Final Results

 

TIDMNTX 
 
RNS Number : 1988Z 
NXT PLC 
17 September 2009 
 

17 September 2009 
NXT plc 
 
 
Final Results 
 
 
NXT plc ('NXT' or the 'Company' and together with its subsidiaries 'the Group'), 
the provider of unique sound solutions, best known for its flat-panel 
loudspeaker technology, announces its Final Results for the 12 months to 30 June 
2009. 
 
 
Highlights 
 
 
  *  Revenues of GBP3.4 million, an increase of 62% over last year (2008 - GBP2.1 
  million) 
  *  Sales boosted by Haptic licence agreement with Nissha Printing Co., a major move 
  for NXT into the growing touchscreen market 
  *  Operating costs of GBP4.0 million including GBP0.3 million provision for 
  potential bad debts 
  *  Retained after-tax loss GBP0.5 million (2008 - GBP2.1 million) 
  *  Strategic focus now firmly on three growth markets - flat TV, portable speakers 
  and small touch screens 
  *  28 new brands and eight new retailers have confirmed or launched NXT-equipped 
  models since the beginning of the financial year 
  *  Continued strong customer demand for NXT technology licences 
  *  Appointment of James Lewis, with effect from 1 October 2009, the technology 
  entrepreneur and founder of Oxford Semiconductor, as Non-executive Director to 
  bring additional expertise in international sales and marketing, further 
  strengthening the Board following the appointment of Ian Buckley as Chairman 
 
 
 
Ian Buckley, Chairman, said: "The year has been a demanding one for so many 
businesses globally. With the support of new and existing licensees NXT has been 
able to continue its development across many sectors and grow sales at a time 
when many other companies have experienced declining revenues, and our employees 
have continued to produce innovative solutions to technical and business 
challenges. We do not anticipate that the economy will improve dramatically in 
the short term. However, the level of interest in bending wave haptic technology 
and in our new product introductions gives the Board encouragement for the 
future success of the Company." 
 
 
The full published accounts for the financial year ended 30 June 2009 will be 
posted to shareholders at the end of October and will be made available on the 
NXT website at that time (www.nxtsound.com). 
 
 
For additional information, please contact: 
 
 
NXT plc: 
+------------------------------------+------------------------------------+ 
| Ian Buckley, Chairman              |               [phone] | 
+------------------------------------+------------------------------------+ 
| Peter Thoms, Chief Executive       |               [phone] | 
+------------------------------------+------------------------------------+ 
 
 
Media enquiries: 
+------------------------------------+------------------------------------+ 
| Allerton Communications            |               [phone] | 
+------------------------------------+------------------------------------+ 
| Peter Curtain                      |                                    | 
+------------------------------------+------------------------------------+ 
 
 
Chairman's statement 
 
 
For the year ended 30 June 2009 NXT plc achieved revenues of GBP3.4 million, an 
increase of 62% over the same period last year (GBP2.1 million). Operating costs 
on continuing operations were contained at the same levels as last year but 
following a review of trade debtors the Board has decided it would be prudent to 
make an additional provision for potential bad debts amounting to GBP0.3 
million. This has resulted in operating costs totalling GBP4.0 million. The 
retained after-tax loss for the year was GBP0.5 million compared with a loss of 
GBP2.1 million in the previous year. 
 
 
A major contributor to the sales increase was the licence signed with Nissha 
Printing Co., Ltd ("Nissha") for $1.8 million in December 2008. This exclusive 
licence was for NXT's haptic and associated bending wave technology in certain 
small touch screen applications and was a significant step for NXT into the 
growing touch screen market. 
 
 
Over the last 18 months NXT has negotiated the surrender of three onerous 
leases. The final surrender was completed this year and the termination of these 
three leases eliminates a significant cash burden of GBP750,000 per annum. 
 
 
I was appointed Chairman at the beginning of April 2009 and succeeded David 
MacKay who had guided NXT through a period of restructuring and subsequently 
through to the execution of the licence agreement with Nissha. David decided 
that, following this significant milestone, it was an appropriate time to stand 
down. The Board and his colleagues at NXT thank him for his support and for the 
contribution made during his period first as a Non-executive Director, and then 
subsequently as Chairman. 
 
 
The Board considered that it would be strengthened by the addition of a 
non-executive Director with international sales and marketing experience and I 
am pleased to announce that James Lewis will join in that capacity with effect 
from 1 October 2009. James founded Oxford Semiconductor in 1992 and grew it into 
a $40 million global business supplying complex semiconductor devices for 
computer peripherals and consumer electronics. From 2000 until 2004 he lived in 
California to direct its US operations and since 2005 has provided non-executive 
and advisory roles to technology and cleantech start-ups in the UK.Going 
forward, I believe that we have a small but experienced team who can deliver the 
business opportunities for NXT's audio and touch technologies. 
 
 
Following the announcement of NXT's interim results in February 2009 there was 
demand from institutions to invest in new capital. The Company placed 4% of 
its equity and raised GBP440,000 gross.  The major institution in this placing 
was Gartmore Investment Management which has since increased its holding in 
NXT ordinary shares to over 7%. 
 
 
Principal risks and uncertainties 
 
 
The principal risks and uncertainties facing the company are referenced in note 
5 of the Financial review notes. 
 
 
Outlook 
 
 
The year has been a demanding one for many businesses globally. With the support 
of new and existing licensees NXT has been able to continue its development 
across many sectors and grow sales at a time when many other companies have 
experienced declining revenues, and our employees have continued to produce 
innovative solutions to technical and business challenges. We do not anticipate 
that the economy will improve dramatically in the short term. However, the level 
of interest in bending wave haptic technology and in our new product 
introductions gives the Board encouragement for the future success of the 
Company. 
 
 
Ian Buckley 
Chairman 
 
 
 
 
  Chief executive's review 
 
 
I am pleased to report that revenues for the year to 30 June 2009 increased by 
62% to GBP3.4 million (2008 - GBP2.1 million). 
 
 
The instability caused by the global recession has altered the commercial 
landscape for NXT. Some of the business sectors within which we operate have 
suffered a considerable impact from the downturn in consumer discretionary 
spending. In the past 18 months, we have experienced some customers failing, 
others' divisions closing and development projects being cancelled. Against this 
difficult backdrop I am glad to report that NXT has achieved royalty income for 
the year to 30 June 2009 similar to that of the preceding year ($1.8 million vs 
$1.9 million). As a significant proportion of NXT's income is denominated in US 
dollars, year on year the sales figure benefited by 30% due to the Dollar: 
Sterling exchange rate (GBP1.2 million vs GBP0.9 million). 
 
 
Licensing and consulting income for the period was GBP2.2m (up by 94% on the 
previous year), and during the 12 months NXT signed 19 new licences, the most 
significant of which was the agreement with Nissha Printing Co., Ltd, for our 
haptic interface technology, announced last December.Consulting income for the 
period was lower than in the previous year, a direct result of a number of 
customers reducing R&D budgets. However, since July 2009 enquiries have 
increased and we have in that time received several new project briefs and a 
number of approvals to proceed with paid-for engineering work. 
 
 
As long ago as 2000, NXT scientists registered a series of inventions based on 
their studies into haptic functionality, recognising that it could be used as a 
feature of a distributed mode loudspeaker. It was this work that provided the 
foundations for the agreement signed with Nissha, an important endorsement from 
a leader in the global small touch screen market. The licence involves both 
companies focusing on the development of the technology for certain touch screen 
products, including mobile phone, gaming console, notebook PC and digital camera 
applications. Royalties will be generated upon the sale of relevant products and 
the three-year term of the licence can be extended in December 2011 with both 
parties' agreement. While it is not intended that there would be an additional 
licence fee payable for any extension, it is expected that there would be a 
substantial commitment by Nissha to pay minimum royalties. The combination of 
the Nissha endorsement and the demonstrable effects of tactile touch directly 
from the screen (the 'feel' of a pencil writing on paper while using a stylus 
and separate tactile feedback sensations at different locations when using a 
screen's multi-touch capabilities) lead us to believe there are many 
opportunities to license this technology in fields outside of those granted to 
Nissha. 
 
 
We have previously indicated our strategy of focusing sales and engineering 
resources on the three growth market sectors of flat TV, portable speakers and 
small size touch screens, and this continues to deliver positive returns, 
despite those markets growing at rates below expectations. 
 
 
Recognising that in a deteriorating global economy consumers would trade down to 
lower-priced products, our development team began designing simpler, cheaper 
products two years ago. Emphasising mobility, function and form, we have 
developed a series of value-oriented portable speakers that are now on sale. 
This diverse range includes speakers that double as cases for devices such as 
Apple's iPod and iPhone models, accessory speakers for netbooks (the latest 
development in mobile computing) and pocket-sized, value-priced speakers. 
 
 
Over the years, NXT has cultivated strong relationships with certain retailers, 
developing products for their house brands. Without the marketing power of the 
international brands, retailers rely on design, performance and technology to 
help their own brand products stand out at the point of sale and create consumer 
appeal - defining characteristics of NXT's range of open model 'off the shelf' 
products. Many of the world's leading consumer electronics retailers now offer 
NXT-designed products in their private label and exclusive brand product ranges, 
including Best Buy, Currys, Future Shop, PC World, The Source, Dick Smith 
Electronics and Comet. Mass merchants, grocery retailers and specialist 
retailers are also looking to NXT to help create differentiation for their 
products. 
 
 
While the consumer electronics sector remains challenging, working with dynamic 
young brands has helped to expand the distribution of NXT-equipped products in 
both established and developing markets. With the ability to react quickly and 
capitalise on market trends, these brands typically work to faster, shorter 
development schedules than their more traditional competitors. Examples of such 
companies launching NXT-enabled products in the past 12 months include BlueDot 
(Japan), TechGear (Hong Kong, Taiwan, France), iHome (worldwide), Parrot 
(worldwide), Revo (worldwide) and AudioUnlimited (USA). Some of these products 
are truly exceptional in terms of their design and performance, including 
Parrot's Zikmu wireless speaker system, an award-winner at the 2009 Consumer 
Electronics Show and an excellent showcase for NXT technology. 
 
 
Alongside these companies, long-term brand partners including Maxell, TEAC, 
Hitachi, Medion and TDK each introduced new NXT-equipped products during the 
year. In many cases, these products have been either completely or partially 
designed by NXT's development team. 
 
 
In February's interim report, I highlighted the importance of expanding our 
distribution with new customers and since the beginning of the 2008/09 financial 
year, 28 new brands and eight new retailers have confirmed or launched 
NXT-equipped models. Determined to further increase the global distribution of 
NXT-based products, the Company will participate in the Mumbai Global Sources 
trade show in November, adding to the two Hong Kong shows and Las Vegas 
exhibition that NXT attends every year. 
 
 
VIZIO commenced shipments of its 55" VF550XVT LCD TV, its third and largest size 
TV to be fitted with NXT's Balanced Mode Radiator (BMR) drive units at the start 
of the year. In June 2009, Japanese consumer electronics brand JVC announced the 
availability of the LT-42WX70, the first TV from the brand to feature BMR 
technology. The mass production of the slim, high power drive units used in 
these TVs has led to cost reductions through economies of scale to the extent 
that the drive units are now being considered for other applications, including 
slim form sound bars. Development work continues focused mainly on evaluating 
alternative drive unit designs and enhancing performance levels. 
 
 
The fortunes of the world's leading automotive manufacturers have been 
extensively reported, the industry suffering more than most in the downturn. 
While the slowdown in new vehicle registrations has directly affected revenues 
for NXT, with sales 7% below last year, the commitment of our licensees and 
their development roadmaps, including smaller exciters and BMR drive units, 
offers some reassurance as to medium term growth once consumer confidence 
returns and markets recover. Toyota introduced the new Wish mid-sized people 
carrier to selected Asian markets in April, the eighth vehicle from the Japanese 
manufacturer with our flat panel speaker technology deployed in the headliner as 
an invisible speaker solution. In addition to the Toyota vehicles, Citroën 
currently offers three models with NXT speakers. 
 
 
In most years, certain NXT enabled products have reached markets that 
demonstrate one of the intrinsic advantages of NXT technology, the ability to go 
where other speakers cannot. This year's standout application originates in 
Oregon and deserves recognition for both its practical and safety benefits. The 
Enertia PowerCycle from Brammo is an electric motorcycle targeting commuters and 
leisure users. The environmentally friendly motor presents a safety issue for 
riders, passengers, pedestrians and others, since its quiet operation means it 
is barely audible in use. Brammo turned to NXT to resolve this problem by 
equipping the Enertia's engine cowling with NXT technology enabling the bike to 
reproduce authentic 'engine' sounds, warning other road users of its presence. 
Thanks to the unique advantages of NXT technology, these sealed speakers are 
impervious to dust, dirt and moisture, making them maintenance-free as well as 
lightweight and low powered. 
 
 
Also in North America, Hallmark extended its range of NXT technology-based 
greetings cards ahead of the Christmas 2008 period with a number of new designs 
and the addition of recordable messaging for enhanced personalisation of the 
card. Hallmark's range of NXT technology-based cards now covers almost every 
major celebratory occasion in the calendar and continues to grow. 
 
 
Technology Update 
NXT's BMR technology, a hybrid drive unit that combines the mid and high 
frequency performance of an NXT flat panel loudspeaker with the low frequency 
attributes of conventional, pistonic speakers has continued to win selection for 
new applications. Designed to reproduce wide bandwidth audio from a single drive 
unit, BMR offers designers the ability to 'drop in' the technology to concept 
designs in much the same way as with cone speakers. This ease of selection is a 
major advantage in the fast-moving consumer electronics industry, where products 
are best brought to market quickly. 
 
 
Within the catalogue of drivers there are now BMR speakers specifically designed 
for Hi-Fi, TV, home audio and professional audio applications. Further designs 
for custom installation, automotive and home theatre are also under 
consideration. In addition to the TVs launched during the year, several other 
products fitted with BMR drivers were announced, including the prestigious 
Ovator S-600 floor standing speakers from Hi-Fi specialist, Naim, bringing the 
total number of products launched to date to 20 with more planned introductions. 
 
 
 
Refinements to NXT's distributed mode actuator (DMA), a small scale 
piezo-ceramic transducer, have been ongoing for the past few years. Demand for 
increased performance, reduced cost and miniaturisation have been the key 
targets and the latest iteration is the best performing and smallest yet at just 
1.8mm in height. Cost reductions have been accelerated by the recent 
availability of improved high voltage, low power drive electronics, opening up 
new opportunities for NXT in 2010. The DMA is used in portable devices, 
touchscreens and on-ear headsets. Long term licensee and DMA specialist, 
Authentic Ltd is currently producing the components for use as audio actuators 
in a portable home entertainment product to be launched by one of the major 
Japanese brands. In addition to this launch, prototypes of an on-ear headset are 
in the pre-production phase of development. 
 
 
As part of the bending wave haptics development programme patents have been 
filed for improvements in function and new exciters. Demonstrators with touch 
panels over 10 inches have been shown to the supply chain, but most interest 
currently is in the 7-inch to 9-inch screen sizes where NXT is using new 
patented electro mechanical exciters. 
 
 
Having previously raised the possibility of supply chain participation, NXT has 
this year trialled this strategy by selling licence-paid exciters to selected 
resellers and developers. Initially focusing on specialised application 
exciters, the limited scale test has served to legitimise previous 
supply arrangements and provide a higher level of customer service to buyers. 
The trial will be extended this year to test other component sales 
opportunities. 
 
 
In conclusion, I believe the progress made by NXT in the year under review 
represents a considerable achievement in some of the most challenging economic 
conditions and confirms the underlying demand for the technology. The commitment 
of my colleagues and the commercial opportunities available to NXT through the 
breadth of its technology portfolio, illustrated by the agreement entered into 
with Nissha, give the Board confidence for the future, notwithstanding the 
difficult trading environment. 
 
 
Peter Thoms 
Chief Executive Officer 
 
 
  Financial Review 
 
 
Overview 
The after tax loss for the year to 30 June 2009 was 76% less than the previous 
year at GBP496,000. The loss includes a bad debt provision of GBP275,000 which 
was reasonable following a vigorous review of trade debtors in the light of the 
current economic climate. Operating costs included non cash expenditure for the 
stock option valuation of GBP175,000 and depreciation and amortisation of 
GBP65,000. 
 
 
Most indicators were positive in the year, specifically revenue up 62%, speaker 
volumes up 101% and operating costs, excluding non cash items, controlled at 
last year's levels, despite the movement in exchange rates putting pressure on 
overseas cost bases. 
 
 
A major contributor to revenue was the new haptic licence signed by Nissha 
Printing Co. Ltd. in December 2008. Having spent over two years preparing the 
new technology for commercialisation, this was an important milestone. Joint 
development continues on the technology, and we anticipate haptic related income 
continuing to make an important contribution to our revenue line going forward. 
 
 
Performance monitoring 
The Group monitors the financial performance of the business in a number of 
ways. The key performance indicators are: 
- Royalties (as a percentage of income) 
- Speaker volumes 
- Average royalty rates 
- Operating costs 
- Operating cash flows 
 
 
Revenue 
Revenue is generated in US Dollars, Euros and Sterling. However the majority of 
the income is US Dollar denominated and the Group monitors its income in US 
Dollars. The Sterling : US Dollar exchange rate can have a significant impact on 
the results as illustrated by the analysis below. 
 
+-------------------+--+---------+----+---------+---+--------+ 
| Revenue              |    2008 |    |    2009 |   | Growth | 
|                      |         |    |         |   |        | 
+----------------------+---------+----+---------+---+--------+ 
| $                 |  |   $'000 |    |   $'000 |   |      % | 
+-------------------+--+---------+----+---------+---+--------+ 
| Royalties            |   1,885 |    |   1,795 |   |    (5) | 
+----------------------+---------+----+---------+---+--------+ 
| Licences, consulting |   2,287 |    |   3,336 |   |     46 | 
| and other income     |         |    |         |   |        | 
+----------------------+---------+----+---------+---+--------+ 
| Total             |  |   4,172 |    |   5,131 |   |     23 | 
+-------------------+--+---------+----+---------+---+--------+ 
|                   |  |         |    |         |   |        | 
+-------------------+--+---------+----+---------+---+--------+ 
| Average exchange     |    2.01 |    |    1.53 |   |        | 
| rate                 |         |    |         |   |        | 
+----------------------+---------+----+---------+---+--------+ 
|                   |  |         |    |         |   |        | 
+-------------------+--+---------+----+---------+---+--------+ 
| GBP               |  | GBP'000 |    | GBP'000 |   |      % | 
+-------------------+--+---------+----+---------+---+--------+ 
| Royalties            |     936 |    |   1,152 |   |     23 | 
+----------------------+---------+----+---------+---+--------+ 
| Licences, consulting |   1,139 |    |   2,211 |   |     94 | 
| and other income     |         |    |         |   |        | 
+----------------------+---------+----+---------+---+--------+ 
| Total             |  |   2,075 |    |   3,363 |   |     62 | 
+-------------------+--+---------+----+---------+---+--------+ 
 
 
Royalty income accounts for 34% of the Group's annual income. The increased 
focus on licensing over the past two years has resulted in the royalty revenue 
becoming less significant as a percentage of total income, but it is anticipated 
this will reverse over the next two years. The continued concentration on 
licensing activity saw 19 new licences granted in the year (2008 - 18). The 
sales force saw a significant change in potential licensee behaviour due to the 
global economic crisis, which impacted notably on the take up of consulting and 
extended the sales lead time. However their sustained efforts enabled the new 
licensee numbers to remain stable. 
 
 
Another key performance measure for the Group is the average royalty received 
per speaker. NXT has different royalty rates and volume discount tables based on 
the field of use for the technology. The average royalty per speaker has fallen 
from 41 cents to 20 cents due to the inclusion of high volume / low royalty 
products such as the Hallmark cards. The Group will only report the average 
royalty per speaker as it considers that publishing its royalty tables would 
restrict its competitive advantage. 
 
 
+-------------------+-----------+-----------+ 
|                   |      2008 |      2009 | 
+-------------------+-----------+-----------+ 
| Speaker volumes   |4,524,162  | 9,113,862 | 
+-------------------+-----------+-----------+ 
| Average royalty   |  41 Cents |  20 Cents | 
| rate              |           |           | 
+-------------------+-----------+-----------+ 
 
 
 
 
Cost control 
+-------------------------------------+----------+-----------+----------+ 
| GBP'000                             |     2007 |      2008 |     2009 | 
+-------------------------------------+----------+-----------+----------+ 
| Cash operating costs on continuing  |    5,094 |     3,410 |    3,475 | 
| operations                          |          |           |          | 
+-------------------------------------+----------+-----------+----------+ 
| Depreciation and amortisation       |       50 |        63 |       69 | 
+-------------------------------------+----------+-----------+----------+ 
| Stock option provision              |       91 |       114 |      175 | 
+-------------------------------------+----------+-----------+----------+ 
| Increases in provisions such as     |       96 |        80 |      275 | 
| rent and bad debt                   |          |           |          | 
+-------------------------------------+----------+-----------+----------+ 
| Restructuring costs                 |      456 |       662 |        - | 
+-------------------------------------+----------+-----------+----------+ 
| Total operating costs               |    5,787 |     4,329 |    3,994 | 
+-------------------------------------+----------+-----------+----------+ 
 
 
There has been a continued focus on cost control and cash operating costs on 
continuing operations have remained stable year on year. 
 
 
The current instability in world markets has led the Group to continue its focus 
on cost control. Actions for the first half of 2009/2010 include a management 
pay cut of 10% and other staff pay cuts of 5% and a further rationalisation of 
headcount, travel and consultants' costs. Whilst no individual action impacts 
significantly on the cost base, the totality of the reductions should manage the 
cost base for the year. 
 
 
Cash management 
Cash outflow for the year was GBP346,000. Two onerous leases were surrendered 
during the year, with a resultant cash outflow of GBP248,000.  Prototypes 
designed and developed by our engineers increased the fixed asset spend to 
GBP138,000.Cash inflow from a placement of shares in March 2009 was GBP420,000, 
mainly taken up by the movement in working capital. 
 
 
As a precautionary measure in this uncertain economic environment, an overdraft 
facility has been agreed with the Group's bankers. The Group has the ability to 
drawdown on this facility at any time. 
 
 
Operating cash flows are set out in the Consolidated Cash Flow Statement. 
 
 
Results 
The retained loss for the financial year was GBP496,000 compared with 
GBP2,056,000 in 2008, an improvement of 76%. 
 
 
Kate BarnesFinance Director 
 
Consolidated income statement at 30 June 2009 
+---------------------------------------------------------+----------+----------+ 
|                                                         |    2009  |    2008  | 
|                                                         |  GBP'000 |  GBP'000 | 
+---------------------------------------------------------+----------+----------+ 
| Continuing operations                                   |          |          | 
+---------------------------------------------------------+----------+----------+ 
| Revenue                                                 |    3,363 |    2,075 | 
+---------------------------------------------------------+----------+----------+ 
| Cost of goods sold                                      |     (89) |        - | 
+---------------------------------------------------------+----------+----------+ 
| Net revenue                                             |    3,274 |    2,075 | 
+---------------------------------------------------------+----------+----------+ 
| Other operating expenses                                |  (3,994) |  (3,667) | 
+---------------------------------------------------------+----------+----------+ 
| Redundancy costs                                        |        - |    (662) | 
+---------------------------------------------------------+----------+----------+ 
| Operating expenses                                      |  (3,994) |  (4,329) | 
+---------------------------------------------------------+----------+----------+ 
| Loss before financing income                            |    (720) |  (2,254) | 
+---------------------------------------------------------+----------+----------+ 
| Net financing income                                    |       23 |       21 | 
+---------------------------------------------------------+----------+----------+ 
| Loss on ordinary activities before taxation             |    (697) |  (2,233) | 
+---------------------------------------------------------+----------+----------+ 
| Taxation                                                |      201 |      177 | 
+---------------------------------------------------------+----------+----------+ 
| Retained loss for the financial year attributable       |    (496) |  (2,056) | 
| to equity holders of the Company                        |          |          | 
+---------------------------------------------------------+----------+----------+ 
| Basic and fully diluted loss per share                  |   (0.3)p |   (1.7)p | 
+---------------------------------------------------------+----------+----------+ 
 
 
  Consolidated balance sheet at 30 June 2009 
+---------------------------------------------------------+-----------+-----------+ 
|                                                         |     2009  |     2008  | 
|                                                         |   GBP'000 |   GBP'000 | 
+---------------------------------------------------------+-----------+-----------+ 
| Assets                                                  |           |           | 
+---------------------------------------------------------+-----------+-----------+ 
| Non-current assets                                      |           |           | 
+---------------------------------------------------------+-----------+-----------+ 
| Property, plant and equipment                           |       139 |        43 | 
+---------------------------------------------------------+-----------+-----------+ 
| Intangible assets                                       |       278 |       301 | 
+---------------------------------------------------------+-----------+-----------+ 
| Long-term debtors                                       |        41 |        50 | 
+---------------------------------------------------------+-----------+-----------+ 
|                                                         |       458 |       394 | 
+---------------------------------------------------------+-----------+-----------+ 
| Current assets                                          |           |           | 
+---------------------------------------------------------+-----------+-----------+ 
| Trade and other receivables                             |     1,172 |     1,079 | 
+---------------------------------------------------------+-----------+-----------+ 
| Current tax recoverable                                 |       188 |       175 | 
+---------------------------------------------------------+-----------+-----------+ 
| Cash and cash equivalents                               |       599 |       945 | 
+---------------------------------------------------------+-----------+-----------+ 
|                                                         |     1,959 |     2,199 | 
+---------------------------------------------------------+-----------+-----------+ 
| Total assets                                            |     2,417 |     2,593 | 
+---------------------------------------------------------+-----------+-----------+ 
| Equity and liabilities                                  |           |           | 
+---------------------------------------------------------+-----------+-----------+ 
| Share capital                                           |     1,496 |     1,436 | 
+---------------------------------------------------------+-----------+-----------+ 
| Deferred share capital                                  |    22,682 |    22,682 | 
+---------------------------------------------------------+-----------+-----------+ 
| Share premium account                                   |    87,019 |    86,595 | 
+---------------------------------------------------------+-----------+-----------+ 
| Other reserve                                           |       282 |       282 | 
+---------------------------------------------------------+-----------+-----------+ 
| Stock option reserve                                    |       746 |       571 | 
+---------------------------------------------------------+-----------+-----------+ 
| Retained earnings                                       | (110,290) | (109,825) | 
+---------------------------------------------------------+-----------+-----------+ 
|                                                         |     1,935 |     1,741 | 
+---------------------------------------------------------+-----------+-----------+ 
| Current liabilities                                     |           |           | 
+---------------------------------------------------------+-----------+-----------+ 
| Trade and other payables                                |       309 |       431 | 
+---------------------------------------------------------+-----------+-----------+ 
| Short-term provisions                                   |       173 |       421 | 
+---------------------------------------------------------+-----------+-----------+ 
|                                                         |       482 |       852 | 
+---------------------------------------------------------+-----------+-----------+ 
| Total liabilities                                       |       482 |       852 | 
+---------------------------------------------------------+-----------+-----------+ 
| Total equity and liabilities                            |     2,417 |     2,593 | 
+---------------------------------------------------------+-----------+-----------+ 
 
 
  Consolidated statement of changes in equity 
+-------------------+----------+----------+----------+----------+----------+-----------+----------+ 
|                   |   Share  | Deferred |   Share  |   Other  |   Stock  |  Retained |   As at  | 
|                   | capital  |    share | premium  | reserve  |   option |           |  30 June | 
|                   |  GBP'000 |  capital |  GBP'000 |  GBP'000 |  reserve |  earnings |     2009 | 
|                   |          |  GBP'000 |          |          |  GBP'000 |           |  GBP'000 | 
|                   |          |          |          |          |          |   GBP'000 |          | 
+-------------------+----------+----------+----------+----------+----------+-----------+----------+ 
| At 1 July 2007    |   23,627 |        - |   83,881 |      437 |      457 | (107,937) |      465 | 
+-------------------+----------+----------+----------+----------+----------+-----------+----------+ 
| Retained loss for |        - |        - |        - |        - |        - |   (2,056) |  (2,056) | 
| the               |          |          |          |          |          |           |          | 
| financial year    |          |          |          |          |          |           |          | 
+-------------------+----------+----------+----------+----------+----------+-----------+----------+ 
| Currency          |        - |        - |        - |        - |        - |        14 |       14 | 
| translation       |          |          |          |          |          |           |          | 
| differences       |          |          |          |          |          |           |          | 
+-------------------+----------+----------+----------+----------+----------+-----------+----------+ 
| Capital           | (22,682) |   22,682 |        - |        - |        - |         - |        - | 
| restructure       |          |          |          |          |          |           |          | 
+-------------------+----------+----------+----------+----------+----------+-----------+----------+ 
| Issue of shares   |      470 |        - |    2,563 |        - |        - |         - |    3,033 | 
| (net of expenses) |          |          |          |          |          |           |          | 
+-------------------+----------+----------+----------+----------+----------+-----------+----------+ 
| Share-based       |       21 |        - |      151 |    (155) |        - |       154 |      171 | 
| payment           |          |          |          |          |          |           |          | 
+-------------------+----------+----------+----------+----------+----------+-----------+----------+ 
| Fair value of     |        - |        - |        - |        - |      114 |         - |      114 | 
| stock options     |          |          |          |          |          |           |          | 
+-------------------+----------+----------+----------+----------+----------+-----------+----------+ 
| At 30 June 2008   |    1,436 |   22,682 |   86,595 |      282 |      571 | (109,825) |    1,741 | 
+-------------------+----------+----------+----------+----------+----------+-----------+----------+ 
| Retained loss for |        - |        - |        - |        - |        - |     (496) |    (496) | 
| the               |          |          |          |          |          |           |          | 
| financial year    |          |          |          |          |          |           |          | 
+-------------------+----------+----------+----------+----------+----------+-----------+----------+ 
| Currency          |        - |        - |        - |        - |        - |        31 |       31 | 
| translation       |          |          |          |          |          |           |          | 
| differences       |          |          |          |          |          |           |          | 
+-------------------+----------+----------+----------+----------+----------+-----------+----------+ 
| Issue of shares   |       60 |        - |      424 |        - |        - |         - |      484 | 
| (net of expenses) |          |          |          |          |          |           |          | 
+-------------------+----------+----------+----------+----------+----------+-----------+----------+ 
| Fair value of     |        - |        - |        - |        - |      175 |         - |      175 | 
| stock options     |          |          |          |          |          |           |          | 
+-------------------+----------+----------+----------+----------+----------+-----------+----------+ 
| At 30 June 2009   |    1,496 |   22,682 |   87,019 |      282 |      746 | (110,290) |    1,935 | 
+-------------------+----------+----------+----------+----------+----------+-----------+----------+ 
  Consolidated cash flow statement at 30 June 2009 
+---------------------------------------------------------+----------+----------+ 
|                                                         |     2009 |     2008 | 
|                                                         |  GBP'000 |  GBP'000 | 
+---------------------------------------------------------+----------+----------+ 
| Cash flows from operating activities                    |          |          | 
+---------------------------------------------------------+----------+----------+ 
| Loss before finance income                              |    (720) |  (2,254) | 
+---------------------------------------------------------+----------+----------+ 
| Adjustments for:                                        |          |          | 
+---------------------------------------------------------+----------+----------+ 
| Depreciation and amortisation                           |       65 |       63 | 
+---------------------------------------------------------+----------+----------+ 
| Fair value of share-based payments                      |      175 |      114 | 
+---------------------------------------------------------+----------+----------+ 
| Foreign exchange translation                            |       31 |       14 | 
+---------------------------------------------------------+----------+----------+ 
|                                                         |    (449) |  (2,063) | 
+---------------------------------------------------------+----------+----------+ 
| (Increase)/decrease in trade and other receivables      |     (84) |       56 | 
+---------------------------------------------------------+----------+----------+ 
| Decrease in trade and other payables                    |    (122) |    (268) | 
+---------------------------------------------------------+----------+----------+ 
| Utilisation of provisions                               |    (248) |    (887) | 
+---------------------------------------------------------+----------+----------+ 
| Shares issued for non-cash consideration                |       47 |      171 | 
+---------------------------------------------------------+----------+----------+ 
| Profit on sale of fixed assets                          |        - |        4 | 
+---------------------------------------------------------+----------+----------+ 
| Cash outflow from operations                            |    (856) |  (2,987) | 
+---------------------------------------------------------+----------+----------+ 
| Taxation received                                       |      188 |      346 | 
+---------------------------------------------------------+----------+----------+ 
| Net cash outflow from operating activities              |    (668) |  (2,641) | 
+---------------------------------------------------------+----------+----------+ 
| Cash flows from investing activities                    |          |          | 
+---------------------------------------------------------+----------+----------+ 
| Purchase of property, plant and equipment               |    (138) |      (9) | 
+---------------------------------------------------------+----------+----------+ 
| Proceeds from sale of property, plant and equipment     |        - |      (4) | 
+---------------------------------------------------------+----------+----------+ 
| Interest received                                       |       37 |       29 | 
+---------------------------------------------------------+----------+----------+ 
| Interest paid                                           |     (14) |      (8) | 
+---------------------------------------------------------+----------+----------+ 
| Net cash (outflow) / inflow from investing activities   |    (115) |        8 | 
+---------------------------------------------------------+----------+----------+ 
| Cash flows from financing activities                    |          |          | 
+---------------------------------------------------------+----------+----------+ 
| Proceeds from the issue of share capital (net of issue  |      437 |    3,033 | 
| costs)                                                  |          |          | 
+---------------------------------------------------------+----------+----------+ 
| Net cash inflow from financing activities               |      437 |    3,033 | 
+---------------------------------------------------------+----------+----------+ 
| Net (decrease) / increase in cash and cash equivalents  |    (346) |      400 | 
+---------------------------------------------------------+----------+----------+ 
| Cash and cash equivalents at the beginning of year      |      945 |      545 | 
| (note A)                                                |          |          | 
+---------------------------------------------------------+----------+----------+ 
| Cash and cash equivalents at the end of year (note A)   |      599 |      945 | 
+---------------------------------------------------------+----------+----------+ 
 
Financial Review Notes 
For the year ended 30 June 2009 
 
 
 
 
1. The financial information set out above does not constitute the company's 
statutory accounts for the years ended 30 June 2009 or 2008 but is derived from 
those accounts. Statutory accounts for 2008 have been delivered to the Registrar 
of Companies and those for 2009 will be delivered following the company's annual 
general meeting. The auditors have reported on those accounts; their reports 
were unqualified, did not draw attention to any matters by way of emphasis 
without qualifying their report and did not contain statements under s498(2) or 
(3) Companies Act 2006. 
2. The financial statements at 30 June 2009 show that the Group generated a loss 
from continuing operations of GBP0.5 million with cash utilised in continuing 
operations of GBP0.7 million. The Group has increased revenue by 62% in the last 
year, and reduced losses by 77%. The Group balance sheet shows net assets of 
GBP1.9 million. Cash generated through the issue of equity in the year totalled 
GBP0.4 million. 
The main factors contributing to the increase in revenues was the launch of new 
NXT technology and the continuing ability of existing licensees to exploit the 
original NXT technologies. Should no new licensees sign up or should existing 
licensees cease to use the technology, the Group's funding and operating 
strategy would come under significant pressure, potentially requiring changes to 
the operating and financing model. 
However the Board has concluded that no matters have come to its attention which 
suggests that the Group will not be able to maintain its licensee base, and 
obtain new licensees. The Board has considered various alternative operating and 
funding strategies should these be necessary and are confident that these 
present viable options to allow the Group to continue as a going concern should 
they be necessary. 
In August 2009 an overdraft facility was agreed with the Group's bankers. The 
Group has the ability to draw down the facility at any time and this has been 
put in place as a precautionary measure. The Board has 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 Board is satisfied that the 
Group can operate within the terms of the facility and that no review will be 
triggered in the foreseeable future. 
Based on the information set out above the Board believe that it is appropriate 
to prepare these financial statements on the going concern basis 
 
 
3. The directors do not recommend the payment of a final dividend. 
 
 
4. Basic and fully diluted earnings per share have been calculated on the Group 
loss for the financial year and on the weighted average number of ordinary 
shares in issue for the year, which was 145,566,920 (2008 - 123,078,058) 
ordinary shares. Whilst unexercised options in the Company would increase the 
weighted average number of potential shares in the year, due to the losses of 
the Group in the year they are not considered to be dilutive. 
 
 
5 The principal risks and uncertainties facing the Group are: 
Going concern - the ongoing viability of the Group is assessed on a monthly 
basis through the Board meetings and Operational Priority meetings. Cash flows 
are prepared on a monthly basis so that cash flow issues can be identified at 
the earliest opportunity. 
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. 
 
 
 
Development by the Group of its existing technologies or development of new 
technologies may take longer than anticipated; development delays, defects in 
technology or new technology proving to be unreliable may all lead to a 
reduction in anticipated revenue generation. The Group cannot guarantee that it 
will be able to commercialise technology at an early stage of development. 
The Group depends on key executives and personnel - a significant part of the 
Group's value and the key to its future technology creation lie in its 
scientists, engineers and executives. Retention of key personnel, and the 
maintenance of such a qualified workforce, is a high priority for the Group. 
However, it is not possible to guarantee retention of the services of key 
personnel. The departure from the Group of any of the executive directors or 
certain senior employees could, in the short term, have a material adverse 
effect on the Group's business. 
 
 
6. The Group's consolidated financial statements on which this financial 
information is based, have been prepared in accordance with International 
Financial Reporting Standards (IFRSs) as adopted for use by listed companies in 
the European Union and also in accordance with those parts of the Companies Act 
2006 applicable to companies reporting under IFRSs. 
 
 
 
 
 
This information is provided by RNS 
            The company news service from the London Stock Exchange 
   END 
 
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