Concha Regulatory News (CHA)

30 December 2011

Hot Tuna (International) PLC

("Hot Tuna" or "The Group")

Final Results for the year ended 30 June 2011

Hot Tuna (International) PLC (AIM: HTT), a leading surf wear and fashion brand, announces its final results for the year ended 30 June 2011.

OPERATIONS AND FINANCE REVIEW

Overview

This report covers the Company's trading results for the year ending 30 June 2011. Overall it has been a disappointing year with decreasing sales over the year across all our geographic regions, resulting in an operational loss prior to exceptional items of £0.86 million.

Operational Review

Operational costs remain controlled at the lower level carried forward from 2010 and have little scope for further reduction. In the event of the business continuing, it is the Company's intention to realise further cost savings by entering distributorships and targeting online sales going forward.

Design & Product

The Company retains Hot Tuna's core brand values of edgy surf/streetwear while seeking to utilise the brand's classic heritage. New suppliers have been sort to provide the highest possible quality within target cost brackets.

The coming Autumn/Winter range focuses on clean, classic, quirky and humourous designs on high quality natural products.

Europe

The summer 2010 trading period showed signs of mild recovery with product being delivered to new accounts in Italy generated by the Italian/Austrian distributor. The product was delivered on budget and within customer delivery windows. The UK e-commerce customers reflected slight increases in their modest sized orders as retailers and e-tailers reduced stock holdings and became cautious in product being stocked. Further sales where generated by old seasonal stock being discounted and channelled through markets where full price merchandise was not sold.

At the end of the summer 2010 season Italian retailers had reported good to very good sell through on product and the outlook for 2012 season looked promising. UK e-tailers reported fair sell through in line with UK retail market conditions. UK was signalling a general slowdown pushed in part by UK summer conditions and the start of softening retail numbers. UK accounts purchased product very late after production had been confirmed and in some cases individual styles were not able to be produced due to late purchasing, although online retailers both suffered and prospered from the harsh weather conditions over the start of 2011.

During the financial year the European market showed a decrease in turnover from £0.12 million in 2010 to £0.06 million in 2011. As such, the Company is focusing on rolling out its e-commerce strategy and repairing relations with our prior customer base.

While sales for the 2012 period to-date are up on the same period last year the difference is not significant and we expect European sales for 2012 to be in-line with 2011.

Australia

The Australian market reaction to the new season adult range was positive at tradeshows and a modest increase in the number of accounts buying reflected this. Discounting of old children's range product continued and previous seasons recalled product was returned in to the discount market as 'seconds' product. The children's range was not put back into the market, instead a concerted effort was made to establish back into the market the adults range.

While struggling to recover from the issues of product recall and losing two major retailers in 2010, Australian turnover disappointed expectations and decreased from £0.29 million in 2010 to £0.06 million in 2011.

In 2012 the Company is focusing on the potential for its recently signed Australian distribution agreement. This agreement is expected to significantly improve revenue from January 2012 with emphasis on the post June 2012 period and the board has begun scaling down operations in Australia in light of this.

US

The US retail sector has suffered the most of all markets, and sales continued to be dominated by the swim range. A successful Miami Swim Show at Salon Allure in July 2010 boosted confidence with good orders placed by traditional customers Victoria Secrets and Delias for deliveries from November 2010 through to March 2011. The Company had expected these to result in solid repeat orders from January to March, however as the US retail market retreated and the economy softened, accounts pulled back and only minimal orders were received.

The USA market remains potentially the largest market but will require a distribution partner to capitalise on this, as has been successfully achieved in the Australian market.

Similarly to 2010, the modest sales achieved in the US market were driven by our women's swim collection. Total turnover for the US was £0.09 million in 2011 compared to £0.06 million in 2010 which failed to reach our expectations from the prior year.

In light of the US performance, the board has started winding down US operations and expect all trading and overhead expenditure to have ceased by February 2012.

Financial Review

The operational review has highlighted the disappointing sales performance achieved this year, reducing turnover to £0.21 million (2010: £0.46 million). Due to reduced stock ordering, stock write-down was minimised in 2011 and Company posted a gross profit of £0.05 million (2010: loss £0.03 million).

Total other operational expenses were reduced to £0.91 million (2010: £1.37 million), which is attributable to a reduction in both general and administrative expenses and depreciation and amortisation. In 2011, losses from operations decreased to £0.86 million (2010: £1.40 million).

Due to tighter cost control, operational cash outflows decreased to £0.76 million in the 2011 financial year (2010: £1.37 million).

Net cash outflow after changes in working capital and finance costs from operating activities was £0.94 million (2010: £1.68 million), this improvement in 2011 operating cashflows is largely due to a normalisation from the large decrease in payables in the prior year. Total cash inflow over the period was £0.07 million (2010: £0.62 million) which included the offset by the net proceeds from the placing of £1.01 million resulting in a cash balance at the end of the year of £0.68 million (2010: £0.59 million).

Outlook

While improvement has been made in avenues to market post financial year end with the launch of the ecommerce site www.hot-tuna.com and signing of an Australian distribution agreement, revenue has not met forecasts and cashflows are not expected to support the business through 2012. As such the board took the decision to sell the Company's key asset of the IP and stock of Hot Tuna in November 2011. Currently the board is working with interested parties and is expecting to present a firm purchase offer to shareholders in January 2012. Although strong interest has been shown in the purchase of the brand to date, in the event of a sale not being achieved the board will investigate funding solutions and aggressive overhead cutting while working constructively with the Australian distributor.

In the event of a sale of the brand and business being successfully achieved, the board has indicated the Company will remain as a listed 'shell', with the incumbent directors excluding Marcus Yeoman expected to step down.

Francis Ball

Executive Chairman

21 December 2011

DIRECTORS' REPORT

The directors submit their report and the financial statements of Hot Tuna (International) PLC ("Hot Tuna") and its subsidiary undertakings ("the Group") for the year ended 30 June 2011.

Hot Tuna (International) PLC is a public company incorporated in England and Wales, and quoted on AIM.

PRINCIPAL ACTIVITIES

The principal activity of the Group during the year was that of design, production and sale of our branded surf and youth lifestyle apparel to specified regions of the world.

PRINCIPAL RISKS AND UNCERTAINTIES

The directors consider the following to be key risks involved in running the day to day business of Hot Tuna (International) PLC and its subsidiaries:

·; protection of intellectual property across the globe and new registrations in emerging markets

·; loss of key executives and members of the staff would affect product offering and have an adverse impact on operations

·; changes to import and export restrictions across the world

·; obsolescence of inventory, could cause lower than expected margins and large expenditure write offs to the profit and loss

·; general economic climate and consumer sentiment

·; fluctuations in foreign currencies could harm the results of our operations

·; generation of consistent and profitable financial margins

·; liquidity of the market for trading our shares

The directors address these risks by:

·; implementation of internal control policies and global policies and procedures

·; hire of experienced counsel and advisors to provide guidance and advice

·; having an active involvement in day to day operational activities

·; hiring experienced personnel with industry experience

·; offering competitive and rewarding remuneration packages to executives

·; regular board meetings to address general and industry specific risks and concerns

BUSINESS REVIEW AND FUTURE DEVELOPMENTS

The Group trading loss for the year, after taxation and minority interests, was £0.77 million (2010: £1.31 million).

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

The directors are precluded from declaring a dividend for the year (2010: nil).

KEY PERFORMANCE INDICATORS

Due to Hot Tuna's current business being in the early stages of the growth cycle, the directors do not consider it appropriate to compare against key performance indicators in the market and within the industry.

In the future it is anticipated that the following key performance indicators will be used to monitor the health and profitability of our business:

·; gross profit margins

·; net profit margins

·; sales turnover margins

·; number of sales doors (customers) in each region

·; customer retention

·; number of distributors globally

·; brand exposure and recognition

·; press releases and exposure

·; industry awards or accolades

FINANCIAL INSTRUMENTS

The financial risk management objectives of the Company and its subsidiaries are disclosed in more detail in the accounting policies and note 21.

DIRECTORS

The following directors have held office during the year.

DIRECTORS' INTERESTS IN SHARES

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

Directors' interests in options are disclosed in the Directors' Remuneration Report.

CREDITOR PAYMENT POLICY

The Group's policy is to agree terms of transactions, including payment terms and to ensure that, in the absence of dispute, all suppliers are dealt with in accordance with its standard payment practice whereby all outstanding trade accounts are settled within the term agreed with the supplier at the time of the supply or otherwise 30 days from receipt of the relevant invoice. The number of days outstanding between receipt of invoices and date of payment calculated by reference to the amount owed to trade creditors at the period end as a proportion of the amounts invoiced by suppliers during the period, was 262 days (2010: 177 days).

POLITICAL AND CHARITABLE CONTRIBUTIONS

No donations for political or charitable purposes have been made by the Group or the Company during the year.

EMPLOYEES

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

SUBSTANTIAL SHAREHOLDINGS

As at 19th December 2011 the Company has been notified of the following interests of 3% or more in the issued ordinary share capital of the Company:

STATEMENT AS TO DISCLOSURE OF INFORMATION TO AUDITORS

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

DIRECTORS' INDEMNITY INSURANCE

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

POST BALANCE SHEET EVENTS

At the date these financial statements were approved, being 21 December 2011, the Directors were not aware of any significant post balance sheet events other than those set out in the notes to the financial statements.

AUDITORS

Chapman Davis LLP has indicated its willingness to continue in office.

By order of the Board on 21 December 2011

CORPORATE GOVERNANCE STATEMENT

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

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

BOARD STRUCTURE

The Board comprises a non executive director and three executive directors. Given the size of the Group, it is considered that this gives the necessary mix of industry specific and broad business experience necessary for the effective governance of the Group.

There are no matters specifically reserved to the Board for its decision, although board meetings are held on a regular basis and effectively no decision of any consequence is made other than by the directors. During the year 6 board meetings were held. All directors participate in the key areas of decision-making, including the appointment of new directors.

The Board is responsible to shareholders for the proper management of the Group. A statement of directors' responsibilities in respect of the accounts is set out below. The non-executive director has a particular responsibility to ensure that the strategies proposed by the executive directors are fully considered.

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

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

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

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

AUDIT COMMITTEE

The Audit Committee comprises of Marcus Yeoman (Chairman of the committee) and Francis Ball. Meetings can also be attended by the external auditors.

The remit of the Committee is to review:

·; the appointment and performance of the external auditors

·; the independence of the auditors

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

·; the interim or final financial report and accounts

·; the external auditors management letter and management's responses

·; the systems of risk management and internal controls

·; operating, financial and accounting policies and practices, and

·; to make related recommendations to the Board

The Audit Committee meets once a year.

REMUNERATION COMMITTEE

The Remuneration Committee comprises Marcus Yeoman (Chairman of the committee), and Francis Ball, with Mark Percy (Seymour Pierce) advising, and is responsible for making recommendations to the Board on the Company's framework of Executive remuneration and its cost. The Committee determines the contract terms, remuneration and other benefits for the directors.

NOMINATION COMMITTEE

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

INTERNAL CONTROL 

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

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

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

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

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

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

RELATIONS WITH SHAREHOLDERS

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

The Company's 2011 report and its financial statements will be presented to the shareholders for their approval at the AGM to be held at 2.30 pm on Friday 27th January 2012 at the office of Brown Rudnick LLP, 8 Clifford Street, London W1S 2LQ. The notice of the AGM will be distributed to shareholders together with the Annual Report.

GOING CONCERN

The financial report for the year ended 30 June 2011 has been prepared on a going concern basis. As at the date of this report, the Company has no available credit facilities. In the event the Company required further funds to continue, a fund raising exercise would be proposed with existing and/or potential new investors, and additionally the Company is in the process of selling the Group's IP and assets which the Directors believe will be successful, and raise sufficient cash resources to enable the "new" Group structure to continue for the next 12 months. Accordingly, the directors believe the going concern basis to be appropriate.

DIRECTORS' REMUNERATION REPORT

Remuneration Committee

The members of the committee are Marcus Yeoman and Francis Ball with Mark Percy (Seymour Pierce) advising. Details of the remuneration of each director are set out below.

Executive remuneration packages are prudently designed to attract, motivate and retain directors of high calibre, who are needed to drive and maintain the Group's position as a market leader and to reward them for enhancing value to the shareholder.

Remuneration Policy

Share options

The directors have options granted to them under the terms of the Hot Tuna (International) PLC Share Option Scheme which is open to other qualifying employees. The reason for the scheme is to incentivise the directors and management personnel and enable them to benefit from the increased market capitalisation of the Company.

Pension arrangements

There are no pension arrangements in the Group. Two alternative schemes are under review.

Directors' contracts

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

Non-executive directors

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

The non-executive director is employed on a renewable fixed term contract not exceeding three years.

Directors' emoluments

* Kiran Morzaria resigned on 29 April 2011.

** Francis Ball was appointed on 21 February 2011

DIRECTORS' INTERESTS IN OPTIONS

Aggregate emoluments disclosed above do not include any amounts for the value of options to acquire ordinary shares in the Company or granted to or held by the directors. Details of options held by directors who served during the year are as follows:

All options have been granted under the Hot Tuna (International) PLC Share Option Scheme. Options granted under this scheme are not subject to performance criteria. The market price of the ordinary shares at 30 June 2011 was 0.09 pence (2010: 0.18 pence) and the range during the year was 0.08 pence to 0.28 pence (2010: 0.18 pence to 0.55 pence).

There was no exercise, forfeiture or waiver of any of the above options during the year.

STATEMENT OF DIRECTORS' RESPONSIBILITIES

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

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

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

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

In preparing each of the Group and Company financial statements, the directors are required to:

a. select suitable accounting policies and then apply them consistently;

b. make judgements and estimates that are reasonable and prudent;

c. state whether they have been prepared in accordance with IFRSs adopted by the EU; and

d. prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group and the Company will continue in business.

The directors are responsible for keeping proper accounting records which disclose with reasonable accuracy at any time the financial position of the Company and to enable them to ensure that the financial statements comply with the requirements of the Companies Act 2006. They are also responsible for safeguarding the assets of the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

The directors are also responsible for the maintenance and integrity of the Hot Tuna (International) PLC website.

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

INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF HOT TUNA (INTERNATIONAL) PLC

We have audited the financial statements of Hot Tuna International Plc for the year ended 30th June 2011 which comprise the Group Income Statement, the Group and Parent Company Balance Sheets, the Group and Parent Company Statements of Cash Flows, the Group and Parent Company Statements of Changes in Equity and the related notes 1 to 22. The financial reporting framework that has been applied in their preparation is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union.

This report is made solely to the Company's members, as a body, in accordance with sections Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the Company's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company's members, as a body, for our audit work, for this report, or for the opinions we have formed.

Respective responsibilities of directors and auditors

As explained more fully in the Directors' Responsibilities Statement set out above, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit the financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board's Ethical Standards for Auditors.

Scope of the audit

An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of: whether the accounting policies are appropriate to the group's and the parent company's circumstances and have been consistently applied and adequately disclosed; the reasonableness of significant accounting estimates made by the directors; and the overall presentation of the financial statements.

Opinion on financial statements

In our opinion:

• the financial statements give a true and fair view of the state of the Group's and of the Parent Company's affairs as at 30 June 2011 and of the Group's and the Parent Company's loss for the year then ended;

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

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

Emphasis of matter - Going concern

In forming our opinion on the financial statements, which is not qualified, we have considered the adequacy of the disclosure made in note 1 to the financial statements concerning the Company's ability to continue as a going concern. The Group incurred a net loss of £0.77 million during the year ended 30 June 2011 and, at that date, the Group's cash assets were £0.68 million, and net cash outflow from operating activities for the year ended 30 June 2011 were £0.94 million. These conditions, along with the other matters explained in note 1 to the financial statements, including the sale of the Group's IP and assets, indicate the existence of a material uncertainty which may cast significant doubt about the company's ability to continue as a going concern. The financial statements do not include the adjustments that would result if the Company was unable to continue as a going concern.

Opinion on other matters prescribed by the Companies Act 2006

In our opinion:

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

• the information given in the Directors' Report for the financial year for which the financial statements are prepared is consistent with the financial statements.

Matters on which we are required to report by exception

We have nothing to report in respect of the following:

Under the Companies Act 2006 we are required to report to you if, in our opinion:

• adequate accounting records have not been kept by the Parent Company, or returns adequate for our audit have not been received from branches not visited by us; or

• the Parent Company financial statements and the part of the Directors' Remuneration Report to be audited are not in agreement with the accounting records and returns; or

• certain disclosures of directors' remuneration specified by law are not made; or

• we have not received all the information and explanations we require for our audit.

Keith Fulton (Senior Statutory Auditor)

for and on behalf of Chapman Davis LLP

Chartered Accountants and Statutory Auditors

London, United Kingdom

21 December 2011

FINANCIAL STATEMENTS

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 30 JUNE 2011

The Company's loss for the year ended 30 June 2011 was £0.74 million (2010: £1.58 million loss). The Company is exempt from publishing its own income statement under section 408 of the Companies Act 2006.

CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2011

The financial statements were approved by the board of directors and authorised for issue on 21 December.

STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 30 JUNE 2011

CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED FOR THE YEAR ENDED 30 JUNE 2011

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2011

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

1. REVENUE

An analysis of the Group's revenue is as follows:

2. BUSINESS AND GEOGRAPHICAL SEGMENTS

Segment information is presented in respect of the Group's management and internal reporting structure.

Segment results, assets and liabilities include items directly attributable to a segment as well as those that can be allocated on a reasonable basis.

Operating and Geographical segments

All locations operate the same activity - design, production and sale of branded apparel.

The Group's operations are located in Europe, including the United Kingdom, United States and Australia.

Inter-segment sales are charged at prevailing market prices.

3. LOSS FROM OPERATIONS

Loss from operations has been arrived at after charging:

4. STAFF COSTS

The above costs are included in general and administrative expenses.

The highest paid director received £82,500 (2010: £131,042) and no directors received any pension contributions during the year (2010: nil).

5. FINANCE REVENUE  

6. FINANCE COSTS  

7. INCOME TAX EXPENSE  

The group has losses of approximately £12.7 million (2010: £11.5 million) available for carry forward against future trading profits. No provision has been made for deferred tax assets as there is no certainty that future profits will be available to offset these losses.

8. DIVIDENDS

The directors are precluded from declaring a dividend for the year, (2010: nil).

9. LOSS PER SHARE

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

The denominator for the purpose of calculating the basic earnings per share has been adjusted to reflect all capital raisings. Due to the loss incurred in the period, there is no dilutive effect resulting from the issue of share options, warrants and shares to be issued.

10. INTANGIBLE ASSETS

The "Hot Tuna" brand is considered to have an indefinite life and therefore is not amortised.

At 30 June 2011, the directors have carried out an impairment review and have considered no further write down in the value of the licenses and brand is required (2010: £nil).

IMPAIRMENT REVIEW

This year the directors carried out an impairment review of the Brand. In prior years the brands carrying value has been compared to its recoverable amount based on a net present value calculation. The key assumptions therein were those regarding discount rates, growth rates and expected changes to selling prices and direct costs during the period. Management estimated discount rates using post-tax rates that reflect current market assessments of the time value of money and the risks specific to the Hot Tuna brand and the rate used was 9.9%. The forecast cash flows are based on approved annual budgets for the next financial year and management projections for the following nine years with a terminal value from the tenth year onwards. This additional forecast period has a compound growth rate of 21%. The directors have reviewed the 10 year forecast as updated to reflect current trading and risks applicable to the Group, and in addition also considered the net realisable value for the Brand, as indicated by the Group's intention to sell the Hot Tuna Brand. All of these factors have not indicated that there is any need for an impairment charge in the current period, and the Directors believe the Brand value is stated currently below its realisable value.

Based on the above the directors believe that no impairment of the Brand is required for the period ending June 2011.

11. PROPERTY, PLANT AND EQUIPMENT

12. INVESTMENTS IN SUBSIDIARIES

The following are the Company's subsidiaries:

13. INVENTORIES

14. TRADE AND OTHER RECEIVABLES

Trade receivables are amounts due from the sale of goods.

The average credit period taken on sale of goods is 68 days (2010: 92 days). An allowance has been made for estimated irrecoverable amounts from the sale of goods of £nil (2010: £nil). This allowance has been based on the knowledge of the financial circumstances of individual debtors at the balance sheet date.

The Group holds no collateral against these receivables at the balance sheet date.

The following table provides an aged analysis of trade receivables as at 30 June, but not impaired. The Group believes that the balances are ultimately recoverable based on a review of past payment history and the current financial status of the customers.

There are no significant credit risks arising from financial assets that are neither past due nor impaired.

At 30 June 2011, £35,474 (2010: £75,103) of receivables were denominated in Sterling, £45,961 (2010: £nil) in US dollars and £nil (2010: £41,826) in Australian dollars.

The directors consider that the carrying amount of trade and other receivables approximates to their fair value.

15. TRADE AND OTHER PAYABLES

16. CONVERTIBLE LOAN NOTES

The convertible loan notes in issue at 1 July 2009 were issued on 2 March 2007. The loan notes were issued for US$450,000 which was to be paid over 540 days by 15 instalments of US$30,000 on prescribed dates at thirty-five day intervals throughout the loan term ("Repayment Amounts"). Whilst outstanding the convertible loan note bore an interest rate of 7% per annum (payable monthly).

On the 20th January 2010 The Company agreed with the lender to vary the loan notes. This accelerated the repayments to occur over 7 instalments between 28 January 2010 and 28 July 2010, the interest rate was also increased to 15% per annum. Under the terms of the variation the Company was permitted to settle all outstanding principle amounts together with all outstanding interest accrued on the loan notes in one payment. On the 30 April 2010 this was done by the payment of £169,000. This payment terminates the loan note facilities and all terms there associated with.

The terms of the loan notes which were in place prior to settlement were as follows:

·; In the event that the Company does not make any such cash repayment in accordance with the terms of the subscription letter for the loan notes then the Company shall be treated as having issued an "Advance Notice" under the facility and repayment of the relevant amount of the loan notes shall take place by setting off the Repayment Amounts against the issue of Ordinary shares in the Company at a price determined 97% of the lowest of the daily volume weighted average prices of the ordinary shares during the ten consecutive trading day period beginning on the first trading day after the scheduled repayment date of the Repayment Amounts.

·; The issuer had the option at any time during the loan term of converting part or the whole of the outstanding loan notes into ordinary shares. However, the Company had the option upon the issuer exercising its conversion rights of paying cash in lieu of such ordinary shares. The conversion price was 130% of the average volume weighted price in the 20 days prior to exercise of the option.

The interest charged for the previous year was calculated by applying an effective interest rate of 7% to the liability component for the period since the issue of the loan note.

17. OPERATING LEASES

18. SHARE CAPITAL

The Directors of the Company continue to be limited as to the number of shares they can allot at any time and remain subject to the allotment authority granted by the shareholders pursuant to section 551 of the Companies Act 2006

The deferred shares have no voting rights, are not admitted to trading on AIM and are only entitled to negligible participation in the dividends and the return of capital in the Company

The Company has one class of ordinary shares which carry no right to fixed income.

The Company has a share option scheme for all employees of the Group. Options are exercisable at a price defined by the individual option agreement. The vesting period varies according to the individual employment contract (between zero and five years). If the options remain unexercised during the specified period from the date of grant, the options expire. Options are forfeited if the employee leaves the Group before the options vest.

Details of the assumptions used in the calculation of these fair values are set out below. Expected volatility was based on the historical volatility of the Company's share price over period under review. Expected dividends were based on the Company's payments to shareholders over the two years prior to the grant or award date.

Under the schemes, the weighted average estimated fair value per option granted by the Company during 2011 was nil (2010: nil). The fair value of the share options granted under the plans during 2011 was nil (2010: nil). The value of the awards is charged in the Income Statement over the vesting period.