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Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
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Secure Design | LSE:SDKK | London | Ordinary Share | JP3420970000 | ORD NPV (DI) |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
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0.00 | 0.00% | 8.00 | 0.00 | 01:00:00 |
Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
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0 | 0 | N/A | 0 |
RNS Number : 6118E Secure Design KK 30 September 2008 FOR RELEASE 7.00 AM 30 SEPTEMBER 2008 SECURE DESIGN KK ("Secure Design" or "the Company") (A leading biometrics company based in Tokyo, Japan specialising in fingerprint authentication) Interim Results (unaudited) for six months ended 30 June 2008 2008 2007 2008 2007 JPY'000 JPY'000 STG STG Continuing operations Revenue 14,849 240,421 69,928 1,132,191 Gross profit / (loss) (73,158) 125,780 (344,518) 592,321 Loss from operations (313,220) (91,023) (1,475,017) (428,650) Loss before tax (322,035) (90,260) (1,516,530) (425,055) Basic loss per share (7.75) (2.87) (0.036) (0.014) Diluted loss per share (7.37) (2.70) (0.035) (0.013) * Exchange rate used throughout this announcement: £1*JPY212.35 * Further funding required to meet the working capital needs of Company * Restructuring is now in progress based on Mobile phone and PC Network business * Loss before tax increased by 256.8% * Diluted loss per share increased by 173.0% * Continued investment in research and development * Confident of a much improved performance in 2009 For further information, please contact: Secure Design KK Taketoshi Kashiwabara Japan +81-3-5652-0321 (Chairman) Toshiya Kurita Japan +81-3-5652-0321 (Chief Financial Controller) Charles Stanley Securities Nominated Adviser +44 (0) 20 7149 6000 Russell Cook / Freddy Crossley Cubitt Consulting Brian Coleman-Smith / James Verstringhe/ Nicola Krafft +44 (0) 20 7367 5100 Background Note on Secure Design On 14 July 2006, Secure Design was the first Japanese company to be admitted to trading on AIM. It offers fingerprint authentication products to companies and individuals that wish to establish high levels of security using biometrics. Biometrics uses a physical attribute of the body, such as a fingerprint to identify and verify the individual with the aim of making individual authentication efficient and secure. The Company offers a range of fingerprint authentication products and systems, from an integrated system to a mobile device. The Company designs and outsources the production of these products and can tailor them to individual client specific needs and applications. Biometric applications provide convenient and reliable security which reduces the cost associated with the failure of conventional authentication methods. The principal factor which distinguishes biometrics from conventional password based authentication is the enhanced security level it provides while maintaining the privacy of individual users. The worldwide demand for biometrics is estimated to increase from just over $3 billion in 2007 to over $5.6 billion by 2010.* *Biometrics Market and Industry Report 2007-2012 SECURE DESIGN KK ("Secure Design" or "the Company") (A leading biometrics company based in Tokyo, Japan specialising in fingerprint authentication) Interim Results for six months ended 30 June 2008 Chairman's Statement We have not achieved the management's expectations of turnover in the first half of the year due, primarily, to implementing a major reorganisation, which we believe, will enable us to market our range of biometric solutions to a growing customer base in Japan and in a number of overseas territories. With our continuing investment in research and development, our ongoing programme of new product launches and the planned reorganisation, together with a further reduction in the cost base, we are confident of a much improved performance in 2009 and beyond. Results Turnover in the period was JPY 14.85 million (£69,928), which was 93.8% lower compared to the results achieved in first half of 2007 when the Company reported sales of JPY240.42 (£1.13 million). The loss before tax increased by 256.8% to JPY 322.0 million (£1,516,530) compared to JPY 90.26 million (£425,055). The diluted loss per share fell by 173.0% to JPY 7.37 (0.03p) compared to JPY 2.70 (0.013p) in first half of 2007. Operating review In the first six months of the year we have focused on our home market and developing our range of products. We are, however, actively looking at expanding into a number of overseas markets where we see opportunities to introduce our e- passport systems together with a number of other products. In the first half of the year, 56% of our sales came from SD-Gate which provides access security levels for each door and individual employee. Since the launch of the ITube memory stick, which consists of flash memory, a fingerprint image sensor, CPU and ASIC that contains a fingerprint matching programme, which can be used by any Windows based PC via a standard USB interface, we have developed a number of products around this technology. Another of the ITube family of products, FLO-Tube, which facilitates the logon to Windows, the Web system and other Applications securely.ITube products accounted for just under 10% of sales. We are actively looking to increase the sales of our existing products whilst we develop a range of innovative products for the international markets. Operating expenses Operating expenses in the period were JPY 240 million (£1,130,501), which were higher by JPY 23 million compared to those for the first half of 2007 mainly due to bad debt reserve of JPY 111.6 million (£525,339). Cash Balance The cash balance at the end of the period was JPY 40 million (£191,210), reflecting a fund raising of JPY 136 million in the period. The Company is currently seeking to raise further funds during the second half of the year for working capital and the continued development of the Company. The details of which will be announced in due course. Dividend At this stage in the Company's development, the directors do not intend to declare a dividend. Accounts Receivables The accounts receivables balance at the end of the period was JPY 26.9 million (£126,691). After reviewing the accounts receivables balance, we have written off JPY 111.6 million (£525,339) and taken action to collect the money from the client. Employees I would like to take this opportunity to thank all our employees for their contributions. Their hard work, dedication and commitment is much appreciated. We depend upon them to take care of our customers, and they do so in a positive manner. The company now has 10 employees, including directors. Restructuring During the first half of the year we started the process of reorganising the company by restructuring both the sales division and R&D division. We also took the decision to review our product mix with our 51.5% subsidiary Beyond LSI and we anticipate this major reorganisation of the business taking place during the second half of the year with real benefits being seen in 2009 and beyond. Beyond LSI has completed development of the fundamental fingerprint technology. The pilot products have shown the rapid growth of BLSI, which include sales of 1 million mobile phones, 15,000 sets of network scanners, and 10,000 sets of physical locks. Market Despite the current difficult economic situation, market demand for fingerprint authentication products is increasing. Mobile phones companies are starting to increase the use of fingerprint sensors to provide additional security for their customers and this form of authentication is becoming accepted for NotePCs and is now becoming more widely used in desktop PCs. In addition, we believe that the competitive cost of fingerprint modules will open a new market from USB keys to locks for various other applications. Commercial Initiatives In the second half of the year, we have announced the following initiatives: * Mobile Phone Beyond LSI, in partnership with Mitsumi Electric Co., LTD, offers security solutions to meet the expanding needs of the mobile industry. BLSI is recognized as a leader in providing security software products that use fingerprint biometrics on mobile phones while Mitsumi, a leading supplier of Mitsumi original optical swipe fingerprint sensors, is a long term partner of BLSI, which has succeeded in developing a new type of optical swipe sensors suitable for mobile phones. BLSI has partnered Mitsumi to provide customers with security software for their mobile phones. The optical sensor also works as a pointing device which movement is echoed on the screen by movements of the pointer or cursor and other visual changes. In 2009, Sharp will continue to implement our fingerprint sensor on the two million mobile phones it sells to NTT Docomo. In addition, Sharp, as a leading mobile phone producer in Japan, manufactures 20 to 30 million mobile sets per year ,and is planning to bring our technology to both Softbank and AU, two leading Japanese mobile phone operators. A leading supplier of this kind of sensor is also considering moving away from using its current semiconductor sensor and replacing it with an optical sensor. We therefore anticipate receiving an order from Sharp for 4 million sets in spring of 2009. * PC & Network BLSI offers fingerprint authentication solutions in the field of Logical Access to PC, VPN and Internet Systems by employing USB authentication devices or image capturing devices such as Fkey and FkeyC Hardware based authentication with dedicated original LSIs ( Large Scale Integrators) is leading the market for secure and convenient personal identification. The development of LSIs is accelerating the trend towards integrating this type of technology into people's daily lives. * Semiconductor Image Sensor The development of a new semiconductor fingerprint image sensor in collaboration with Oriental System Technology and Sanyo Semiconductor that is suitable for smart card applications. The Directors believe that commercial applications of biometrics smart card will be largely driven by progress of government projects. The Company has the fingerprint verification algorithm which complies with ISO Standard ISO/IEC 19794, Information Technology - Biometric Interchange Data Format. The basic design of the new sensor has been completed and the first prototype will be produced in the first quarter of 2009. * e-Passport In 2006 approximately 15 million e-Passports were issued with a further 35 million to 40 million expected to be issued this year (Source: Card Technology, March 2007). But few of the passports are being read electronically. This is due to the lack of installed or activated readers, which, for the time being, makes the contactless chips on most passports little more than ornaments. We announced a collaboration with PCS Security Pte Ltd, which will enable the Company to enter this exciting and growing market. Outlook The Board has undertaken a number of initiatives that will, it hopes, result in a Company that will provide the basis for future growth. It is going to take time for such initiatives to bear fruit and in the meantime the Company continues to be loss making. For those commercial initiatives highlighted above the Company needs to secure further funding, while I will continue to support the Company's financing needs, further investment will be required from external investors. There is no certainty that further funding will be obtained. If such funding can be obtained then I and the rest of the Board are confident that the Company will be able to build upon the commercial relationships that it has established through Beyond LSI and that it would have a sustainable future. Taketoshi Kashiwabara Chairman 30 September 2008 Note: Exchange rate per Pound (£) for the above translation is JPY212.35, which has been derived from the TTM rate on June/End, 2008 Consolidated Income Statements for the period from 01 Jan to 30 June 2008 2007 2008 2007 JPY'000 JPY'000 STG STG Continuing operations Revenue 14,849 240,421 69,928 1,132,191 Cost of sales 88,008 114,641 414,446 539,870 Gross profit/ (loss) (73,158) 125,780 (344,518) 592,321 Sales and marketing expenses 124,124 87,447 584,527 411,808 General and administrative 77,819 64,263 366,468 302,629 expenses Research and development 38,119 65,092 179,508 306,534 expenses Loss from operations (313,220) (91,023) (1,475,017) (428,650) Net financial costs / (income) 1,218 (763) 5,734 (3,595) Share of loss of equity (7,596) - (35,774) - accounted investee Loss before tax (322,035) (90,260) (1,516,530) (425,055) Income tax expenses - - - - Loss for the period (322,035) (90,260) (1,516,530) (425,055) Basic loss per share (7.75) (2.87) (0.036) (0.014) Diluted loss per share (7.37) (2.70) (0.035) (0.013) Consolidated Balance Sheets As at 30 June As at 31 December As at 30 June As at 31 December 2008 2007 2008 2007 JPY'000 JPY'000 STG STG Assets Non-current assets Property, plant and equipment 7,681 9,683 36,172 45,601 Investment securities 29,738 32,682 140,043 153,908 Investment in equity accounted 64,474 57,071 303,620 268,756 investee Goodwill 11,920 12,500 56,134 58,865 Intangible assets 45,966 77,518 216,464 365,051 Other non-current assets 4,428 4,858 20,851 22,877 164,207 194,312 773,283 915,058 Current assets Inventories 49,108 117,469 231,260 553,185 Trade and other receivables 26,903 136,433 126,691 642,492 Cash and cash equivalents 40,604 9,515 191,210 44,806 116,614 263,417 549,162 1,240,483 Total assets 280,821 457,729 1,322,445 2,155,541 Liabilities Current liabilities Trade and other payables 96,280 86,220 453,402 406,029 96,280 86,220 453,402 406,029 Net current assets 20,334 177,197 95,757 834,454 Total liabilities 96,280 86,220 453,402 406,029 Net assets 184,541 371,509 869,042 1,749,512 Equity Share capital 781,614 713,614 3,680,782 3,360,556 Share premium 539,772 472,255 2,541,897 2,223,945 Fair value reserve (425) (425) (1,999) (1,999) Share option reserve 11,887 12,337 55,979 58,096 Deficit (1,148,307) (826,272) (5,407,614) (3,891,086) Total equity 184,541 371,509 869,041 1,749,512 Consolidated Statements of Changes in Equity for the period from 01 Jan to 30 June JPY'000 STG Share capital Share premium Fair value reserve Share option reserve Deficit Total equity Total equity Balance as at 1 January 2007 587,369 347,001 (575) 2,339 (177,313) 758,821 3,573,445 Share issued - - - - - - - Share issuance costs - - - - - - - Fair value adjustments of - - 1,305 - - 1,305 6,144 available-for sales investments Share option costs charged to - - - 3,124 - 3,124 14,709 income for the period Net loss for the period - - - - (90,260) (90,260) (425,055) Balance as at 30 June 2007 587,369 347,001 730 5,463 (267,573) 672,990 3,169,243 Balance at 1 January 2008 713,614 472,255 (425) 12,337 (826,272) 371,509 1,749,512 Share issued 68,000 68,000 - - - 136,000 640,452 Share issuance costs - (483) - - - (483) (2,274) Fair value adjustments of - - - - - - - available-for sales investments Share option costs charged to - - - (450) - (450) (2,117) income for the period Net loss for the period - - - - (322,035) (322,035) (1,516,529) Balance as at 30 June 2008 781,614 539,772 (425) 11,887 (1,148,307) 184,541 869,041 Consolidated Cash flow Statements for the period from 01Jan to 30 June 2008 2007 2008 2007 JPY'000 JPY'000 STG STG Operating Activities Cash used in operations (86,212) (82,923) (405,991) (390,498) Interest paid - - - - Net cash used in operating (86,212) (82,923) (405,991) (390,498) activities Investing activities Interest received 19 505 89 2,378 Purchase of property, plant and - (897) - (4,225) equipment Purchase of intangible assets (3,447) (7,284) (16,231) (34,303) Acquisition of associate company (15,000) - (70,638) - Disposal of investment securities 1,645 - 7,745 - Increase of short-term lending (1,500) 30,000 (7,064) 141,276 Net cash from (used in) investing (18,283) 22,324 (86,099) 105,126 activities Financing activities Proceeds on issue of new shares, 135,517 - 638,178 - net of issuance cost Net cash from financing activities 135,517 - 638,178 - Net increase (decrease) in cash 31,022 (60,599) 146,088 (285,372) and cash equivalents Effect of exchange rate 67 - 316 - fluctuations on cash held Cash and cash equivalents at 9,515 94,488 44,806 444,964 beginning of year Cash and cash equivalents at end 40,604 33,889 191,210 159,592 of period Notes to the Accounts 1. These consolidated financial statements have been prepared by management on the bases of generally accepted accounting principles applicable to a "going concern", which assumes the Company will continue in operation for the foreseeable future and will be able to realise its assets and discharge its liabilities in the normal course of operations. The Company posted a continuing net loss of JPY 322 million in the first half ended 30 June 2008 JPY 648 million in December 2007 and JPY 162 million in December 2006. Net loss for this period was mainly due to poor sales results of JPY 15 million and losses for uncollectable receivables of JPY111 million. These consolidated financial statements do not reflect adjustments that would be necessary if the going concern assumption was not appropriate because management believes that in the years ended 31 December 2009 the Company will head for surplus of JPY 10 million and in 2010 JPY 360 million and the Company can successfully raise sufficient funds later this year to execute the business plan. If the going concern assumption were not appropriate for the consolidated financial statements, then an adjustment would be necessary to the carrying values of the assets and liabilities, the reported revenues and expenses and the balance sheet classification used. 2. This interim report was approved by the Directors on 29 September 2008. The results for the both of current and comparative half year have not been audited, but were the subject of an independent review carried out by the Company's auditors, Kainan Audit Corporation. Their review confirmed that the figures were prepared using accounting policies and practices consistent with those adopted in the 2007 annual report and those that will be adopted for the 2008 annual report. The audited results for the year ended 31 December 2007 are an abridged version of the company's financial statements which the predecessor auditor, Kainan Audit Corporation gave an unqualified report. 3. Loss per share Basic and diluted loss per share is calculated on net loss for the period of JPY322,035 thousand (£1,516,530). The basic and diluted loss per share is based on 41,556,393 and 43,692,218 weighted average ordinary shares, respectively. 4. A Dividend is not proposed at this stage. 5. Exchange rate used throughout this announcement: £1*JPY212.35 Related Party Transactions for the period from 01 Jan to 30 June 2008 (Unit: JPY'000) Mr. Kashiwab-ara Fuji Digital Imaging Techno-imagia Nihon Byond Sekiju LSI n Sales of goods in the period - - 1,270 702 - Interest Income in the period - - - 12 Purchase of goods or services 330 4,000 - - - in the period Short-term lending made to - - - - 1,500 related parties in the period Amounts owed by related - - - - 1,500 parties at end of the period Amounts owed to related - - - - - parties at end of the period Copies of the statement are being sent to shareholders. Further copies are available on request from: Toshiya Kurita Chief Financial Controller Secure Design KK Headquarters and R&D Centre ICST Building 3F 1-9-2 Nihonbashihoridomecho, Chuo-ku Tokyo 103-0012 Japan Tel: +81.3.5652.0321 Email:t_kurita@securedesign.jp Brian Coleman-Smith Cubitt Consulting Limited 30 Coleman Street London EC2R 5AL. Tel: + 44 (0)20 7367 5100 Email:brian.coleman-smith@cubitt.consulting.com This information is provided by RNS The company news service from the London Stock Exchange END IR UKANRWORKUAR
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