Half Yearly Report

 

TIDMNTX 
 
RNS Number : 7200H 
NXT PLC 
26 February 2010 
 

                                                                26 February 2010 
                                    NXT plc 
                               Half Yearly Report 
NXT plc ('NXT', the 'Group' or the 'Company'), the provider of unique sound 
solutions, best known for its flat-panel loudspeaker technology, announces its 
Half Yearly Report for the six months to 31 December 2009. 
 
Highlights 
·   Half-year revenues GBP1.0 million, compared with GBP2.1 million (2008 
included one-off Nissha Printing Co. Ltd exclusive licence fee of GBP1.2 
million) 
·    GBP1 million placing supported by licensing partner Nissha Printing and 
institutional investors 
·    Post-tax loss of GBP0.75 million in challenging market, compared with 
GBP0.34 million profit 
·    Total cash outflow contained at GBP0.4 million (GBP0.6 million) 
·    Significant progress in flat-screen TV activities 
·    Growth in portable speaker market 
·    Company well placed to exploit promising touch screen and other markets in 
2010 
 
Peter Thoms, CEO, said "While the external commercial environment is still 
difficult we have good momentum across NXT haptic and BMR technologies. The 
success of the remaining six months will be dependent on the timing of signing 
new haptic licensees. The enthusiasm in the touch market coupled with the share 
placing puts NXT in a good position for the remainder of the calendar year 
2010." 
For additional information, please contact: 
NXT plc: 
+----------------------------------------------------+----------------------------+ 
| Peter Thoms, Chief Executive                       |       [phone] | 
+----------------------------------------------------+----------------------------+ 
Media enquiries: 
+------------------------------------------------+--------------------------------+ 
| Allerton Communications                        |           [phone] | 
+------------------------------------------------+--------------------------------+ 
| Peter Curtain                                  |                                | 
+------------------------------------------------+--------------------------------+ 
 
 
Interim Management Report 
 
The six months to 31 December 2009 proved challenging for NXT, with customers 
continuing to be risk-averse. Revenues for the period were GBP1.0 million 
compared with GBP2.1 million for the same period last year (which included the 
one-off licence fee of GBP1.2 million received from Nissha Printing Co. Ltd 
("Nissha") for its bending wave haptics licence). NXT continues to tightly 
control its cost base, and expenditure net of R&D tax credits was level with 
last year. The post-tax loss for the period was GBP0.75 million (December 2008 - 
GBP0.34 million profit) whilst total cash outflow, reflecting improved control 
of debtors, was contained at GBP0.4 million (December 2008 - GBP0.6 million 
outflow). 
 
Today's announcement of the placing of 7.5 million shares at 13 pence will raise 
GBP1.0 million (before expenses) and provides additional financial headroom 
which the Board regard as appropriately prudent in continuing difficult economic 
conditions. The shares were placed with Nissha, several institutions in London 
and the directors. 
 
In the immediate future efforts are focused on signing licences and consulting 
agreements for NXT's bending wave haptics in order to grow applications across 
numerous touch screen formats. These, when combined with launches of innovative 
new loudspeaker products, are anticipated to drive royalty income in the second 
half of the financial year to 30 June 2010. 
 
Operations 
 
TouchSound has been introduced as the trademark that NXT will use for touch 
screens which also act as a loudspeaker. When required the screen may also be 
equipped with NXT haptic feedback, a tactile response directly from the screen. 
 
The key milestone in the period under review was to prove the claim that NXT's 
technology could enable separate tactile feedback sensations at different 
locations when using a screen's multi-touch capabilities, and also that the 
technology was applicable to larger screens. At the Consumer Electronics Show 
("CES") in January 2010, NXT exhibited the first tablet PC developed with Nissha 
to incorporate multi-touch haptic functionality on a resistive multi-touch 
screen. In addition NXT demonstrated a 15 inch infrared touch overlay screen 
from a Taiwanese company that functioned both as a loudspeaker and a touch 
screen with haptic feedback. 
 
All of these developments involve NXT leveraging its world class understanding 
of bending wave physics. NXT scientists have developed a novel way of creating 
haptic feedback from touch screens and touch panels by differentiating the audio 
signal normally deployed in NXT's flat distributed mode loudspeakers. The audio 
signal is optimised to deliver tactile vibrations so that touch screens can be 
either tuned to simultaneously function as a loudspeaker or operate almost 
silently but with haptic feedback, depending on applications and customer 
requirements. 
 
To further enhance the commercial applications, on 18 November 2009 NXT signed 
an agreement to license TouchSense haptics technology from Immersion 
Corporation. The agreement enables NXT and its licensees to also benefit from 
Immersion's touch feedback intellectual property for touch screen and touch 
panel applications. With access to Immersion's complementary technology NXT's 
plans to expand the licensee base in the upcoming months are further 
strengthened. 
 
The application of TouchSound requires an NXT patented transducer - a 
distributed mode actuator ("DMA"), (piezo-ceramic transducer) for small screens 
or an electromechanical exciter for screens above seven inches. Working with 
Nissha the development of the DMA supply chain and its associated electronics is 
progressing and the electromechanical exciters are production ready. 
 
In addition to the touch screen market NXT continues to focus resources on the 
flat TV and portable speaker markets. 
 
Significant progress has been made in the TV market in the six months under 
review and we believe that more customers are planning to use NXT's Balanced 
Mode Radiator ("BMR") drive units to fit into the latest slim-form TVs. NXT and 
its licensee Shinhint are now engaged with the world's three leading TV Original 
Equipment Manufacturers ("OEMs"), all based in Taiwan. The range of XVT LCD TV 
models from VIZIO, using the original 10-watt BMR drivers, was well received and 
replacement models have begun to reach the market, with more to be announced. In 
addition, JVC's Xiview announced in June 2009 was the first model to incorporate 
the latest, even slimmer, 10-watt drive unit. Extensive development work 
continues to deliver smaller, cost competitive drive units for the popular sized 
TVs in the 26-inch to 37-inch range. Based on order books and commitments it is 
anticipated more than 10 new models will be launched in the first half of 2010, 
with a good mix of display sizes and brands. 
 
The portable speaker market is one of the few consumer electronic markets which 
grew in 2009. NXT has introduced many new product designs and increased its 
distribution but buyers have either delayed orders or are placing smaller orders 
than expected. In the period NXT announced 20 new products and as a result of 
the Hong Kong, Mumbai and CES trade shows is now engaged with more than 10 new 
brands and distributors. In the upcoming six months there is evidence of a 
return of commitment to large promotional orders and an anticipated increase in 
revenues as new products come on stream. 
 
NXT technology traditionally attracts innovative, creative applications and this 
year's CES proved to be a strong showcase for the possibilities open to 
developers. Having demonstrated the concept launch 12 months ago, Silicon Valley 
Global, the company behind Tunebug, launched its range of products using NXT's 
award winning SurfaceSound technology. Tunebug speakers are portable sound 
generators that connect to audio sources via a 3.5mm input or Bluetooth to 
transform numerous flat surfaces into loudspeakers. Tunebug Vibe is available 
now and Tunebug Shake is scheduled to launch in March 2010. Also at the show 
Hybra Advance Technology Inc exhibited and won a CES Innovation award for its 
on-ear headset utilising NXT's DMA, while Canadian wireless audio specialist 
Eleven Engineering was also an honouree for its BMR-equipped Cecille speaker 
system. 
 
There is a continuous drive within NXT to increase the quality and functionality 
of NXT products. BMR technology is a hybrid drive unit designed to produce wide 
bandwidth, wide directivity audio from a single drive unit. As well as being 
used in flat TVs BMR drive units can already be found in quality audio products 
from Naim, Q Acoustics, Revo, and TEAC. 
 
The world's automotive manufacturers have suffered during the recession and, as 
previously reported, this adversely impacted on NXT revenues. However, the last 
quarter's reported royalties are now back to pre-recession levels and new 
markets and new development programmes are in the pipeline. In the USA there is 
renewed interest in NXT technology and manufacturers are evaluating a 
demonstration vehicle from a tier one USA trim supplier. In Europe a 
BMR-equipped luxury vehicle will be announced at a 2010 motor show. 
 
Strategy 
 
NXT is continuing with its revenue model of licensing audio and tactile touch 
technology along with associated consulting. In the majority of cases a royalty 
is collected on the sale of the NXT-enabled product. The model is continually 
being adapted to enable NXT to participate in the supply chain for certain 
components where there is a benefit for the customer and NXT. 
 
NXT plans to expand all sectors of the business; however the focus will be on 
growth markets or markets where NXT can achieve premium margins. 
 
The touch screen market is an example of a fast developing sector where NXT can 
participate. For example, revenue from the touch sensor market is anticipated to 
grow 10 times faster than the display industry over the next six years. It is a 
fragmented market with over one hundred suppliers, but in 2008 Nissha, our 
licensee for small touch screens, was number one by volume and number three by 
value. The opportunity and the rapid growth can be illustrated by Nissha's 
actions. In 2008 it shipped approximately 50 million touch screens for portable 
gaming and mobile phones. In November 2009 Nissha announced a new factory which 
would bring its annual capacity to 213 million touch screens. 
 
The market for larger touch screens is spread over a dozen touch technologies. 
In unit terms, screens over nine inches only account for 9 per cent of the total 
market, however they account for 54 per cent of total revenues. TouchSound is 
compatible with virtually all current touch technologies and the NXT team is 
targeting the major players in the large touch screen market. 
 
To promote NXT going forward a redesigned website is being prepared to ensure 
the technology and applications are clearly presented in graphics, video and 
text. The current website already generates sales leads and recent enquiries 
have generated developments in diverse applications ranging from military to 
toys. 
 
Below we are reporting on our key performance indicators. These are historic 
indicators for the Company and report on progress without restricting NXT's 
competitive advantage in the market. With a change in the mix of the business 
the Board will review the indicators over the next six months to ensure that 
they reflect the understanding of the Company's objectives and strategy. 
 
Performance monitoring and financial review 
 
Key performance criteria 
 
As set out in our annual report, we monitor our performance implementing our 
strategy with reference to our five key performance indicators ("KPIs"). These 
KPIs are applied on a Group wide basis. The performance in the six months ended 
31 December 2009 is set out in the table below, together with the comparative 
data for the six months to 31 December 2008. 
 
+--------------------------------------+-----------+-----------+ 
| Six months ended 31 December         |      2009 |      2008 | 
+--------------------------------------+-----------+-----------+ 
| Royalties (as a percentage of        |       39% |       30% | 
| income)                              |           |           | 
+--------------------------------------+-----------+-----------+ 
| Speaker volumes                      |      4.4m |      3.7m | 
+--------------------------------------+-----------+-----------+ 
| Average royalty rates                |     $0.17 |     $0.26 | 
+--------------------------------------+-----------+-----------+ 
| Operating costs                      |  GBP1.82m |  GBP1.78m | 
+--------------------------------------+-----------+-----------+ 
| Operating cash flows                 | (GBP0.3m) | (GBP0.6m) | 
+--------------------------------------+-----------+-----------+ 
 
Revenue 
 
+--------------------------+----------+---------+---------+---------+ 
| Revenue                             |    2009 |    2008 | Growth  | 
+-------------------------------------+---------+---------+---------+ 
|                        $ |          |   $'000 |   $'000 |       % | 
+--------------------------+----------+---------+---------+---------+ 
|                          |          |         |         |         | 
+--------------------------+----------+---------+---------+---------+ 
| Royalties                           |     720 |     966 |   (25%) | 
+-------------------------------------+---------+---------+---------+ 
| Licences and consulting             |     949 |   2,225 |   (57%) | 
+-------------------------------------+---------+---------+---------+ 
| Total                    |          |   1,669 |   3,191 |   (48%) | 
+--------------------------+----------+---------+---------+---------+ 
|                          |          |         |         |         | 
+--------------------------+----------+---------+---------+---------+ 
| Exchange rate                       |    1.66 |    1.52 |         | 
+-------------------------------------+---------+---------+---------+ 
|                          |          |         |         |         | 
+--------------------------+----------+---------+---------+---------+ 
|                      GBP |          |         |         |         | 
+--------------------------+----------+---------+---------+---------+ 
|                          |          |         |         |         | 
+--------------------------+----------+---------+---------+---------+ 
| Royalties                           |     434 |     637 |   (32%) | 
+-------------------------------------+---------+---------+---------+ 
| Licences and consulting             |     573 |   1,469 |   (61%) | 
+-------------------------------------+---------+---------+---------+ 
| Total                    |          |   1,007 |   2,106 |   (52%) | 
+--------------------------+----------+---------+---------+---------+ 
 
Royalty income has decreased 25 per cent compared to the same period last year. 
This was predominantly due to a lack of promotional activity. Historically we 
have seen three or four promotions in the period to December, which usually 
deliver significant volumes. With the slowdown in the economy there were no 
promotions in the period. 
 
In December 2008 an exclusive licence deal was signed with Nissha, accounting 
for GBP1.2 million of the revenue in that period. Licensing has been progressing 
well in the six months to December 2009, although the late signing of the 
Immersion licence meant that some anticipated haptic licences were not signed 
within the period. 
 
Speaker volumes increased to 4.4 million due to use in greetings cards, a high 
volume, low margin business. This has also driven down the average royalty rate 
to $0.17. We do not expect this to continue into 2010. 
 
Cash management 
 
The cash balance at 31 December 2009 was GBP206,000. Working capital is being 
closely monitored and costs are also being tightly controlled and are expected 
to remain stable for the next six months. 
 
Detailed cash flows are maintained and reviewed by senior management on a 
regular basis. Whilst our conservative cash flow forecasts show that the Group 
can operate within its current cash resources and overdraft facility, it was 
considered prudent to raise a further GBP1 million by way of a placing of 7.5 
million shares in order to strengthen the balance sheet. 
 
Retained earnings 
 
The retained loss for the six month period was GBP752,000, compared to a profit 
of GBP371,000 for the six months to December 2008. 
 
Principal risks and uncertainties 
 
There are a number of potential risks and uncertainties which could have a 
material impact on the Group's performance over the remaining six months of the 
financial year and could cause actual results to differ materially from expected 
and historical results. 
 
The principal risks and uncertainties facing the business are: 
 
+-+-----------------------------------------------------------+ 
| ·| going concern - the ongoing viability of the Group;       | 
+-+-----------------------------------------------------------+ 
| ·| development by the Group of its existing technologies or  | 
| | development of new technologies may take longer than      | 
| | anticipated; and                                          | 
+-+-----------------------------------------------------------+ 
| ·| the Group depends on key executives and personnel and     | 
| | cannot guarantee retention.                               | 
+-+-----------------------------------------------------------+ 
 
The success of the Group is materially dependent upon: 
 
+-+-----------------------------------------------------------+ 
| ·| the successful exploitation of existing technologies and  | 
| | products and the development of new products by its       | 
| | licensees;                                                | 
+-+-----------------------------------------------------------+ 
| ·| the generation of increased revenues by further           | 
| | exploitation of its existing technologies and through     | 
| | sales of licensed products by its licensees;              | 
+-+-----------------------------------------------------------+ 
| ·| the successful commercialisation by the Group of its new  | 
| | technologies presently at the development stage;          | 
+-+-----------------------------------------------------------+ 
| ·| the ability of the Group to identify market opportunities | 
| | and invent, develop and commercialise new technologies    | 
| | and ensure that its licensees develop products            | 
| | appropriate for those markets; and                        | 
+-+-----------------------------------------------------------+ 
| ·| the Group continuing actively to license its technologies | 
| | and those technologies licensed in from third parties.    | 
+-+-----------------------------------------------------------+ 
 
The directors do not consider that the principal risks and uncertainties have 
changed since the publication of the annual report for the year ended 30 June 
2009. A detailed explanation of the risks can be found on pages 18 and 19 of the 
annual report which is available at www.nxtsound.com. 
 
Going concern 
 
As stated in note 1 to the unaudited condensed consolidated interim financial 
information, the directors are satisfied that the Group has sufficient resources 
to continue in operation for the foreseeable future, a period of not less than 
12 months from the date of this report. Accordingly they continue to adopt the 
going concern basis in preparing the condensed financial statements. 
 
Future Outlook 
 
While the external commercial environment is still difficult we have good 
momentum across NXT haptic and BMR technologies. The success of the remaining 
six months will be dependent on the timing of signing new haptic licensees. 
 
The enthusiasm in the touch market coupled with the share placing puts NXT in a 
good position for the remainder of the calendar year 2010. 
 
 
By order of the Board, 
 
 
+------------------------------+------------------------------+ 
| Signature                    | Signature                    | 
+------------------------------+------------------------------+ 
|                              |                              | 
+------------------------------+------------------------------+ 
| Peter Thoms                  | Kate Barnes                  | 
+------------------------------+------------------------------+ 
| Chief Executive Officer      | Finance Director             | 
+------------------------------+------------------------------+ 
| 26 February 2010             |                              | 
+------------------------------+------------------------------+ 
 
 
Unaudited condensed consolidated income statement 
For the six months ended 31 December 2009 
+------------------------------------------------------------+-----------+-----------+-----------+ 
|                                                            | Unaudited | Unaudited | Audited   | 
|                                                            | Results   | results   |  accounts | 
|                                                            | for the   | for the   | for the   | 
|                                                            | six       | six       | year      | 
|                                                            | months    | months    | ended     | 
|                                                            | ended     | ended     |           | 
+------------------------------------------------------------+-----------+-----------+-----------+ 
|                                                            | 31        | 31        | 30 June   | 
|                                                            | December  | December  | 2009      | 
|                                                            | 2009      | 2008      | GBP'000   | 
|                                                            | GBP'000   | GBP'000   |           | 
+------------------------------------------------------------+-----------+-----------+-----------+ 
| Revenue                                                    |           |           |           | 
+------------------------------------------------------------+-----------+-----------+-----------+ 
| Continuing operations                                      | 1,007     | 2,106     | 3,363     | 
+------------------------------------------------------------+-----------+-----------+-----------+ 
| Cost of sales                                              | (42)      | (45)      | (89)      | 
+------------------------------------------------------------+-----------+-----------+-----------+ 
| Net revenue                                                | 965       | 2,061     | 3,274     | 
+------------------------------------------------------------+-----------+-----------+-----------+ 
| Other operating expenses                                   | (1,820)   | (1,781)   | (3,994)   | 
+------------------------------------------------------------+-----------+-----------+-----------+ 
| (Loss)/profit before financing income                      | (855)     | 280       | (720)     | 
+------------------------------------------------------------+-----------+-----------+-----------+ 
| Net financing income                                       | -         | 3         | 23        | 
+------------------------------------------------------------+-----------+-----------+-----------+ 
| (Loss)/profit on ordinary activities before taxation       | (855)     | 283       | (697)     | 
+------------------------------------------------------------+-----------+-----------+-----------+ 
| Taxation                                                   | 103       | 88        | 201       | 
+------------------------------------------------------------+-----------+-----------+-----------+ 
| Retained (loss)/profit for the period                      | (752)     | 371       | (496)     | 
+------------------------------------------------------------+-----------+-----------+-----------+ 
| Basic and fully diluted (loss) /profit per share           | (0.5)p    |      0.3p |    (0.3)p | 
+------------------------------------------------------------+-----------+-----------+-----------+ 
 
Unaudited condensed consolidated statement of comprehensive income 
For the six months ended 31 December 2009 
+-------------------------------------------------+-----------+-----------+-----------+ 
|                                                 | Unaudited | Unaudited | Audited   | 
|                                                 | Results   | results   |  accounts | 
|                                                 | for the   | for the   | for the   | 
|                                                 | six       | six       | year      | 
|                                                 | months    | months    | ended     | 
|                                                 | ended     | ended     |           | 
+-------------------------------------------------+-----------+-----------+-----------+ 
|                                                 | 31        | 31        | 30        | 
|                                                 | December  | December  | June      | 
|                                                 | 2009      | 2008      | 2009      | 
|                                                 | GBP'000   | GBP'000   | GBP'000   | 
+-------------------------------------------------+-----------+-----------+-----------+ 
| Retained (loss)/profit for the period           | (752)     | 371       | (496)     | 
+-------------------------------------------------+-----------+-----------+-----------+ 
| Exchange differences on translation of foreign  | (12)      | 64        | 14        | 
| operations                                      |           |           |           | 
+-------------------------------------------------+-----------+-----------+-----------+ 
| Total comprehensive income for the period       | (764)     | 435       | (482)     | 
+-------------------------------------------------+-----------+-----------+-----------+ 
 
 
Unaudited condensed consolidated balance sheet 
As at 31 December 2009 
+------------------------------------------------------------+-----------+-----------+-----------+ 
|                                                            | Unaudited | Unaudited | Audited   | 
|                                                            | balance   | balance   | balance   | 
|                                                            | sheet at  | sheet at  | sheet     | 
|                                                            | 31        | 31        | at        | 
|                                                            | December  | December  | 30 June   | 
|                                                            | 2009      | 2008      | 2009      | 
|                                                            | GBP'000   | GBP'000   | GBP'000   | 
+------------------------------------------------------------+-----------+-----------+-----------+ 
| Assets                                                     |           |           |           | 
+------------------------------------------------------------+-----------+-----------+-----------+ 
| Non-current assets                                         |           |           |           | 
+------------------------------------------------------------+-----------+-----------+-----------+ 
| Property, plant and equipment                              | 114       | 59        | 139       | 
+------------------------------------------------------------+-----------+-----------+-----------+ 
| Other intangible assets                                    | 387       | 290       | 278       | 
+------------------------------------------------------------+-----------+-----------+-----------+ 
| Long term debtors                                          | 41        | 50        | 41        | 
+------------------------------------------------------------+-----------+-----------+-----------+ 
|                                                            | 542       | 399       | 458       | 
+------------------------------------------------------------+-----------+-----------+-----------+ 
| Current assets                                             |           |           |           | 
+------------------------------------------------------------+-----------+-----------+-----------+ 
| Trade and other receivables                                | 970       | 2,389     | 1,172     | 
+------------------------------------------------------------+-----------+-----------+-----------+ 
| Current tax recoverable                                    | 75        | 75        | 188       | 
+------------------------------------------------------------+-----------+-----------+-----------+ 
| Cash and cash equivalents                                  | 206       | 173       | 599       | 
+------------------------------------------------------------+-----------+-----------+-----------+ 
|                                                            | 1,251     | 2,637     | 1,959     | 
+------------------------------------------------------------+-----------+-----------+-----------+ 
|                                                            |           |           |           | 
+------------------------------------------------------------+-----------+-----------+-----------+ 
| Total assets                                               | 1,793     | 3,036     | 2,417     | 
+------------------------------------------------------------+-----------+-----------+-----------+ 
|                                                            |           |           |           | 
+------------------------------------------------------------+-----------+-----------+-----------+ 
| Equity and liabilities                                     |           |           |           | 
+------------------------------------------------------------+-----------+-----------+-----------+ 
| Share capital                                              | 1,512     | 1,438     | 1,496     | 
+------------------------------------------------------------+-----------+-----------+-----------+ 
| Deferred share capital                                     | 22,682    | 22,682    | 22,682    | 
+------------------------------------------------------------+-----------+-----------+-----------+ 
| Share premium account                                      | 87,201    | 86,604    | 87,019    | 
+------------------------------------------------------------+-----------+-----------+-----------+ 
| Shares to be issued                                        | 282       | 282       | 282       | 
+------------------------------------------------------------+-----------+-----------+-----------+ 
| Stock option reserve                                       | 821       | 634       | 746       | 
+------------------------------------------------------------+-----------+-----------+-----------+ 
| Retained earnings                                          | (111,054) | (109,390) | (110,290) | 
+------------------------------------------------------------+-----------+-----------+-----------+ 
|                                                            | 1,444     | 2,250     | 1,935     | 
+------------------------------------------------------------+-----------+-----------+-----------+ 
|                                                            |           |           |           | 
+------------------------------------------------------------+-----------+-----------+-----------+ 
| Current liabilities                                        |           |           |           | 
+------------------------------------------------------------+-----------+-----------+-----------+ 
| Trade and other payables                                   | 301       | 515       | 309       | 
+------------------------------------------------------------+-----------+-----------+-----------+ 
| Short-term provisions                                      | 48        | 271       | 173       | 
+------------------------------------------------------------+-----------+-----------+-----------+ 
|                                                            | 349       | 786       | 482       | 
+------------------------------------------------------------+-----------+-----------+-----------+ 
| Total liabilities                                          | 349       | 786       | 482       | 
+------------------------------------------------------------+-----------+-----------+-----------+ 
|                                                            |           |           |           | 
+------------------------------------------------------------+-----------+-----------+-----------+ 
| Total equity and liabilities                               | 1,793     | 3,036     | 2,417     | 
+------------------------------------------------------------+-----------+-----------+-----------+ 
 
 
Unaudited condensed consolidated statement of changes in equity 
+------------------+---------+----------+---------+---------+---------+-----------+----------+----------+ 
|                  | Share   | Deferred | Share   | Shares  | Stock   | Retained  | Total    | Total    | 
|                  | capital | share    | premium | to be   | option  | earnings  | equity   | equity   | 
|                  | GBP'000 | capital  | GBP'000 | issued  | reserve | GBP'000   | as at    | as at    | 
|                  |         | GBP'000  |         | GBP'000 | GBP'000 |           | 31       | 31       | 
|                  |         |          |         |         |         |           | December | December | 
|                  |         |          |         |         |         |           | 2009     | 2008     | 
|                  |         |          |         |         |         |           | GBP'000  | GBP'000  | 
+------------------+---------+----------+---------+---------+---------+-----------+----------+----------+ 
| At 1 July        | 1,496   | 22,682   | 87,019  | 282     | 746     | (110,290) | 1,935    | 1,741    | 
+------------------+---------+----------+---------+---------+---------+-----------+----------+----------+ 
| Retained         | -       | -        | -       | -       | -       | (752)     | (752)    | 371      | 
| profit/(loss)    |         |          |         |         |         |           |          |          | 
| for the          |         |          |         |         |         |           |          |          | 
| financial period |         |          |         |         |         |           |          |          | 
+------------------+---------+----------+---------+---------+---------+-----------+----------+----------+ 
| Currency         | -       | -        | -       | -       | -       | (12)      | (12)     | 64       | 
| translation      |         |          |         |         |         |           |          |          | 
| differences      |         |          |         |         |         |           |          |          | 
+------------------+---------+----------+---------+---------+---------+-----------+----------+----------+ 
| Issue of shares  | 16      | -        | 182     | -       | -       | -         | 198      | 11       | 
| (net of          |         |          |         |         |         |           |          |          | 
| expenses)        |         |          |         |         |         |           |          |          | 
+------------------+---------+----------+---------+---------+---------+-----------+----------+----------+ 
| Stock option     | -       | -        | -       | -       | 75      | -         | 75       | 63       | 
| charge           |         |          |         |         |         |           |          |          | 
+------------------+---------+----------+---------+---------+---------+-----------+----------+----------+ 
| At 31 December   | 1,512   | 22,682   | 87,201  | 282     | 821     | (111,054) | 1,444    | 2,250    | 
+------------------+---------+----------+---------+---------+---------+-----------+----------+----------+ 
 
 
Unaudited condensed consolidated cash flow statement 
For the six months ended 31 December 2009 
+--------------------------------------------------+-----------+-----------+---------+ 
|                                                  | Unaudited | Unaudited | Audited | 
|                                                  | cash flow | cash flow | cash    | 
|                                                  | for the   | for the   | flow    | 
|                                                  | six       | six       | for the | 
|                                                  | months    | months    | year    | 
|                                                  | ended     | ended     | ended   | 
|                                                  | 31        | 31        | 30 June | 
|                                                  | December  | December  | 2009    | 
|                                                  | 2009      | 2008      | GBP'000 | 
|                                                  | GBP'000   | GBP'000   |         | 
+--------------------------------------------------+-----------+-----------+---------+ 
| Cash flows from operating activities             |           |           |         | 
+--------------------------------------------------+-----------+-----------+---------+ 
| Profit/(loss) before taxation and interest       |     (855) |       280 |   (720) | 
+--------------------------------------------------+-----------+-----------+---------+ 
| Adjustments for:                                 |           |           |         | 
+--------------------------------------------------+-----------+-----------+---------+ 
| Depreciation, amortisation and impairment        |        52 |        31 |      65 | 
+--------------------------------------------------+-----------+-----------+---------+ 
| Stock option charge                              |        75 |        63 |     175 | 
+--------------------------------------------------+-----------+-----------+---------+ 
| Foreign exchange translation                     |      (12) |        64 |      31 | 
+--------------------------------------------------+-----------+-----------+---------+ 
|                                                  |     (740) |       438 |   (449) | 
+--------------------------------------------------+-----------+-----------+---------+ 
| (Increase)/decrease in trade and other           |       219 |   (1,310) |    (84) | 
| receivables                                      |           |           |         | 
+--------------------------------------------------+-----------+-----------+---------+ 
| Increase/decrease in trade and other payables    |       (8) |        84 |   (122) | 
+--------------------------------------------------+-----------+-----------+---------+ 
| Utilisation of provisions                        |     (125) |     (150) |   (248) | 
+--------------------------------------------------+-----------+-----------+---------+ 
| Shares issued for non-cash consideration         |         - |        11 |      47 | 
+--------------------------------------------------+-----------+-----------+---------+ 
| Cash outflow from operations                     |     (654) |     (927) |   (856) | 
+--------------------------------------------------+-----------+-----------+---------+ 
| Taxation received                                |       199 |       188 |     188 | 
+--------------------------------------------------+-----------+-----------+---------+ 
| Net cash outflow from operating activities       |     (455) |     (739) |   (668) | 
+--------------------------------------------------+-----------+-----------+---------+ 
| Cash flows from investing activities             |           |           |         | 
+--------------------------------------------------+-----------+-----------+---------+ 
| Purchase of property, plant and equipment (Note  |     (136) |      (36) |   (138) | 
| A)                                               |           |           |         | 
+--------------------------------------------------+-----------+-----------+---------+ 
| Sale of property, plant and equipment            |         - |         - |       - | 
+--------------------------------------------------+-----------+-----------+---------+ 
| Interest received                                |         - |         3 |      37 | 
+--------------------------------------------------+-----------+-----------+---------+ 
| Interest paid                                    |         - |         - |    (14) | 
+--------------------------------------------------+-----------+-----------+---------+ 
| Net cash (used)/generated in investing           |     (136) |      (33) |     115 | 
| activities                                       |           |           |         | 
+--------------------------------------------------+-----------+-----------+---------+ 
| Cash flows from financing activities             |           |           |         | 
+--------------------------------------------------+-----------+-----------+---------+ 
| Proceeds from the issue of share capital         |       198 |         - |     437 | 
+--------------------------------------------------+-----------+-----------+---------+ 
| Net cash raised in financing activities          |       198 |         - |     437 | 
+--------------------------------------------------+-----------+-----------+---------+ 
| Net (decrease)/increase in cash and cash         |     (393) |     (772) |   (346) | 
| equivalents                                      |           |           |         | 
+--------------------------------------------------+-----------+-----------+---------+ 
| Cash and cash equivalents at the beginning of    |       599 |       945 |     945 | 
| period (Note B)                                  |           |           |         | 
+--------------------------------------------------+-----------+-----------+---------+ 
| Cash and cash equivalents at the end of period   |       206 |       173 |     566 | 
| (Note B)                                         |           |           |         | 
+--------------------------------------------------+-----------+-----------+---------+ 
Notes to the cash flow statement 
A. Property, plant and equipment 
During the period the Group acquired property, plant and equipment of GBP136,000 
by way of cash payment. 
B. Cash and cash equivalents 
All cash balances consist of cash on hand with banks or in a guaranteed fixed 
interest deposit account for a maximum of three months. 
 
 
 
Notes to the unaudited condensed consolidated interim financial information 
1. Basis of preparation and accounting policies 
Basis of preparation 
These condensed consolidated interim financial statements have been prepared in 
accordance with International Accounting Standards (IAS) and International 
Financial Reporting Standards (IFRS) as issued by the International Accounting 
Standards Board. They do not include all of the information required for full 
annual financial statements, and should be read in conjunction with the 
consolidated financial statements of the Group for the year ended 30 June 2009, 
which is available at www.nxtsound.com . These interim financial statements have 
not been audited or reviewed. 
The Group's business activities, together with the factors likely to affect its 
future development, performance and position are set out in the interim 
management report. The interim management report also includes a summary of the 
group's financial position and its cash flows. 
The directors believe that the Group is well placed to manage its business risks 
successfully despite the current uncertain economic outlook. 
Going concern 
The Board has undertaken a recent and thorough review of the Group's forecasts 
and associated risks and sensitivities. The extent of this review reflects the 
uncertain economic outlook for the worldwide economy taken as a whole, as well 
as the specific financial circumstances of the Group at this time. The review 
has identified that the Group's cash flow forecasts are particularly sensitive 
to adverse changes in its working capital cycle (debtor days and creditor days) 
and the continuing ability of the Group to exploit the technology via licensing 
and consultancy. The Board has concluded that the risk of materially adverse 
changes in either of these areas is both unlikely and manageable. 
Following this review, the Board has concluded that it has a reasonable 
expectation that the Group has adequate resources to continue in operational 
existence for the foreseeable future and for this reason the going concern basis 
continues to be adopted in preparing the financial statements. 
The monthly performance of the business and its forecasts are being regularly 
reviewed in detail. Should there be an unforeseen and material adverse change in 
any of the key sensitivities impacting on the Group's forecasts, the Board would 
seek to mitigate the impact by adopting different operating and funding 
strategies. 
In August 2009 an overdraft facility was agreed with the Group's bank. The Group 
has the ability to draw down the facility at any time. The directors have 
considered the Group's forecasts and projections, together with adjustments to 
reflect various outcomes arising from adverse trading conditions, and conclude 
that they indicate that the Group has sufficient funding to operate within the 
level of this facility. The facility has no fixed date for review and the 
directors are satisfied that the Group can operate within the terms of the 
facility and that no review will be triggered in the foreseeable future. 
Nature of financial information 
The financial information contained in this document does not constitute the 
Group's audited statutory accounts within the meaning of Section 435 of the 
Companies Act 2006. The financial information for the year ended 30 June 2009 
has been extracted from the audited financial statements for that year on which 
the auditors gave an unqualified report and which did not contain a statement 
under Sections 498(2) or 237(3) of the Companies Act 2006. A copy of those 
financial statements has been filed with the Registrar of Companies. 
Significant accounting policies 
The accounting policies applied by the Group in these condensed consolidated 
interim financial statements are the same as those previously applied by the 
Group in its consolidated financial statements for the year ended 30 June 2009, 
except for those described below. 
Changes in accounting policy 
In the current financial year, the Group has adopted International Financial 
Reporting Standard 8 'Operating Segments' and International Accounting Standard 
1 'Presentation of Financial Statements' (revised 2007). 
IFRS 8 requires operating segments to be identified on the basis of internal 
reports about components of the Group that are regularly reviewed by the Chief 
Executive to allocate resources to the segments and to assess their performance. 
In contrast the predecessor standard (IAS 14 'Segmental Reporting') required the 
Group to identify two sets of segments (business and geographical), using a 
risks and rewards approach, with the Group's system of internal financial 
reporting to key management personnel only serving as the starting point for the 
identification of such segments. However, as the Group only has one business 
segment, and this is reflected in the internal financial reporting, there have 
been no changes made to note 3. 
IAS 1 requires the presentation of a statement of comprehensive income as a 
primary statement. As such, a statement of comprehensive income has been 
included as a primary statement. 
2. Earnings per share 
Basic earnings per share has been calculated on the Group profit for the 
financial period and on the weighted average number of ordinary shares in issue 
for the relevant period, which in the six months to 31 December 2009 was 
149,931,702 ordinary shares. Whilst unexercised share options in the Company 
would increase the weighted average number of potential shares in the period, 
due to the losses of the Group in the period they are not considered to be 
dilutive. 
3. Segmental analysis 
The Group operates in a single reportable business segment: the development and 
licensing of audio and touch technologies. 
For management purposes, the Group is currently organised into four geographical 
areas - United Kingdom, Hong Kong, Japan and the US. These geographical segments 
are the basis on which the Group reports its primary segment information. 
The Group's revenue originates in the UK. The customers are located in the 
following geographical areas: 
+------------------------------------------------------------+----------+----------+ 
|                                                            | Six      | Six      | 
|                                                            | months   | months   | 
|                                                            | to       | to       | 
|                                                            | December | December | 
|                                                            | 2009     | 2008     | 
|                                                            | GBP'000  |  GBP'000 | 
+------------------------------------------------------------+----------+----------+ 
| UK                                                         |       49 |       40 | 
+------------------------------------------------------------+----------+----------+ 
| Rest of Europe                                             |       62 |       90 | 
+------------------------------------------------------------+----------+----------+ 
| Asia Pacific                                               |      704 |    1,816 | 
+------------------------------------------------------------+----------+----------+ 
| USA and Canada                                             |      192 |      160 | 
+------------------------------------------------------------+----------+----------+ 
| Total revenue                                              |    1,007 |    2,106 | 
+------------------------------------------------------------+----------+----------+ 
 
+--------------------------------+---------+---------+---------+---------+---------+ 
| Six months to December 2009    |         |         |         |         |         | 
+--------------------------------+---------+---------+---------+---------+---------+ 
|                        GBP'000 | UK      | HK      | Japan   | US      | Total   | 
+--------------------------------+---------+---------+---------+---------+---------+ 
| Net revenue                    |     965 |       - |       - |       - |     965 | 
+--------------------------------+---------+---------+---------+---------+---------+ 
| Costs                          | (1,181) |   (397) |    (82) |   (160) | (1,820) | 
+--------------------------------+---------+---------+---------+---------+---------+ 
| (Loss)                         |   (216) |   (397) |    (82) |   (160) |   (855) | 
+--------------------------------+---------+---------+---------+---------+---------+ 
| Interest income                |         |         |         |         |       - | 
+--------------------------------+---------+---------+---------+---------+---------+ 
| Loss before tax                |         |         |         |         |   (855) | 
+--------------------------------+---------+---------+---------+---------+---------+ 
| Tax                            |         |         |         |         |     103 | 
+--------------------------------+---------+---------+---------+---------+---------+ 
| Profit for the period          |         |         |         |         |   (752) | 
| attributable                   |         |         |         |         |         | 
| to equity shareholders         |         |         |         |         |         | 
+--------------------------------+---------+---------+---------+---------+---------+ 
| Depreciation and amortisation  |      40 |       6 |       - |       6 |      52 | 
+--------------------------------+---------+---------+---------+---------+---------+ 
| Assets                         |   1,563 |     182 |      19 |      29 |   1,793 | 
+--------------------------------+---------+---------+---------+---------+---------+ 
| Liabilities                    |     333 |       6 |       - |      10 |     349 | 
+--------------------------------+---------+---------+---------+---------+---------+ 
 
+--------------------------------+---------+---------+---------+---------+---------+ 
| Six months to December 2008    |         |         |         |         |         | 
+--------------------------------+---------+---------+---------+---------+---------+ 
|                        GBP'000 | UK      | HK      | Japan   | US      | Total   | 
+--------------------------------+---------+---------+---------+---------+---------+ 
| Net profit                     |   2,061 |       - |       - |       - |   2,061 | 
+--------------------------------+---------+---------+---------+---------+---------+ 
| Costs                          | (1,203) |   (364) |    (82) |   (132) | (1,781) | 
+--------------------------------+---------+---------+---------+---------+---------+ 
| Profit/(loss)                  |     858 |   (364) |    (82) |   (132) |     280 | 
+--------------------------------+---------+---------+---------+---------+---------+ 
| Interest income                |         |         |         |         |       3 | 
+--------------------------------+---------+---------+---------+---------+---------+ 
| Profit before tax              |         |         |         |         |     283 | 
+--------------------------------+---------+---------+---------+---------+---------+ 
| Tax                            |         |         |         |         |      88 | 
+--------------------------------+---------+---------+---------+---------+---------+ 
| Profit for the period          |         |         |         |         |     371 | 
| attributable                   |         |         |         |         |         | 
| to equity shareholders         |         |         |         |         |         | 
+--------------------------------+---------+---------+---------+---------+---------+ 
| Depreciation and amortisation  |      19 |       6 |       - |       6 |      31 | 
+--------------------------------+---------+---------+---------+---------+---------+ 
| Assets                         |   2,873 |     132 |      13 |      18 |   3,036 | 
+--------------------------------+---------+---------+---------+---------+---------+ 
| Liabilities                    |     770 |       4 |       - |      12 |     786 | 
+--------------------------------+---------+---------+---------+---------+---------+ 
 
Year to June 2009 
+--------------------------------+---------+---------+---------+---------+---------+ 
|                        GBP'000 | UK      | HK      | Japan   | US      | Total   | 
+--------------------------------+---------+---------+---------+---------+---------+ 
| Net revenue                    |   3,363 |       - |       - |       - |   3,363 | 
+--------------------------------+---------+---------+---------+---------+---------+ 
| Costs                          | (3,112) |   (632) |   (177) |   (162) | (4,083) | 
+--------------------------------+---------+---------+---------+---------+---------+ 
| Loss                           |     251 |   (632) |   (177) |   (162) |   (720) | 
+--------------------------------+---------+---------+---------+---------+---------+ 
| Interest income                |         |         |         |         |      23 | 
+--------------------------------+---------+---------+---------+---------+---------+ 
| Loss before tax                |         |         |         |         |   (697) | 
+--------------------------------+---------+---------+---------+---------+---------+ 
| Tax                            |         |         |         |         |     201 | 
+--------------------------------+---------+---------+---------+---------+---------+ 
| Loss for the year attributable |         |         |         |         |   (496) | 
| to equity shareholders         |         |         |         |         |         | 
+--------------------------------+---------+---------+---------+---------+---------+ 
| Depreciation and amortisation  |      29 |      22 |       - |      14 |      65 | 
+--------------------------------+---------+---------+---------+---------+---------+ 
| Assets                         |   2,302 |      78 |      14 |      23 |   2,417 | 
+--------------------------------+---------+---------+---------+---------+---------+ 
| Liabilities                    |     467 |       5 |       - |      10 |     482 | 
+--------------------------------+---------+---------+---------+---------+---------+ 
 
The results above exclude management recharges. 
Capital Additions: In 2009 there were GBP1,000 of capital additions in Hong Kong 
and GBP135,000 of capital additions in the UK. In 2008 there were GBP13,000 of 
capital additions in Hong Kong and GBP23,000 of capital additions in the US. 
4. Tax 
The Tax rebate of GBP75,000 relating to Research and Development activities has 
been recognised for the six month period, representing the best estimate of the 
amount refundable.   In addition to this the Group received a further GBP28,000 
relating to prior period tax claims. 
5. Dividends 
The directors do not recommend the payment of an interim dividend. 
6. Property, plant and equipment 
During the period, the Group purchased a licence from Immersion Corp. Inc. The 
licence is being amortised over three years, being the initial licence period. 
The licence will be reviewed every six months for impairment. 
7. Share Capital 
Share capital as at 31 December 2009 was GBP1.5 million. During the period, the 
Group issued the following: 
+----------+---------------------------------------------------------------------+ 
| ·        | 171,644 shares for 8.58p and 50,000 shares for 6.29p arising from   | 
|          | the exercise of shares options held under the NXT 2000              | 
|          | Supplementary Share Option Scheme.                                  | 
+----------+---------------------------------------------------------------------+ 
| ·        | 1,285,714 shares for cash at 15.5p to raise funds for the purchase  | 
|          | of a licence from Immersion Corp. Inc.                              | 
+----------+---------------------------------------------------------------------+ 
 
The total number of shares in issue at 31 December 2009 was 151,138,594. 
8. Post balance sheet event 
On 26 February 2010 the Company placed 7.5 million shares at 13 pence raising 
GBP1.0 million (before expenses). The placing provides additional financial 
headroom which the Board regards as appropriately prudent in continuing 
difficult economic conditions. The shares were placed with Nissha, several 
institutions in London and the directors. 
9. Statement of Directors' Responsibilities 
We confirm to the best of our knowledge: 
 
+----------+---------------------------------------------------------------------+ 
| (a)      | the condensed set of financial statements has been prepared in      | 
|          | accordance with IAS 34 'Interim Financial reporting';               | 
+----------+---------------------------------------------------------------------+ 
| (b)      | the interim management report includes a fair review of the         | 
|          | information required by DTR 4.2.7R (indication of important events  | 
|          | during the first six months and description of principal risks and  | 
|          | uncertainties for the remaining six months of the year); and        | 
+----------+---------------------------------------------------------------------+ 
| (c)      | the interim management report includes a fair review of the         | 
|          | information required by DTR 4.2.8R (disclosure of related parties'  | 
|          | transactions and changes therein).                                  | 
+----------+---------------------------------------------------------------------+ 
 
By order of the Board, 
Peter Y Thoms 

NXT will not be sending hard copies of these Interim Financial Statements to 
individual shareholders. They will be available on the Company's website, 
www.nxtsound.com. However, if you would like to receive a hard copy, please put 
your request in writing to NXT plc, Regus House, 1010 Cambourne Business Park, 
Cambourne, Cambridgeshire, CB23 6DP. 
 
 
 
 
This information is provided by RNS 
            The company news service from the London Stock Exchange 
   END 
 
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