SOLO.L Regulatory News (SOLO)

28 Mar 2008 07:01

Immersion Technologies Intl PLC28 March 2008 IMMERSION TECHNOLOGIES INTERNATIONAL PLC Incorporated, registered and domiciled in England and Wales Company number 05542880 Interim Financial Report for the six months ended 31 December 2007 The interim financial report does not include full disclosure of the typenormally included in an Annual Financial Report. Accordingly, this financialreport should be read in conjunction with the Annual Financial Statements forthe period ended 30 June 2007 and any and all public announcements made byImmersion Technologies International PLC during the interim period. IMMERSION TECHNOLOGIES INTERNATIONAL PLC ("Immersion" or the "Company") INTERIM RESULTS FOR 6 MONTHS ENDED 31 DECEMBER 2007 I am pleased to report Immersion's interim results for the 6 months ended 31December 2007. The start of the period saw the commencement of manufacturing,in June 2007, at the Company's facility in Nanjing, China. As a result,Immersion is now able to manufacture a broad range of audio products, applyingits unique sound technology in both electrostatic loudspeakers ('ESL') andelectromagnetic loudspeakers ('EML'). Importantly, we are able to retaincomplete control both of the quality of products that are supplied to customersand of our own intellectual property. Results The Group made a loss for the six month period ended 31 December 2007 of£1,023,655. The loss for the year ended 30 June 2007 was £2,627,005. The net cash position of the Group at 31 December 2007 was £918,514. Review of Operations Following completion of the Company's manufacturing facility in China, asignificant amount of time and effort was devoted to conducting an extensiveseries of tests for the production of a new hybrid ESL. The originalspecification of the new hybrid ESL ordered by Nakamichi Corporation Limited ("Nakamichi") was altered to meet their specific tuning and equalisationparameters, with a view to mass production. All of the tests which Nakamichi applied to the speakers were passed by theirchief engineer, Kozo Kobayashi (considered to be one the world's leading audioengineers), and production of the new hybrid ESL commenced in December 2007.The rapid development and production of the new hybrid ESL took less than 18months from the drawing board to a finished product. This is a significantachievement in an industry where similar products take years to realise. The work done by the Company in China has been extremely important, as it hasproven the Company's technology and manufacturing capabilities. The design ofthe new hybrid ESL represented a new frontier in speaker design andmanufacturing techniques that have not been used before demonstrating that theCompany is a leader in not only speaker technology, but design and manufacturingas well. This has increased the commercial possibilities available to theCompany, since the technology can now be offered to potential customers "inhouse", so loudspeakers and other related equipment can be manufactured by theCompany to a diverse range of specifications. In July 2007, Immersion established a sales office in Singapore. This hasextended the Company's potential reach and has created entries to several of theworld's largest manufacturers of consumer electronics. The Company has also continued to make good progress in a number of othertechnical areas including its ESL and EML technologies. The latest thirdgeneration ESL arrays are reaching and exceeding boundaries to an extent neverthought possible by producing enhanced sound pressure level output from smallerfootprint arrays. This advancement in ESL has also been complemented by thedevelopment of new EML subwoofers and high frequency drivers that providesimilar output and frequency responses comparable to EML units that are muchlarger in volume without compromising on audio quality. For the first time, the Company has also completed its new commercial ESL andEML platforms that offer a wealth of flexibility for audio solutions. The ESLand EML platforms allow a multitude of 'mix and match' solutions depending onthe particular application required. For example, the Company can now offer acombination of high frequency ESL or EML drivers to broaden the perspective oftechnical features and price points giving potential customers greaterflexibility and options. This achievement now allows the Company to participatein more price sensitive markets where not only the demand for better qualityaudio is growing, but also where the market volumes are much higher. As aconsequence, the Company is well positioned to address the demands in both thepremium and more mainstream consumer electronic markets. Finally, these new platforms allow the Company to expand its presence in theautomotive markets as well by allowing the Company to become a supplier of fullrange audio solutions whereas previously the Company's technology was used onlyin low-frequency applications. Management Since 31 December 2007, the Board has undergone a number of changes. Followingthe Board's decision to relocate the Finance Department to the Company'sheadquarters in Melbourne, Blair Snowball resigned as the Company's FinanceDirector, with effect from 31 January 2008. As a result, Kiran Morzaria has beenappointed as interim Finance Director and Scott Grimshaw joined the Company asGroup Financial Controller. On 30 January 2008, Craig Evans and Greg Turnidgeresigned as directors of the Company, and I became Non-Executive Chairman andArie van den Broek became interim Chief Executive Officer. I am looking forward to working with Arie. His knowledge and experience of theaudio speaker market is impressive and he has already created a number ofcommercial opportunities, which we are actively pursuing. Outlook Going forward, we intend to pursue an aggressive sales and marketing strategy.We have received a large number of expressions of interest in our audioloudspeaker products. The fact that we are not restricted to licensing thetechnology to potential users, but can also manufacture a wide range of productsincorporating the technology gives us a high degree of flexibility in offeringaudio solutions. This flexible approach is proving extremely attractive to Consumer ElectronicManufacturers ("CEMs") and other retailers of audio equipment. The outstandingquality of the sound from our loudspeakers is a powerful selling tool and hasbeen well received by everyone who has experienced it. We are therefore veryoptimistic about our long term prospects. David LenigasNon-Executive Chairman27 March 2008 CONSOLIDATED INCOME STATEMENT For the six For the period Notes Months ended 2 March 2006 to 31 December 2007 30 June 2007 Unaudited Audited £ £ Revenue 27,179 17,971 Cost of Sales (82,120) (592) Gross Profit (54,941) 17,379 Administrative expenses 3 (1,000,380) (2,613,438) Loss from operations (1,055,321) (2,596,059) Finance Income 31,666 38,278 Loss before tax (1,023,655) (2,557,781) Income tax benefit/(expense) - (69,224) Loss for the period attributable to shareholders (1,023,655) (2,627,005) LOSS PER SHARE Six months ended Period ended 31 December 2007 30 June 2007 Basic 6 1.10 pence 4.63 pence Diluted 6 1.10 pence 4.63 pence The above income statement should be read in conjunction with the accompanying notes. CONSOLIDATED BALANCE SHEET As at As at Notes 31 December 2007 30 June 2007 Unaudited Audited £ £Non-current assetsIntangible assets 6,562,405 6,683,505Plant and equipment 138,028 68,758 6,700,433 6,752,263Current assetsTrade and other receivables 272,875 260,136Inventories 121,559 -Cash and cash equivalents 918,514 2,121,858 1,312,948 2,381,994 Total assets 8,013,381 9,134,257 Current liabilitiesTrade and other payables 117,296 360,221Prepaid Income 85,792 -Corporation tax liability - 11,771Total liabilities 203,088 371,992 Net assets 7,810,293 8,762,265 EquityShare capital 1,586,209 1,574,087Share premium reserve 2,855,324 2,824,117Foreign exchange reserve 64,333 51,288Other reserves 5,933,629 5,933,629Share-based payments 1,021,458 1,006,149Accumulated loss (3,650,660) (2,627,005) 7,810,293 8,762,265 Kiran Morzaria Finance Director27 March 2008 The above Balance Sheet should be read in conjunction with the accompanyingnotes. CONSOLIDATED STATEMENT OF CHANGES IN EQUITY For the six For the period Notes Months ended 2 March 2006 to 31 December 2007 30 June 2007 Unaudited Audited £ £Total equity at the beginning of the period 8,762,265 - Loss for the period (1,023,655) (2,627,005) Total recognised income and expense for the period 7,738,610 (2,627,005) Transactions with equity holders in their capacity as equityholders:Contributions of equity net of transactions cost 43,329 5,877,291Employee share based expense 15,309 1,019,302Change in foreign exchange translation reserve 13,045 51,288Reverse acquisition - 4,441,389 71,683 11,389,270 Total equity at the end of the six month period attributable 7,810,293 8,762,265to members of Immersion Technologies International Plc The above Statement of Changes in Equity should be read in conjunction with theaccompanying notes. CONSOLIDATED CASH FLOW STATEMENT For the six For the period Notes Months ended 2 March 2006 to 31 December 2007 30 June 2007 Unaudited Audited £ £OPERATING ACTIVITIESLoss after tax for the period (1,023,655) (2,627,005)Adjustments for:Depreciation 3 8,902 2,784Amortisation 3 121,100 234,941Share-based payments 3 15,310 1,019,302Finance income (31,666) (38,278)Income tax (benefit)/expense - 69,224Decrease/(Increase) in receivables (12,739) 111,541Decrease/(Increase) in inventories (121,559) -(Decrease)/Increase in payables (157,133) 90,116 CASH USED IN OPERATING ACTIVITIES (1,201,440) (1,137,375)Income tax paid (11,771) - NET CASH USED IN OPERATING ACTIVITIES (1,213,211) (1,137,375) INVESTING ACTIVITIESInterest received 31,666 38,278Cash acquired from business combinations - 3,434,766Purchase of patents - (509,652)Purchase of plant and equipment (78,173) (63,864) NET CASH USED IN INVESTING ACTIVITIES (46,507) 2,899,528 FINANCING ACTIVITIESProceeds on issuing of ordinary shares 43,329 1,015,000Cost of issue of ordinary shares - (604,007) NET CASH FROM FINANCING ACTIVITIES 43,329 410,993 NET DECREASE IN CASH AND CASH EQUIVALENTS (1,216,389) 2,173,146 CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 2,121,858 -Exchange loss on cash and cash equivalents 13,045 (51,288)CASH AND CASH EQUIVALENTS AT END OF PERIOD 918,514 2,121,858 The above Cash Flow should be read in conjunction with the accompanying notes. 1 SIGNIFICANT ACCOUNTING POLICIES Basis of preparation of Interim Financial report The principal accounting policies adopted in the preparation of the financial statements are the same as that were disclosed in the Financial Statements for the period ended 30 June 2007. These policies have been consistently applied to all the periods presented, unless otherwise stated. The financial statements for the half year ended 31 December 2007 have not been audited. The comparative figures provided for the period to 30 June 2007 do not constitute statutory accounts as defined in Section 240 of the Companies Act 1985, but are extracted from the company's statutory accounts for that period. Comparative figures for the six months ended 31 December 2006 are not included as they are considered not comparable due to the reverse takeover that was concluded in April 2007. These financial statements are presented in Sterling since that is the currency in which the majority of the Company's transactions are denominated. The measurement basis used in the preparation of the financial statements is historical cost, except for financial instruments, which are measured at fair value. Reporting Bases and Conventions The half-year financial report has been prepared on an accrual basis and is based upon historical cots. Going Concern The half-year financial report for the six months ended 31 December 2007 has been prepared on a going concern basis. Though the company has continued to trade unprofitably causing the cash reserves to reduce through the period, the Director's believe that there is sufficient cash through existing reserves and forecast revenue for the Group to continue to operate. 2 SEGMENT REPORTING For management purposes the Group is organised into 4 operating divisions: Corporate; Product Research, Development and Design; Product Manufacture, and; Sales. These divisions are the basis on which the Group reports its primary segment information. Secondary segment information is presented on a geographic basis. The primary segment information corresponds closely to geographical segments as operational segments reside in distinct locations of the United Kingdom, Australia and Asia. Corporate Product Product Sales Unallocated Total Business segments R&D and Manufacture Design Six months ended 31 December £ £ £ £ £ £ 2007-Unaudited Segment Revenue 5,492 21,687 - - - 27,179 Segment loss from operations (470,555) (408,279) (130,352) (46,135) - (1,055,321) Finance Income 31,666 Loss for the period (1,023,655) Period ended 30 June 2007-Audited Segment Revenue - 17,971 - - - 17,971 Segment loss from operations (1,079,804) (1,258,405) (62,272) 2,244 (197,822) (2,596,059) Finance income 38,278 Loss before tax (2,557,781) Tax expense (69,224) Loss for the period (2,627,005) 2 SEGMENT REPORTING (CONTINUED) United Australia Asia Unallocated Total Geographical segments Kingdom £ £ £ £ £ Six months ended 31 December 2007-Unaudited Segment Revenue 5,492 21,687 - - 27,179 Segment Result (596,915) (281,920) (176,486) - (1,055,321) Finance Income 31,666 Loss for the period (1,023,655) Period ended 30 June 2007-Audited Segment Revenue - 17,971 - - 17,971 Segment Result (1,079,804) (1,258,405) (60,028) (197,822) (2,596,059) Finance income 38,278 Loss before tax (2,557,781) Income tax expense (69,224) Loss for the period 2,627,005 For the six For the period Months ended 2 March 2006 to 31 December 2007 30 June 2007 Unaudited Audited £ £ 3 CONSOLIDATED LOSS FROM OPERATIONS Loss from operations has been arrived at after charging: Directors fees 185,861 441,000 Salaries and wages 285,033 126,850 Consultancy costs 74,850 82,470 Audit fees 24,400 84,135 Other professional fees 55,632 22,555 Amortisation of intangible assets 121,100 234,941 Depreciation 8,902 2,784 Research and development 26,053 188,668 Equity settled share-based payments 15,310 1,019,302 Office rent 34,164 12,073 Other expenses 169,075 398,660 1,000,380 2,613,438 4 SHARE CAPITAL ISSUED For the six months ended For the period 2 March 2006 to 31 December 2007 30 June 2007 Unaudited Audited Number £ Number £ Authorised: Ordinary shares of £0.007 each 1,000,000,000 7,000,000 1,000,000,000 7,000,000 Issued and Fully Paid: At the beginning of the period 224,869,614 1,574,087 - - Issued ordinary shares of £0.007 1,731,645 12,122 224,869,614 1,574,087 At the end of the period 226,601,259 1,586,209 224,869,614 1,574,087 At the beginning and the end of the period there were no shares issued that were not fully paid. 5 PURCHASE OF MINORITY INTEREST On 1 July 2007, 1,731,645 shares in Immersion Technology International Limited (representing 0.97% of its issued share capital), were issued to two shareholders who, as described in the Company's Admission Document (12 April 2007) did not waive their rights to compensation shares under the Whise Acoustics Share Purchase Agreement and thus became entitled to the shares on this date. On 11 December 2007 the Group negotiated the purchase of the minority interest by issuing one Immersion Technologies International plc share in exchange for each Immersion Technology International Limited share. 6 BASIC AND DILUTED LOSS PER ORDINARY SHARE The calculation of basic loss per share is based on loss after taxation of £1,023,655 (30 June 2007: £2,627,005) and on 93,082,247 ordinary shares (30 June 2007:56,796,033), being the weighted average number of ordinary shares on issue during the period. The diluted loss per share is equal to the basic loss per share because all of the 17,891,424 options (weighted average being 7,747,055) on issue were considered not potentially dilutive. That is, all options have an exercise price far greater than the weighted average share price during the year (ie they are out-of the-money) and therefore would not be advantageous for the holders to exercise those options.. 7 COMMITMENTS The Company has a commitment to make an equity investment of US$1,500,000 into its Chinese subsidiary, Immersion Technology (Nanjing) Co. Limited, by the end of April 2009. This commitment is required by rules for establishing a Foreign Controlled Company in Nanjing, China. If the Company closes its subsidiary in Nanjing prior to April 2009 then it does not have an obligation to complete the investment. However the Company expects to complete the commitment in stages over the 2008 year, although precise dates are not yet determined. As at the date of publishing the financial statements the Company has invested US$850,000 (US$550,000 as at 30 June 2007) and therefore is expected to have a further commitment of US$650,000 to be made over the next 12 months. 8 EVENTS SUBSEQUENT TO THE BALANCE SHEET DATE The management is not aware of any significant events other than the Board Changes which are disclosed in Chairman's Statement. The financial statements were authorised for issue by the board as a whole following their approval on 27 March 2008. This information is provided by RNS The company news service from the London Stock Exchange