TIDMNTX
RNS Number : 1578T
NXT PLC
23 September 2010
23 September 2010
NXT plc
Final results
NXT plc ('NXT' or the 'Company'), the provider of unique sound solutions, best
known for its flat-panel loudspeaker technology, announces its preliminary
results for the 12 months to 30 June 2010
Key points
· Company proposes to raise up to approximately GBP8.0 million (GBP7.2
million net of expenses) by way of a Firm Placing and a Placing and Open Offer
- see separate announcement
· GBP5 million of this firm-placed
· Restructuring announced in August 2010 - to be completed by end of October
2010
· Sales for year to 30 June 2010 GBP1.9 million (2009: GBP3.2 million)
following disappointing performance, announced in July 2010, in haptics
licensing and standalone audio
· James Lewis appointed Chief Executive Officer
· Peter Thoms announces his retirement after 18 years of dedicated service
to the Company.
Ian Buckley, Chairman, said: "The new business model we have developed
revitalises the company's prospects. It will enable NXT to take greater control
over its routes to market and generate gross profit from more predictable
revenue streams. Through the fundraising we will re-focus the workforce and
expand component and module offerings to meet current and future market needs.
Interest in the new products has been highly encouraging and the Board is
confident that the change in management and business model marks the start of a
new era for NXT. We are encouraged by the support for this shift in focus from
our existing and new institutional shareholders and are determined to
demonstrate that this support is justified."
After 18 years as a Director, Peter Thoms announces his retirement today,
effective with immediate effect. Peter has made a significant contribution to
the Company over this time and the Board thanks him for his commitment and
valuable contribution to the Company.
For additional information, please contact:
NXT plc:
+--------------------------------+--------------------------------+
| Ian Buckley, Chairman | +44 (0) 1223 597 840 |
+--------------------------------+--------------------------------+
| James Lewis, Chief Executive | +44 (0) 1223 597 840 |
+--------------------------------+--------------------------------+
Media enquiries:
+--------------------------------+--------------------------------+
| Allerton Communications | +44 (0) 20 3137 2500 |
+--------------------------------+--------------------------------+
| | |
+--------------------------------+--------------------------------+
Chairman's Statement
For the year ended 30 June 2010 NXT plc ('NXT' or the 'Company' and together
with its subsidiaries 'the
Group') revenues were GBP1.9 million, a decrease of 40 per cent. over the same
period last year (GBP3.2 million).
Operating costs continued to be contained at similar levels to previous years at
GBP3.7 million, resulting in a loss after tax of GBP1.7 million.
The decrease in revenue was mainly due to the lack of licensing activity in the
period. Whilst interest in
NXT's intellectual property remains high, our potential customers are unwilling
to commit to a large up-front licence fee to access the technology and to then
be faced with the complexities of partnering licensed factories to implement the
technology. The Board concluded that a rapid and fundamental change in business
strategy was essential and took steps to transition to a business model that
generates significant gross profit margin on sales of components utilising its
intellectual property, rather than the very low levels of royalty previously
received.
To envision and implement this change in direction, NXT appointed James Lewis as
Chief Executive Officer from 1 August 2010. James's background as a successful
entrepreneur in a hi-tech electronic component sales model provides the ideal
mix of skills and experience to drive the Company to growth.
His initial objective has been to review the current structure of the Group and
effect a restructure that will enable the Group to operate within its projected
revenue stream in the shortest possible period. Along side that he has
strengthened the executive team and is working with them to implement a growth
plan for the Company through investment of resource in a range of new products
that capture NXT's technology and intellectual property in a component and
module form that can be sold to customers world-wide.
NXT has therefore decided to properly capitalise the company by raising new
funds to effect the restructure, cover a small working capital deficit and
enable the investment to be made in growth.
The fundraising that will be announced today (23 September 2010) takes the form
of a firm placing of
GBP5 million, a placing of up to GBP0.5 million and an open offer of GBP2.5
million and is subject to shareholder approval at the AGM on 18 October 2010.
The net proceeds from the Firm Placing of approximately GBP4.2 million will be
used to cover the expected working capital shortfall in November 2010, to
complete a powerful executive team, restructure the Company and ensure that NXT
commences its path to growth, as well as to develop some of the Group's existing
products.
Based on the Directors' expectations of the Company's current trading prospects,
the Directors believe that without the net proceeds of the Firm Placing, there
will be a shortfall in the Company's working capital in November 2010.
Accordingly, a portion of the net proceeds of the Firm Placing will be used to
cover the estimated working capital shortfall.
Peter Thoms moved to Vice-Chairman on 1 August 2010, and has announced his
retirement today. Following 18 years of loyal service to the Company, I would
like to thank Peter for his commitment and dedication and wish him all the best
for the future.
Principal Risks and uncertainties
The principal risks and uncertainties facing the Company are referenced in the
Directors' Report on pages 14 and 15 of the Annual Report and Accounts,
published today.
Outlook
The year has been a challenging one for NXT, with a very disappointing
performance due to the unsuccessful business model pursued over many years. The
Board has recognised this and taken the major decisions that led to the
decisive actions early in the current year. The developing opportunities for
NXT's intellectual property in both current and future markets combined with
the support in the fundraising process of new and existing institutional
shareholders positions NXT to fully exploit its technological and business
capabilities...
Ian Buckley
Chairman
Operating and Financial Review
Operating Review
The year to 30 June 2010 has been a poor one for NXT. Income from new licenses
and overall royalty payments were below expectations, offset partly by increased
sales of exciter components into niche applications and income generated from
consulting to licensees.
Furthermore the resulting sales for the 12 month period are in the order of
GBP1.9 million, compared with GBP3.2 million last year. In the previous year the
Company signed a licence with Nissha Printing in Japan for GBP1.2 million.
The underlying business of the Group has not grown compared with the prior year.
There was royalty growth in the automotive and television sectors along with
ongoing revenue from consulting services. However, royalties from the low-end
audio product sector did not perform as well as predicted and license income
(excluding the impact of the licence with Nissha Printing Company Limited in
2008/09) was less than the previous year.
Royalties from television models featuring BMR slim drive units have increased
in the year to 30 June 2010. The drive units are designed to fit the latest
slim-form televisions and have been shipped for 10 new models during the period.
Models have been announced by Insignia and Vizio in the United States. The drive
units will also be used by Oneida, one of India's leading television brands,
later in 2010.
Automotive royalties have recovered to pre-recession levels with further
interest being shown by a range of car and accessory companies. While design
cycles in this sector are lengthy and resource-intensive, the potential volumes
as new technology is introduced into additional product ranges are attractive.
NXT has continued to review its licensing and royalty model over the past three
years, and explored opportunities for a gross profit margin-generating approach
to be adopted.
The resulting component sales business, though still small, has demonstrated
encouraging progress over the past 12 months in niche applications, and the
Directors believe that it should make a significant contribution to the
Company's success in the future as mainstream sectors are addressed. In March
2010, NXT purchased intellectual property relating to an ultra-efficient, low
power amplifier chip, from the founders of the silicon chip start-up Audium
Semiconductor Ltd. The technology is synergistic with NXT's BMR technology as
every speaker needs an amplifier and both technologies are designed to offer the
best in listening experience and value. In initiating the acquisition, the Board
recognised the excellent strategic fit as well as the ability to leverage its
BMR products into NXT's target customer base at several different value points,
covering sale of components, fabricated modules and sub-solutions. This flexible
end customer-oriented approach will enable the Company to gain more control over
its revenue stream, its forecasting and its cash flow.
Strategic Review
The new CEO, James Lewis, was appointed on 1 August 2010 to bring new strategy
and focus to the business. Having been involved with the business for 10 months
as a Non-executive Director, Lewis has prior knowledge of the Group and an
understanding of its strengths and weaknesses. Lewis has identified certain
issues that were affecting operational efficiency of the business including the
fragmentation of technical resources between the UK and Hong Kong offices. A
fast-paced re-structuring of the business will create a decisive executive team
supporting two business units - audio and display products - backed up by
tightly managed sales and technical teams. The emphasis will be on building up
the core development team in the UK to plan and execute on technology roadmaps
for the business units. Regional offices in the USA and Far East will provide
sales, technical support and administrative support for customers in those
geographies, and proximity to outsourced fabrication facilities means that
supply chain management and quality control functions will reside in the Hong
Kong office.
Addressing executive management, the Company appointed Chris Travis as Chief
Technical Officer on 9 August 2010 with credentials in audio, consumer
electronics and hand-held devices. Business unit managers have also been
appointed for audio and haptics groups. The restructuring of the Group has
resulted in a headcount reduction of 8, comprised mainly of technicians and
industrial designers. The proceeds of the Issue will enable a stronger and more
cohesive intellectual team to be built in the UK in line with business plans for
creation of audio and haptic product families.
The Directors recognise that changing relationships and influence between retail
channels, product brands and original equipment manufacturers ("OEMs") over the
last few years has reduced the effectiveness of the licensing/royalty model
practiced by the Group to date. As a result, a transition has been commenced to
a component and sub-systems model. This was initiated by the creation of a small
range of BMR and Distributed Mode Loudspeaker ("DML") drivers that can be sold
as components into audio systems manufacturers. During the year ended 30 June
2010, the Company has generated revenue and gross profit on sales of these
components, which are manufactured by third party manufacturers to the Company's
requirements.
The second step of the business model transition was the opportunistic purchase
of Audium semiconductor's audio amplifier technology. This novel amplifier chip
is extremely power efficient relative to all other digital amplifier chips on
the market today, leading to new opportunities in consumer audio products where
electrical power is at a premium, such as battery-powered, USB-powered and
wireless speakers. NXT was able to acquire the intellectual property, finished
amplifier devices and work-in-progress for a nominal sum, and also took on three
of Audium Semiconductor's employees to complete the optimisation of the device
in BMR speaker applications. Focusing initially on high audio fidelity speakers
that can be connected to a PC's USB port, and deliver a powerful peak audio
level from the small amount of power available over USB, NXT intends to
demonstrate a top-quality 'benchmark' product in early 2011. The Directors
anticipate that this will lead to initial gross profit margin-generating
component and sub-system sales in the second half of the financial year to 30
June 2011.
It is anticipated that the same business model will be applied to the Company's
haptics technology, which has thus far been licensed to early adopters. The
Company has identified that there is a market for modules that enable companies
to rapidly integrate, evaluate and commence production of devices utilising
haptics feedback. The Directors believe that the first products in a family of
platforms, that combine hardware modules with specially designed DMA or DML
transducers and enabling software, are likely to be produced within the next
financial year and sales are likely to commence shortly after July 2011. The CEO
has initiated a programme that the Board hopes will achieve working prototypes
of saleable modules by January 2011 (if not sooner) and product sales are likely
to be a direct result of the focused sales effort initiated by the Company.
These haptics solutions will be targeted at manufacturers of hand-held computing
devices and industrial terminals.
Nissha Printing has continued to invest in product development and the supply
chain for NXT Bending Wave Haptics. There has been keen interest in the
Company's technology for larger screens, with three companies showing
haptic-enabled touch screens at Computex in Taiwan this year. Many other
significant touch-screen manufacturers and users of touch screens are currently
engaged with the Company. However, the technology remains relatively new in
large-screen applications and demand creation is not yet at a stage of
advancement that enables manufacturers to pay significant up-front licence fees.
NXT has, therefore, signed several evaluation licences and development
agreements to bring products to market.
NXT intends to build its reputation as a brand associated with quality and
value.
By June 2011, the Group intends to have four revenue streams:
- Component and sub-system sales - Principally focusing on quality-demanding
audio market opportunities, the Directors believe that NXT's strategy for the
deployment of the optimised platform of BMR speakers and the Audium amplifier
device will give rise to opportunities to intersect the market at different
levels. Customers seeking a short design cycle will be offered module solutions
where a fully working printed circuit board and BMR speakers will be sold to
customers who will design enclosures for them and assemble and sell their
end-products. Alternatively, individual amplifier and BMR components will be
sold to customers with in-house design capability, and who desire to
functionally differentiate their products. It is likely that this category of
product development will incur longer design cycles, and more support
requirements. For companies able to take first-mover advantage, NXT can 'private
label' its own benchmark products (i.e. have its design manufactured with
customers' brand identification marked on them), and sell a complete product.
The Directors anticipate that sales in the financial year to 30 June 2011 will
comprise early sales of private-labelled products and initial quantities of
modules to the company's first design wins. Customer feedback from the earliest
technology demonstrations underlines this. A similar approach will be reviewed
for haptics to explore customer entry-points with modules comprising hardware
and software developed by NXT.
- Licensing - The Company's previous strategy was to license its intellectual
property to customers at relatively low fees to encourage such customers to sign
licences with the Company and to launch products containing the Company's
technology. The support demands of licensees' in training, developing and
manufacturing products was substantial and there was limited return on NXT's
resource investment. In recent years, NXT has sought to evaluate its licensing
model to increase its revenues through higher fees and royalties. This
evaluation has enabled the Group to selectively identify appropriate partners
and protect their commitment to the Group by, for example, offering varying
levels of operational exclusivity or advantageous financial conditions. However,
in the current economic climate, where companies are less willing to pay large
fees upfront and are reducing their in-house design teams, the licensing model
has proved difficult to sustain. Licensing by the Company to key partners is
expected to continue with a focus on partners whose sales volume prospects make
the deployment of the Company's resource worthwhile. Meanwhile, the Group will
make efforts to turn licensees into customers for new products that NXT is
developing.
- Royalties - Licensees are required to make royalty payments to the Company for
each shipped product containing NXT technology. Royalty rates vary depending on
the market into which the product will be sold, but traditionally high volume
products yield lower royalties, while niche applications demand a premium rate.
Key royalty streams for the future will be strongly supported with IP
development and technical support for customers, and focus markets are expected
to include Flat Panel TVs and automotive sound systems. Ongoing support for
important haptics licensee Nissha Printing will be maintained as its market
launch plans unfold. The Directors anticipate that royalties will be forthcoming
within three years, as a result of dialogue that has taken place between Nissha
Printing and the Company.
- Consulting - Small amounts of consulting income for the Company will be
generated by licensees requiring customisation of hardware or software to
differentiate their products from competitors.
In order to most effectively address these opportunities, the business will be
streamlined into two business units - display applications and audio
applications. These two units will be tasked and resourced to address the market
opportunities presented by the Company's product-driven strategy. The latter
will also continue to generate revenue from the previously operated
licensing/royalty model for low-end audio products. Opportunities for projects
that fall within the sub-category of low-end audio will be put under close
scrutiny so that only those that can be expected to generate net profit within
the unit will be embarked upon. The Company's main focus will transition to
larger companies, and to those dynamic enough to create rapid impact on their
target markets with NXT-enabled products. In addition to the recent appointment
of a new Chief Technical Officer, the Company intends to strengthen its
executive management team, which shall be led by the Chief Executive Officer, to
include a Chief Commercial Officer. The intention behind such a move is to
ensure that a rigorous and balanced analysis of technical and commercial
strategy takes place.
To enable the Company to make these changes, to grow the Company with a
structured and experienced management team, and invest in new products, NXT is
proposing to raise funds of a maximum of GBP8.0 million by way of a firm placing
and open offer. This also addresses the Company's short-term cash position,
which, whilst being carefully managed, does not allow the Company to fully
exploit the technology.
Financial Review
Key Performance Indicators
NXT plc has the following Key Performance Indicators to allow management to
monitor the performance of the Group - Royalties (per cent. of total income),
speaker volumes, operating costs, operating cash flows.
· Royalties (per cent. of total income)
The Group target was previously, that royalties account for more than 50 per
cent. of Group income.
In the year ended 30 June 2010 royalties accounted for 46 per cent. of total
income (2009: 36 per cent.).
· Speaker volumes and average royalty rates
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.
In 2009 speaker volumes were at 9.1 million due to the introduction of Hallmark
cards. However,
Hallmark cards have not shipped as many products during the financial year to
June 2010 as were shipped in the year to June 2009 and the consumer electronics
market has been poor. Mitigating this decrease was the of BMR drivers in
televisions. The net movement in the year was a 3 per cent. decrease in speakers
sold (8.8 million).
+--------------------------------------------+------------------+--------------+
| Average royalty rates | 2009 | 2010 |
+--------------------------------------------+------------------+--------------+
| Speaker volumes (millions) | 9.1 million | 8.8 million |
+--------------------------------------------+------------------+--------------+
| Average royalty rate | 20 cents | 15 cents |
+--------------------------------------------+------------------+--------------+
· Operating costs
The Group has been striving to reduce operating costs over the past three years.
Operating costs excluding non-cash items were:
2008 GBP3,410,000
2009 GBP3,475,000
2010 GBP3,372,000
This excludes any non-cash items such as depreciation and amortisation and IFRS
2 Stock Option costs. In addition, restructuring costs and bad debt provisions
are also removed.
· Operating cashflows
The lack of licensing income has significantly affected the cash outflow in the
year ended 30 June 2010, resulting in GBP1.7 million of outflow offset by the
proceeds from the issue of share capital of GBP1.1 million.
Revenue
Group revenues in the year ended 30 June 2010 of GBP1.9 million represented a
GBP1.3 million decrease on the previous year, mainly attributable to the lack of
licensing revenue and a downturn in the consumer electronics sector (2009:
GBP3.2 million). 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 | | 2009 | | 2010 | | Change |
| analysis | | | | | | % |
+-------------+--+---------+--+---------+--+--------+
| | | $'000 | | $'000 | | 09-10 |
+-------------+--+---------+--+---------+--+--------+
| | | | | | | |
+-------------+--+---------+--+---------+--+--------+
| Royalties | | 1,795 | | 1,352 | | (24)% |
+-------------+--+---------+--+---------+--+--------+
| Licences | | 3,136 | | 1,557 | | (50)% |
| and | | | | | | |
| consulting | | | | | | |
+-------------+--+---------+--+---------+--+--------+
| Total | | 4,931 | | 2,909 | | (41)% |
+-------------+--+---------+--+---------+--+--------+
| | | | | | | |
+-------------+--+---------+--+---------+--+--------+
| Average | | 1.53 | | 1.57 | | |
| exchange | | | | | | |
| rate | | | | | | |
+-------------+--+---------+--+---------+--+--------+
| | | | | | | |
+-------------+--+---------+--+---------+--+--------+
| | | GBP'000 | | GBP'000 | | |
+-------------+--+---------+--+---------+--+--------+
| | | | | | | |
+-------------+--+---------+--+---------+--+--------+
| Royalties | | 1,152 | | 861 | | (25)% |
+-------------+--+---------+--+---------+--+--------+
| Licences | | 2,071 | | 992 | | (52)% |
| and | | | | | | |
| consulting | | | | | | |
+-------------+--+---------+--+---------+--+--------+
| Total | | 3,223 | | 1,853 | | (43)% |
+-------------+--+---------+--+---------+--+--------+
Operating loss
Group loss before financing costs in the year ended 30 June 2010 was GBP2.0
million, an increase of GBP1.1 million on 2009 (GBP0.9 million). This was
attributable to the lack of significant licensing income of the magnitude seen
in the 2009 accounts, which included an exclusive GBP1.2 million licence fee.
Research and development costs
Research and development costs relate to expenditure made in exploiting new
technologies and enhancing old ones.
Research and development costs represent a substantial part of NXT's operating
cost base and are a fundamental feature of keeping the technology refreshed and
relevant to the anticipated needs of the market. Research and development
expenditure is expensed as incurred, unless the expenditure on research and
development activities relates to a self contained project where the future cash
flows have been identified, in which case it is capitalised.
2008 2009 2010
Expenditure GBP730,000 GBP512,000 GBP909,000
Loss on ordinary activities before taxation
Loss on ordinary activities before taxation for the year ended 30 June 2010 was
GBP2.0 million (2009: GBP0.8 million).
Financial Position
The continuing difficult trading environment, along with the poor performance of
the traditional licensing and royalty business model has resulted in a further
retained loss in the year to June 2010. The Directors have performed a review of
the assets in the Group and Company balance sheets and are satisfied that there
is no impairment to their value.
However, the direct impact on the cash position of the Group means that cash
resources are low and the
Directors are operating the Group with prudent cash management. The current
restructuring of the Group is aimed at ensuring that the Group could continue to
operate without any further injection of funds, however this would not give the
Company any opportunity to grow in its current form.
The Auditors have included an Emphasis of Matter in their report, highlighting
the cash position of the Group, and underlining the need for the Company to
raise further funds.
Subject to shareholder approval, the raising of up to GBP8.0 million will cover
the shortfall in working capital, strengthen the balance sheet, and enable the
Company to invest in products and employees that will give NXT the best
opportunity to grow.
James Lewis Kate Barnes
Chief Executive Officer Chief Financial Officer
Consolidated Statement of Comprehensive Income for the year ended 30 June 2010
+---------------------------------------------------+----------+-------------+
| | 2010 | 2009 |
| | GBP'000 | GBP'000 |
| | | (restated1) |
+---------------------------------------------------+----------+-------------+
| Continuing operations | | |
+---------------------------------------------------+----------+-------------+
| Revenue | 1,853 | 3,223 |
+---------------------------------------------------+----------+-------------+
| Cost of goods sold | (110) | (89) |
+---------------------------------------------------+----------+-------------+
| Gross profit | 1,743 | 3,134 |
+---------------------------------------------------+----------+-------------+
| Operating expenses | (3,717) | (3,994) |
+---------------------------------------------------+----------+-------------+
| Loss before financing income | (1,974) | (860) |
+---------------------------------------------------+----------+-------------+
| Net financing (costs)/income | (2) | 23 |
+---------------------------------------------------+----------+-------------+
| Loss before taxation | (1,976) | (837) |
+---------------------------------------------------+----------+-------------+
| Taxation | 231 | 201 |
+---------------------------------------------------+----------+-------------+
| Loss for the financial year | (1,745) | (636) |
+---------------------------------------------------+----------+-------------+
| Curency translation differences | (8) | 31 |
+---------------------------------------------------+----------+-------------+
| Total comprehensive income attributable to the | (1,753) | (605) |
| equity holders of the Company | | |
+---------------------------------------------------+----------+-------------+
| | | |
+---------------------------------------------------+----------+-------------+
| Basic and fully diluted loss per share | (1.1)p | (0.4)p |
+---------------------------------------------------+----------+-------------+
1.Restated due to a change in accounting policy - see Note 1
Consolidated Balance Sheet as at 30 June 2010
+----------------------------------------+-----------+-------------+-----------+
| | 2010 | 2009 | 2008 |
| | GBP'000 | GBP'000 | GBP'000 |
| | | (Restated1) | |
+----------------------------------------+-----------+-------------+-----------+
| Assets | | | |
+----------------------------------------+-----------+-------------+-----------+
| Non-current assets | | | |
+----------------------------------------+-----------+-------------+-----------+
| Property, plant and equipment | 186 | 139 | 43 |
+----------------------------------------+-----------+-------------+-----------+
| Intangible assets | 470 | 278 | 301 |
+----------------------------------------+-----------+-------------+-----------+
| Long-term debtors | 41 | 41 | 50 |
+----------------------------------------+-----------+-------------+-----------+
| | 697 | 458 | 394 |
+----------------------------------------+-----------+-------------+-----------+
| Current assets | | | |
+----------------------------------------+-----------+-------------+-----------+
| Trade and other receivables | 729 | 1,032 | 1,079 |
+----------------------------------------+-----------+-------------+-----------+
| Current tax recoverable | 188 | 188 | 175 |
+----------------------------------------+-----------+-------------+-----------+
| Cash and cash equivalents | 167 | 599 | 945 |
+----------------------------------------+-----------+-------------+-----------+
| | 1,084 | 1,819 | 2,199 |
+----------------------------------------+-----------+-------------+-----------+
| Total assets | 1,781 | 2,277 | 2,593 |
+----------------------------------------+-----------+-------------+-----------+
| Equity and liabilities | | | |
+----------------------------------------+-----------+-------------+-----------+
| Share capital | 1,587 | 1,496 | 1,436 |
+----------------------------------------+-----------+-------------+-----------+
| Deferred share capital | 22,682 | 22,682 | 22,682 |
+----------------------------------------+-----------+-------------+-----------+
| Share premium account | 88,058 | 87,019 | 86,595 |
+----------------------------------------+-----------+-------------+-----------+
| Other reserve | 282 | 282 | 282 |
+----------------------------------------+-----------+-------------+-----------+
| Stock option reserve | 815 | 746 | 571 |
+----------------------------------------+-----------+-------------+-----------+
| Accumulated deficit | (112,183) | (110,430) | (109,825) |
+----------------------------------------+-----------+-------------+-----------+
| | 1,241 | 1,795 | 1,741 |
+----------------------------------------+-----------+-------------+-----------+
| Current liabilities | | | |
+----------------------------------------+-----------+-------------+-----------+
| Trade and other payables | 430 | 309 | 431 |
+----------------------------------------+-----------+-------------+-----------+
| Borrowings | 110 | - | - |
+----------------------------------------+-----------+-------------+-----------+
| Short-term provisions | - | 173 | 421 |
+----------------------------------------+-----------+-------------+-----------+
| | 540 | 482 | 852 |
+----------------------------------------+-----------+-------------+-----------+
| Total liabilities | 540 | 482 | 852 |
+----------------------------------------+-----------+-------------+-----------+
| Total equity and liabilities | 1,781 | 2,277 | 2,593 |
+----------------------------------------+-----------+-------------+-----------+
1.Restated due to a change in accounting policy - see Note 1
Consolidated Statement of Changes in Equity as at 30 June 2010
+-----------------+----------+----------+---------+---------+---------+-------------+---------+
| | Share | Deferred | Share | Other | Stock | Accumulated | Total |
| | capital | share | premium | reserve | option | deficit | |
| | | capital | | | reserve | | GBP'000 |
| | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 | |
+-----------------+----------+----------+---------+---------+---------+-------------+---------+
| At 30 June 2007 | 23,627 | - | 83,881 | 437 | 457 | (107,937) | 465 |
+-----------------+----------+----------+---------+---------+---------+-------------+---------+
| Retained loss | - | - | - | - | - | (2,056) | (2,056) |
| for the | | | | | | | |
| financial year | | | | | | | |
+-----------------+----------+----------+---------+---------+---------+-------------+---------+
| Other | - | - | - | - | - | 14 | 14 |
| comprehensive | | | | | | | |
| income | | | | | | | |
+-----------------+----------+----------+---------+---------+---------+-------------+---------+
| Total | - | - | - | - | - | (2,042) | (2,042) |
| comprehensive | | | | | | | |
| income | | | | | | | |
+-----------------+----------+----------+---------+---------+---------+-------------+---------+
| 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 | - | - | - | - | - | (636) | (636) |
| for the | | | | | | | |
| financial year | | | | | | | |
+-----------------+----------+----------+---------+---------+---------+-------------+---------+
| Other | - | - | - | - | - | 31 | 31 |
| comprehensive | | | | | | | |
| income | | | | | | | |
+-----------------+----------+----------+---------+---------+---------+-------------+---------+
| Total | | | | | | (605) | (605) |
| comprehensive | | | | | | | |
| income | | | | | | | |
+-----------------+----------+----------+---------+---------+---------+-------------+---------+
| 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 | (110,430) | 1,795 |
| (restated1) | | | | | | | |
+-----------------+----------+----------+---------+---------+---------+-------------+---------+
| Retained loss | - | - | - | - | - | (1,745) | (1,745) |
| for the | | | | | | | |
| financial year | | | | | | | |
+-----------------+----------+----------+---------+---------+---------+-------------+---------+
| Other | - | - | - | - | - | (8) | (8) |
| comprehensive | | | | | | | |
| income | | | | | | | |
+-----------------+----------+----------+---------+---------+---------+-------------+---------+
| Total | | | | | | (1,753) | (1,753) |
| comprehensive | | | | | | | |
| income | | | | | | | |
+-----------------+----------+----------+---------+---------+---------+-------------+---------+
| Issue of shares | 91 | - | 1,039 | - | - | - | 1,130 |
| | | | | | | | |
| (net of | | | | | | | |
| expenses) | | | | | | | |
+-----------------+----------+----------+---------+---------+---------+-------------+---------+
| Fair value of | - | - | - | - | 69 | - | 69 |
| stock options | | | | | | | |
+-----------------+----------+----------+---------+---------+---------+-------------+---------+
| At 30 June 2010 | 1,587 | 22,682 | 88,058 | 282 | 815 | (112,183) | 1,241 |
+-----------------+----------+----------+---------+---------+---------+-------------+---------+
1.Restated due to a change in accounting policy - see Note 1
Consolidated Cashflow Statement for the year ended 30 June 2010
+---------------------------------------------------+----------+-------------+
| | 2010 | 2009 |
| | GBP'000 | GBP'000 |
| | | (Restated1) |
+---------------------------------------------------+----------+-------------+
| Cash flows from operating activities | | |
+---------------------------------------------------+----------+-------------+
| Loss before finance income | (1,974) | (860) |
+---------------------------------------------------+----------+-------------+
| Adjustments for: | | |
+---------------------------------------------------+----------+-------------+
| Depreciation and amortisation | 152 | 65 |
+---------------------------------------------------+----------+-------------+
| Fair value of share-based payments | 69 | 175 |
+---------------------------------------------------+----------+-------------+
| Foreign exchange translation | (8) | 31 |
+---------------------------------------------------+----------+-------------+
| | (1,761) | (589) |
+---------------------------------------------------+----------+-------------+
| Decrease in trade and other receivables | 303 | 56 |
+---------------------------------------------------+----------+-------------+
| Increase / (decrease) in trade and other payables | 131 | (122) |
+---------------------------------------------------+----------+-------------+
| Utilisation of provisions | (173) | (248) |
+---------------------------------------------------+----------+-------------+
| Shares issued for non-cash consideration | - | 47 |
+---------------------------------------------------+----------+-------------+
| Cash outflow from operations | (1,500) | (856) |
+---------------------------------------------------+----------+-------------+
| Taxation received | 232 | 188 |
+---------------------------------------------------+----------+-------------+
| Net cash outflow from operating activities | (1,268) | (668) |
+---------------------------------------------------+----------+-------------+
| Cash flows from investing activities | | |
+---------------------------------------------------+----------+-------------+
| Purchase of intangible assets | (232) | - |
+---------------------------------------------------+----------+-------------+
| Purchase of property, plant and equipment | (170) | (138) |
+---------------------------------------------------+----------+-------------+
| Interest received | - | 37 |
+---------------------------------------------------+----------+-------------+
| Interest paid | (2) | (14) |
+---------------------------------------------------+----------+-------------+
| Net cash outflow from investing activities | (404) | (115) |
+---------------------------------------------------+----------+-------------+
| Cash flows from financing activities | | |
+---------------------------------------------------+----------+-------------+
| Proceeds from the issue of share capital (net of | 1,130 | 437 |
| issue costs) | | |
+---------------------------------------------------+----------+-------------+
| Net cash inflow from financing activities | 1,130 | 437 |
+---------------------------------------------------+----------+-------------+
| Net decrease in cash and cash equivalents | (542) | (346) |
+---------------------------------------------------+----------+-------------+
| Cash and cash equivalents at the beginning of | 599 | 945 |
| year (note A) | | |
+---------------------------------------------------+----------+-------------+
| Cash and cash equivalents at the end of year | 57 | 599 |
| (note A) | | |
+---------------------------------------------------+----------+-------------+
Notes to the cash flow statement
A 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. The bank overdraft is
included in this balance.
1.Restated due to a change in accounting policy - see Note 1
Notes to the accounts
1. Basis of preparation and statement of compliance
While the financial information included in this preliminary announcement has
been prepared in accordance with the measurement and recognition criteria of
International Financial Reporting Standards (IFRSs), this announcement does not
itself contain sufficient information to comply with IFRSs. The Company
published full financial statements that comply with IFRSs on 23 September 2010.
.The financial information set out above does not constitute the company's
statutory accounts for the years ended 30 June 2010 or 2009, but is derived from
those accounts. Statutory accounts for 2009 have been delivered to the Registrar
of Companies and those for 2010 will be delivered following the company's annual
general meeting. The auditors have reported on those accounts; the auditors
report for June 2010 did include a reference to a matter to which the auditors
drew attention by way of emphasis without qualifying their reports and did not
contain statements under s498(2) or (3) Companies Act 2006.
During 2010, NXT changed its accounting policy for revenue recognition. The
effect in 2009 was a decrease in revenue and gross profit, and an increase in
retained loss of GBP140,000. Further detail is provided in note 1 to the
financial statements for the year ended 30 June 2010.
2. Going concern
The Group's business activities, together with factors likely to affect its
future development, performance and financial position and commentary on the
Group's financial results, its cash flows, liquidity requirements and borrowing
facilities are set out in the Directors' Report on pages 14 to 15 of the Annual
Report and Accounts, published today. In addition notes 1 and 20 to the
financial statements include the Group's objectives, policies and processes for
managing its capital, its financial risk management objectives, details of its
financial instruments and its exposures to liquidity risk and credit risk. The
financial statements at 30 June 2010 show that the Group generated a loss from
continuing operations of GBP1.75 million with a decrease in net cash and cash
equivalents of GBP0.5 million. The Group balance sheet shows net assets of
GBP1.3 million. Cash generated through the issue of equity in the year totalled
GBP1.1 million.
The main factor contributing to the decrease in revenues was the lack of new
licensing activity during the period. The Board has concluded that the lack of
new licenses has resulted in significant pressure on the Group's funding and
operating strategy. Changes are being made to the operating and financial
model, including a change in business strategy and routes to market.
The Board have considered various operating and funding strategies. Operating
strategies already put into practice as at September 2010 include a business
reorganisation, resulting in a reduction in headcount of 26%. In addition the
Group has closed a funding round consisting of a firm placing, placing and open
offer announced today, which is subject to shareholder approval at the AGM, and
will result in sufficient funding to enable the Group to continue as a going
concern. The directors have assumed, following discussions with shareholders,
that shareholder approval will be achieved.
Prior to the completion of this fundraising the Group is dependent on the
continuing existence of its bank overdraft facility and also certain
arrangements with creditors. In the event that this facility and these
arrangements are withdrawn or the fundraising fails to complete the Group would
be required to substantially curtail its operations.
There is a material uncertainty related to the above events which casts
significant doubt on the Group's ability to continue as a going concern and,
therefore, it may be unable to realise its assets and discharge its liabilities
in the normal course of business.
Based on the information set out above the directors believe that it is
appropriate to prepare these financial statements on the going concern basis.
3. Segmental analysis
The Group has adopted IFRS 8 Operating Segments with effect from 1 July 2009.
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
Operating Decision Maker to allocate resources to the segments and to assess
their performance. In contrast, the predecessor Standard (IAS 14 Segment
Reporting) required the Group to identify two sets of segments (business and
geographical), using a risks and returns approach, with the Group's system of
internal financial reporting to key management personnel serving only as the
starting point for the identification of such segments.
There has been no change in the identification of the Group's reportable
segments following the adoption of IFRS 8.
NXT plc is organized internally to report to the Group's chief operating
decision maker, the Chief Executive Officer on the financial and operational
performance of the group as a whole. The Group's chief operating decision maker
is ultimately responsible for entity-wide resource allocation decisions and
evaluates the performance of the Group on a group wide basis and any elements
within it on a combination of information from the executives in charge of the
Group and Group financial information.
As a consequence of the above factors the Group has one operating and reportable
segment in accordance with IFRS 8 Operating Segments.
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:
+------------------------------------------------------------+---------+------------+
| | 2010 | 2009 |
| | GBP'000 | |
| | | GBP'000 |
| | | (restated) |
+------------------------------------------------------------+---------+------------+
| UK | 44 | 77 |
+------------------------------------------------------------+---------+------------+
| Rest of Europe | 223 | 169 |
+------------------------------------------------------------+---------+------------+
| Asia Pacific | 1,229 | 2,676 |
+------------------------------------------------------------+---------+------------+
| USA and Canada | 357 | 301 |
+------------------------------------------------------------+---------+------------+
| Total revenue | 1,853 | 3,223 |
+------------------------------------------------------------+---------+------------+
+----------------------------------+---------+--------+--------+--------+---------+
| 2010 GBP'000 | UK | HK | Japan | US | Total |
+----------------------------------+---------+--------+--------+--------+---------+
| Revenue: | 861 | - | - | - | 861 |
| Royalties | | | | | |
+----------------------------------+---------+--------+--------+--------+---------+
| Licences and other | 992 | - | - | - | 992 |
+----------------------------------+---------+--------+--------+--------+---------+
| Costs | (2,402) | (867) | (178) | (380) | (3,827) |
+----------------------------------+---------+--------+--------+--------+---------+
| Loss | (549) | (867) | (178) | (380) | (1,974) |
+----------------------------------+---------+--------+--------+--------+---------+
| Net financing income | | | | | (2) |
+----------------------------------+---------+--------+--------+--------+---------+
| Loss before tax | | | | | (1,976) |
+----------------------------------+---------+--------+--------+--------+---------+
| Tax | | | | | 231 |
+----------------------------------+---------+--------+--------+--------+---------+
| Loss for the year attributable | | | | | (1,745) |
| to equity shareholders | | | | | |
+----------------------------------+---------+--------+--------+--------+---------+
| Depreciation and amortisation | 127 | 13 | - | 12 | 152 |
+----------------------------------+---------+--------+--------+--------+---------+
| Non-current assets | 664 | 24 | - | 9 | 697 |
+----------------------------------+---------+--------+--------+--------+---------+
| Current assets | 925 | 135 | 10 | 14 | 1,084 |
+----------------------------------+---------+--------+--------+--------+---------+
| Liabilities | 490 | 43 | - | 7 | 540 |
+----------------------------------+---------+--------+--------+--------+---------+
+----------------------------------+---------+--------+--------+--------+---------+
| 2009 GBP'000 (restated) | UK | HK | Japan | US | Total |
+----------------------------------+---------+--------+--------+--------+---------+
| Revenue: | 1,152 | - | - | - | 1,152 |
| Royalties | | | | | |
+----------------------------------+---------+--------+--------+--------+---------+
| Licences and other | 2,071 | - | - | - | 2,071 |
+----------------------------------+---------+--------+--------+--------+---------+
| Costs | (3,112) | (632) | (177) | (162) | (4,083) |
+----------------------------------+---------+--------+--------+--------+---------+
| Loss | 111 | (632) | (177) | (162) | (860) |
+----------------------------------+---------+--------+--------+--------+---------+
| Interest income | | | | | 23 |
+----------------------------------+---------+--------+--------+--------+---------+
| Loss before tax | | | | | (837) |
+----------------------------------+---------+--------+--------+--------+---------+
| Tax | | | | | 201 |
+----------------------------------+---------+--------+--------+--------+---------+
| Loss for the year attributable | | | | | (636) |
| to equity shareholders | | | | | |
+----------------------------------+---------+--------+--------+--------+---------+
| Depreciation and amortisation | 29 | 22 | - | 14 | 65 |
+----------------------------------+---------+--------+--------+--------+---------+
| Non-current assets | 424 | 34 | - | - | 458 |
+----------------------------------+---------+--------+--------+--------+---------+
| Current assets | 1,738 | 44 | 14 | 23 | 1,819 |
+----------------------------------+---------+--------+--------+--------+---------+
| Liabilities | 467 | 5 | - | 10 | 482 |
+----------------------------------+---------+--------+--------+--------+---------+
The results above exclude management recharges.
Included within the above are revenues of approximately GBP300,000 (2009:
GBP1,437,000) which arose from sales to the Group's largest customer.
4. Loss per share and underlying loss reconciliation
Basic and fully diluted loss per share has been calculated on the Group's loss
attributable to shareholders of GBP1,745,000 (2009 restated - GBP636,000) and on
the weighted average number of ordinary shares in issue during the financial
year (excluding deferred shares), which was 153,111,433 (2009 - 145,566,920).
Whilst unexercised share options and warrants in the Company would increase the
weighted average number of potential shares in the year, due to the losses of
the Group they are not considered to be dilutive.
5. Post Balance Sheet Events
The Company will announce today a firm placing, placing and open offer
fundraising, to raise up to GBP8.0 million before expenses. This is subject to
shareholder approval at the Annual general Meeting on 18 October 2010.
6. Availability of Annual Report and Accounts
NXT will only be sending hard copies of these Financial Statements to individual
shareholders who have requested them. Otherwise, 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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