |
+----+--------------------------------------------+---------+---------+
| | | | |
+----+--------------------------------------------+---------+---------+
The average credit period during the year ended 31 March 2010 was 56 days (2009:
62 days). At 31 March 2010 GBP315,000 (2009: GBP315,000) of trade receivables
were impaired and provided for. The individually impaired receivables relate to
customers which are unexpectedly in difficult economic situations. It was
assessed that a portion of the receivables is expected to be recovered. The
ageing analysis of these receivables is as follows: GBP4,000 between 6 and 12
months and GBP311,000 over 1 year. There has been no movement on the provision
since 31 March 2010.
14 Trade and other receivables (continued)
The carrying amounts of the Company's trade and other receivables are
denominated in the following currencies:
+----+--------------------------------------------+---------+---------+
| | | 2010 | 2009 |
| | | GBP'000 | GBP'000 |
| | | | |
+----+--------------------------------------------+---------+---------+
| | Sterling | 1,209 | 441 |
+----+--------------------------------------------+---------+---------+
| | Euros | 10 | 464 |
+----+--------------------------------------------+---------+---------+
| | US Dollars | 177 | 222 |
+----+--------------------------------------------+---------+---------+
| | | | |
+----+--------------------------------------------+---------+---------+
| | | 1,396 | 1,127 |
+----+--------------------------------------------+---------+---------+
| | | | |
+----+--------------------------------------------+---------+---------+
| | | | |
+----+--------------------------------------------+---------+---------+
There is no material difference between the book value and fair value of the
trade and other receivables.
The maximum exposure to credit risk at the reporting date is:
+----+--------------------------------------------+---------+---------+
| | | 2010 | 2009 |
| | | GBP'000 | GBP'000 |
| | | | |
+----+--------------------------------------------+---------+---------+
| | | | |
+----+--------------------------------------------+---------+---------+
| | Trade receivables - net | 237 | 696 |
+----+--------------------------------------------+---------+---------+
| | | | |
+----+--------------------------------------------+---------+---------+
+----+--------------------------------------------+---------+---------+
| 15 | Cash and cash equivalents | | |
+----+--------------------------------------------+---------+---------+
| | | | |
+----+--------------------------------------------+---------+---------+
| | Cash and cash equivalents comprise cash held by the Company |
| | and short term bank deposits with an original maturity date |
| | of three months or less. The carrying amount of these |
| | assets approximates their fair value. |
+----+----------------------------------------------------------------+
| | | 2010 | 2009 |
| | | GBP'000 | GBP'000 |
| | | | |
+----+--------------------------------------------+---------+---------+
| | | | |
+----+--------------------------------------------+---------+---------+
| | Sterling short-term bank deposits | 3,855 | 2,513 |
+----+--------------------------------------------+---------+---------+
| | Current accounts - Sterling | 66 | 25 |
+----+--------------------------------------------+---------+---------+
| | Current accounts - Euro | 10 | 615 |
+----+--------------------------------------------+---------+---------+
| | Current accounts - US Dollars | 214 | 432 |
+----+--------------------------------------------+---------+---------+
| | | | |
+----+--------------------------------------------+---------+---------+
| | | 4,145 | 3,585 |
+----+--------------------------------------------+---------+---------+
| | | | |
+----+--------------------------------------------+---------+---------+
The Company holds small balances in foreign currencies to meet current trading
requirements. Cash surplus to immediate requirements is held on money market
deposit at varying rates of interest. The carrying value of the cash and cash
equivalents approximates their fair values.
The Company's income is received in the following approximate percentages; 24%
(2009: 33%) in Sterling, 59% (2009: 24%) in US Dollars and 17% (2009: 43%) in
Euros.
The interest rates and maturity dates on the short-term deposits was as follows:
+----+---------------------------------------+----------+------------+
| | | Interest | Maturity |
| | | Rate | |
+----+---------------------------------------+----------+------------+
| | 2010 | | |
+----+---------------------------------------+----------+------------+
| | GBP19,000 | 0.50% | Instant |
| | | | access |
+----+---------------------------------------+----------+------------+
| | GBP934,000 | 1.40% | Instant |
| | | | access |
+----+---------------------------------------+----------+------------+
| | GBP700,000 | 1.22% | 6 days |
+----+---------------------------------------+----------+------------+
| | GBP202,000 | 1.10% | 12 days |
+----+---------------------------------------+----------+------------+
| | GBP500,000 | 1.27% | 34 days |
+----+---------------------------------------+----------+------------+
| | GBP1,500,000 | 1.30% | 34 days |
+----+---------------------------------------+----------+------------+
+----+---------------------------------------+----------+------------+
| 15 | Cash and cash equivalents (continued) | | |
+----+---------------------------------------+----------+------------+
| | | Interest | Maturity |
| | | Rate | |
+----+---------------------------------------+----------+------------+
| | 2009 | | |
+----+---------------------------------------+----------+------------+
| | GBP43,000 | 0.50% | Instant |
| | | | access |
+----+---------------------------------------+----------+------------+
| | GBP324,000 | 1.40% | 6 days |
+----+---------------------------------------+----------+------------+
| | GBP576,000 | 2.75% | 6 days |
+----+---------------------------------------+----------+------------+
| | GBP320,000 | 1.93% | 35 days |
+----+---------------------------------------+----------+------------+
| | GBP500,000 | 4.16% | 57 days |
+----+---------------------------------------+----------+------------+
| | GBP350,000 | 2.13% | 63 days |
+----+---------------------------------------+----------+------------+
| | GBP400,000 | 1.50% | 91 days |
+----+---------------------------------------+----------+------------+
+----+-------------------------------------------+---------+---------+
| 16 | Trade and other payables | 2010 | 2009 |
| | | GBP'000 | GBP'000 |
| | | | |
+----+-------------------------------------------+---------+---------+
| | Amounts falling due within one year: | | |
+----+-------------------------------------------+---------+---------+
| | Trade payables | 704 | 301 |
+----+-------------------------------------------+---------+---------+
| | Other payables | 20 | 17 |
+----+-------------------------------------------+---------+---------+
| | Other taxation and social security | 117 | 89 |
+----+-------------------------------------------+---------+---------+
| | Accruals and deferred income | 234 | 200 |
+----+-------------------------------------------+---------+---------+
| | | | |
+----+-------------------------------------------+---------+---------+
| | | 1,075 | 607 |
+----+-------------------------------------------+---------+---------+
| | | | |
+----+-------------------------------------------+---------+---------+
| | | | |
+----+-------------------------------------------+---------+---------+
The carrying amounts of the Company's trade and other payables are denominated
in the following currencies:
+----+--------------------------------------------+---------+---------+
| | | 2010 | 2009 |
| | | GBP'000 | GBP'000 |
| | | | |
+----+--------------------------------------------+---------+---------+
| | | | |
+----+--------------------------------------------+---------+---------+
| | Sterling | 835 | 520 |
+----+--------------------------------------------+---------+---------+
| | Euros | 20 | 7 |
+----+--------------------------------------------+---------+---------+
| | US Dollars | 220 | 80 |
+----+--------------------------------------------+---------+---------+
| | | | |
+----+--------------------------------------------+---------+---------+
| | | 1,075 | 607 |
+----+--------------------------------------------+---------+---------+
| | | | |
+----+--------------------------------------------+---------+---------+
There is no material difference between the book value and fair value of the
trade and other payables.
+----+---------------------------------+---------+--------------+------------+
| 17 | Provisions | Onerous | Dilapidation | |
| | | Lease | Provision | Total |
| | | GBP'000 | GBP'000 | Provisions |
| | | | | GBP'000 |
+----+---------------------------------+---------+--------------+------------+
| | | | | |
+----+---------------------------------+---------+--------------+------------+
| | Balance at 1 April 2008 | 54 | - | 54 |
+----+---------------------------------+---------+--------------+------------+
| | Provision for dilapidations | - | 80 | 80 |
+----+---------------------------------+---------+--------------+------------+
| | Utilised during the year to 31 | (35) | - | (35) |
| | March 2009 | | | |
+----+---------------------------------+---------+--------------+------------+
| | | | | |
+----+---------------------------------+---------+--------------+------------+
| | Balance at 31 March 2009 | 19 | 80 | 99 |
+----+---------------------------------+---------+--------------+------------+
| | Utilised during the year to 31 | (19) | (80) | (99) |
| | March 2010 | | | |
+----+---------------------------------+---------+--------------+------------+
| | | | | |
+----+---------------------------------+---------+--------------+------------+
| | Balance at 31 March 2010 | - | - | - |
+----+---------------------------------+---------+--------------+------------+
| | | | | |
+----+---------------------------------+---------+--------------+------------+
| | | | | |
+----+---------------------------------+---------+--------------+------------+
| | A provision of GBP190,000 was recognised in the year ended |
| | 31 March 2006 in respect of a lease now considered |
| | onerous. The remaining provision was fully utilised during |
| | the year ended 31 March 2010. |
| | |
+----+-----------------------------------------------------------------------+
| | A provision of GBP80,000 was recognised during the year |
| | ended 31 March 2009 in respect of the costs of bringing a |
| | premises back to the condition stated in the lease at the |
| | end of that lease. This provision was fully utilised |
| | during the year ending 31 March 2010. |
+----+---------------------------------+---------+--------------+------------+
+----+----------------------------------------+---------+---------+
| 18 | Equity | 2010 | 2009 |
| | | GBP'000 | GBP'000 |
| | | | |
+----+----------------------------------------+---------+---------+
| | Authorised Share Capital: | | |
+----+----------------------------------------+---------+---------+
| | | | |
+----+----------------------------------------+---------+---------+
| | 125,000,000 (2009: 80,000,000) | 1,250 | 800 |
| | ordinary shares of 1p each | | |
+----+----------------------------------------+---------+---------+
| | | | |
+----+----------------------------------------+---------+---------+
| | Allotted, issued and fully paid: | | |
+----+----------------------------------------+---------+---------+
| | | | |
+----+----------------------------------------+---------+---------+
| | 91,556,121 (2009: 61,556,121) ordinary | 915 | 615 |
| | shares of 1p each | | |
+----+----------------------------------------+---------+---------+
| | | | |
+----+----------------------------------------+---------+---------+
The Company has one class of ordinary shares which carry no right to fixed
income.
Changes to equity during the year were as follows:
+--+---------------------------+---------+---------+----------+---------+
| | | Share | Share | Retained | |
| | | Capital | Premium | Earnings | Total |
| | | GBP'000 | GBP'000 | GBP'000 | GBP'000 |
| | | | | | |
+--+---------------------------+---------+---------+----------+---------+
| | Balance brought forward | 615 | 21,735 | (14,531) | 7,819 |
| | at 1 April 2008 | | | | |
+--+---------------------------+---------+---------+----------+---------+
| | Loss for the year | - | - | (2,589) | (2,589) |
| | transferred to Retained | | | | |
| | Earnings | | | | |
+--+---------------------------+---------+---------+----------+---------+
| | Share Based payments | - | - | 29 | 29 |
+--+---------------------------+---------+---------+----------+---------+
| | | | | | |
+--+---------------------------+---------+---------+----------+---------+
| | Balance at 31 March 2009 | 615 | 21,735 | (17,091) | 5,259 |
| | | | | | |
+--+---------------------------+---------+---------+----------+---------+
| | 28 July 2009: Issued | 41 | 700 | - | 741 |
| | 4,115,740 new ordinary | | | | |
| | shares of 1p each | | | | |
+--+---------------------------+---------+---------+----------+---------+
| | 29 July 2009: Issued | 259 | 4,400 | - | 4,659 |
| | 25,884,260 new ordinary | | | | |
| | shares of 1p each | | | | |
+--+---------------------------+---------+---------+----------+---------+
| | Costs associated with the | - | (239) | - | (239) |
| | issue of new shares | | | | |
+--+---------------------------+---------+---------+----------+---------+
| | Loss for the year | - | - | (2,366) | (2,366) |
| | transferred to Retained | | | | |
| | Earnings | | | | |
+--+---------------------------+---------+---------+----------+---------+
| | Share Based payments | - | - | 40 | 40 |
+--+---------------------------+---------+---------+----------+---------+
| | | | | | |
+--+---------------------------+---------+---------+----------+---------+
| | Balance carried forward | 915 | 26,596 | (19,417) | 8,094 |
| | at 31 March 2010 | | | | |
+--+---------------------------+---------+---------+----------+---------+
| | | | | | |
+--+---------------------------+---------+---------+----------+---------+
The share premium account represents the excess of the price paid for shares
over their nominal value less any directly attributable issue costs and is not
distributable. Retained Earnings represents the cumulative value of transfers
from the Statement of comprehensive income.
On 2 July 2009, the authorised share capital of the Company was increased from
GBP800,000 to GBP1,250,000 by the creation of an additional 45,000,000 Ordinary
Shares of 1p each to rank pari passu in all respects with the existing Ordinary
Shares of 1p each in the capital of the Company.
On 28 July 2009, 4,115,740 new ordinary shares of 1p each were issued for a
consideration of GBP740,833 and on 29 July 2007, 25,884,260 new ordinary shares
of 1p each were issued for a consideration of GBP4,659,167.
18 Equity (continued)
Share Options
The following options and share awards over Ordinary Shares of 1p have been
granted and were outstanding at the end of the year:
+--------+------------+----------+-----------+-----------+----------+---------------------+
| Scheme | Date | Number of | Exercise | Exercise |
| | of | shares for | price | period |
| | grant | which rights | | |
| | | are exercisable | | |
+---------------------+----------+-----------------------+----------+---------------------+
| | | | 31.03.10 | 01.04.09 | | From - |
| | | | | | | To |
+--------+------------+----------+-----------+-----------+----------+---------------------+
| | EMI | 15/02/01 | 2,250 | 2,250 | 45p | 15/02/04-15/02/11 |
| | scheme | | | | | |
+--------+------------+----------+-----------+-----------+----------+---------------------+
| | EMI | 07/01/02 | 24,750 | 24,750 | 55p | 07/01/05-07/01/12 |
| | scheme | | | | | |
+--------+------------+----------+-----------+-----------+----------+---------------------+
| | EMI | 24/07/02 | 6,000 | 6,000 | 33.5p | 24/07/05-24/07/12 |
| | scheme | | | | | |
+--------+------------+----------+-----------+-----------+----------+---------------------+
| | EMI | 03/07/03 | 3,000 | 3,000 | 39p | 03/07/06-03/07/13 |
| | scheme | | | | | |
+--------+------------+----------+-----------+-----------+----------+---------------------+
| | EMI | 12/12/03 | 251,000 | 251,000 | 90p | 12/12/06-12/12/13 |
| | scheme | | | | | |
+--------+------------+----------+-----------+-----------+----------+---------------------+
| | EMI | 25/08/04 | 221,000 | 221,000 | 70.5p | 25/02/06-25/08/14 |
| | scheme | | | | | |
+--------+------------+----------+-----------+-----------+----------+---------------------+
| | EMI | 09/12/04 | 228,000 | 228,000 | 100p | 09/12/07-09/12/14 |
| | scheme | | | | | |
+--------+------------+----------+-----------+-----------+----------+---------------------+
| | EMI | 28/07/05 | 115,000 | 115,000 | 127.5p | 28/07/08-28/07/15 |
| | scheme | | | | | |
+--------+------------+----------+-----------+-----------+----------+---------------------+
| | EMI | 10/01/06 | 50,000 | 50,000 | 65p | 10/01/09-10/01/16 |
| | scheme | | | | | |
+--------+------------+----------+-----------+-----------+----------+---------------------+
| | EMI | 07/02/06 | 163,934 | 163,934 | 61p | 07/02/09-07/02/16 |
| | scheme | | | | | |
+--------+------------+----------+-----------+-----------+----------+---------------------+
| | EMI | 19/07/06 | 184,000 | 188,000 | 43p | 19/07/09-19/07/16 |
| | scheme | | | | | |
+--------+------------+----------+-----------+-----------+----------+---------------------+
| | EMI | 21/01/07 | 8,000 | 8,000 | 49.5p | 20/01/10-20/01/17 |
| | scheme | | | | | |
+--------+------------+----------+-----------+-----------+----------+---------------------+
| | EMI | 21/09/07 | 200,000 | 208,000 | 36.5p | 21/09/10-21/09/17 |
| | scheme | | | | | |
+--------+------------+----------+-----------+-----------+----------+---------------------+
| | EMI | 05/08/08 | 500,000 | 500,000 | 11.75p | 05/08/11-05/08/18 |
| | scheme | | | | | |
+--------+------------+----------+-----------+-----------+----------+---------------------+
| | EMI | 23/09/08 | 228,000 | 242,000 | 12.25p | 23/09/11-23/09/18 |
| | scheme | | | | | |
+--------+------------+----------+-----------+-----------+----------+---------------------+
| | EMI | 20/01/09 | 500,000 | 500,000 | 11.75p | 20/01/12-20/01/19 |
| | scheme | | | | | |
+--------+------------+----------+-----------+-----------+----------+---------------------+
| | EMI | 21/09/09 | 254,000 | - | 21.50p | 21/09/12-21/09/19 |
| | scheme | | | | | |
+--------+------------+----------+-----------+-----------+----------+---------------------+
| | EMI | 21/01/10 | 222,950 | - | 18.50p | 20/01/13-20/01/20 |
| | scheme | | | | | |
+--------+------------+----------+-----------+-----------+----------+---------------------+
| | EMI | 01/03/10 | 18,000 | - | 17p | 01/03/13-01/03/20 |
| | scheme | | | | | |
+--------+------------+----------+-----------+-----------+----------+---------------------+
| | Approved | 15/02/01 | 47,050 | 47,050 | 45p | 15/02/04-15/02/11 |
| | scheme | | | | | |
+--------+------------+----------+-----------+-----------+----------+---------------------+
| | Approved | 12/12/03 | 20,000 | 20,000 | 90p | 12/12/06-12/12/13 |
| | scheme | | | | | |
+--------+------------+----------+-----------+-----------+----------+---------------------+
| | Unapproved | 19/12/04 | 80,000 | 80,000 | 100p | 09/12/07-19/12/14 |
| | scheme | | | | | |
+--------+------------+----------+-----------+-----------+----------+---------------------+
| | Unapproved | 07/02/06 | 409,836 | 409,836 | 61p | 07/02/09-09/02/16 |
| | scheme | | | | | |
+--------+------------+----------+-----------+-----------+----------+---------------------+
| | Unapproved | 19/07/06 | 10,000 | 10,000 | 43p | 19/07/09-19/07/16 |
| | scheme | | | | | |
+--------+------------+----------+-----------+-----------+----------+---------------------+
| | Unapproved | 21/09/07 | 10,000 | 10,000 | 36.5p | 21/09/10-21/09/17 |
| | scheme | | | | | |
+--------+------------+----------+-----------+-----------+----------+---------------------+
| | Unapproved | 05/08/08 | 1,000,000 | 1,000,000 | 11.75p | 05/08/11-05/08/18 |
| | scheme | | | | | |
+--------+------------+----------+-----------+-----------+----------+---------------------+
| | Unapproved | 23/09/08 | 10,000 | 10,000 | 12.25p | 23/09/11-23/09/18 |
| | scheme | | | | | |
+--------+------------+----------+-----------+-----------+----------+---------------------+
| | Unapproved | 21/09/09 | 10,000 | - | 21.50p | 21/09/12-21/09/19 |
| | scheme | | | | | |
+--------+------------+----------+-----------+-----------+----------+---------------------+
| | Unapproved | 21/01/10 | 777,050 | - | 18.50p | 20/01/13-20/01/20 |
| | scheme | | | | | |
+--------+------------+----------+-----------+-----------+----------+---------------------+
| | LTIP | 19/07/06 | 300,000 | 300,000 | 1p | 24/02/2010-19/07/16 |
| | scheme | | | | | |
+--------+------------+----------+-----------+-----------+----------+---------------------+
| | LTIP | 19/07/06 | 90,000 | 90,000 | 1p | On |
| | scheme | | | | | announcement |
| | | | | | | of results |
| | | | | | | year ended |
| | | | | | | March |
| | | | | | | 2009-2011 |
+--------+------------+----------+-----------+-----------+----------+---------------------+
| | | | | | | |
+--------+------------+----------+-----------+-----------+----------+---------------------+
| | | | 5,943,820 | 4,687,820 | | |
+--------+------------+----------+-----------+-----------+----------+---------------------+
| | | | | | | |
+--------+------------+----------+-----------+-----------+----------+---------------------+
19 Share Based Payments
The Company has a number of share option plans in existence. Outstanding share
options at 31 March 2010 are listed in Note 18. Exercise of an option is
subject to continued employment. Options were valued using the Black-Scholes
option-pricing model.
The fair value per option granted and the assumptions used in the calculation
are as follows:
+--+------------------------+------+-----------+-----------+-----------+-----------+
| | | | | | | |
+--+------------------------+------+-----------+-----------+-----------+-----------+
| | Grant date | | 01/03/10 | 20/01/10 | 21/09/09 | 20/01/09 |
+--+------------------------+------+-----------+-----------+-----------+-----------+
| | Share price at grant | | GBP0.1700 | GBP0.1850 | GBP0.2150 | GBP0.1175 |
| | date | | | | | |
+--+------------------------+------+-----------+-----------+-----------+-----------+
| | Exercise price | | GBP0.1700 | GBP0.1850 | GBP0.2150 | GBP0.1175 |
+--+------------------------+------+-----------+-----------+-----------+-----------+
| | No. of employees | | 3 | 2 | 46 | 1 |
+--+------------------------+------+-----------+-----------+-----------+-----------+
| | Shares under option | | 18,000 | 1,000,000 | 274,000 | 500,000 |
+--+------------------------+------+-----------+-----------+-----------+-----------+
| | Vesting period (years) | | 3.0 | 3.0 | 3.0 | 3.0 |
+--+------------------------+------+-----------+-----------+-----------+-----------+
| | Expected volatility | | 61% | 61% | 62% | 58% |
+--+------------------------+------+-----------+-----------+-----------+-----------+
| | Option life (years) | | 10 | 10 | 10 | 10 |
+--+------------------------+------+-----------+-----------+-----------+-----------+
| | Expected life (years) | | 4.0 | 4.0 | 4.0 | 4.0 |
+--+------------------------+------+-----------+-----------+-----------+-----------+
| | Risk free rate | | 2.0% | 2.0% | 2.1% | 2.30% |
+--+------------------------+------+-----------+-----------+-----------+-----------+
| | Expected dividends | | 0.0% | 0.0% | 0.0% | 0.0% |
| | expressed as a | | | | | |
| | dividend yield | | | | | |
+--+------------------------+------+-----------+-----------+-----------+-----------+
| | Fair value per option | | GBP0.08 | GBP0.06 | GBP0.07 | GBP0.04 |
+--+------------------------+------+-----------+-----------+-----------+-----------+
+--+-------------------------+-----------+-----------+-----------+-----------+-----------+
| | Grant date | 23/09/08 | 05/08/08 | 21/09/07 | 21/01/07 | 19/07/06 |
+--+-------------------------+-----------+-----------+-----------+-----------+-----------+
| | Share price at grant | GBP0.1225 | GBP0.1175 | GBP0.3650 | GBP0.4950 | GBP0.4300 |
| | date | | | | | |
+--+-------------------------+-----------+-----------+-----------+-----------+-----------+
| | Exercise price | GBP0.1225 | GBP0.1175 | GBP0.3650 | GBP0.4950 | GBP0.4300 |
+--+-------------------------+-----------+-----------+-----------+-----------+-----------+
| | No. of employees | 48 | 2 | 46 | 4 | 41 |
+--+-------------------------+-----------+-----------+-----------+-----------+-----------+
| | Shares under option | 264,000 | 1,500,000 | 232,000 | 16,000 | 213,000 |
+--+-------------------------+-----------+-----------+-----------+-----------+-----------+
| | Vesting period (years) | 3.0 | 3.0 | 3.0 | 3.0 | 3.0 |
+--+-------------------------+-----------+-----------+-----------+-----------+-----------+
| | Expected volatility | 55% | 55% | 52.0% | 48.0% | 48.0% |
+--+-------------------------+-----------+-----------+-----------+-----------+-----------+
| | Option life (years) | 10 | 10 | 10 | 10 | 10 |
+--+-------------------------+-----------+-----------+-----------+-----------+-----------+
| | Expected life (years) | 4.0 | 4.0 | 4.0 | 4.0 | 4.0 |
+--+-------------------------+-----------+-----------+-----------+-----------+-----------+
| | Risk free rate | 4.50% | 4.50% | 5.00% | 5.30% | 5.30% |
+--+-------------------------+-----------+-----------+-----------+-----------+-----------+
| | Expected dividends | 0.0% | 0.0% | 0.0% | 0.0% | 0.0% |
| | expressed as a dividend | | | | | |
| | yield | | | | | |
+--+-------------------------+-----------+-----------+-----------+-----------+-----------+
| | Fair value per option | GBP0.04 | GBP0.03 | GBP0.11 | GBP0.18 | GBP0.12 |
+--+-------------------------+-----------+-----------+-----------+-----------+-----------+
None of outstanding share options have attached performance criteria.
The expected volatility is based on historical volatility over the last three
years. The expected life is the average expected period to exercise. The risk
free rate of return is the yield on zero-coupon UK government bonds of a term
consistent with the assumed option life.
19 Share Based Payments (continued)
A reconciliation of option movements over the year to 31 March 2010 is shown
below:
+------------------------+-----------+----------+-----------+----------+
| | 2010 | 2009 |
+------------------------+----------------------+----------------------+
| | Number | Weighted | Number | Weighted |
| | | average | | average |
| | | exercise | | exercise |
| | | price | | price |
+------------------------+-----------+----------+-----------+----------+
| Outstanding at 1 April | 4,687,820 | GBP0.37 | 2,467,320 | GBP0.59 |
+------------------------+-----------+----------+-----------+----------+
| Granted | 1,292,000 | GBP0.19 | 2,264,000 | GBP0.12 |
+------------------------+-----------+----------+-----------+----------+
| Forfeited | 36,000 | GBP0.24 | 43,500 | GBP0.44 |
+------------------------+-----------+----------+-----------+----------+
| | | | | |
+------------------------+-----------+----------+-----------+----------+
| Outstanding at 31 | 5,943,820 | GBP0.33 | 4,687,820 | GBP0.37 |
| March | | | | |
+------------------------+-----------+----------+-----------+----------+
| | | | | |
+------------------------+-----------+----------+-----------+----------+
| Exercisable at 31 | 2,213,820 | GBP0.62 | 1,621,820 | GBP0.79 |
| March | | | | |
+------------------------+-----------+----------+-----------+----------+
| | | | | |
+------------------------+-----------+----------+-----------+----------+
The weighted average fair value of options granted in the year was GBP80,620
(2009: GBP75,560).
Share Options 2010
+------------------+-----------+-----------+------------------+-------------+
| Range of | Weighted | Number | Weighted average |
| exercise prices | average | of | remaining life |
| | exercise | shares | |
| | price | | |
+ + + +--------------------------------+
| | | | Expected | Contractual |
+------------------+-----------+-----------+------------------+-------------+
| GBP0.00 - | GBP0.24 | 5,249,820 | 2.1 | 7.9 |
| GBP0.75 | | | | |
+------------------+-----------+-----------+------------------+-------------+
| GBP0.75 - | GBP1.01 | 694,000 | 0.0 | 4.4 |
| GBP1.50 | | | | |
+------------------+-----------+-----------+------------------+-------------+
Share Options 2009
+------------------+-----------+-----------+------------------+-------------+
| Range of | Weighted | Number | Weighted average |
| exercise prices | average | of | remaining life |
| | exercise | shares | |
| | price | | |
+ + + +--------------------------------+
| | | | Expected | Contractual |
+------------------+-----------+-----------+------------------+-------------+
| GBP0.00 - | GBP0.25 | 3,993,820 | 2.3 | 8.3 |
| GBP0.75 | | | | |
+------------------+-----------+-----------+------------------+-------------+
| GBP0.75 - | GBP1.01 | 694,000 | 0.1 | 5.4 |
| GBP1.50 | | | | |
+------------------+-----------+-----------+------------------+-------------+
The total charge for the year relating to employee share based payment plans was
GBP40,000 (2009: GBP29,000), all of which related to equity-settled share based
payment transactions.
20 Operating lease commitments - minimum lease payments
At 31 March 2010 the Company had minimum lease payments under non-cancellable
operating leases as follows:
+----------+----------+-----------+----------+-----------+-----------+----------+-----------+
| | | Land & | Software | Testing | Land & | Software | Testing |
| | | Buildings | Licences | Equipment | Buildings | Licences | Equipment |
+----------+----------+-----------+----------+-----------+-----------+----------+-----------+
| | | 2010 | 2010 | 2010 | 2009 | 2009 | 2009 |
| | | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 |
| | | | | | | | |
+----------+----------+-----------+----------+-----------+-----------+----------+-----------+
| | | | | | | | |
+----------+----------+-----------+----------+-----------+-----------+----------+-----------+
| | Expiring | 143 | 350 | 3 | 188 | 321 | 15 |
| | within | | | | | | |
| | one year | | | | | | |
+----------+----------+-----------+----------+-----------+-----------+----------+-----------+
| | Expiring | 130 | 350 | - | 273 | 387 | 3 |
| | in the | | | | | | |
| | second | | | | | | |
| | to fifth | | | | | | |
| | year | | | | | | |
+----------+----------+-----------+----------+-----------+-----------+----------+-----------+
| | | | | | | | |
+----------+----------+-----------+----------+-----------+-----------+----------+-----------+
| | | 273 | 700 | 3 | 461 | 708 | 18 |
+----------+----------+-----------+----------+-----------+-----------+----------+-----------+
| | | | | | | | |
+----------+----------+-----------+----------+-----------+-----------+----------+-----------+
| | | | | | | | |
+----------+----------+-----------+----------+-----------+-----------+----------+-----------+
Operating leases on land and buildings relate to the Company's head office at
Sheep Street, Cirencester and, in previous years, also included Ash Court,
Wokingham. The current lease for Sheep Street runs until February 2012. The
lease on Ash Court came to an end in July 2009.
Leases for software licences relate to licence agreements for Electronic Design
Automation tools, which agreed on three year terms. The lease of testing
equipment relates to one piece of equipment leased on a three year term which
comes to an end in June 2010.
21 Cashflow
+--------+--------------+--------+---------+---------+
| | | | 2010 | 2009 |
| | | | GBP'000 | GBP'000 |
+--------+--------------+--------+---------+---------+
| | | | | |
+--------+--------------+--------+---------+---------+
| | Loss | | (2,884) | (2,923) |
| | before | | | |
| | tax | | | |
+--------+--------------+--------+---------+---------+
| | Adjustments | | | |
| | for: | | | |
+--------+--------------+--------+---------+---------+
| | Depreciation | | 138 | 130 |
| | of property, | | | |
| | plant & | | | |
| | equipment | | | |
+--------+--------------+--------+---------+---------+
| | Loss | | - | 2 |
| | on | | | |
| | disposal | | | |
| | of | | | |
| | property, | | | |
| | plant & | | | |
| | equipment | | | |
+--------+--------------+--------+---------+---------+
| | Amortisation | | 111 | 890 |
| | of | | | |
| | intangible | | | |
| | assets | | | |
+--------+--------------+--------+---------+---------+
| | Share | | 40 | 29 |
| | based | | | |
| | payments | | | |
+--------+--------------+--------+---------+---------+
| | (Decrease) | | (99) | 45 |
| | / increase | | | |
| | in | | | |
| | provisions | | | |
+--------+--------------+--------+---------+---------+
| | Investment | | (79) | (216) |
| | income | | | |
+--------+--------------+--------+---------+---------+
| | | | | |
+--------+--------------+--------+---------+---------+
| | Operating | | (2,773) | (2,043) |
| | cash | | | |
| | flows | | | |
| | before | | | |
| | movements | | | |
| | in | | | |
| | working | | | |
| | capital | | | |
+--------+--------------+--------+---------+---------+
| | Decrease | | 29 | (74) |
| | / | | | |
| | (increase) | | | |
| | in | | | |
| | inventories | | | |
+--------+--------------+--------+---------+---------+
| | (Increase) | | (341) | 1,232 |
| | / decrease | | | |
| | in | | | |
| | receivables | | | |
+--------+--------------+--------+---------+---------+
| | Increase | | 468 | (10) |
| | / | | | |
| | (decrease) | | | |
| | in | | | |
| | payables | | | |
+--------+--------------+--------+---------+---------+
| | | | | |
+--------+--------------+--------+---------+---------+
| | Cash | | (2,617) | (895) |
| | used | | | |
| | in | | | |
| | operations | | | |
+--------+--------------+--------+---------+---------+
| | | | | |
+--------+--------------+--------+---------+---------+
| | | | | |
+--------+--------------+--------+---------+---------+
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR KKFDBDBKKPAD
Innovision Research&technology (LSE:INN)
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Innovision Research&technology (LSE:INN)
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