Annual Report and Accounts

RNS Number : 8108J

Immersion Technologies Intl PLC

09 December 2008

 



 FOR IMMEDIATE RELEASE                                                                                                   9 December 2008

Immersion Technologies International plc

('Immersion' or 'Company')

ANNUAL AUDITED RESULTS ANNNOUNCEMENT

FOR THE YEAR TO 30 JUNE 2008

The Company is pleased to announce the audited results of the Company for the year ended 30 June 2008. These results will be posted to shareholders by 19th December 2008.  Extracts of the audited results are set out below.

Chairman's Statement

The Company has had mixed success over the last 12 months in its progress. The setback for the Company was when Nakamichi Corporation Limited ('Nakamichi') failed to take product pursuant to its Supply Agreement with the Company. As a result the Company's strategy has evolved from supplying complete built units to supplying components. There has been some continued interest in the Company's technology from leading consumer electronics companies when the Company displayed its products recently at the IFA Show in Berlin and the Korean Audio Show. In order to minimise the cash burn the Company has streamlined its head count and closed its operations in Singapore and China.

FINANCIAL RESULTS 

The Group's loss for the year is £2,468,816 (period from 2 March 2006 to 30 June 2007 was £2,627,005), in which it earned sales revenue of £18,703, license revenue and interest income of £46,666 and £42,061 respectively. During the year the Group spent £73,017 on research and development and building a broad product range. Amortisation of intangible assets, such as intellectual property, is £245,800 (prior period was £234,941) for the year and the employee and director remuneration costs totalled £951,489 (prior period was £567,850).

REVIEW OF OPERATIONS 

The Technology

The Company has made progress in the evolution of the technology as follows:

Electrostatic Loudspeakers (ESL)

The product development strategy has moved from the manufacturer of complete built units to providing components for customers to add into their product range as necessary. This strategy has the added value of enabling customers to specify the components which the Company can then design and supply in reduced lead times.

Conventional Cone Speakers (CCS)

The CCS technology has evolved from large, standalone sub-woofa products to developing smaller complete units for the consumer electronic industry. In particular the Company has developed a sound bar for use in flat panel TVs. The experience gained from supplying the CCS technology into the automotive industry has enabled small components to be developed producing audiofile quality sound.

Trade Shows

During the year, the Company exhibited its products at trade shows in Germany and Korea where positive interest was shown for our Company products. The Company continues to produce sample and prototypes for potential customers in order to obtain a volume order for its products.

Overseas Facilities

As a result of Nakamichi failing to take manufactured product from the Company, we have decided to shut the manufacturing facility in China. The Company has however retained a small prototype development centre where its sample and prototypes can be produced cost efficiently.

Our Singapore sales and account management office for Nakamichi was closed. Headcount across the Group has been reduced to focus on development of core products.

Nakamichi

The Company signed and executed a design, development and manufacturing contract with Nakamichi dated 22 December 2006 ('the Supply Agreement') for the supply of the Dragon® Hybrid ESL loudspeakers which was due to have the first shipment in December 2007. This contract with Nakamichi for supply of products was worth approximately US$12.1 over a two year period with a minimum commitment for US$5.1m.

The Company completed production of more than 100 pairs of the Dragon® Hybrid ESL loudspeakers for Nakamichi pursuant to the Supply Agreement The first consignment of product was available for collection by Nakamichi on 10 December 2007. However, since that time Nakamichi has failed to collect and pay the balance for the consignment and has failed to issue further purchase orders as required under the Supply Agreement. The Company has placed Nakamichi on notice of this contravention and has reserved all its rights. The Company continues to resolve the matter commercially, failing which it may be required to issue legal proceedings in order to enforce its rights and safeguard the interests of shareholders. 

OUTLOOK

The Company continues to look for ways in which it can exploit the technology. Nakamichi was a setback but the Company is working with other consumer electronic companies in order to solve their audio issues. 

The Company will look at other opportunities in order to preserve shareholder value within the Company and in the meantime we will actively conserve our cash as much as possible. The directors would like to take this opportunity to thank our shareholders for their continued support.

David Lenigas

Non Executive Chairman

9 December 2008

Directors' Report

The Directors are pleased to present this year's annual report together with the consolidated financial statements for the period ended 30 June 2008.

Principal Activities

The principal activity of the Group is the product development, design and manufacture of unique and high performance audio solutions.  

Business Review and future developments

A review of the current and future development of the Group's business is given in the Chairman's Statement on page 3.

Results and Dividends

Loss on ordinary activities of the Group after taxation amounted to £2.47 million. The Directors do not recommend payment of a dividend.

Key Performance Indicators

Given the nature of the business and that the Group is in the development phase of operations, the directors are of the opinion that analysis using KPI's is not appropriate for an understanding of the development, performance or position of our businesses at this time.

Post Balance Sheet events

At the date these financial statements were approved, being 9 December 2008, the Directors were not aware of any significant post balance sheet events other than those set out in the notes to the financial statements.

Substantial Shareholdings

At 9 December 2008 the following had notified the Company of disclosable interests in 3% or more of the nominal value of the Company's shares:

Shareholder	Number of Shares	% of Issued Capital
E D Evans Pty Limited	38,050,000	16.67
Security Transfer Registrars Pty	26,143,749	11.46
CIPAF SA	15,000,000	6.57
Miami Properties Plc	12,000,000	5.26
CIM Special Situations Fund Limited	10,614,285	4.65
Lindsay Alfred Champion	8,150,000	3.57
Vidacos Nominees Limited	7,975,000	3.49

Directors

The names of the Directors who served during the year are set out below:

Director    Date of Appointment    Date of Resignation

Executive Directors

Kiran Morzaria - Executive Director

Craig Evans - Executive Director     29 January 2008

Non-Executive Directors

David Lenigas- Non-executive Chairman     29 January 2008    

Gregory Turnidge -Former Non-executive Chairman          29 January 2008

Alexander Barblett - Non-executive Director 

Vincent Fodera - Executive Director         7 July 2008

Blair Snowball - Executive Director          31 January 2008

Directors' Remuneration

The Company remunerates the Directors at a level commensurate with the size of the Company and the experience of its Directors. The Remuneration Committee has reviewed the Directors' remuneration and believes it upholds the objectives of the Company with regard to this issue. Details of the Director emoluments and payments made for professional services rendered are set out in Note 5 to the financial statements.

Directors' Interests

The beneficial interests of the serving Directors in the shares and options of the Company during the period to 30 June 2008 were as follows:

	At 30 June 2008		At 30 June 2007		At 30 June 2008	At 30 June 2007
Beneficial and non-beneficial	Number of Shares	%	Number of Shares	%	Number of Options	Number of Options
David Lenigas	-	-	-	-	2,500,000	-
Kiran Morzaria  (1)	711,428	0.31	711,428	0.32	750,000	-
Alexander John Barblett (3)	600,000	0.26	600,000	0.27	1,250,000	1,500,000
Vincent David Fodera (2)	2,787,384	1.22	1,560,000	0.69	2,500,000	2,750,000
Blair Snowball	-	-	-	-	-	-
Craig Evans	-	-	-	-	-	-
Gregory Turnidge	-	-	-	-	-	-

1) Of which 571,428 of the current shareholding are held on account with TD Waterhouse Nominees (Europe) Limited and 40,000 shares are held by Cornell De Beer Morzaria who is a related party to Kiran Caldas Morzaria. 

2) All shares are beneficially held through Security Transfer Registrars Pty Ltd.

3) Of which 400,000 shares are registered in a third party company, (Entopia Consulting Limited), over which Mr Barblett has an option to acquire the whole or part of the issued share capital therein, and 200,000 are held by Lisa Mitchell who is a related party to the Director.

Corporate Governance

A statement on Corporate Governance is set out on pages 8 - 9. 

Environmental Responsibility

The Company is aware of the potential impact that its subsidiary companies may have on the environment. The Company ensures that it, and its subsidiaries at a minimum comply with the local regulatory requirements and the revised Equator Principles with regard to the environment.

Employment Policies

The Group will be committed to promoting policies which ensure that high calibre employees are attracted, retained and motivated, to ensure the ongoing success for the business. Employees and those who seek to work within the Group are treated equally regardless of sex, marital status, creed, colour, race or ethnic origin. 

Health and Safety

The Group's aim will be to achieve and maintain a high standard of workplace safety. In order to achieve this objective the Group will provide training and support to employees and set demanding standards for workplace safety.

Payment to Suppliers

The Group's policy is to agree terms and conditions with suppliers in advance; payment is then made in accordance with the agreement provided the supplier has met the terms and conditions. There are no material trade payables as at 30 June 2008.

Political Contributions and Charitable Donations

During the period the Group did not make any political contributions or charitable donations.

Annual General Meeting ('AGM')

This report and financial statements will be presented to shareholders for their approval at the AGM. The Notice of the AGM will be distributed to shareholders together with the Annual Report.

Statement of disclosure of information to auditors

As at the date of this report the serving directors confirm that:

• So far as each director is aware, there is no relevant audit information of which the Company's auditors are unaware, and

• they have taken all the steps that they ought to have taken as directors' in order to make themselves aware of any relevant audit information and to establish that the Company's auditor are aware of that information

Auditors

A resolution to appoint Chapman Davis LLP and to authorise the Directors to fix their remuneration will be proposed at the next Annual General Meeting.

Going Concern

Notwithstanding the loss incurred during the period under review, the Directors are of the opinion that ongoing evaluations of the Company's interests and cash resources, indicate that preparation of the Group's accounts on a going concern basis is appropriate.

Statement of Directors' Responsibilities 

The directors prepare financial statements for each financial year which give a true and fair view of the state of affairs of the company and the group and of the profit or loss of the group for that period. In preparing those financial statements, the directors are required to:

• select suitable accounting policies and then apply them consistently;

• make judgements and estimates that are reasonable and prudent;

• state whether applicable accounting standards have been followed, subject to any material departures disclosed and explained in the financial statements;

• prepare the financial statements on the going concern basis unless it is inappropriate to presume that the group will continue in business.

The directors are responsible for keeping proper accounting records, for safeguarding the assets of the group and for taking reasonable steps for the prevention and detection of fraud and other irregularities. They are also responsible for ensuring that the annual report includes information required by the Alternative Investment Market.

Electronic communication

The maintenance and integrity of the Company's website is the responsibility of the directors: the work carried out by the auditors does not involve consideration of these matters and, accordingly, the auditors accept no responsibility for any changes that may have occurred to the financial statements since they were initially presented on the website.

The Company's website is maintained in accordance with AIM Rule 26.

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

By order of Board:

Kiran Morzaria

Director

9 December 2008

Group Income Statement for the year ended 30 June 2008

		Year		Period
	Notes	ended		2 March 2006 to
		30 June 2008		30 June 2007
		£		£
Revenue	3	68,501		17,971
Cost of Sales		(270,758)		(592)
Gross (Loss)/Profit		(202,257)		17,379
Administrative expenses	4	(2,308,620)		(2,613,438)
(Loss) from operations		(2,510,877)		(2,596,059)
Finance Income	7	42,061		38,278
(Loss) before tax		(2,468,816)		(2,557,781)
Tax expense	6	-		(69,224)
(Loss) for the period attributable to shareholders		(2,468,816)		(2,627,005)
		Year		Period
LOSS PER SHARE	Notes	ended		2 March 2006 to
		30 June 2008		30 June 2007
Basic	8	1.08 pence		1.80 pence
Diluted	8	1.08 pence		1.80  pence

  Group Balance Sheet as at 30 June 2008

		As at		As at
	Notes	30 June 2008		30 June 2007
		£		£
Non-current assets
Intangible assets	9	800,000		6,683,505
Plant and equipment	10	-		68,758
		800,000		6,752,263
Current assets
Trade and other receivables	11	49,588		260,136
Cash and cash equivalents		272,113		2,121,858
		321,701		2,381,994
Total assets		1,121,701		9,134,257
Current liabilities
Trade and other payables	13	273,204		360,221
Provisions		1,949		-
Corporation tax liability		-		11,771
Total liabilities		275,153		371,992
Net assets		846,548		8,762,265
Equity
Share capital	16	1,597,573		1,574,087
Share premium reserve		2,868,959		2,824,117
Unissued share capital		185,000		-
Foreign exchange reserve		60,240		51,288
Other reserves		-		5,933,629
Share-based payments		80,360		1,006,149
Accumulated loss		(3,945,584)		(2,627,005)
		846,548		8,762,265
The financial statements were approved by the board of directors and authorised for issue on 9 December 2008. They were signed on its behalf by ;
Kiran Mozaria	David Lenigas
Director	Director

  Company Balance Sheet as at 30 June 2008

		As at		As at
		30 June 2008		30 June 2007
	Notes	£		£
Non-Current assets
Investment in subsidiaries	18	2,433,213		18,683,895
Amounts due from subsidiaries	21	885,585		763,688
		3,318,798		19,447,583
Current assets
Trade and other receivables	12	31,675		114,865
Cash and cash equivalents		197,305		1,999,166
		228,980		2,114,031
Total assets		3,547,778		21,561,614
Current liabilities
Trade and other payables	14	93,315		186,050
Corporation tax liability		-		11,771
Amounts payable to subsidiaries	21			466,669
Total liabilities		93,315		664,490
Net assets		3,454,463		20,897,124
Equity
Share capital	16	1,597,573		1,574,087
Share premium		2,868,959		2,824,117
Unissued share capital		185,000		-
Share-based payment reserve		80,360		59,801
Other reserves		-		16,798,801
Accumulated loss		(1,277,429)		(359,682)
		3,454,463		20,897,124
The financial statements were approved by the board of directors and authorised for issue on 9 December 2008. They were signed on its behalf by ;
Kiran Morzaria	David Lenigas
Finance Director	Director

  Group Cash Flow Statement for the year ended 30 June 2008 

				Period
		Year ended		2 March 2006 to
		30 June 2008		30 June 2007
OPERATING ACTIVITIES
Loss after tax for the period		(2,468,816)		(2,627,005)
Adjustments for:
Depreciation		171,541		2,784
Amortisation		245,800		234,941
Loss on disposal of assets		(4,726)		-
Share-based payments		45,559		1,019,302
Finance income		(42,061)		(38,278)
Income tax expense		-		69,224
Increase in provisions		1,949		-
Decrease in receivables		210,548		111,541
(Decrease)/ Increase in payables		(87,017)		90,116
CASH USED IN OPERATING ACTIVITIES		(1,927,223)		(1,137,375)
Income tax paid		(11,771)		-
NET CASH USED IN OPERATING ACTIVITIES		(1,938,994)		(1,137,375)
INVESTING ACTIVITIES
Interest received		42,061		38,278
Cash acquired from business combinations		-		3,434,766
Proceeds from disposal of assets		4,704		-
Purchase of patents		(44,416)		(509,652)
Purchase of plant and equipment		(112,172)		(63,864)
NET CASH USED IN INVESTING ACTIVITIES		(109,823)		2,899,528
FINANCING ACTIVITIES
Proceeds on issuing of ordinary shares		43,328		1,015,000
Proceeds on share capital-un issued		185,000		-
Cost of issue of ordinary shares		-		(604,007)
NET CASH FROM FINANCING ACTIVITIES		228,328		410,993
NET DECREASE IN CASH AND CASH EQUIVALENTS		(1,820,489)		2,173,146
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD		2,121,858		-
Exchange loss on cash and cash equivalents		(29,256)		(51,288)
CASH AND CASH EQUIVALENTS AT END OF PERIOD		272,113		2,121,858
The above Cash Flow should be read in conjunction with the accompanying notes.

  Company Cash Flow Statement for the year ended 30 June 2008

				Period
		Year ended		1 September 2006
		30 June 2008		to 30 June 2007
	Notes	£		£
OPERATING ACTIVITIES
Loss after tax for the period		(917,748)		(274,985)
Adjustments for:
Depreciation		2,973		-
Share-based payments		45,559		6,618
Finance income		(40,893)		(132,078)
Income tax expense		-		11,771
Decrease / (Increase) in receivables		83,190		(80,661)
(Decrease) / Increase in payables		(92,735)		133,821
CASH USED IN OPERATING ACTIVITIES		(919,654)		(335,514)
Income tax paid		(11,771)		-
NET CASH USED IN OPERATING ACTIVITIES		(931,425)		(335,514)
INVESTING ACTIVITIES
Interest received		40,893		132,078
Purchase of plant and equipment		(2,973)		-
Loans to subsidiaries		(331,443)		(763,687)
Loans from subsidiaries		(257,122)		-
Investment in Subsidiaries		(548,119)		(187,100)
NET CASH (USED IN) / FROM INVESTING ACTIVITIES		(1,098,764)		(818,709)
FINANCING ACTIVITIES
Proceeds on issuing of ordinary shares		43,328		-
Proceeds on share capital-unissued		185,000		-
Cost of issue of ordinary shares		-		(575,290)
NET CASH (USED IN) / FROM FINANCING ACTIVITIES		228,328		(575,290)
NET (DECREASE) / INCREASE IN CASH AND CASH EQUIVALENTS		(1,801,861)		(1,729,513)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD		1,999,166		3,728,679
CASH AND CASH EQUIVALENTS AT END OF PERIOD		197,305		1,999,166

The above Cash Flow should be read in conjunction with the accompanying notes.

  Statement of Changes in Equity for the year ended 30 June 2008

Group

			Unissued	Share
	Share	Share	Share	Based	Foreign	Other		Accumulated
	Capital	Premium	Capital	Payments	Exchange	Reserves		Losses	Total
	£	£	£	£	£	£		£	£
Balance at 2 March 2006	-	-	-	-	-	-		-	-
Foreign translation differences	-	-	-	-	51,288	-		-	51,288
Loss for the period	-	-	-	-	-	-		(2,627,005)	(2,627,005)
Total recognised income and expense for the period	-	-	-	-	51,288	-	(2,627,005)		(2,575,717)
Share issue	175,904	5,743,257	-	(13,153)	-	-		-	5,906,008
Cost of share issue	-	(28,717)	-	-	-	-		-	(28,717)
Value of reverse acquisition	1,398,183	(2,890,423)	-	-	-	5,933,629		-	4,441,389
Share-based payments	-	-	-	1,019,302	-	-		-	1,019,302
Balance at 30 June 2007	1,574,087	2,824,117	-	1,006,149	51,288	5,933,629		(2,627,005)	8,762,265
Cancelled share based payment	-	-	-	53,183	-	(53,183)		-	-
Cancelled share based payment	-	-	-	(999,530)	-	-		999,530	-
Foreign translation differences	-	-	-	-	-	(150,707)		150,707	-
Balance at 30 June 2007	1,574,087	2,824,117	-	59,802	51,288	5,864,739		(1,476,768)	8,762,265

Foreign translation differences	-	-	-	-	8,952	-	-		8,952
Loss for the period	-	-	-	-	-	-	(2,468,816)		(2,468,816)
Total recognised income and expense for the period	-	-	-	-	8,952	-	(2,468,816)		(2,459,864)
Share issue	23,486	44,842	185,000	-	-	-		-	253,328
Share-based payments	-	-	-	27,177	-	-		-	27,177
Cancelled share based payment	-	-	-	(6,619)	-	-		-	(6,619)
Impairment charge	-	-	-	-	-	(5,682,119)		-	(5,682,119)
Foreign translation differences						(47,620)			(47,620)
Balance at 30 June 2008	1,597,573	2,868,959	185,000	80,360	60,240	-		(3,945,584)	846,548

 

 Statement of Changes in Equity for the year ended 30 June 2008
(continued)

Company

			Unissued	Share
	Share	Share	Share	Based	Foreign	Other	Accumulated
	Capital	Premium	Capital	Payments	Exchange	Reserves	Losses	Total Equity
	£	£	£	£	£	£	£	£
Balance at 31 August 2006	342,762	3,399,407	-	53,183	-	-	(84,698)	3,710,654
Loss for the period	-	-	-	-	-	-	(274,985)	(274,985)
Total recognised income and expense for the period	-	-	-	-	-	-	(274,985)	(274,985)
Share issue	1,231,326	-	-	-	-	-	-	1,231,326
Value of reverse acquisition	-	-	-	-	-	16,798,801	-	16,798,801
Cost of share issue	-	(575,290)	-	-	-	-	-	(575,290)
Share-based payment	-	-		6,618	-	-	-	6,618
Balance at 30 June 2007	1,574,087	2,824,117	-	59,801	-	16,798,801	(359,682)	20,987,124
Loss for the period	-	-	-	-	-	-	(917,747)	(917,747)
Total recognised income and expense for the period	-	-	-	-	-	-	(917,747)	(917,747)
Share issue	23,486	44,842	185,000	-	-	-	-	253,328
Share-based payment	-	-	-	27,177	-	-	-	27,177
Cancelled share based payment				(6,618)				(6,618)
Impairment charge	-	-	-	-	-	(16,798,801)	-	(16,798,801)
Balance at 30 June 2008	1,597,573	2,868,959	185,000	80,360	-	-	(1,277,429)	3,454,463

1	SIGNIFICANT ACCOUNTING POLICIES
	The following account policies are those of the Group and apply to the consolidated financial statements.
	Authorisation of financial statements
	The Group financial statements of Immersion Technologies International Plc for the year ended 30 June 2008 were authorised for issue by the Board on 9 December 2008 and the balance sheets signed on the Board's behalf by Mr. Kiran Morzaria and Mr. David Lenigas. The Company is a public limited Company incorporated in England & Wales under the Companies Act 1985. The Company's ordinary shares are traded on the AIM Market operated by the London Stock Exchange.
	Statement of compliance with IFRS
	The Group's financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS). The Company's financial statements have been prepared in accordance with IFRS as adopted by the European Union and as applied in accordance with the provisions of the Companies Act 1985. The principal accounting policies adopted by the Group and Company are set out below. Adoption of standards and interpretations As at the date of authorisation of these financial statements, there were Standards and Interpretations that were in issue but are not yet effective and have not been applied in these financial statements. The Directors anticipate that the adoption of these Standards and Interpretations in future periods will have no material impact on the financial statements of the group or company, except for additional disclosures when the relevant Standards come into effect.
	Basis of preparation
	The principal accounting policies adopted in the preparation of the financial statements are set out below. The policies have been consistently applied to all the periods presented, unless otherwise stated.
	The financial statements have been prepared in accordance with and comply with International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB) and with those parts of the Companies Act 1985 applicable to companies preparing their accounts under IFRS.
	These financial statements are presented in Sterling since that is the currency in which the majority of the Company's transactions are denominated. The measurement basis used in the preparation of the financial statements is historical cost, except for financial instruments, which are measured at fair value.
	Basis of consolidation
	Where the Company has the power, either directly or indirectly, to govern the financial and operating policies of another entity or business so as to obtain benefits from its activities, it is classified as a subsidiary. The consolidated financial statements present the results of the Company and its subsidiaries ('the Group') as if they formed a single entity. Intercompany transactions and balances between Group companies are therefore eliminated in full.
	Business combinations and goodwill
	On acquisition, the assets and liabilities of a subsidiary are measured at their fair values at the date of acquisition. Any excess of the cost of acquisition over the fair values of the identifiable net assets acquired is recognised as goodwill.

	Revenue recognition
	Revenue is recognised to the extent that the right to consideration is obtained in exchange for performance. Payment received in advance of performance is deferred on the balance sheet as a liability and released as services are performed or products are exchanged as per the agreement with the customer.
	Revenue derived from the license royalties are recognised on notification of payment by the licensee. Revenue derived from the sale of manufactured products and recognised when delivered to the customer in accordance with the specific supply contract terms.
	Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to that asset's net carrying amount.
	Foreign currencies
	Transactions in currencies other than Sterling are recorded at the rates of exchange prevailing on the dates of the transactions. At each balance sheet date, monetary assets and liabilities that are denominated foreign currencies are retranslated at the rates prevailing on the balance sheet date. Gains and losses arising on retranslation are included in the income statement for the period.
	On consolidation, the results of overseas operations are translated into sterling at rates approximating to those ruling when the transactions took place. All assets and liabilities of the overseas operations, including goodwill arising on the acquisition of those operations, are translated at the rate ruling at the balance sheet date. Exchange differences arising on translating the opening net assets at opening rate and the results of overseas operations at actual rate are recognised directly in equity (the 'foreign exchange reserve').
	Taxation
	The tax expense represents the sum of the current tax and deferred tax.
	The current tax is based on taxable profit for the period. Taxable profit differs from net profit as reported in the income statement because it excludes items of income or expense that are taxable or deductible in other periods and it further excludes items that are never taxable or deductible. The liability for current tax is calculated by using tax rates that have been enacted or substantively enacted by the balance sheet date.

	Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amount of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the balance sheet liability method. Deferred tax liabilities are recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary difference arises from goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction which affects neither the tax profit nor the accounting profit.
	Deferred tax is calculated at the tax rates that are expected to apply to the period when the asset is realised or the liability is settled. Deferred tax is charged or credited in the income statement, except when it relates to items credited or charged directly to equity, in which case the deferred tax is also dealt with in equity.
	Internally-generated Intangible Assets - Research and Development Expenditure
	Expenditure on internally developed products is capitalised if it can be demonstrated that:
	· it is technically feasible to develop the product for it to be sold;
	· adequate resources are available to complete the development;
	· there is an intention to complete and sell the product;
	· the Group is able to sell the product;
	· sale of the product will generate future economic benefits; and
	· expenditure on the project can be measured reliably.
	Capitalised development costs are amortised over the periods the Group expects to benefit from selling the products developed. The amortisation expense is included within the administrative expenses in the consolidated income statement.
	Development expenditure not satisfying the above criteria and expenditure on the research phase of internal projects are recognised in the consolidated income statement as incurred.
	Externally acquired intangible assets
	Externally acquired intangible assets are initially recognised at cost and subsequently amortised on a straight-line basis over their useful economic lives. The amortisation expense is included within the administrative expenses line in the consolidated income statement.
	Intangible assets are recognised on business combinations if they are separable from the acquired entity or give rise to other contractual/legal rights. The amounts ascribed to such intangibles are arrived at by using appropriate valuation techniques.
	The significant intangibles recognised by the Group, their useful economic lives and the methods used to determine the cost of intangibles acquired in a business combination are as follows:
	Intangible asset Useful economic life Valuation method
	Intellectual property Patent life (20 years) Estimated royalty stream if the rights were to be licensed
	Licenses 10 years Estimated discounted cash flow
	Impairment of tangible and intangible assets excluding goodwill
	At each balance sheet date the Group reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If there is such indication then an estimate of the asset's recoverable amount is performed and compared to the carrying amount.
	Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value. Where the asset does not generate cash flows that are independent from other assets, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs.
	If the recoverable amount of an asset is estimated to be less that its carrying amount, the carrying amount of the asset is reduced to its recoverable amount. An impairment loss is recognised as an expense immediately, unless the relevant asset is carried at a re-valued amount, in which case the impairment loss is treated as a revaluation decrease.
	Where an impairment loss subsequently reverses, the carrying amount of the asset is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset in prior periods. A reversal of an impairment loss is recognised as income immediately, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.
	Property, plant and equipment
	Items of property, plant and equipment are initially recognised at cost and subsequently at depreciated cost. As well as the purchase price, cost includes directly attributable costs and the estimated present value of any future costs of dismantling and removing items. The corresponding liability is recognised within provisions.
	Depreciation is provided on all of property, plant and equipment to write off the carrying value of items over their expected useful economic lives. It is applied at the following rates:
	Plant and equipment - 15%-25% per annum straight line
	Office equipment - 20%-25% per annum straight line
	Inventories
	Inventories are initially recognised at cost, and subsequently at the lower of cost and net realisable value. Cost comprises all costs of purchase, cost of conversion and other costs incurred in bringing the inventories to their present location and condition, Weighted average cost is used to determine the cost of ordinarily interchangeable items.

	Provisions
	Provisions are recognised for liabilities of uncertain timing or amount that have arisen as a result of past transactions and are discounted at a pre-tax rate reflecting current market assessments of the time value of money and the risks specific to the liability.
	Financial instruments
	Financial assets and financial liabilities are recognised on the balance sheet when the Group has become a party to the contractual provisions of the instrument
	Cash and cash equivalents
	Cash and cash equivalents comprise cash in hand, cash at bank and short term deposits with banks and similar financial institutions.
	Trade and other receivables
	Trade and other receivables do not carry any interest and are stated at their nominal value as reduced by appropriate allowances for estimated irrecoverable amounts.
	Financial liability and equity
	Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the Company after deducting all of its liabilities.
	Trade and other payables
	Trade and other payables are non interest bearing and are stated at their nominal value.
	Equity instruments
	Equity instruments issued by the Company are recorded at the proceeds received, net of direct issue costs.

	Share-based payments
	Where share options are awarded to employees, the fair value of the options at the date of grant is charged to the consolidated income statement over the vesting period. Non-market vesting conditions are taken into account by adjusting the number of equity instruments expected to vest at each balance sheet date so that, ultimately, the cumulative amount recognised over the vesting period is based on the number of options that eventually vest. Market vesting conditions are factored into the fair value of the options granted. As long as all other vesting conditions are satisfied, a charge is made irrespective of whether the market vesting conditions are satisfied. The cumulative expense is not adjusted for failure to achieve a market vesting condition.
	Where the terms and conditions of options are modified before they vest, the increase in the fair value of the options, measured immediately before and after the modification, is also charged to the consolidated income statement over the remaining vesting period.
	Where equity instruments are granted to persons other than employees, the consolidated income statement is charged with the fair value of goods and services received. Equity-settled share-based payments are measured at fair value at the date of grant except if the value of the service can be reliably established. The fair value determined at the grant date of equity-settled share-based payments is expensed on a straight-line basis over the vesting period, based on the Company's estimate of shares that will eventually vest.
	Critical accounting estimates and judgements
	The Group makes estimates and assumptions regarding the future. Estimates and judgements are continually evaluated based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. In the future, actual experience may differ from these estimates and assumptions. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below.

	Impairment of goodwill
	The Group is required to test, on an annual basis, whether goodwill has suffered any impairment. The recoverable amount is determined based on value in use calculations. The use of this method requires the estimation of future cash flows and the choice of a discount rate in order to calculate the present value of the cash flows - actual outcomes may vary. If the carrying amount exceeds the recoverable amount then an impairment is made.
	Useful lives of intangible assets and property, plant and equipment
	Intangible assets and property, plant and equipment are amortised or depreciated over their useful lives. Useful lives are based on the management's estimates of the period that the assets will generate revenue, which are based on judgement and experience and periodically reviewed for continued appropriateness. Changes to estimates can result in significant variations in the carrying value and amounts charged to the consolidated income statement in specific periods.
	Share-based payments
	The Group utilised an equity-settled share-based remuneration scheme for employees. Employee services received, and the corresponding increase in equity, are measured by reference to the fair value of the equity instruments at the date of grant, excluding the impact of any non-market vesting conditions. The fair value of share options are estimated by using Black-Scholes valuation method as at the date of grant. The assumptions used in the valuation are described in note 17 and include, among others, the expected volatility, expected life of the options and number of options expected to vest.
	Warranty claims
	The Group may offer warranties on its products. The Group estimates the amount and cost of future warranty claims for its salesto be 10% of the sales price. 10% accrued warranty provisions for product shipments are provided. Factors that impact the estimated claim information include the success of the Group's productivity and quality initiatives, as well as parts and labour costs.

	Identifying the acquirer in business combinations
	IFRS 3 defines the acquirer in a business combination as being the entity that obtains control of the other combining entities and defines control as being held by the combining entity that has the power to govern the financial and operating policies of the other entity so as to obtain benefits from its activities. The Group considers all relevant facts and circumstances to determine which of the combining entities has control, including the voting rights of shareholders, composition of combined entities board and management.
	Determination of fair values of intangible assets acquired in business combinations
	The fair value of patents and trademarks acquired in a business combination is based on the discounted estimated royalty payments that would have been avoided as a result of the trademark or a patent being owned. The fair value of other intangible assets is based on the discounted cash flows expected to be derived from the use and eventual sale of the asset.
	Income taxes
	The Group is subject to income tax in several jurisdictions and significant judgement is required in determining the provision for income taxes. During the ordinary course of business, there are transactions and calculations for which the ultimate tax determination is uncertain. As a result, the Group recognises tax liabilities based on estimates of whether additional taxes and interest will be due. The Group believes that its accruals for tax liabilities are adequate for all open audit years based on its assessment of many factors including past experience and interpretations of tax law. This assessment relies on estimates and assumptions and may involve a series of complex judgments about future events. To the extent that the final tax outcome of such matters is different than the amounts recorded, the differences will impact income tax expense in the period in which such determination is made.
	Deferred taxation
	Deferred tax assets are recognised when it is judged more likely than not that they will be recovered.
	Going Concern
	The financial report for the year ended 30 June 2008 has been prepared on a going concern basis.

2	SEGMENT REPORTING
	For management purposes the Group is organised into 4 operating divisions: Corporate; Product Research, Development and Design; Product Manufacture, and; Sales. These divisions are the basis on which the Group reports its primary segment information. Secondary segment information is presented on a geographic basis. The primary segment information corresponds closely to geographical segments as operational segments reside in distinct locations of the United Kingdom, Australia and Asia.
	For the year ended 30 June 2008	Corporate	Product	Product	Sales	Unallocated	Total
	Business segments		R&D and	Manufacture		or
			Design			Eliminated
	Revenue	£	£	£	£	£	£
	External sales	5,642	44,799	-	18,060	-	68,501
	Total revenue from continuing operations	5,642	44,798	-	18,060	-	68,501
	Result
	Segment result from continuing operations	(1,178,168)	(795,387)	(192,163)	(345,159)	-	(2,510,877)
	Finance income						42,061
	Loss before tax						(2,468,816)
	Income tax expense						-
	Loss for the period from continuing operations						(2,468,816)
	Other segment items included in the income statement are as follows:
	Depreciation	3,409	55,133	78,469	34,530	-	171,541
	Amortisation					245,800	245,800
	Balance sheet
	Segment assets	3,468,816	16,406	37,267	32,426	(2,433,214)	1,121,701
	Segment liabilities	(94,246)	(65,772)	(20,336)	(94,799)	-	(275,153)
	Net assets	3,374,570	(49,366)	16,931	(62,373)	(2,433,214)	846,548
	For the year ended 30 June 2008		United	Australia	Asia	Unallocated	Total
	Geographical segments		Kingdom
	Revenue		£	£	£	£	£
	External sales		5,642	44,799	18,060		68,501
	Total revenue from continuing operations		5,642	44,799	18,060		68,501
	Result
	Segment result from continuing operations		(1,259,881)	(587,657)	(663,339)	-	(2,510,877)
	Finance income						42,061
	Loss before tax						(2,468,816)
	Income tax expense						-
	Loss for the period from continuing operations						(2,468,816)
	Balance sheet
	Segment assets		3,468,816	16,406	69,693	(2,433,214)	1,121,701
	Segment liabilities		(94,246)	(65,772)	(115,135)	-	(275,153)
	Net assets		3,374,570	(49,366)	(45,442)	(2,433,214)	846,548
	Inter-segment transfers are priced along the same lines as sales to external customers, except that an appropriate discount is applied to encourage use of group resources at a rate accepted to local tax authorities.

	For the period ended 30 June 2007	Corporate	Product	Product	Sales	Unallocated	Total
	Business segments		R&D and	Manufacture		or
			Design			Eliminated
		£	£	£	£	£	£
	Revenue
	External sales	-	17,971	-	-	-	17,971
	Total revenue from continuing operations	-	17,971	-	-	-	17,971
	Result
	Segment result from continuing 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)
	Income tax expense						(69,224)
	Loss for the period from continuing operations						(2,627,005)
	Other segment items included in the income statement are as follows:
	Depreciation	781	2,003	-	-	-	2,784
	Amortisation	220,423	14,518	-	-	-	234,941
	Balance sheet
	Segment assets	10,224,965	92,200	152,811	117,994	(1,453,713)	9,134,257
	Segment liabilities	(1,418,232)	(594,632)	(49,792)	(81,530)	1,772,194	(371,992)
	Net assets	8,806,733	(502,432)	103,019	36,464	318,481	8,762,265
	For the period ended 30 June 2007		United	Australia	Asia	Unallocated	Total
	Geographical segments		Kingdom
			£	£	£	£	£
	Revenue
	External sales		-	17,971	-	-	17,971
	Total revenue from continuing operations		-	17,971	-	-	17,971
	Result
	Segment result from continuing operations		(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 from continuing operations						(2,627,005)
	Balance sheet
	Segment assets		10,224,965	92,200	270,805	(1,453,713)	9,134,257
	Segment liabilities		(1,418,232)	(594,632)	(131,322)	1,772,194	(371,992)
	Net assets		8,806,733	(502,432)	139,483	318,481	8,762,265
	Inter-segment transfers are priced along the same lines as sales to external customers, except that an appropriate discount is applied to encourage use of group resources at a rate accepted to local tax authorities.

3	CONSOLIDATED REVENUE	Year ended	Period
		30 June 2008	2 March 2006 to
			30 June 2007
		£	£
	Revenue arises from:
	Sale of goods	18,703	-
	Royalties	46,666	10,036
	Other Income	3,132	7,935
		68,501	17,971
4	CONSOLIDATED LOSS FROM OPERATIONS
	Loss from operations has been arrived at after charging:
	Directors fees	463,859	441,000
	Salaries and wages	469,210	126,850
	Consultancy costs	129,350	82,470
	Audit fees	68,651	84,135
	Other professional fees	77,151	22,555
	Amortisation of intangible assets	245,800	234,941
	Depreciation	171,541	2,784
	Research and development	73,017	188,668
	Net Equity settled share-based payments	45,558	1,019,302
	Foreign exchange loss	8,314	(5,029)
	Other expenses	556,169	410,733
		2,308,620	2,613,438
	Amounts payable to BDO Stoy Hayward LLP and Chapman Davis LLP and their associates in respect of both audit and non-audit services:
	Audit services - group statutory audit (prior year)	64,651	36,000
	Other services - company statutory audits	-	25,000
	Other services - tax review	-	6,000
	Other services - interim audit review	2,500	-
	Other services - interim audit review and CT advice	1,500	-
	Amounts payable to previous auditors MRI Moores Rowland LLP and their associates in respect of both audit and non-audit services:
	Other services - interim audit review	-	4,120
	Due diligence on acquisition of Whise Acoustics Limited	-	9,232
	Amounts payable to previous auditors of Whise Acoustics Limited, Leydin Freyer Corporate Pty Ltd:
	Other services - interim audit review and CT advice	-	3,783
		68,651	84,135

5	STAFF COSTS and DIRECTORS REMUNERATION
				Consolidated
						Period
				Year ended		2 March 2006 to
				30 June 2008		30 June 2007
				£		£
	The average number of employees (including executive directors) was :			65		19
	Their aggregate remuneration comprised :
	Wages and salaries			951,489		508,898
	Share-based payments			26,862		21,010
				978,351		529,908
	Consolidated Directors' and Key Management emoluments for the year ending 30 June 2008	Salary & fees	Bonus		Share-based payments		Total
		£	£		£		£
	Vincent Fodera-resigned 7/7/2008	120,040	-		13,871		133,911
	Sandy Barblett	28,575	-		1,936		30,511
	Kiran Morzaria	11,500	-		3,871		15,371
	David Lenigas - appointed 29/1/2008	-	-		3,871		3,871
	Gregory Turnidge-resigned 29/1/2008	27,140	-		4,936		32,076
	Craig Evans-resigned 29/1/2008	142,940	-		1,936		144,876
	Blair Snowball-resigned 29/1/2008	66,164	-		12,000		78,164
	Arie van der Broek- CEO appointed 15/9/2007	67,500	-		3,871		71,371
		463,859	-		46,292		510,151
	Consolidated Directors' emoluments for the period ending 30 June 2007	Salary & fees	Bonus		Share-based payments		Total
		£	£		£		£
	Vincent Fodera	99,000	15,000		4,988		118,988
	Sandy Barblett	33,000	15,000		2,721		50,721
	Kiran Morzaria	1,500	-		-		1,500
	Gregory Turnidge	19,500	10,000		2,721		32,221
	Christopher Lambert	9,000	-		-		9,000
	Craig Evans	121,000	15,000		5,443		141,443
	Blair Snowball	88,000	15,000		4,988		107,988
		371,000	70,000		20,861		461,861

6	CONSOLIDATED INCOME TAX EXPENSE
			Period
		Year ended	2 March 2006 to
		30 June 2008	30 June 2007
		£	£
	Current tax expense
	UK corporation tax and income tax of overseas operations on profits for the period	-	69,224
	Deferred tax expense
	Origination and reversal of temporary differences	-	-
	Total income tax expense	-	69,224
	The reasons for the difference between the actual tax charge for the period and the standard rate of corporation tax in the UK applied to profits for the year are as follows:
	Loss for the period	(2,468,816)	(2,557,781)
	Expected tax gain based on the standard rate of corporation tax in the UK of 30%	(728,301)	(767,334)
	Expenses not deductible for tax purposes	22,055	57,804
	Capital items expensed	-	(64,738)
	Share based payments	8,017	7,936
	Losses unutilised	84,749	574,238
	Utilisation of previously unrecognised tax losses	-	261,318
	Different tax rates applied in overseas jurisdictions		-
	Total tax (gain) expense	(613,480)	69,224
	Tax gain of £613,480 is not recognised as a deferred tax asset
	The Group also has a potential deferred tax asset in respect of losses carried forward of £874,257. This has not been recognised due to uncertainty over the amount and timing of future taxable profits against which the asset could be recovered.

7	CONSOLIDATED FINANCE INCOME
			Period
		Year ended	2 March 2006 to
		30 June 2008	30 June 2007
		£	£
	Interest on bank deposits	42,061	38,278

8	LOSS PER SHARE
	The calculation of the basic and diluted loss per share is based on the following data:	Year ended	Period ended
		30 June 2008	30 June 2007
		£	£
	Loss
	Loss for the purposes of basic and diluted loss per share	(2,468,816)	(2,627,005)
	Number of shares
	Weighted average number of ordinary shares for the purposes of basic and diluted loss per share	228,220,186	145,569,036
	Basic and diluted loss per share	1.08 pence	1.80 pence
	The diluted loss per share is equal to the basic loss per share because all of the 18,284,489 options (weighted average being 14,273,530 on issue were considered not potentially dilutive. That is, all options have an exercise price far greater than the weighted average share price during the year (ie they are out-of the-money) and therefore would not be advantageous for the holders to exercise those options.

9	CONSOLIDATED INTANGIBLE ASSETS
			Intellectual
		Goodwill	Property	Licences	Total
		£	£	£	£
	Balance at 1 July 2007	1,768,417	4,978,173	171,856	6,918,446
	Additions	-	44,416	-	44,416
	Balance at 30 June 2008	1,768,417	5,022,589	171,856	6,962,862
	Accumulated amortisation and impairment
	Balance at 1 July 2007	-	223,484	11,457	234,941
	Amortisation charge for the period	-	228,614	17,186	245,800
	Impairment charge	1,768,417	3,770,491	143,213	5,682,121
	Balance at 30 June 2008	1,768,417	4,222,589	171,856	6,162,862
	Net book value
	Balance at 30 June 2008	-	800,000	-	800,000
	Goodwill was acquired during the prior period through two separate business combinations. Intellectual property consists of acquired patents, for which amortisation commenced from the date of acquisition. All but three patents have an average remaining useful life of approximately 20 years. Impairment Review  At 30 June 2008, the directors have carried out an impairment review and have subsequently written down the value of the Goodwill, Intellectual Property and the Licences by approximately £5.7 million (see Note 19). The directors are of the opinion that the carrying value is now stated at fair value.

10	CONSOLIDATED PLANT AND EQUIPMENT
		Plant and	Office	Leasehold
		equipment	equipment	improvements	Total
	Cost	£	£	£	£
	Balance at 1 July 2007	68,319	3,223	-	71,542
	Additions	51,284	34,747	26,141	112,172
	Disposals	(4,417)	(6,664)	-	(11,081)
	Balance at 30 June 2008	115,186	31,306	26,141	172,633
	Accumulated depreciation and impairment
	Balance at 1 July 2007	2,197	587	-	2,784
	Depreciation for the period	112,989	32,411	26,141	171,541
	Disposals	-	(1,692)	-	(1,692)
	Balance at 30 June 2008	115,186	31,306	26,141	172,633
	Net book value
	Balance at 30 June 2008	-	-	-	-

	Cost
	Balance at 2 March 2006	-	-	-	-
	Additions	68,319	3,223	-	71,542
	Balance at 30 June 2007	68,319	3,223	-	71,542
	Accumulated depreciation and impairment
	Balance at 2 March 2006	-	-	-	-
	Depreciation for the period	2,197	587	-	2,784
	Balance at 30 June 2007	2,197	587	-	2,784
	Net book value
	Balance at 30 June 2007	66,122	2,636	-	68,758

11	CONSOLIDATED TRADE AND OTHER RECEIVABLES
		30 June 2008	30 June 2007
	Current trade and other receivables	£	£
	Trade debtors	17,913	304
	Prepayments	25,194	95,647
	Tax receivable	-	141,692
	Other debtors	6,481	22,493
		49,588	260,136
	The directors consider that the carrying amount of trade and other receivables approximates their fair value.

12	COMPANY TRADE AND OTHER RECEIVABLES
		30 June 2008	30 June 2007
	Current trade and other receivables	£	£
	Prepayments	25,194	13,384
	Other debtors	6,481	101,481
		31,675	114,865

13	CONSOLIDATED TRADE AND OTHER PAYABLES
		30 June 2008	30 June 2007
	Current trade and other payables	£	£
	Trade payables	69,699	117,583
	Accruals	111,099	161,108
	Deferred income	92,406	81,530
		273,204	360,221
	The directors consider that the carrying amount of trade payables approximates to their fair value.

14	COMPANY TRADE AND OTHER PAYABLES
		30 June 2008	30 June 2007
	Current trade and other payables	£	£
	Trade payables	7,781	46,366
	Accruals	85,534	139,684
		93,315	186,050

15	FINANCIAL INSTRUMENTS - RISK MANAGEMENT
	The Group is exposed through its operations to one or more of the following financial risks:
	· Fair value or cash flow interest rate risk
	· Foreign currency risk
	· Liquidity risk
	· Credit risk
	Policy for managing these risks is set by the Board following recommendations from the Finance Director. Certain risks are managed centrally, while others are managed locally following guidelines communicated from the centre. The policy for each of the above risks is described in more detail below.
	Fair value and cash flow interest rate risk
	Currently the Group does not have external borrowings. However, the Group has a policy of holding debt at a floating rate. The directors will revisit the appropriateness of this policy should the Group's operations change in size or nature. Operations are not permitted to borrow long-term from external sources locally.
	Foreign currency risk
	Foreign exchange risk arises because the Group has operations located in various parts of the world whose functional currency is not the same as the functional currency in which the Group companies are operating. The Group's net assets are exposed to currency risk giving rise to gains or losses on retranslation into sterling. Only in exceptional circumstances will the Group consider hedging its net investments in overseas operations as generally it does not consider that the reduction in volatility in consolidated net assets warrants the cash flow risk created from such hedging techniques.

	Foreign exchange risk also arises when individual Group operations enter into transactions denominated in a currency other than their functional currency. It is Group policy that where the risk to the Group is considered significant, Group treasury will enter into a forward contract with a reputable bank.
	Liquidity risk
	The liquidity risk of each Group entity is managed centrally by the Group treasury function. Each operation has a facility with Group treasury, the amount of the facility being based on budgets. The budgets are set locally and agreed by the board annually in advance, enabling the Group's cash requirements to be anticipated. Where facilities of Group entities need to be increased, approval must be sought from the Group finance director. Where the amount of the facility is above a certain level agreement of the board is needed.
	All surplus cash is held centrally to maximise the returns on deposits through economies of scale. The type of cash instrument used and its maturity date will depend on the Group's forecast cash requirements.
	Credit risk
	The Group is mainly exposed to credit risk from credit sales. It is Group policy, implemented locally, to assess the credit risk of new customers before entering contracts. Such credit ratings are taken into account by local business practices.
	The Group does not enter into complex derivatives to manage credit risk, although in certain isolated cases may take steps to mitigate such risks if it is sufficiently concentrated.

16	SHARE CAPITAL
			Consolidated and Company				Consolidated and Company
			Year ended				Year ended
			30 June 2008				30 June 2007
			Number		£		Number			£
	Authorised:
	Ordinary shares of £0.007 each		1,000,000,000		7,000,000		1,000,000,000			7,000,000
	Issued and Fully Paid:
	At the beginning of the period		224,869,614		1,574,087		342,761,601			342,762
	Consolidation of share capital		-		-		(293,795,658)			-
	Issued ordinary shares of £0.007 each		1,731,645		12,122		-			-
	Issued ordinary shares of £0.007 each		1,623,375		11,364		175,903,671			1,231,325
	At the end of the period		228,224,634		1,597,573		224,869,614			1,574,087
	At the beginning and the end of the period there were no shares issued that were not fully paid.
	The following share capital was issued in the period to 30 June 2008;
	(1) On 1 July 2007, 1,731,645 shares in Immersion Technology International Limited (representing 0.97% of its issued share capital), were issued to two shareholders who, as described in the Company's Admission Document (12 April 2007) did not waive their rights to compensation shares under the Whise Acoustics Share Purchase Agreement and thus became entitled to the shares on this date. On 11 December 2007 the Group negotiated the purchase of the minority interest by issuing one Immersion Technologies International plc share in exchange for each Immersion Technology International Limited share.
	(2) On 6 May 2008 the Company issued 1,623,375 ordinary shares at £0.0154 per share in lieu of cash settlements to current and former directors.

17	SHARE-BASED PAYMENTS
	During the period the Company issued options to key management and employees
		Year ended 30 June 2008			Period ended 30 June 2007
		Weighted	Number		Weighted	Number
		average			average
		exercise price			exercise price
	Outstanding at the beginning of the period	£0.13	13,484,489		£0.21	734,489
	Granted during the year	£0.0154	17,550,000		£0.125	12,750,000
	Forfeited during the year
	Cancelled during the year	£0.125	(12,750,000)		-	-
	Exercised during the year	-	-		-	-
	Lapsed during the year	-	-		-	-
	Outstanding at the end of the year	£0.0232	18,284,489		£0.13	13,484,489
	The exercise price of options outstanding at the end of the period ranged between 21p and 1.54p and their weighted average contractual life was 9.8 years.
	The weighted average fair value of each option granted during the year was 0.93p.
	The Group used the Black-Scholes model to determine the value of the options and the inputs were as follows:
					Year ended	Period ended
					30 June 2008	30 June 2007
	Weighted average share price				£0.015	£0.051
	Weighted average exercise price				£0.232	£0.125
	Expected volatility				54%	30%
	Expected life				5 years	5 years
	Risk free rate				5.00%	5.00%
	Expected dividends				£nil	£nil
	Expected volatility was determined by using the volatility rate used by listed companies in similar industries and those companies with similar sizes.
	On 6 May 2008 Immersion Technology International Limited also issued 1,623,375 shares as compensation payment to a Director and former Directors.  The total share-based payment charge for the compensations shares is £25,000, which was valued at the date grant based on a valuation of 1.54 pence per share.
	The total share-based payment expense in the period for the Group was £52,176, of which £27,176 pertained to new  options to employees and directors which were in relation to options that were issued last year and cancelled and reissued. The cancellation of the charge for previously issued share options was £6,618, and £25,000 of compensation shares as mentioned above, resulting in a net charge of £45,558 in the income statement.

18	INVESTMENT IN SUBSIDIARIES
		30 June 2008	30 June 2007
		£	£
	As at 1 July	18,683,895	-
	Additions during the year	548,119	18,683,895
	Write-down of investment	(16,798,801)	-
	At 30 June	2,433,213	18,683,895
	The subsidiaries of Immersion Technologies International plc, all of which have been included in these consolidated financial statements, are as follows:
	Name	Country of incorporation	Proportion of ownership interest
	Immersion Technologies UK Limited	UK	100%
	Immersion Technology Property Limited	UK	100%
	Immersion Technology International Limited	UK	100%
	Immersion Technologies (Singapore) Pte Limited	Singapore	100%
	Immersion Technology (Nanjing) Co. Limited	China	100%
	Immersion Technologies Australia Pty Limited	Australia	100%
	Whise Acoustics Limited	Australia	100%
	Whise Technologies Pty Limited	Australia	100%

19.    IMPAIRMENT REVIEW

The directors undertook an impairment review of the Group's assets as at 30 June 2008 in view of subsequent events to this date regarding the closure of the operations in Singapore and China. The format of the review was by assessing the carrying value of assets as at 30 June 2008 by country and sector of origin. The analysis and resultant impairment charges were considered as follows:

Category	Net Costs capitalised to 30 June 2008	Impairment charge	Net costs carried forward
	£	£	£
GROUP
Intangible assets
Goodwill	1,768,417	(1,768,417)	-
Intellectual property	4,570,491	(3,770,491)	800,000
Licences	143,213	(143,213)	-
Total	6,482,121	(5,682,121)	800,000
Tangible assets
Plant and equipment	103,757	(103,757)	-
Office equipment	23,386	(23,386)	-
Leasehold improvements	17,681	(17,681)	-
Total	144,824	(144,824)	-
COMPANY
Investment in subsidiaries	19,232,014	(16,798,801)	2,433,213

20	GROUP RELATED PARTY TRANSACTIONS
	Transactions between the parent and its subsidiaries, which are related parties, have been eliminated on consolidation and are not disclosed in this note. Transactions between the Group and its associates are disclosed below. Details of directors remuneration, being the only key personnel, are given in note 5.
	Directors transactions
	During the period, the Group incurred rent payable to ED Evans Holdings Pty Limited, a company owned by ED Evans the father of Craig Evans a former director (resigned 29 January 2008). The total paid for the year was £ 20,395.
	Remuneration of Key Management Personnel The remuneration of the directors, and other key management personnel of the Group, is set out below in aggregate for each of the categories specified in IAS24 Related party Disclosures.
		2008	2007
		£	£
	Short-term employee benefits	463,859	441,000
	Share-based payments	25,000	20,861
		488,859	461,861

21	COMPANY RELATED PARTY TRANSACTIONS
	During the period the Company made loans to the following subsidiaries. The loans provide necessary funds for the subsidiaries to invest in setting up operations. The Company will continue to fund the subsidiaries, in this way, through the set up phase. The Directors believe the loans are fully recoverable but do not expect to make repayment calls within the next reporting period, however these loans are repayable on demand:
				As at	As at
				30 June 2008	30 June 2007
				£	£
	Immersion Technology International Limited			-	627,482
	Immersion Technologies (Singapore) Pte Limited			18,933	-
	Immersion Technologies Australia Pty Limited			1,076,199	136,206
				1,095,132	763,688
	During the period the Company entered into transactions which resulted in loans payable to the following subsidiaries:
				As at	As at
				30 June 2008	30 June 2007
				£	£
	Immersion Technology International Limited			209,347	466,469
	Immersion Technology Property Limited			100	100
	Immersion Technologies UK Limited			100	100
				209,547	466,669
	Net amounts due from subsidiaries			885,585	297,019

22	ULTIMATE CONTROLLING PARTY
	In the opinion of the directors there is no controlling party.

23	OPERATING LEASES
	The Group leases all of its properties. The terms of property leases vary from country to country, although the majority are tenant repairing with rent reviews every 3 years and many have break clauses.
	The total future of minimum lease payments are due as follows:
		Year ended	Period ended
		30 June 2008	30 June 2007
		£	£
	Not later than one year	37,204	64,456
	Later than one year and not later than five years	-	108,889
	Later than five years	-	-
		37,204	173,345

24	RETIREMENT BENEFIT SCHEME
	The Group does not operate either a defined contribution or defined benefit retirement scheme.

25	COMMITMENTS
	The Company has a commitment to make an equity investment of US$1,500,000 into its Chinese subsidiary, Immersion Technology (Nanjing) Co. Limited, by the end of April 2009. This commitment is required by rules for establishing a Foreign Controlled Company in Nanjing, China. If the Company ceases to require a subsidiary in Nanjing prior to April 2009 then it does not have an obligation to complete the investment. As at the date of publishing the financial statements the Company has invested US$1,300,000 (US$300,000 as at 30 June 2007) and therefore is expected to have a further commitment of US$200,000 to be made  up to April 2009. The Company is in the process of filing action against Nakamichi Corporation for breach of contract in failing to purchase its manufactured goods for which the Nanjin facility was set up. The financial cost attributable to this action, can not be estimated at this time.

26	POST BALANCE SHEET EVENTS
	On 7 July 2008, Mr Vincent Fodera resigned as a director of the Company. On 22 July 2008 the Company placed 18,500,000 ordinary shares of 0.7p each in the capital of the Company at a price of 1p per ordinary share ('Placing Shares') with certain investors (the 'Placing') rising £185,000. Pursuant to the Placing, participants have additionally been granted one warrant to subscribe for an additional ordinary share in Immersion Technologies for every two new ordinary shares subscribed in the Placing. These warrants are exercisable at 1.5p per share for a period of five years from the date of admission of the Placing Shares to trading on AIM.  On 18 August 2008, the Company placed 17,500,000 ordinary shares of 0.7p each in the capital of the Company at a price of 1p per ordinary share raising £175,000. Pursuant to the Placing, participants have additionally been granted one warrant to subscribe for an additional ordinary share in Immersion Technologies for every two new ordinary shares subscribed in the Placing. These warrants are exercisable at 1.5p per share for a period of five years from the date of admission of the Placing Shares to trading on AIM.  The Company has also issued a further 1,100,000 ordinary shares of 0.7p each, in lieu of fees related to the Placing (the 'Fee Shares'). The recipients of the Fee Shares have been granted Warrants on the same basis as the participants in the Placing, as described above.
27	Profit and loss account of the parent company As permitted by section 230 of the Companies Act 1985, the profit and loss account of the parent company has not been separately presented in these accounts. The parent company loss for the year was £917,748 (2007:loss £274,985).

Additional Notes:

The above financial information comprises non-statutory accounts within the meaning of section 240 of the Companies Act 1985. The financial information for the year ended 30 June 2008 has been extracted from published accounts for the year ended June 2008 that have been delivered to the Registrar of Companies and on which the report of the auditors was unqualified and did not contain statements under s237 (2) or (3) of the Companies Act 1985.

The Report and Accounts will be posted to shareholders by Friday 19th December 2008. Copies may be obtained during normal office hours from the Company's registered office, Level 5, 22 Arlington Street, London, SW1A 1RD or from the company's website, www.iti-plc.com. 

Contacts:

Immersion Technologies International plc
David Lenigas/Kiran Morzaria	[phone]
Beaumont Cornish - Nominated Adviser
Roland Cornish/Michael Cornish	[phone]
Pelham Public Relations
Archie Berens	[phone] / [phone]

 

END

 

 

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