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| Date/Time | Headline | Source |
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| 16-03-10 | RNS |
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This news article is displayed preformatted as it may contain results tables
RNS Number : 6463I
BgenuineTec Inc.
16 March 2010
FOR IMMEDIATE RELEASE
16 March 2010
BgenuineTec Inc
("BgenuineTec" or "the Company")
Preliminary Results for the year ended 31 December 2009
BgenuineTec Inc (AIM:BGTI) today announces its preliminary results for the year ended 31 December 2009.
Financial highlights
· Revenues increased to JPY44.33 million (£0.30 million) (FY 2008:
JPY25.46 million (£0.17 million)
· Gross loss reduced to JPY20.53 million (£0.14 million) (FY 2008:
JPY76.72 million (£0.52 million)
· Loss from operations reduced to JPY286.11million (£1.95million)
(FY 2008: JPY 496.52 million (£3.39 million)
· Loss before tax reduced to JPY380.67million (£2.60million) (FY
2008: JPY 537.92 million (£3.67 million)
· Basic loss per share JPY5.48(£0.04) (FY 2008: JPY 11.51 (£0.08)
Operational highlights
· Successful integration of BeyondLSI Inc. (Japan) technology
· Formation of business alliances with Shenyang Beyond LSI
Inc.(China),DDS Inc.(Japan) and Fingerprint Cards AB (Sweden).
· Development of Fingerprint algorithm for advance mobile phone
sensors
· Successful launch for Module business with Fingerprint Area
Sensor of Fingerprint Cards AB (Sweden)
· Release of a new access control system with SDGate-V
Commenting on the results, Taketoshi Kashiwabara, Chairman of BgenuineTec Inc, said:
"2009 has been a challenging year for BgenuineTec. Notwithstanding the trading environment during the year, we have successfully managed to reduce losses and I would like to confirm my commitment to fund the business through these difficult times."
For further information, please contact:
BgenuineTec Inc (Japan)
Taketoshi Kashiwabara (Chairman) +81-3-5652-0321
Toshiya Kurita Japan (Chief Financial Controller) +81-3-5652-0321
Nominated Adviser
Charles Stanley Securities
Russell Cook +44 (0) 20 7149 6000
Dugald J Carlean
Media Enquiries
Cubitt Consulting
Chris Lane / James Verstringhe +44 (0) 20 7367 5100
Background Note on BgenuineTec Inc.
On 14 July 2006, BgenuineTec Inc.(AIM; BGTI) 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.
BgenuineTec Inc
("BgenuineTec" or "the Company")
Preliminary Results for the year ended 31 December 2009
Chairman's Statement
2009 has been a challenging year for the Company. To maximise the BgenuineTec's resources in light of the global economic downturn and the difficult trading environment, the Board took decisive action to focus the Company's activities on the volume business with LSI (large scale integration chip) solutions for mobile phones and note PCs and the application business with module solutions for Networks and door locks
Demand for biometric identification products is increasing, especially in the fields of information security, financial transactions, security systems and medical treatment. There is also considerable demand for fingerprint authentication on mobile phones and note PCs. To date, the provision of reasonably priced and secure solutions for the aforementioned industries has not been widely available. BgenuineTec's objective is to see that personal authentication is installed on all small portable devices that are used every day. To do this, the Company is focused on exploring high quality, low cost solutions for volume applications such as mobile phones and Note PCs.
During the year, the Company has successfully formed alliances with various companies, in particular with a number of fingerprint identification partners, with which we will develop a global marketing strategy. In particular the alliances with Shenyang BeyondLSI Inc. and DDS Inc. are typical cases for the module business in the Chinese market and for the network business in Japanese markets. As a result of an alliance with a major overseas company, which is planning to use BgenuineTec's technology to develop a range of products, we are optimistic that that this will generate substantial revenues during the course of the next one to two years.
Profit and Loss Account
For the year ended 31 December 2009, revenues increased by 74.1% to JPY 44.3 million (£0.30 million) from JPY 25.46 million (£0.17 million). Gross losses have reduced from JPY 76.7 million (£0.52 million) in 2008 to JPY 20.5 million (£0.14 million) in 2009. The Board has taken strong measures to address the Company's cost base in order to create a sustainable business model for the Company. Selling, general and administrative expenses were reduced in the year from JPY 423.9 million (£2.9 million) in 2008 to JPY 272.3 million (£1.9 million).
As a result the operating loss was reduced by 42.4% to JPY 286.1 million from JPY 496.5 million and the loss before tax was to JPY 380.7 million (£2.6 million) from JPY 537.9 million (£3.7 million).
The loss per share was JPY 5.5 (£0.04) compared to the loss per share of JPY 11.5 (£0.08) in 2008.
Balance Sheet
The Balance Sheet reflects, where appropriate, asset write downs for Inventory of JPY 100.5 million (£0.69 million), Trade receivables totalling JPY 14.6 million (£0.1 million) and non-current assets of JPY 34.0 million (£ 0.23 million). Total net assets at the year end were a loss of JPY 78.2 million (-£0.53 million), compared to JPY 155 million (£1.05 million) at 31 December 2009.
The financial statements have been prepared by management on a going concern basis and do not reflect any adjustments that would be necessary if the going concern assumption was incorrect. The Board believes that the going concern assumption is currently valid based on its view of the Company's future trading and its continued ability to access equity finance. An exchange rate of £1 = JPY 146.53 has been used throughout this statement.
Outlook
The Company's fingerprint business incorporates core components including software algorithms, sensors, engine LSI and modules, which are the embedded systems required for effective fingerprint authentication. Above all, sensors are an important factor in our business. Even though we can handle optical area sensors of the classical type, which are still useful in some application fields, sensors at low cost and high performance are needed to penetrate the world markets. We aim to expand the alliances with leading sensor companies and work on joint projects to provide competitive solutions to the world market.
This financial year, we plan to strengthen our sales team for both our core component business, especially the module business, and our local products such as network solutions, door locks and OA equipment (e.g. fax machines, telecopiers, scanners). We have set up two sales divisions for both global and local markets. These teams are supported by technical engineers, headed by the Chief Executive and the Chief Technical Officer.
In the difficult economic situation, we are planning to use our technical skills and to work closely with our partners to develop new products for overseas markets and establish a firm base for the company to increase sales and return the company to profit. My confidence in our ability to do so is reflected in my commitment to my fellow directors and to our shareholders to fund the company through to profitability and I will be supporting another funding to ensure that BgenuineTec has resources in place to continue its development.
Taketoshi Kashiwabara
Chairman
16 March 2010.
BgenuineTec Inc
Consolidated income statements for the years ended 31 December 2009 and 2008
NOTES Year Year Year Year
Ended Ended Ended
31/12/09 31/12/08 31/12/09 Ended
31/12/08
JPY'000 JPY'000 STG STG
(*) (*)
Revenue 2/24 44,329 25,455 302,528 173,716
Cost of sales 4 (64,858) (102,175) (442,631) (697,295)
Gross profit (loss) (20,529) (76,720) (140,103) (523,579)
Other operating income 6,770 4,123 46,202 28,141
Sales and marketing expenses 4 (50,694) (131,250) (345,967) (895,725)
General and administrative 4 (192,723) (160,900) (1,315,245) (1,098,068)
expenses
Research and development 4 (28,929) (131,768) (197,424) (899,257)
expenses
Lossfrom operations 4 (286,105) (496,515) (1,952,537) (3,388,488)
Finance income 6 - 3,092 - 21,106
Finance costs 5 (23,526) (25,016) (160,552) (170,725)
Net finance costs (23,526) (21,924) (160,552) (149,619)
Impairment of investment in 13 (64,869) - (442,700) -
equity accounted investee
Share of loss of investment in 13 (6,167) (19,484) (42,088) (132,971)
equity accounted investee
Loss before tax (380,667) (537,923) (2,597,877) (3,671,078)
Income tax expense 18 - - - -
Loss for the year (380,667) (537,923) (2,597,877) (3,671,078)
Attributable to:
Equity holders of the Company (380,667) (537,923) (2,597,877) (3,671,078)
Minority interests - - - -
Lossper share 7
Basic (5.48) (11.51) (0.04) (0.08)
Diluted - - - -
Consolidated statement of comprehensive income
for the the years ended 31 December 2009 and
2008
NOTES 2009 2008 2009 2008
JPY'000 JPY'000 * *
(Note 5) (Note 5)
Loss for the period (380,667) (537,923) (2,597,877) (3,671,078)
Other comprehensive income
Financial assets available for
sale:
-Change in fair value 12 - 425 - 2,897
-Income tax expense - - - -
Other comprehensive income for - 425 - 2,897
the period
Total comprehensive loss for (380,667) (537,498) (2,597,877) (3,668,181)
the period
Attributable to:
Equity holders of the Company (380,667) (537,498) (2,597,877) (3,668,181)
Minority interests - - - -
BgenuineTec Inc
Consolidated statements of changes in equity for the years ended 31 December 2009 and 2008
Attributable to equity holder of the company
JPY'000
Share Share premium Fair value reserve Share option reserve Deficit Total equity
NOTES capital STG
(*)
Balanceasat1 January2008 713,614 472,255 (425) 12,337 (826,272) 371,509 2,535,377
Share issued 16 154,000 154,000 - - - 308,000 2,101,959
Share issuance costs - (1,091) - - - (1,091) (7,446)
Fair value adjustments of 12 - - 425 - - 425 2,897
available-for-sale investments
Share option costs charged to 16 - - - 13,630 - 13,630 93,025
income for the year
Net loss for the year 17 - - - - (537,923) (537,923) (3,671,078)
Balance as at 1 January 2009 867,614 625,164 - 25,967 (1,364,195) 154,550 1,054,734
Share issued 16 79,220 79,220 - - - 158,440 1,081,280
Share issuance costs - (634) - - - (634) (4,325)
Fair value adjustments of 12 - - - - - - -
available-for-sale investments
Share option costs charged to 16 - - - (9,917) - (9,917) (67,680)
income for the year
Net loss for the year 17 - - - (380,667) (380,667) (2,597,877)
Balance as at 946,834 703,750 - 16,050 (1,744,862) (78,228) (533,868)
31 December 2009
BgenuineTec Inc
Consolidated statement of financial position as at 31 December 2009 and 2008
NOTES 2009 2008 2009 2008
JPY'000 JPY'000 STG STG
(*) (*)
ASSETSNon-current assets
Property, plant and equipment 8 3,133 4,214 21,379 28,755
Investment securities 12 6,446 6,446 43,991 43,990
Investments in equity 13 - 68,036 - 464,315
accounted investee
Goodwill 10 - 7,200 - 49,137
Intangible assets 11 19,856 4,858 135,510 33,154
Other non-current assets 9 4,574 4,636 31,220 31,640
34,009 95,390 232,100 650,991
Current assets
Inventories 14 17,680 51,727 120,660 353,013
Trade and other receivables 15/24 14,649 43,442 99,970 296,475
Cash and cash equivalents 15 804 45,237 5,486 308,721
33,133 140,406 226,116 958,209
Total assets 67,142 235,796 458,216 1,609,200
LIABILITIES
Current liabilities
Borrowings 15/24 166 - 1,135 -
Trade and other payables 19/24 143,604 81,246 980,029 554,466
Provision for asset retirement 22 1,600 - 10,920 -
obligation
145,370 81,246 992,084 554,466
Net current assets (112,237) 59,160 (765,917) 403,743
Total liabilities 145,370 81,246 992,084 554,466
Net assets (78,228) 154,550 (533,868) 1,054,734
EQUITY
Share capital 16 946,834 867,614 6,461,708 5,921,068
Share premium 16 703,750 625,164 4,802,770 4,266,454
Fair value reserve 12 - - - -
Share option reserve 16 16,050 25,967 109,538 177,218
Deficit 17 (1,744,862) (1,364,195) (11,907,884) (9,310,006)
Total equity (78,228) 154,550 (533,868) 1,054,734
BgenuineTec Inc
Consolidated Statement of cash flows for the years ended 31 December 2009 and 2008
NOTES Year Year Year Year
Ended Ended Ended
31/12/09 31/12/08 31/12/09 Ended31/12/08
JPY'000 JPY'000 STG STG
(*) (*)
OPERATING ACTIVITIES
Cashused inoperations 20 (154,370) (225,105) (1,053,506) (1,536,241)
Interestreceived (paid), net (36) 76 (247) 524
NET CASH USED IN OPERATING (154,406) (225,029) (1,053,753) (1,535,717)
ACTIVITIES
INVESTING ACTIVITIES
Expenditure on product - (3,897) - (26,597)
development
Purchase of intangible assets (19,048) - (129,991) -
Acquisition of associate (3,000) (30,450) (20,474) (207,807)
company
Purchase of investment (25,000) - (170,613) -
security
Proceeds from sales of 1,924 1,644 13,130 11,224
investment securities
Expenditure lending collection (22,888) (13,400) (156,197) (91,449)
Proceeds from lending made 20,000 - 136,491 -
NET CASH USED IN INVESTING (48,012) (46,103) (327,654) (314,629)
ACTIVITIES
FINANCING ACTIVITIES
Proceeds from short-term 166 - 1,135 -
borrowings
Proceeds on issue ofnew 157,807 306,909 1,076,957 2,094,512
shares, net of issuance cost
NET CASH FROM FINANCING 157,973 306,909 1,078,092 2,094,512
ACTIVITIES
NETINCREASE (DECREASE)IN CASH (44,445) 35,777 (303,315) 244,166
AND CASH EQUIVALENTS
EFFECT OF EXCHANGE RATE 12 (55) 80 (377)
FLUCTUATIONS ON CASH HELD
CASH AND CASH EQUIVALENTS AT 45,237 9,515 308,721 64,932
BEGINNING OF YEAR
CASH AND CASH EQUIVALENTS AT 15 804 45,237 5,486 308,721
END OF YEAR
BgenuineTec Inc
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BgenuineTec Inc, hereafter "the Company", is a company incorporated and
domiciled in Japan. The legal form of the Company is a limited liability
corporation called "Kabushiki-kaisha". The Company designs and
manufactures a range of fingerprint authentication technologies and
products to companies and individuals that wish to establish high levels of
security in various applications using biometrics. The business activity
also includes R&D and sales of fingerprint systems and components.
Theconsolidatedfinancial statementsof the Companyhave been prepared in
accordance with International Financial Reporting Standards ("IFRS"), as
adopted by the EU. The designation "IFRSs" also includes all valid
International Accounting Standards (IASs). All interpretations of the
International Financial Reporting Interpretations Committee (IFRIC)
mandatory for the financial year 2009 have also been applied. Pound
sterling amounts included herein are given solely for convenience and are
stated, as matter of arithmetical computation only, at the rate of
JPY146.53=£1, the approximate exchange rate at 31 December 2009. The
translation should not be construed as representations that the Japanese
yen amounts have been, could have been, or could in the future be,
converted into pounds sterling.
The principal accounting policies adopted are set outbelow.
Going-concern
These consolidated financial statements have been prepared by management on
the basis 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 net loss of JPY382million in the year ended 31 December
2009, mainly due to poor sales results of JPY44million andimpairment loss
on investment in associate company*of JPY64million.
The poor sales resulted from the internal restructuring of the sales and
development divisions, the worldwide recession and a deferred order from a
major client.
To enable the Company to rectify the continued loss-making, the Company is
either in the process of carrying out or going to carry out following
actions in 2009.
a. Readjust the product mix by introducing technologies and products from
the associated Company "Beyond LSI Inc".
b. Restructuring sales organization and strengthen sales manpower.
c. Strengthen management.
d. Enhancing core technology and penetrating overseas market.
To expand its business, the Company needs additional funding of JPY 180
million in 2010 from the date of signing of these accounts. Further to
this, additional JPY 100 million is necessary in terms with investors. Fund
raising of JPY 156 million is planned in the first half of 2010, and JPY
24 million in second half of 2010. Fundamental to the Going Concern
assumption is a belief by the Board that it can raise such equity.
These consolidated financial statements do not reflect adjustments that
would be necessary if the going concern assumptionwasnot appropriate
becausethe Company has a firm conviction to achieve sales and operating
profits in 2010 and 2011 by execution of above actions, and the
fund-raising in 2010 as mentioned above.
If the going concern assumption were not appropriate for the consolidated
financial statements, then adjustment would be necessary to the carrying
values of the assets and liabilities, the reported revenues and expenses,
and classificationsused in the consolidated statement of financial
position.
Basis of consolidationEquity method
Associates are those entities in which the Company has significant
influence, but not control, over the financial and operating policies.
Significant influence is presumed to exist when the Company holds between
20% and 50% of the voting power of another entity. Associates are accounted
for using the equity method (equity accounted investees) according to IAS28
(Investments in Associates). The consolidated financial statements include
the Company's share of the income and expenses of equity accounted
investees, after adjustments to align the accounting policies with those of
the Company, from the date that significant influence commences until the
date that significant influence ceases. When the Company's share of losses
exceeds its interest in an equity accounted investee, the carrying amount
of that interest (including any long-term investments) is reduced to nil
and the recognition of further losses is discontinued except to the extent
that the Company has an obligation or has made payments on behalf of the
investee.
GoodwillGoodwill arising onbusiness combinationrepresents the excess of the
cost of acquisition over the fair value of the identifiableassets and
liabilities of a transferorat the date of acquisition.In respect of equity
accounted investees, the carrying amount of goodwill is included in the
carrying amount of the investment.
Goodwill is recognised as an asset and reviewed for impairment at least
annually. Any impairment is recognised immediately in the income statement
and is not subsequently reversed.
The Company has only single cash generating unit for the purpose of
impairment testing.
Revenue recognitionRevenue arises from sales of goods.
Revenue is measured at the fair value of the consideration received or
receivable and represents amounts receivable for goods and services
provided in the normal course of business, net of discounts and consumption
taxes.
Sales of goods are recognised when goods are delivered and title has
passed.
LeasingLeases are classified as finance leases whenever the terms of the
lease transfer substantially all the risks and rewards of ownership to the
lessee. All other leases are classified as operating leases. There was no
asset under finance lease as of the balance sheet date.
Rentals payable under operating leases are charged to income on a
straight-line basis over the term of the relevant lease.
Foreign currenciesThe Company's functional and presentational currency is
Japanese Yen ("JPY").
Transactions in currencies other than Japanese Yen are recorded at the
rates of exchange prevailing on the dates of the transactions. At the
balance sheet date, monetary assets and liabilities that are
denominatedinforeigncurrencies are retranslated at the rates prevailing on
the balance sheetdate. Non-monetary assets and liabilities carried at fair
value that are denominated in foreign currencies are translated at the
rates prevailing at the date when the fair value was determined. Gains and
losses arising on retranslation are included in the income statement for
theyear.
TaxationThe tax expense represents the sum of the tax currently payable and
deferred tax.
The tax currently payable is based on taxable profit for the year. Taxable
profit differs from net profit as reported in the income statement because
it excludes items of income or expense that are taxable or deductible in
other years and it further excludes items that are never taxable or
deductible. TheCompany's liability for current tax is calculated by using
tax rates that have been enacted or substantively enacted by the balance
sheet date.
Deferred tax is the tax expected to be payable or recoverable on
differences between the carryingamount of assets and liabilities in the
financial statements andthe corresponding tax bases used in the computation
of taxable profit, and is accounted for using the balance sheet liability
method. Deferred tax liabilities are recognised for all taxable temporary
differences and deferred tax assets are recognised to the extent that it is
probable that taxable profits will be available against which deductible
temporary differences can be utilised. Such assets and liabilities are not
recognised if the temporary difference arisesfromgoodwillon the initial
recognition of goodwill or an asset or liability, which is not part of a
business combination and at the time of recognition did not affect
accounting or taxable profit.
The carrying amount of deferred tax assets is reviewed at each balance
sheet date and reduced to the extent that it is no longer probable that
sufficient taxable profits will be available to allow all or part of the
assets to be recovered.
Deferred tax is calculated at the tax rates that are expected to apply to
the period when the asset is realised or the liability is settled. Deferred
tax is charged or credited in the income statement, except when it relates
to items credited or charged directly to equity, in which case the deferred
tax is also dealt with in equity.
Property, plant and equipmentProperty, plant and equipmentare stated at
cost less accumulated depreciation and any recognised impairment loss.
Depreciation is charged so as to write off the cost or valuation of assets,
other than land and properties under construction, over their estimated
useful lives, using the straight-line method, on the following basis:
Leasehold improvement 10%-17%
Fixtures andequipment 17%-50%
The gain or loss arising on the disposal or retirement of an asset is
determined as the difference between the sales proceeds and thecarrying
amount of the asset and is included in the income statement for theyear.
Other non-current assets
Other non-current assets consist of lease depositsfor office premisesand
long-term prepaid expenses, which are stated at historical cost minus
unrefundedamounts.
Development costs
Development costsconcerning software programs developed externallyare
capitalised and measured initially at purchase cost and amortised on a
straight-line basis over their estimated useful lives(3years).
An internally generated intangible asset arising from the Company's
biometric technology business development is recognised only if all of the
following conditions are met:
· an asset is created that can be identified (such as software
and new processes);
· it is probable that the asset created will generate future
economic benefits; and
· the development cost of the asset can be measured reliably.
Internally generated intangible assets are amortisedon a straight-line
basis over their useful lives.
Expenditure on research activities is recognised as an expense in the
period in which it is incurred.
Patents, exclusive sales rights and trademarksPatents and trademarks are
measured initially at purchase cost and amortised on a straight-line basis
over their estimated useful lives(8years). Exclusive sales rights are not
amortised since there is substantially no period for termination in the
agreement.
Impairment of tangible and intangible assets excluding goodwillAt each
balance sheet date, the Company reviews the carrying amounts ofits tangible
and intangible assets to determine whether there is anyindication that
those assets have suffered an impairment loss. If any suchindication
exists, the recoverable amount of the asset is estimated inorder to
determine the extent of the impairment loss (if any). Where the asset does
not generate cash flows that are independent from other assets,the Company
estimates the recoverable amount of the cash-generating unit to which the
asset belongs. An intangible asset with an indefinite useful life is tested
for impairment annually and whenever there is an indication that the asset
may be impaired.
Recoverable amount is the higher of fair value less costs to sell and value
in use. In assessing value in use, the estimated future cash flows are
discounted to their present value using a pre-tax discount rate that
reflects current market assessments of the time value of money and the
risks specific to the asset for which the estimates of future cash flows
havenotbeen adjusted.
If the recoverable amount of an asset (or cash-generating unit) isestimated
to be less than its carrying amount, the carrying amount ofthe asset
(cash-generating unit) is reduced to its recoverable amount. An impairment
loss is recognised as an expense immediately, unless therelevant asset is
carried at a revalued amount, in which casethe impairment loss is treated
as a revaluation decrease.
Where an impairment loss subsequently reverses, the carrying amountof the
asset (cash-generating unit) is increased to the revised estimate of its
recoverable amount, but so that the increased carrying amount does not
exceed the carrying amount that would have been determined had no
impairment loss been recognised for the asset (cash-generating unit)in
prior years. A reversal of an impairment loss is recognised as income
immediately, unless the relevant asset isalreadycarried at a revalued
amount, in which case the reversal of the impairment loss is treated as a
revaluationincrease.
InventoriesInventories are stated at the lower of cost and net realisable
value. Costcomprises direct materials, transportation and any other
incidental costs incurred for purchase. Cost is calculated using
theweighted average method. Net realisable value represents the estimated
selling price less all estimated costs to completion and costs to be
incurred in marketing, selling and distribution.
Financial instruments
Financial assets and financial liabilities are recognised on the
Company'sstatement of financial positionwhen the Company has become a
party to the contractual provisions of the instrument.
Trade receivablesTrade receivablesare recognised at fair value and
subsequently measured at amortised cost and are classified as loans and
receivables in accordance with IAS39 Financial Instruments:Recogniton and
Measurement.
Assessments are made regularly as to whether there is any objective
evidence that trade receivables may be impaired. Where there is objective
evidence of impairment, the recoverable amount is calculated by estimating
the present value of the future cash flows discounted using the effective
interest rate. Any impairment losses identified from the impairment test
are recognised as an expense in the income statement.
Investments securitiesInvestments are recognised and derecognised on a
trade date where a purchase or sale of an investment is under a contract
whose terms require delivery of the investment within the timeframe
established by the market concerned, and are initially measured at cost,
including transaction costs.
Investment securities classified as available-for-sale are remeasured at
fair value. Gains and losses arising from the changes in the fair values
of available-for-sale investments are recognised directly in the fair
value reserve in equity, until the investment is sold or otherwise
disposed of or until it is determined to be impaired. The fair value of
an available-for-sale investment is based on its quoted bid price in an
active market at the balance sheet date. The fair value of
available-for-sale investment with no quated bid price is based on fair
value of future cash flows discounted using the market rate of interest.
In accordance with IAS 39, assessments are made regularly as to whether
there is any objective evidence that investments securities may be
impaired. Cumulative losses identified after carrying out an impairment
test are removed from the fair value reserve in equity and recognised as
an expense in the income statement.
Trade payablesTrade payables areclassified as other liabilities in
accordance with IAS 30, initially recognised at fair value and
subsequently measured at amortised cost using the effective interest
method.
Equity instrumentsOrdinary shares are classified as equity instruments
andare recorded at thefair value, net of direct issue costs. Equity
instruments are not subsequently remeasured.
In accordance with IAS39 (Financial Instruments: Recognition and
Measurement), assessments are made regularly as to whether there is any
objective evidence that a financial asset or group of assets may be
impaired. Impairment losses identified after carrying out an impairment
test are recognised as an expense. Gains and losses on available-for-sale
investments are recognised directly in equity until the financial asset is
disposed of or is determined to be impaired, at which time the cumulative
loss previously recognised in equity is included in loss for the year.
Share-based paymentsThe Company operates an equity-settled share-based
payment scheme. Equity-settled share-based payments are measured at fair
value of the share options at the date of grant. The fair value determined
at the grant date is expensed on a straight-line basis over the vesting
period with a corresponding increase in equity, based on the Company's
estimate of the number of options that will eventually vest.
Fair value is measured by use of aBlack-Scholesmodel, taking into account
the terms and conditions upon which the options were granted.
Critical accounting estimates and judgementsEstimates and judgements are
continually evaluated and are based on historical experience and other
factors, including expectations of future events that are believed to be
reasonable under the circumstances.
Critical accounting estimates and assumptions
The Company makes estimates and assumptions concerning the future. The
resulting accounting estimates and assumptions will, by definition, seldom
equaltothe related actual results. The estimates and assumptions that have
a significant risk of causing a material adjustment to the carrying amounts
of assets and liabilities within the next financial year are discussed
below.
The Company is subject to income taxes at city and national level within
Japan. Significant judgement is required in determining the provision for
income taxes. There are many transactions and calculations for which the
ultimate tax determination is uncertain during the ordinary course of
business. The Company recognises liabilities for anticipated tax audit
issues based on estimates of whether additional taxes will be due. Where
the final tax outcome of these matters is different from the amounts that
were initially recorded, such differences will impact the income tax and
deferred tax provisions in the period in which such determination is made.
Provisions
Provisions are recognized when the Company has a present legal or
constructive obligation as a result of past events and it is probable that
an outflow of economic benefits will be required to settle the
obligation.Provisions are measured and recorded as the best estimate of the
expenditure requiredsettlingthe present obligation at the balance sheet
date.
Asset retirement obligation
In accordance with a contractual obligation to a landlord to dismantle and
remove leasehold improvements from a leased office at the end of the lease
contract, a provision for asset retirement obligation is recognised.
IFRS 2 (amended) Group Cash-Settled Share Based Payment
Transactions
IFRS 3 (revised 2008) Business Combinations
IAS 27 (revised 2008) Consolidated and Separate Financial Statements
IAS 39 (amended) Eligible Hedged Items
IFRIC 17 Distributions of Non-cash Assets to Owners
Improvements to IFRSs (2008) Amendments to IFRS 5 Non-current Assets Held for
Sales and Discontinued Operations
Improvements to IFRSs (2009) Amendments to IFRS 2 Share-based Payments and
IFRS 3 Business Combinations (revised 2008)
Improvements to IFRSs (2009) Amendments to IAS 38 Intangible Assets
Improvements to IFRSs (2009) Amendments to IFRIC 9 Reassessment of Embedded
Derivatives
Improvements to IFRSs (2009) Amendments to IFRIC 16 Hedges of a Net Investment
in a Foreign Operation
Improvements to IFRSs (2009) Amendments to IFRS 5 Non-current Assets Held for
Sale and Discontinued Operations
Improvements to IFRSs (2009) Amendments to IFRS 8 Operating Segments
Improvements to IFRSs (2009) Amendments to IAS 1 Presentation of Financial
Statements
Improvements to IFRSs (2009) Amendments to IAS 7 Statement of Cash Flows
Improvements to IFRSs (2009) Amendments to Amendments to IAS 17 Leases
Improvements to IFRSs (2009) Amendments to IAS 36 Impairment of Assets
Improvements to IFRSs (2009) Amendments to IAS 39 Financial Instruments:
Recognition and Measurement
The Company anticipates that the adoption of the Standards and Interpretations in future periods will have no effect on the Company's financial statements for the forthcoming year.
BgenuineTec Inc
NOTES TO THE CONSOLIDATEDFINANCIAL STATEMENTS
FOR the years ended 31 December 2009 and 2008
1 PRESENTATION OF FINANCIAL STATEMENTS
Theconsolidatedfinancial statements have been prepared in accordance with
International Financial Reporting Standards.
Theseconsolidatedfinancial statements are presented inJapanese Yensince
that is the currency in which the majority of the Company's transactions
are denominated.
2 REVENUE
An analysis of the Company's revenue is as JPY'000
follows:
Year ended Year ended
31/12/09 31/12/08
Continuing operations - sale of goods: 44,329 25,455
Total revenue 44,329 25,455
3 Segment Information
Business segmentsFor managementreportingpurposes, the Company is
currently organisedasasingle operating division, that is, biometric
technology. Thisdivisionisthe basisforsegment information.
Principal activity is to be engaged in research and development and sales
of biometric technology products including biometric certification and
authentication services, physical access systems, fingerprint image
sensors and relating software.
Due to the single segment, the segment information is not reported here.
Geographical segmentsThe Company's operations are locatedonlyinJapan and
there was substantially no exportation from Japan.
4 LOSSFROM OPERATIONS
Lossfrom operations has been arrived at after charging:
JPY'000
Year ended Year ended
31/12/09 31/12/08
Staff costs (see belownumbers of staff)
Salaries and wages 92,321 83,021
Share option expense (9,917) 13,631
Social security costs 5,723 7,701
88,127 104,353
Depreciation 1,081 3,541
Impairment of property, plant and - 1,929
equipment
(note 1, described below)
Amortisation 430 27,954
Impairment of intangible assets -7,200
(note 1, described below) 34,604
Auditors' remuneration
-audit for annual report
-other 6,190 5,286
- -
6,190 5,286
Research and development 4,785 24,196
Advisory fees 28,701 18,212
Purchased goods 34,867 17,619
Write-down of inventories 15,843 86,502
Subcontractors fees 20,949 56,112
Travel expenses 11,613 9,688
Operating lease expenses (Note 23) 12,821 13,219
Advertising and public relation expenses 15,177 19,758
Allowance for doubtful receivables 37,479 101,219
Provision for asset retirement obligation 1,600 -
Others 50,341 1,901
Total 337,204 526,093
(note 1) Certain assets in the year ended 31December 2009 and 2008 have been impaired since it is no longer considered recoverable from the Company's continuing operations.
NUMBER OFSTAFF
The average monthly number of employees including executive directors for the year for each
of the Company's principalfunctionswas as follows:
Number
Year ended Year ended
31/12/09 31/12/08
Engineers 3 2
Head office and administration 3 4
6 6
5 FINANCE COSTS JPY'000
Year ended Year ended
31/12/09 31/12/08
Interest onborrowings, net of interest earned 36 -
Foreign exchange loss, net 413 -
Loss on sale of investment security 23,076 1,724
Loss on devaluation of investment security (Note 1 23,292
12)
23,526 25,016
6 FINANCEINCOME
JPY'000
Year ended Year ended
31/12/09 31/12/08
Interestearned, net of interest incurred - 77
Foreign exchange gain, net - 3,015
- 3,092
7 EARNINGS PER SHARE
The calculation of the basic and diluted earnings per share is based on the following
data:
Earnings JPY'000
Year ended Year ended
31/12/09 31/12/08
Earnings for the purposes of basic (380,667) (537,923)
earnings per share (net loss for the year
attributable to equity holders)
Effect of dilutive potential ordinary - -
shares
(note 1, described below)
Earnings for the purposes of diluted (380,667) (537,923)
earnings per share
Number of shares Year ended Year ended
31/12/09 31/12/08
Weighted average number of ordinary shares 69,417,630 46,753,624
for the purposes of basic earnings per
share
Effect of dilutive potential ordinary - -
shares:
- share option(note 1, described below)
Weighted average number of ordinary shares 69,417,630 46,753,624
for the purposes of diluted earnings per
share
(note 1) Share options which the Company and associated company held has
anti-dilutive effect on earnings per share for the years.
8 PROPERTY, PLANT AND EQUIPMENT
JPY'000
Leasehold Plant & Machinery Fixtures & Equipment Total
Improvement
COST OR VALUATION
At 1 January 2008 3,757 171 17,934 21,862
Additions - - - -
Disposal
-disposal - - - -
-impairment - (37) (1,892) (1,929)
(note 1, described below)
At 1 January 2009 3,757 134 16,042 19,933
Additions - - - -
Deductions
-disposal - - - -
-impairment - - - -
At 31 December 2009 3,757 134 16,042 19,933
ACCUMULATEDDEPRECIATION
At 1 January 2008 309 93 11,777 12,179
Charge for the year 399 41 3,100 3,540
Disposal - - - -
At 1 January 2009 708 134 14,877 15,719
Charge for the year 400 - 681 1,081
Disposal - - - -
At 31 December 2009 1,108 134 15,558 16,800
NET BOOK VALUE
At 31 December 2009 2,649 - 484 3,133
At 31 December 2008 3,049 - 1,165 4,214
(note 1) A part of property, plant and equipment relating to specific research and development has been
impaired by estimating future cash flows since they were considered not to be recoverable.
9 OTHER NON-CURRENT ASSETS
JPY'000
Year ended Year ended
31/12/09 31/12/08
Lease deposit for office premises
Beginning balance 4,574 4,673
Addition - 270
Disposal - (369)
Ending balance 4,574 4,574
Long-term prepaid expense
Beginning balance 62 185
Addition - -
Amortisation (62) (123)
Ending balance - 62
Total 4,574 4,636
10 GOODWILL
JPY'000
COST
At 1 January 2008 12,500
Additions -
Deductions
- impairment (note 1, described below) (5,300)
At 1 January 2009 7,200
Additions -
Deductions
- impairment (note 1, described below) (7,200)
At 31 December 2009 -
(note 1) The Company reviewed Goodwill for impairment for the period ended December 31, 2009 and 2008 by
estimating future cash flows. As a result, impairment loss of JPY 7,200,000 and JPY5, 300,000 were recognized
as of December 31, 2009 and 2008 respectively as they were considered not to be recoverable.
11 INTANGIBLE ASSETS
JPY'000
Development costs Patents & trademarks Exclusive sales Total
right
COST
At 1 January 2008 68,693 50,318 3,429 122,440
Additions 3,897 - - 3,897
Deductions
-impairment(note 1) (7,385) (18,489) (3,429) (29,303)
-other (returned) - (20,400) - (20,400)
At 1 January 2009 65,205 11,429 - 76,634
Additions - 19,048 - 19,048
Deductions
-disposal (65,205) - - (65,205)
-impairment - - - -
At 31 December 2009 - 30,477 - 30,477
AMORTISATION
At 1 January 2008 39,922 5,000 - 44,922
Charge for the year 21,602 5,252 - 26,854
At 1 January 2009 61,524 10,252 - 71,776
Charge for the year (61,524) 369 - (61,155)
At 31 December 2009 - 10,621 - 10,621
CARRYING AMOUNT
At 31 December 2009 - 19,856 - 19,856
At 31 December 2008 3,681 1,177 - 4,858
(note 1) A part of intangible assets relating to specific research and development has
been impaired by estimating future cash flows since they were considered not to be
recoverable. A part of intangible assets relating to parents & trademarks and exclusive
sales right has been impaired by estimating future cash flows since they substantially
became ineffective.
12 INVESTMENTSECURITIES
Available-for-sale investments
JPY'000
At 1 January 2008 32,682
Acquired -
Disposed (2,944)
Impairment (23,292)
Increase in fair value -
At 1 January 2009 6,446
Acquired -
Disposed -
Impairment -
Increasein fair value -
At 31 December 2009 6,446
Available-for-sale investments represent shares in Secure Generation Ltd. (Japan,
non-listed), which the Company acquired through the issue of 86,700 new ordinary shares in
2007. The Company owns 6.5% of Secure Generation Ltd. at the balance sheet date. The
Company determined to record JPY23,292,000 of impairment loss for the investment for the
year ended 31 December 2008 remeasured at fair value of future cash flows discounted using
the market rate of interest.
13 EQUITYACCOUNTEDINVESTEE
The Company acquired 40% of share of Beyond LSI, Ltd at December 2007
and additional 20.49% shares at June 2008. Although the Company's
ownership at 31 December 2008 was 60.49%, taking into account the
potential voting rights (i.e. share options) which are exercisable at
the date, the ownership would be reduced to 48.62% when assessing
whether the Company has the power to govern the financial and operating
policies of the investee (IAS27, paragraph 14). Based on an evaluation
of the extent of control over the investee, it is not consolidated but
accounted for using the equity method by the Company.
The Company's share of loss in its equity accounted investee for the
year ended 31 December 2009 wasJPY 3,167,000 (2008: JPY 26,491,000).
The Company acquired 30% of share of ASD Inc. at March 2009. The
Company's share of loss in its equity accounted investee for the year
ended 31 December 2009 wasJPY 3,000,000. ASD Inc. was established by
the ex-Director, Mr.Kiyomoto.
Summary financial information for equity accounted investees, not
adjusted for the percentage ownership held by the Company:
2009 Owner- Current Non- Total assets Current liabilities Non- Total liabilities
ship Assets current assets current liabilities
(Unit: JPY'000)
Beyond LSI Ltd. 24.93% 42,045 4,672 46,717 66,851 158,932 225,783
Revenues Expenses Loss
28,507 32,970 4,463
2009 Owner- Current Non- Total assets Current liabilities Non- Total liabilities
ship Assets current assets current liabilities
(Unit: JPY'000)
ASD Inc. 30.00% 2,061 411 2,472 5,049 10,000 15,049
Revenues Expenses Loss
7,660 23,404 15,744
2008 Owner- Current Non- Total assets Current liabilities Non- Total liabilities
ship Assets current assets current liabilities
(Unit: JPY'000)
Beyond LSI Ltd. 60.49% 13,929 14,919 28,848 78,815 162,972 241,787
Revenues Expenses Loss
11,767 54,722 42,955
14 INVENTORIES
JPY'000
Year ended Year ended
31/12/09 31/12/08
Raw Materials(note 1, described below) 7,967 26,063
Finished goods(note 2, described below) 9,713 25,664
17,680 51,727
(note 1) As of 31 December 2009 and 2008, raw materials have been written down by JPY 29,175,000 and 30,578,000 to their net realisable value.
(note 2) As of 31 December 2009 and 2008, finished goods have been written down by JPY 71,325,000 and 55,925,000 to their net realisable value.
15 OTHER FINANCIAL ASSETS
Trade and other receivablescompriseof the JPY'000
following items;
Year ended Year ended
31/12/09 31/12/08
Trade accounts receivable 7,053 6,516
Prepaid expenses 2,423 2,697
Advance payments to third party - 3,119
Short-term lending to related party (Note 24) - 13,400
Other receivables - 2,060
Consumption tax recoverable 5,173 15,650
Total 14,649 43,442
The average credit period on sales of goods is 75 days. Trade receivables and other receivables are shown as fair values after deduction of the likely uncollectible value amounting to JPY13,192,000 and JPY8,000,000 respectively at 31 December 2009. The directors consider that the carrying amount of trade and other receivables approximates their fair value.
Cash and cash equivalentscomprise cash and short-term deposits held by the
Company treasury function. The carrying amount of these assets
approximatestotheir fair value.
Credit risk -The Company's principal financial assets are bank balances and
cash,investment securities,andtrade and other receivables, which represent
the Company's maximum exposure to credit risk in relation to financial
assets.
The Company's credit risk is primarily attributable to its trade
receivables. The amounts presented in thestatement of financial positionare
recognised at fair value and subsequently measured by estimating the
present value of cash flows discounted using the effective interest rate if
impaired. The Company analyses default risks and customer relations
regularly in order to minimize credit risk of trade receivables.
The credit risk on liquid funds islimited because the counterparties are
banks with high credit-ratings assigned by international credit-rating
agencies.
The Company has a concentration of credit risk, with exposure spread
overonly severalcounterparties and customers.
Financial risk-The Company has no significant interest risk. The Company
is exposed to transactions in currencies other than Japanese Yen. The
Company has a liquidity risk, which is described at Going Concern in the
summary of significant accounting policies.
The balances under foreign currencies as at 31 December 2009 and 2008 were
bank deposits of JPY 131,000 (SEK 10,276.19) and JPY 120,000 (SEK
10,276.19), and receivables of nil and JPY 2,185,000 (USD 24,000), and
payables of JPY 5,355,000 (USD 15,390.00 and STG 26,993.58) and JPY
1,239,000 (USD 9,000.00 and STG 3,150.00). There were no formal risk
management policies in place other than management monitoring the level of
transactions denominated in foreign currencies.
16 SHARE CAPITAL
2009 2009 2008 2008
Number JPY'000 Number JPY'000
Ordinary shares with no
nominal value
Authorised: 125,600,000 N/A 125,600,000 N/A
Issued andfullypaid: 18,740,000 79,220 20,531,595 154,000
Balance at the year end 78,723,821 946,834 59,983,821 867,614
On 5 March 2008, the Company issued 1,500,000 shares and allocated them to
the management bya Board resolution. After such issuance, the aggregate
number of issued shares was 40,952,226.50% of the total paid amount of JPY
15,000,000 was allocated to share capital and the rest was allocated to
share premium.
On 26 June 2008, the Company issued 6,625,000 shares and allocated them to
an institutional investor and the management by a Board resolution. After
such issuance, the aggregate number of issued shares was 47,577,226. 50%
of the total paid amount of JPY 53,000,000 was allocated to share capital
and the rest was allocated to share premium.
On 25 September 2008, the Company issued 714,285 shares and allocated them
to the management bya Board resolution. After such issuance, the aggregate
number of issued shares was 48,291,511. 50% of the total paid amount of JPY
10,000,000 was allocated to share capital and the rest was allocated to
share premium.
On 21 November 2008, the Company issued 11,692,310 shares and allocated
them to the some institutional investors and management bya Board
resolution. After such issuance, the aggregate number of issued shares was
59,983,821. 50% of the total paid amount of JPY 76,000,000 was allocated to
share capital and the rest was allocated to share premium.
On 2 March 2009, the Company issued 4,200,000 shares and allocated them to
an institutional investor and the management by a Board resolution. After
such issuance, the aggregate number of issued shares was 64,183,821. 50%
of the total paid amount of JPY 42,000,000 was allocated to share capital
and the rest was allocated to share premium.
On 6 April 2009, the Company issued 1,000,000 shares and allocated them to
an institutional investor and the management by a Board resolution. After
such issuance, the aggregate number of issued shares was 65,183,821. 50%
of the total paid amount of JPY 10,000,000 was allocated to share capital
and the rest was allocated to share premium.
On 29 May 2009, the Company issued 2,500,000 shares and allocated them to
an institutional investor and the management by a Board resolution. After
such issuance, the aggregate number of issued shares was 67,683,821. 50%
of the total paid amount of JPY 25,000,000 was allocated to share capital
and the rest was allocated to share premium.
On 30 June 2009, the Company issued 2,500,000 shares and allocated them to
an institutional investor and the management by a Board resolution. After
such issuance, the aggregate number of issued shares was 70,183,821. 50%
of the total paid amount of JPY 25,000,000 was allocated to share capital
and the rest was allocated to share premium.
On 27 August 2009, the Company issued 5,200,000 shares and allocated them
to an institutional investor and the management by a Board resolution.
After such issuance, the aggregate number of issued shares was 75,383,821.
50% of the total paid amount of JPY 36,400,000 was allocated to share
capital and the rest was allocated to share premium.
On 21 October 2009, the Company issued 3,340,000 shares and allocated them
to an institutional investor and the management by a Board resolution.
After such issuance, the aggregate number of issued shares was 78,723,821.
50% of the total paid amount of JPY 20,040,000was allocated to share
Details of share options granted during the year ended 31 December 2006, and
the assumptions used in the Black-Scholes model are as follows:
Number of Number of shares
Options
Number of share options 900 900,000
granted as of 31
December 2008
Forfeited during the (320) (320,000)
year
Outstanding as of 31 580 580,000
December 2009
Fair value of share at 10 JPY/share
measurement date
Equity-settled 3.14 JPY/share
share-based payment
fair value
Exercise price 10 JPY/share
Weighted average 10 JPY/share
exercise price
Expected volatility 23.26 % p.a.
Option life 120 Month
Expected dividends nil
Risk-free interest rate 0.8 %
The expected volatility is based on historical volatility of similar listed
entities since the Company was not listed when the options were granted. The
options are granted under a service condition. There are no market conditions
associated with the option granted.
Details of share options granted during the year ended 31 December 2007 and the
assumptions used in the Black-Scholes model are as follows:
Number of Number of
Options shares
Number of share options as 820 820,000
of 31 December 2008
Forfeited during the year (420) (420,000)
Outstanding as of 31 400 400,000
December 2009
Fair value of share at 53.8 JPY/share
measurement date
Equity-settled share-based 31.0313 JPY/share
payment fair value
Exercise price 107 JPY/share
Weighted average exercise 107 JPY/share
price
Expected volatility 128.6 % p.a.
Option life 30 Month
Expected dividends nil
Risk-free interest rate 1.0 %
The options are granted under a service condition. There are no market conditions
associated with the option granted.
17 DEFICIT
JPY'000
Balance at 1January2008 (826,272)
Net loss for theyear (537,923)
Balance at 1January2009 (1,364,195)
Net loss for theyear (380,667)
Balance at 31 December 2009 (1,744,862)
18 DEFERRED TAX
As of 31 December 2009, the Company has unused tax losses of JPY 1,210,860,000 available to
offset against future profits. No deferred tax asset has been recognized in respect of such
unused tax losses due to the unpredictability of future profit streams. The unrecognized
tax losses of JPY8,742,000, JPY 137,271,000, JPY319,834,000,*JPY469,987,000 and
JPY275,026,000 will expire in 2012, 2013, 2014, 2015 and 2016 respectively.
Details of deferred tax assets and liabilities
are as follows:
JPY'000
Year ended Year ended
31/12/09 31/12/08
Tax loss carry forward 492,820 393,998
Impairment loss onreceivables 58,847 58,848
Impairment loss on investment securities - 9,480
Impairment loss on tangible assets - 770
Impairment loss and loss on disposal of 537 11,754
intangible assets
Inventory reserve 40,904 35,206
Differences in depreciation and amortization for 8,984 1,994
tax purposes
Liabilities for expenses disallowed until paid 19,706 3,450
Equity-settled share-based transactions - 7,211
Loss of share of equity method investee 36,915 9,224
Provision for asset retirement obligation 651 -
Others - 70
Deferred tax assets total 659,364 532,005
Share issuance costs 17,535 14,827
Deferred tax liabilities total 17,535 14,827
Net of deferred tax assets and liabilities 641,829 517,178
Valuation allowance (641,829) (517,178)
Deferred tax assets on statement of financial - -
position
Tax reconciliation:
Reported loss before taxation (380,667) (537,923)
Tax rate at 40.7% (154,931) (218,934)
Impact of non-deductible expenses 30,280 454
Impact of prior year's reported loss before (517,178) (298,698)
taxation
Valuation allowance 641,829 517,178
Tax charge for the period - -
19 OTHER FINANCIAL LIABILITIES
Trade and other payablescomprise the followingitems.
JPY'000
Year ended Year ended
31/12/09 31/12/08
Trade accounts payable 5,118 979
Accrued expenses 9,096 8,844
Withholding income tax for employees 13,722 3,295
Miscellaneous tax payable 2,895 2,886
Due to employees and directors (Note 24) 4,977 4,929
Other payables (Note 24) 107,796 60,313
Total 143,604 81,246
The average credit period for trade purchases is 45 days.
The Directors consider that the carrying amount of trade payables and other payables approximates to their fair value.
20 RECONCILIATION OFLOSSFROM OPERATIONS TO NET CASH USED IN OPERATING ACTIVITIES
JPY'000
2009 2008
Lossfor the year (380,667) (537,923)
Adjustments for:
Depreciation of property, 1,081 3,541
plant & equipment
Amortisation of intangible 430 26,977
assetsand long-term prepaid
expense
Loss on disposal of 3,681 -
intangible assets
Impairment loss of tangible - 1,929
assets
Impairment loss of goodwill 7,200 34,604
and other intangible assets
Impairment loss of investment 64,869 -
in associate company
Loss on sale of investment 23,076 1,724
security
Loss on devaluation of 1 23,292
investment security
Finance costs, net 36 (77)
Share option expense (9,917) 13,630
Foreign exchange (gain) / (12) 55
loss on cash held
Share of loss of equity 6,167 19,484
method investee
Operating cash flows before (284,055) (412,764)
movements in working capital
Decrease in inventories 34,046 65,742
Decrease in receivables 15,394 106,492
Increase in allowance of 16,287 -
doubtful receivable
Increase in payables 62,358 15,425
Increase in provision for 1,600 -
asset retirement obligation
Cashused inoperations (154,370) (225,105)
21 CONTINGENT LIABILITIES
The Company is subject to 3 legal proceedings and claims, which arise,
in the ordinary course of their business. If the defence against the
action is unsuccessful, legal damages could totally be estimated to
JPY48, 800,000. The Company believes that adequate provision has been
made in the financial statements for any liability. The Company
expects to have a sufficient ground to successfully defend these legal
actions or the outcome of the action. In the opinion of management,
the amount of ultimate liability with respect to theses actions will
not materially affect the financial position of the Company.
22 PROVISIONS
Asset Retirement Obligation
The Company made a provision for asset retirement obligation amounted
to JPY1,600,000 during the fiscal year ended 31 December 2009 in
respect of the Company's obligation to the landlord to dismantle and
remove leasehold improvements from a leased office at the end of the
lease contract.
23 OPERATING LEASE
The Company leases its office premises and warehouse under cancellable
lease terms. Such contracts may be cancelled with 3 months advance
notice. All other lease agreements are non-cancellable contracts. The
total lease expense for the years ended 31 December 2009 and 2008
amounted to JPY 12,821,000 and JPY 13,219, respectively.
Future minimum lease payments including other operating lease contract
for the years ended 31 December 2009 and 2008 amounted to JPY 7,080,000
and JPY 7,760,000, respectively.
JPY'000
2009 2008
No later than 1 year 6,865 7,044
Later than 1 year and not later than 5 years 215 716
Later than 5 years - -
7,080 7,760
24 RELATED PARTY
TRANSACTIONS
Transactions between the Company and its related parties are disclosed below.
2009 Mr. Kashiwa- Mr. Kunieda Mr. Mr. Mr. Fuji Digital Imaging Techno-imagia Beyond LSI, Inc.
bara (Director) Li Evans Kiyomoto
(Director) (Director) (Director) (Director)
(Unit:JPY'000)
Sales of goods - - - - - - 1,064 1,560
Purchase of goods - - - - - 4,170 - -
Interest earned - - - - - - - 294
Interest incurred 1 - - - - - - -
Long-term lending - - - - - - - 2,888
made to related
party
Short-term borrowing 35,500 - - - - - - -
due form related
party
Investment - - - - - - - -
Patent purchased - - - - - - - 19,048
Allocation of new 85,240 - - - - - - -
shares to third
party
Amounts owed by - - - - - - 1,117 16,288
related parties
at year end
Allowance for - - - - - - (1,117) (16,288)
doubtful receivable
Amounts owed to 166 3,000 2,500 2,435 13,548 9,286 - 361
related parties
at year end
2008 Mr. Kashiwa- Mr. Kiyomoto Mr. Mr. Mr. Takahashi Fuji Digital Imaging Techno-imagia I-O Network Finger- Beyond LSI, Inc.
bara (Director) Evans Cho (ex-Director) Print Cards AB
(Director) (Director) (ex-Director)
(Unit:JPY'000)
Sales of goods in - - - - - - 1,325 - - 3,896
the year
Purchase of goods or - - - - - - - - - -
services
in the year
Consulting fee - - - - - 6,667 - - - -
charged to income
Short-term lending - - - - - - - - - 13,400
made to related
party
in the year
Patent returned - - - - - - - 20,400 - -
Interest earned - - - - - - - - - 12
Amounts owed by - - - - - - - - - 13,400
related parties
at year end
Amounts owed to 9,255 15,415 - 8,800 6,375 - - - - -
related parties
at year end
Technoimagia is one of the related parties of the Company because Mr. Taketoshi Kashiwabara owns the Company at 54.9% (54.4% in 2008) and also owns Technoimagia at 37.5% (37.5% in 2008) directly and indirectly through his controlling company, Fuji Digital Imaging.
Other related parties include:
* Fuji Digital Imaging: Mr Taketoshi Kashiwabara owns 20.1% (20.1% in 2008) but substantially controls Fuji Digital Imaging
* Fingerprint Cards AB (Sweden): Technoimagia owns 23.3% (23.3% in 2008) through Technoimagia Sweden AB
* I-O Network: Mr. Shoichi Kiyomoto was a representative Director of the Company until February 2009 and he owns 66.6% of I-O Network (66.6% in 2008).
l Sales of goods to related parties were made at the Company's usual list prices.
l Purchases were made at market price discounted to reflect the quantity of goods purchased or service rendered.
l All short-term borrowings/lending bear interests, which are subject to the loan rate offered by Japanese banks.
l Amounts owed to directors/ex-directors at 31 December 2008 and 2007 mainly consist of unpaid directors remuneration.
Remuneration of key management personnel
The remuneration of theDirectors, who are the key management personnel of the
Company, is set out below in aggregate for each of the categories specified in
IAS 24 Related Party Disclosures.
JPY'000
2009 2008
Short-term employee 38,537 39,348
benefits
Share-based payment - 8,327
Total remuneration 38,537 47,675
to directors
There were no Directors' transactionsexcept for remuneration, stock issuance
subscription and short-term borrowing by the Company (see above).
25 SUBSEQUENT EVENTS
Sale of associate company
The Company has decided to sold all the shares of Beyond LSI Inc which is
its associate company to a third party in 1stquarter 2010. It results in
JPY1,465,000 of revenue on sale of investment in associate company.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR EANDKFSLEEEF
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This news article is displayed preformatted as it may contain results tables
RNS Number : 6463I
BgenuineTec Inc.
16 March 2010
FOR IMMEDIATE RELEASE
16 March 2010
BgenuineTec Inc
("BgenuineTec" or "the Company")
Preliminary Results for the year ended 31 December 2009
BgenuineTec Inc (AIM:BGTI) today announces its preliminary results for the year ended 31 December 2009.
Financial highlights
· Revenues increased to JPY44.33 million (£0.30 million) (FY 2008:
JPY25.46 million (£0.17 million)
· Gross loss reduced to JPY20.53 million (£0.14 million) (FY 2008:
JPY76.72 million (£0.52 million)
· Loss from operations reduced to JPY286.11million (£1.95million)
(FY 2008: JPY 496.52 million (£3.39 million)
· Loss before tax reduced to JPY380.67million (£2.60million) (FY
2008: JPY 537.92 million (£3.67 million)
· Basic loss per share JPY5.48(£0.04) (FY 2008: JPY 11.51 (£0.08)
Operational highlights
· Successful integration of BeyondLSI Inc. (Japan) technology
· Formation of business alliances with Shenyang Beyond LSI
Inc.(China),DDS Inc.(Japan) and Fingerprint Cards AB (Sweden).
· Development of Fingerprint algorithm for advance mobile phone
sensors
· Successful launch for Module business with Fingerprint Area
Sensor of Fingerprint Cards AB (Sweden)
· Release of a new access control system with SDGate-V
Commenting on the results, Taketoshi Kashiwabara, Chairman of BgenuineTec Inc, said:
"2009 has been a challenging year for BgenuineTec. Notwithstanding the trading environment during the year, we have successfully managed to reduce losses and I would like to confirm my commitment to fund the business through these difficult times."
For further information, please contact:
BgenuineTec Inc (Japan)
Taketoshi Kashiwabara (Chairman) +81-3-5652-0321
Toshiya Kurita Japan (Chief Financial Controller) +81-3-5652-0321
Nominated Adviser
Charles Stanley Securities
Russell Cook +44 (0) 20 7149 6000
Dugald J Carlean
Media Enquiries
Cubitt Consulting
Chris Lane / James Verstringhe +44 (0) 20 7367 5100
Background Note on BgenuineTec Inc.
On 14 July 2006, BgenuineTec Inc.(AIM; BGTI) 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.
BgenuineTec Inc
("BgenuineTec" or "the Company")
Preliminary Results for the year ended 31 December 2009
Chairman's Statement
2009 has been a challenging year for the Company. To maximise the BgenuineTec's resources in light of the global economic downturn and the difficult trading environment, the Board took decisive action to focus the Company's activities on the volume business with LSI (large scale integration chip) solutions for mobile phones and note PCs and the application business with module solutions for Networks and door locks
Demand for biometric identification products is increasing, especially in the fields of information security, financial transactions, security systems and medical treatment. There is also considerable demand for fingerprint authentication on mobile phones and note PCs. To date, the provision of reasonably priced and secure solutions for the aforementioned industries has not been widely available. BgenuineTec's objective is to see that personal authentication is installed on all small portable devices that are used every day. To do this, the Company is focused on exploring high quality, low cost solutions for volume applications such as mobile phones and Note PCs.
During the year, the Company has successfully formed alliances with various companies, in particular with a number of fingerprint identification partners, with which we will develop a global marketing strategy. In particular the alliances with Shenyang BeyondLSI Inc. and DDS Inc. are typical cases for the module business in the Chinese market and for the network business in Japanese markets. As a result of an alliance with a major overseas company, which is planning to use BgenuineTec's technology to develop a range of products, we are optimistic that that this will generate substantial revenues during the course of the next one to two years.
Profit and Loss Account
For the year ended 31 December 2009, revenues increased by 74.1% to JPY 44.3 million (£0.30 million) from JPY 25.46 million (£0.17 million). Gross losses have reduced from JPY 76.7 million (£0.52 million) in 2008 to JPY 20.5 million (£0.14 million) in 2009. The Board has taken strong measures to address the Company's cost base in order to create a sustainable business model for the Company. Selling, general and administrative expenses were reduced in the year from JPY 423.9 million (£2.9 million) in 2008 to JPY 272.3 million (£1.9 million).
As a result the operating loss was reduced by 42.4% to JPY 286.1 million from JPY 496.5 million and the loss before tax was to JPY 380.7 million (£2.6 million) from JPY 537.9 million (£3.7 million).
The loss per share was JPY 5.5 (£0.04) compared to the loss per share of JPY 11.5 (£0.08) in 2008.
Balance Sheet
The Balance Sheet reflects, where appropriate, asset write downs for Inventory of JPY 100.5 million (£0.69 million), Trade receivables totalling JPY 14.6 million (£0.1 million) and non-current assets of JPY 34.0 million (£ 0.23 million). Total net assets at the year end were a loss of JPY 78.2 million (-£0.53 million), compared to JPY 155 million (£1.05 million) at 31 December 2009.
The financial statements have been prepared by management on a going concern basis and do not reflect any adjustments that would be necessary if the going concern assumption was incorrect. The Board believes that the going concern assumption is currently valid based on its view of the Company's future trading and its continued ability to access equity finance. An exchange rate of £1 = JPY 146.53 has been used throughout this statement.
Outlook
The Company's fingerprint business incorporates core components including software algorithms, sensors, engine LSI and modules, which are the embedded systems required for effective fingerprint authentication. Above all, sensors are an important factor in our business. Even though we can handle optical area sensors of the classical type, which are still useful in some application fields, sensors at low cost and high performance are needed to penetrate the world markets. We aim to expand the alliances with leading sensor companies and work on joint projects to provide competitive solutions to the world market.
This financial year, we plan to strengthen our sales team for both our core component business, especially the module business, and our local products such as network solutions, door locks and OA equipment (e.g. fax machines, telecopiers, scanners). We have set up two sales divisions for both global and local markets. These teams are supported by technical engineers, headed by the Chief Executive and the Chief Technical Officer.
In the difficult economic situation, we are planning to use our technical skills and to work closely with our partners to develop new products for overseas markets and establish a firm base for the company to increase sales and return the company to profit. My confidence in our ability to do so is reflected in my commitment to my fellow directors and to our shareholders to fund the company through to profitability and I will be supporting another funding to ensure that BgenuineTec has resources in place to continue its development.
Taketoshi Kashiwabara
Chairman
16 March 2010.
BgenuineTec Inc
Consolidated income statements for the years ended 31 December 2009 and 2008
NOTES Year Year Year Year
Ended Ended Ended
31/12/09 31/12/08 31/12/09 Ended
31/12/08
JPY'000 JPY'000 STG STG
(*) (*)
Revenue 2/24 44,329 25,455 302,528 173,716
Cost of sales 4 (64,858) (102,175) (442,631) (697,295)
Gross profit (loss) (20,529) (76,720) (140,103) (523,579)
Other operating income 6,770 4,123 46,202 28,141
Sales and marketing expenses 4 (50,694) (131,250) (345,967) (895,725)
General and administrative 4 (192,723) (160,900) (1,315,245) (1,098,068)
expenses
Research and development 4 (28,929) (131,768) (197,424) (899,257)
expenses
Lossfrom operations 4 (286,105) (496,515) (1,952,537) (3,388,488)
Finance income 6 - 3,092 - 21,106
Finance costs 5 (23,526) (25,016) (160,552) (170,725)
Net finance costs (23,526) (21,924) (160,552) (149,619)
Impairment of investment in 13 (64,869) - (442,700) -
equity accounted investee
Share of loss of investment in 13 (6,167) (19,484) (42,088) (132,971)
equity accounted investee
Loss before tax (380,667) (537,923) (2,597,877) (3,671,078)
Income tax expense 18 - - - -
Loss for the year (380,667) (537,923) (2,597,877) (3,671,078)
Attributable to:
Equity holders of the Company (380,667) (537,923) (2,597,877) (3,671,078)
Minority interests - - - -
Lossper share 7
Basic (5.48) (11.51) (0.04) (0.08)
Diluted - - - -
Consolidated statement of comprehensive income
for the the years ended 31 December 2009 and
2008
NOTES 2009 2008 2009 2008
JPY'000 JPY'000 * *
(Note 5) (Note 5)
Loss for the period (380,667) (537,923) (2,597,877) (3,671,078)
Other comprehensive income
Financial assets available for
sale:
-Change in fair value 12 - 425 - 2,897
-Income tax expense - - - -
Other comprehensive income for - 425 - 2,897
the period
Total comprehensive loss for (380,667) (537,498) (2,597,877) (3,668,181)
the period
Attributable to:
Equity holders of the Company (380,667) (537,498) (2,597,877) (3,668,181)
Minority interests - - - -
BgenuineTec Inc
Consolidated statements of changes in equity for the years ended 31 December 2009 and 2008
Attributable to equity holder of the company
JPY'000
Share Share premium Fair value reserve Share option reserve Deficit Total equity
NOTES capital STG
(*)
Balanceasat1 January2008 713,614 472,255 (425) 12,337 (826,272) 371,509 2,535,377
Share issued 16 154,000 154,000 - - - 308,000 2,101,959
Share issuance costs - (1,091) - - - (1,091) (7,446)
Fair value adjustments of 12 - - 425 - - 425 2,897
available-for-sale investments
Share option costs charged to 16 - - - 13,630 - 13,630 93,025
income for the year
Net loss for the year 17 - - - - (537,923) (537,923) (3,671,078)
Balance as at 1 January 2009 867,614 625,164 - 25,967 (1,364,195) 154,550 1,054,734
Share issued 16 79,220 79,220 - - - 158,440 1,081,280
Share issuance costs - (634) - - - (634) (4,325)
Fair value adjustments of 12 - - - - - - -
available-for-sale investments
Share option costs charged to 16 - - - (9,917) - (9,917) (67,680)
income for the year
Net loss for the year 17 - - - (380,667) (380,667) (2,597,877)
Balance as at 946,834 703,750 - 16,050 (1,744,862) (78,228) (533,868)
31 December 2009
BgenuineTec Inc
Consolidated statement of financial position as at 31 December 2009 and 2008
NOTES 2009 2008 2009 2008
JPY'000 JPY'000 STG STG
(*) (*)
ASSETSNon-current assets
Property, plant and equipment 8 3,133 4,214 21,379 28,755
Investment securities 12 6,446 6,446 43,991 43,990
Investments in equity 13 - 68,036 - 464,315
accounted investee
Goodwill 10 - 7,200 - 49,137
Intangible assets 11 19,856 4,858 135,510 33,154
Other non-current assets 9 4,574 4,636 31,220 31,640
34,009 95,390 232,100 650,991
Current assets
Inventories 14 17,680 51,727 120,660 353,013
Trade and other receivables 15/24 14,649 43,442 99,970 296,475
Cash and cash equivalents 15 804 45,237 5,486 308,721
33,133 140,406 226,116 958,209
Total assets 67,142 235,796 458,216 1,609,200
LIABILITIES
Current liabilities
Borrowings 15/24 166 - 1,135 -
Trade and other payables 19/24 143,604 81,246 980,029 554,466
Provision for asset retirement 22 1,600 - 10,920 -
obligation
145,370 81,246 992,084 554,466
Net current assets (112,237) 59,160 (765,917) 403,743
Total liabilities 145,370 81,246 992,084 554,466
Net assets (78,228) 154,550 (533,868) 1,054,734
EQUITY
Share capital 16 946,834 867,614 6,461,708 5,921,068
Share premium 16 703,750 625,164 4,802,770 4,266,454
Fair value reserve 12 - - - -
Share option reserve 16 16,050 25,967 109,538 177,218
Deficit 17 (1,744,862) (1,364,195) (11,907,884) (9,310,006)
Total equity (78,228) 154,550 (533,868) 1,054,734
BgenuineTec Inc
Consolidated Statement of cash flows for the years ended 31 December 2009 and 2008
NOTES Year Year Year Year
Ended Ended Ended
31/12/09 31/12/08 31/12/09 Ended31/12/08
JPY'000 JPY'000 STG STG
(*) (*)
OPERATING ACTIVITIES
Cashused inoperations 20 (154,370) (225,105) (1,053,506) (1,536,241)
Interestreceived (paid), net (36) 76 (247) 524
NET CASH USED IN OPERATING (154,406) (225,029) (1,053,753) (1,535,717)
ACTIVITIES
INVESTING ACTIVITIES
Expenditure on product - (3,897) - (26,597)
development
Purchase of intangible assets (19,048) - (129,991) -
Acquisition of associate (3,000) (30,450) (20,474) (207,807)
company
Purchase of investment (25,000) - (170,613) -
security
Proceeds from sales of 1,924 1,644 13,130 11,224
investment securities
Expenditure lending collection (22,888) (13,400) (156,197) (91,449)
Proceeds from lending made 20,000 - 136,491 -
NET CASH USED IN INVESTING (48,012) (46,103) (327,654) (314,629)
ACTIVITIES
FINANCING ACTIVITIES
Proceeds from short-term 166 - 1,135 -
borrowings
Proceeds on issue ofnew 157,807 306,909 1,076,957 2,094,512
shares, net of issuance cost
NET CASH FROM FINANCING 157,973 306,909 1,078,092 2,094,512
ACTIVITIES
NETINCREASE (DECREASE)IN CASH (44,445) 35,777 (303,315) 244,166
AND CASH EQUIVALENTS
EFFECT OF EXCHANGE RATE 12 (55) 80 (377)
FLUCTUATIONS ON CASH HELD
CASH AND CASH EQUIVALENTS AT 45,237 9,515 308,721 64,932
BEGINNING OF YEAR
CASH AND CASH EQUIVALENTS AT 15 804 45,237 5,486 308,721
END OF YEAR
BgenuineTec Inc
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BgenuineTec Inc, hereafter "the Company", is a company incorporated and
domiciled in Japan. The legal form of the Company is a limited liability
corporation called "Kabushiki-kaisha". The Company designs and
manufactures a range of fingerprint authentication technologies and
products to companies and individuals that wish to establish high levels of
security in various applications using biometrics. The business activity
also includes R&D and sales of fingerprint systems and components.
Theconsolidatedfinancial statementsof the Companyhave been prepared in
accordance with International Financial Reporting Standards ("IFRS"), as
adopted by the EU. The designation "IFRSs" also includes all valid
International Accounting Standards (IASs). All interpretations of the
International Financial Reporting Interpretations Committee (IFRIC)
mandatory for the financial year 2009 have also been applied. Pound
sterling amounts included herein are given solely for convenience and are
stated, as matter of arithmetic
Going-concern
These consolidated financial statements have been prepared by management on
the basis 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 net loss of JPY382million in the year ended 31 December
2009, mainly due to poor sales results of JPY44million andimpairment loss
on investment in associate company*of JPY64million.
The poor sales resulted from the internal restructuring of the sales and
development divisions, the worldwide recession and a deferred order from a
major client.
To enable the Company to rectify the continued loss-making, the Company is
either in the process of carrying out or going to carry out following
actions in 2009.
a. Readjust the product mix by introducing technologies and products from
the associated Company "Beyond LSI Inc".
b. Rest
Basis of consolidationEquity method
Associates are those entities in which the Company has significant
influence, but not control, over the financial and operating policies.
Significant influence is presumed to exist when the Company holds between
20% and 50% of the voting power of another entity. Associates are accounted
for using the equity method (equity accounted investees) according to IAS28
(Investments in Associates). The consolidated financial statements include
the Company's share of the income and expenses of equity accounted
investees, after adjustments to align the accounting policies with those of
the Company, from the date that significant influence commences until the
date that significant influence ceases. When the Company's share of losses
exceeds its interest in an equity accounted investee, the carrying amount
of that interest (including any long-term investments) is reduced to nil
and the recognition of further losses is discontinued except to the extent
that the Company has an obligatio
GoodwillGoodwill arising onbusiness combinationrepresents the excess of the
cost of acquisition over the fair value of the identifiableassets and
liabilities of a transferorat the date of acquisition.In respect of equity
accounted investees, the carrying amount of goodwill is included in the
carrying amount of the investment.
Goodwill is recognised as an asset and reviewed for impairment at least
annually. Any impairment is recognised immediately in the income statement
and is not subsequently reversed.
The Company has only single cash generating unit for the purpose of
impairment testing.
Revenue recognitionRevenue arises from sales of goods.
Revenue is measured at the fair value of the consideration received or
receivable and represents amounts receivable for goods and services
provided in the normal course of business, net of discounts and consumption
taxes.
Sales of goods are recognised when goods are delivered and title has
passed.
LeasingLeases are classified as finance leases whenever the terms of the
lease transfer substantially all the risks and rewards of ownership to the
lessee. All other leases are classified as operating leases. There was no
asset under finance lease as of the balance sheet date.
Rentals payable under operating leases are charged to income on a
straight-line basis over the term of the relevant lease.
Foreign currenciesThe Company's functional and presentational currency is
Japanese Yen ("JPY").
Transactions in currencies other than Japanese Yen are recorded at the
rates of exchange prevailing on the dates of the transactions. At the
balance sheet date, monetary assets and liabilities that are
denominatedinforeigncurrencies are retranslated at the rates prevailing on
the balance sheetdate. Non-monetary assets and liabilities carried at fair
value that are denominated in foreign currencies are translated at the
rates prevailing at the date when the fair value was determined. Gains and
losses arising on retranslation are included in the income statement for
theyear.
TaxationThe tax expense represents the sum of the tax currently payable and
deferred tax.
The tax currently payable is based on taxable profit for the year. Taxable
profit differs from net profit as reported in the income statement because
it excludes items of income or expense that are taxable or deductible in
other years and it further excludes items that are never taxable or
deductible. TheCompany's liability for current tax is calculated by using
tax rates that have been enacted or substantively enacted by the balance
sheet date.
Deferred tax is the tax expected to be payable or recoverable on
differences between the carryingamount of assets and liabilities in the
financial statements andthe corresponding tax bases used in the computation
of taxable profit, and is accounted for using the balance sheet liability
method. Deferred tax liabilities are recognised for all taxable temporary
differences and deferred tax assets are recognised to the extent that it is
probable that taxable profits will be availa
Property, plant and equipmentProperty, plant and equipmentare stated at
cost less accumulated depreciation and any recognised impairment loss.
Depreciation is charged so as to write off the cost or valuation of assets,
other than land and properties under construction, over their estimated
useful lives, using the straight-line method, on the following basis:
Leasehold improvement 10%-17%
Fixtures andequipment 17%-50%
The gain or loss arising on the disposal or retirement of an asset is
determined as the difference between the sales proceeds and thecarrying
amount of the asset and is included in the income statement for theyear.
Other non-current assets
Other non-current assets consist of lease depositsfor office premisesand
long-term prepaid expenses, which are stated at historical cost minus
unrefundedamounts.
Development costs
Development costsconcerning software programs developed externallyare
capitalised and measured initially at purchase cost and amortised on a
straight-line basis over their estimated useful lives(3years).
An internally generated intangible asset arising from the Company's
biometric technology business development is recognised only if all of the
following conditions are met:
· an asset is created that can be identified (such as software
and new processes);
· it is probable that the asset created will generate future
economic benefits; and
· the development cost of the asset can be measured reliably.
Internally generated intangible assets are amortisedon a straight-line
basis over their useful lives.
Expenditure on research activities is recognised as an expense in the
period in which it is incurred.
Patents, exclusive sales rights and trademarksPatents and trademarks are
measured initially at purchase cost and amortised on a straight-line basis
over their estimated useful lives(8years). Exclusive sales rights are not
amortised since there is substantially no period for termination in the
agreement.
Impairment of tangible and intangible assets excluding goodwillAt each
balance sheet date, the Company reviews the carrying amounts ofits tangible
and intangible assets to determine whether there is anyindication that
those assets have suffered an impairment loss. If any suchindication
exists, the recoverable amount of the asset is estimated inorder to
determine the extent of the impairment loss (if any). Where the asset does
not generate cash flows that are independent from other assets,the Company
estimates the recoverable amount of the cash-generating unit to which the
asset belongs. An intangible asset with an indefinite useful life is tested
for impairment annually and whenever there is an indication that the asset
may be impaired.
Recoverable amount is the higher of fair value less costs to sell and value
in use. In assessing value in use, the estimated future cash flows are
discounted to their present value using a pre-tax discount rate that
reflects current market assessments of the time value of mo
InventoriesInventories are stated at the lower of cost and net realisable
value. Costcomprises direct materials, transportation and any other
incidental costs incurred for purchase. Cost is calculated using
theweighted average method. Net realisable value represents the estimated
selling price less all estimated costs to completion and costs to be
incurred in marketing, selling and distribution.
Financial instruments
Financial assets and financial liabilities are recognised on the
Company'sstatement of financial positionwhen the Company has become a
party to the contractual provisions of the instrument.
Trade receivablesTrade receivablesare recognised at fair value and
subsequently measured at amortised cost and are classified as loans and
receivables in accordance with IAS39 Financial Instruments:Recogniton and
Measurement.
Assessments are made regularly as to whether there is any objective
evidence that trade receivables may be impaired. Where there is objective
evidence of impairment, the recoverable amount is calculated by estimating
the present value of the future cash flows discounted using the effective
interest rate. Any impairment losses identified from the impairment test
are recognised as an expense in the income statement.
Investments securitiesInvestments are recognised and derecognised on a
trade date where a purchase or sale of an investment is under a contract
whose terms require delivery of the investment within the timeframe
established by the market concerned, and are initially measured at cost,
including transaction costs.
Investment securities classified as available-for-sale are remeasured at
fair value. Gains and losses arising from the changes in the fair values
of available-for-sale investments are recognised directly in the fair
value reserve in equity, until the investment is sold or otherwise
disposed of or until it is determined to be impaired. The fair value of
an available-for-sale investment is based on its quoted bid price in an
active market at the balance sheet date. The fair value of
available-for-sale investment with no quated bid price is based on fair
value of future cash flows discounted using the market rate of interest.
In accordance with IAS 39, assessments are made regularly as to whether th
Trade payablesTrade payables areclassified as other liabilities in
accordance with IAS 30, initially recognised at fair value and
subsequently measured at amortised cost using the effective interest
method.
Equity instrumentsOrdinary shares are classified as equity instruments
andare recorded at thefair value, net of direct issue costs. Equity
instruments are not subsequently remeasured.
In accordance with IAS39 (Financial Instruments: Recognition and
Measurement), assessments are made regularly as to whether there is any
objective evidence that a financial asset or group of assets may be
impaired. Impairment losses identified after carrying out an impairment
test are recognised as an expense. Gains and losses on available-for-sale
investments are recognised directly in equity until the financial asset is
disposed of or is determined to be impaired, at which time the cumulative
loss previously recognised in equity is included in loss for the year.
Share-based paymentsThe Company operates an equity-settled share-based
payment scheme. Equity-settled share-based payments are measured at fair
value of the share options at the date of grant. The fair value determined
at the grant date is expensed on a straight-line basis over the vesting
period with a corresponding increase in equity, based on the Company's
estimate of the number of options that will eventually vest.
Fair value is measured by use of aBlack-Scholesmodel, taking into account
the terms and conditions upon which the options were granted.
Critical accounting estimates and judgementsEstimates and judgements are
continually evaluated and are based on historical experience and other
factors, including expectations of future events that are believed to be
reasonable under the circumstances.
Critical accounting estimates and assumptions
The Company makes estimates and assumptions concerning the future. The
resulting accounting estimates and assumptions will, by definition, seldom
equaltothe related actual results. The estimates and assumptions that have
a significant risk of causing a material adjustment to the carrying amounts
of assets and liabilities within the next financial year are discussed
below.
The Company is subject to income taxes at city and national level within
Japan. Significant judgement is required in determining the provision for
income taxes. There are many transactions and calculations for which the
ultimate tax determination is uncertain during the ordinary course of
business. The Company recognises liabilities fo
Provisions
Provisions are recognized when the Company has a present legal or
constructive obligation as a result of past events and it is probable that
an outflow of economic benefits will be required to settle the
obligation.Provisions are measured and recorded as the best estimate of the
expenditure requiredsettlingthe present obligation at the balance sheet
date.
Asset retirement obligation
In accordance with a contractual obligation to a landlord to dismantle and
remove leasehold improvements from a leased office at the end of the lease
contract, a provision for asset retirement obligation is recognised.
IFRS 2 (amended) Group Cash-Settled Share Based Payment
Transactions
IFRS 3 (revised 2008) Business Combinations
IAS 27 (revised 2008) Consolidated and Separate Financial Statements
IAS 39 (amended) Eligible Hedged Items
IFRIC 17 Distributions of Non-cash Assets to Owners
Improvements to IFRSs (2008) Amendments to IFRS 5 Non-current Assets Held for
Sales and Discontinued Operations
Improvements to IFRSs (2009) Amendments to IFRS 2 Share-based Payments and
IFRS 3 Business Combinations (revised 2008)
Improvements to IFRSs (2009) Amendments to IAS 38 Intangible Assets
Improvements to IFRSs (2009) Amendments to IFRIC 9 Reassessment of Embedded
Derivatives
Improvements to IFRSs (2009) Amendments to IFRIC 16 Hedges of a Net Investment
in a Foreign Operation
Improvements to IFRSs (2009) Amendments to IFRS 5 Non-current Assets Held for
Sale and Discontinued Operations
Improvements to IFRSs (2009) Amendments to IFRS 8 Operating Segments
Improvements to IFRSs (2009) Amendments to IAS 1 Presentation of Financial
Statements
Improvements to IFRSs (2009) Amendments to IAS 7 Statement of Cash Flows
Improvements to IFRSs (2009) Amendments to Amendments to IAS 17 Leases
Improvements to IFRSs (2009) Amendments to IAS 36 Impairment of Assets
Improvements to IFRSs (2009) Amendments to IAS 39 Financial Instruments:
Recognition and Measurement
The Company anticipates that the adoption of the Standards and Interpretations in future periods will have no effect on the Company's financial statements for the forthcoming year.
BgenuineTec Inc
NOTES TO THE CONSOLIDATEDFINANCIAL STATEMENTS
FOR the years ended 31 December 2009 and 2008
1 PRESENTATION OF FINANCIAL STATEMENTS
Theconsolidatedfinancial statements have been prepared in accordance with
International Financial Reporting Standards.
Theseconsolidatedfinancial statements are presented inJapanese Yensince
that is the currency in which the majority of the Company's transactions
are denominated.
2 REVENUE
An analysis of the Company's revenue is as JPY'000
follows:
Year ended Year ended
31/12/09 31/12/08
Continuing operations - sale of goods: 44,329 25,455
Total revenue 44,329 25,455
3 Segment Information
Business segmentsFor managementreportingpurposes, the Company is
currently organisedasasingle operating division, that is, biometric
technology. Thisdivisionisthe basisforsegment information.
Principal activity is to be engaged in research and development and sales
of biometric technology products including biometric certification and
authentication services, physical access systems, fingerprint image
sensors and relating software.
Due to the single segment, the segment information is not reported here.
Geographical segmentsThe Company's operations are locatedonlyinJapan and
there was substantially no exportation from Japan.
4 LOSSFROM OPERATIONS
Lossfrom operations has been arrived at after charging:
JPY'000
Year ended Year ended
31/12/09 31/12/08
Staff costs (see belownumbers of staff)
Salaries and wages 92,321 83,021
Share option expense (9,917) 13,631
Social security costs 5,723 7,701
88,127 104,353
Depreciation 1,081 3,541
Impairment of property, plant and - 1,929
equipment
(note 1, described below)
Amortisation 430 27,954
Impairment of intangible assets -7,200
(note 1, described below) 34,604
Auditors' remuneration
-audit for annual report
-other 6,190 5,286
- -
6,190 5,286
Research and development 4,785 24,196
Advisory fees 28,701 18,212
Purchased goods 34,867 17,619
Write-down of inventories 15,843 86,502
Subcontractors fees 20,949 56,112
Travel expenses 11,613 9,688
Operating lease expenses (Note 23) 12,821 13,219
Advertising and public relation expenses 15,177 19,758
Allowance for doubtful receivables 37,479 101,219
Provision for asset retirement obligation 1,600 -
Others 50,341 1,901
Total 337,204 526,093
(note 1) Certain assets in the year ended 31December 2009 and 2008 have been impaired since it is no longer considered recoverable from the Company's continuing operations.
NUMBER OFSTAFF
The average monthly number of employees including executive directors for the year for each
of the Company's principalfunctionswas as follows:
Number
Year ended Year ended
31/12/09 31/12/08
Engineers 3 2
Head office and administration 3 4
6 6
5 FINANCE COSTS JPY'000
Year ended Year ended
31/12/09 31/12/08
Interest onborrowings, net of interest earned 36 -
Foreign exchange loss, net 413 -
Loss on sale of investment security 23,076 1,724
Loss on devaluation of investment security (Note 1 23,292
12)
23,526 25,016
6 FINANCEINCOME
JPY'000
Year ended Year ended
31/12/09 31/12/08
Interestearned, net of interest incurred - 77
Foreign exchange gain, net - 3,015
- 3,092
7 EARNINGS PER SHARE
The calculation of the basic and diluted earnings per share is based on the following
data:
Earnings JPY'000
Year ended Year ended
31/12/09 31/12/08
Earnings for the purposes of basic (380,667) (537,923)
earnings per share (net loss for the year
attributable to equity holders)
Effect of dilutive potential ordinary - -
shares
(note 1, described below)
Earnings for the purposes of diluted (380,667) (537,923)
earnings per share
Number of shares Year ended Year ended
31/12/09 31/12/08
Weighted average number of ordinary shares 69,417,630 46,753,624
for the purposes of basic earnings per
share
Effect of dilutive potential ordinary - -
shares:
- share option(note 1, described below)
Weighted average number of ordinary shares 69,417,630 46,753,624
for the purposes of diluted earnings per
share
(note 1) Share options which the Company and associated company held has
anti-dilutive effect on earnings per share for the years.
8 PROPERTY, PLANT AND EQUIPMENT
JPY'000
Leasehold Plant & Machinery Fixtures & Equipment Total
Improvement
COST OR VALUATION
At 1 January 2008 3,757 171 17,934 21,862
Additions - - - -
Disposal
-disposal - - - -
-impairment - (37) (1,892) (1,929)
(note 1, described below)
At 1 January 2009 3,757 134 16,042 19,933
Additions - - - -
Deductions
-disposal - - - -
-impairment - - - -
At 31 December 2009 3,757 134 16,042 19,933
ACCUMULATEDDEPRECIATION
At 1 January 2008 309 93 11,777 12,179
Charge for the year 399 41 3,100 3,540
Disposal - - - -
At 1 January 2009 708 134 14,877 15,719
Charge for the year 400 - 681 1,081
Disposal - - - -
At 31 December 2009 1,108 134 15,558 16,800
NET BOOK VALUE
At 31 December 2009 2,649 - 484 3,133
At 31 December 2008 3,049 - 1,165 4,214
(note 1) A part of property, plant and equipment relating to specific research and development has been
impaired by estimating future cash flows since they were considered not to be recoverable.
9 OTHER NON-CURRENT ASSETS
JPY'000
Year ended Year ended
31/12/09 31/12/08
Lease deposit for office premises
Beginning balance 4,574 4,673
Addition - 270
Disposal - (369)
Ending balance 4,574 4,574
Long-term prepaid expense
Beginning balance 62 185
Addition - -
Amortisation (62) (123)
Ending balance - 62
Total 4,574 4,636
10 GOODWILL
JPY'000
COST
At 1 January 2008 12,500
Additions -
Deductions
- impairment (note 1, described below) (5,300)
At 1 January 2009 7,200
Additions -
Deductions
- impairment (note 1, described below) (7,200)
At 31 December 2009 -
(note 1) The Company reviewed Goodwill for impairment for the period ended December 31, 2009 and 2008 by
estimating future cash flows. As a result, impairment loss of JPY 7,200,000 and JPY5, 300,000 were recognized
as of December 31, 2009 and 2008 respectively as they were considered not to be recoverable.
11 INTANGIBLE ASSETS
JPY'000
Development costs Patents & trademarks Exclusive sales Total
right
COST
At 1 January 2008 68,693 50,318 3,429 122,440
Additions 3,897 - - 3,897
Deductions
-impairment(note 1) (7,385) (18,489) (3,429) (29,303)
-other (returned) - (20,400) - (20,400)
At 1 January 2009 65,205 11,429 - 76,634
Additions - 19,048 - 19,048
Deductions
-disposal (65,205) - - (65,205)
-impairment - - - -
At 31 December 2009 - 30,477 - 30,477
AMORTISATION
At 1 January 2008 39,922 5,000 - 44,922
Charge for the year 21,602 5,252 - 26,854
At 1 January 2009 61,524 10,252 - 71,776
Charge for the year (61,524) 369 - (61,155)
At 31 December 2009 - 10,621 - 10,621
CARRYING AMOUNT
At 31 December 2009 - 19,856 - 19,856
At 31 December 2008 3,681 1,177 - 4,858
(note 1) A part of intangible assets relating to specific research and development has
been impaired by estimating future cash flows since they were considered not to be
recoverable. A part of intangible assets relating to parents & trademarks and exclusive
sales right has been impaired by estimating future cash flows since they substantially
became ineffective.
12 INVESTMENTSECURITIES
Available-for-sale investments
JPY'000
At 1 January 2008 32,682
Acquired -
Disposed (2,944)
Impairment (23,292)
Increase in fair value -
At 1 January 2009 6,446
Acquired -
Disposed -
Impairment -
Increasein fair value -
At 31 December 2009 6,446
Available-for-sale investments represent shares in Secure Generation Ltd. (Japan,
non-listed), which the Company acquired through the issue of 86,700 new ordinary shares in
2007. The Company owns 6.5% of Secure Generation Ltd. at the balance sheet date. The
Company determined to record JPY23,292,000 of impairment loss for the investment for the
year ended 31 December 2008 remeasured at fair value of future cash flows discounted using
the market rate of interest.
13 EQUITYACCOUNTEDINVESTEE
The Company acquired 40% of share of Beyond LSI, Ltd at December 2007
and additional 20.49% shares at June 2008. Although the Company's
ownership at 31 December 2008 was 60.49%, taking into account the
potential voting rights (i.e. share options) which are exercisable at
the date, the ownership would be reduced to 48.62% when assessing
whether the Company has the power to govern the financial and operating
policies of the investee (IAS27, paragraph 14). Based on an evaluation
of the extent of control over the investee, it is not consolidated but
accounted for using the equity method by the Company.
The Company's share of loss in its equity accounted investee for the
year ended 31 December 2009 wasJPY 3,167,000 (2008: JPY 26,491,000).
The Company acquired 30% of share of ASD Inc. at March 2009. The
Company's share of loss in its equity accounted investee for the year
ended 31 December 2009 wasJPY 3,000,000. ASD Inc. was established by
the ex-Director, Mr.Kiyomoto.
Summary financial information for equity accounted investees, not
adjusted for the percentage ownership held by the Company:
2009 Owner- Current Non- Total assets Current liabilities Non- Total liabilities
ship Assets current assets current liabilities
(Unit: JPY'000)
Beyond LSI Ltd. 24.93% 42,045 4,672 46,717 66,851 158,932 225,783
Revenues Expenses Loss
28,507 32,970 4,463
2009 Owner- Current Non- Total assets Current liabilities Non- Total liabilities
ship Assets current assets current liabilities
(Unit: JPY'000)
ASD Inc. 30.00% 2,061 411 2,472 5,049 10,000 15,049
Revenues Expenses Loss
7,660 23,404 15,744
2008 Owner- Current Non- Total assets Current liabilities Non- Total liabilities
ship Assets current assets current liabilities
(Unit: JPY'000)
Beyond LSI Ltd. 60.49% 13,929 14,919 28,848 78,815 162,972 241,787
Revenues Expenses Loss
11,767 54,722 42,955
14 INVENTORIES
JPY'000
Year ended Year ended
31/12/09 31/12/08
Raw Materials(note 1, described below) 7,967 26,063
Finished goods(note 2, described below) 9,713 25,664
17,680 51,727
(note 1) As of 31 December 2009 and 2008, raw materials have been written down by JPY 29,175,000 and 30,578,000 to their net realisable value.
(note 2) As of 31 December 2009 and 2008, finished goods have been written down by JPY 71,325,000 and 55,925,000 to their net realisable value.
15 OTHER FINANCIAL ASSETS
Trade and other receivablescompriseof the JPY'000
following items;
Year ended Year ended
31/12/09 31/12/08
Trade accounts receivable 7,053 6,516
Prepaid expenses 2,423 2,697
Advance payments to third party - 3,119
Short-term lending to related party (Note 24) - 13,400
Other receivables - 2,060
Consumption tax recoverable 5,173 15,650
Total 14,649 43,442
The average credit period on sales of goods is 75 days. Trade receivables and other receivables are shown as fair values after deduction of the likely uncollectible value amounting to JPY13,192,000 and JPY8,000,000 respectively at 31 December 2009. The directors consider that the carrying amount of trade and other receivables approximates their fair value.
Cash and cash equivalentscomprise cash and short-term deposits held by the
Company treasury function. The carrying amount of these assets
approximatestotheir fair value.
Credit risk -The Company's principal financial assets are bank balances and
cash,investment securities,andtrade and other receivables, which represent
the Company's maximum exposure to credit risk in relation to financial
assets.
The Company's credit risk is primarily attributable to its trade
receivables. The amounts presented in thestatement of financial positionare
recognised at fair value and subsequently measured by estimating the
present value of cash flows discounted using the effective interest rate if
impaired. The Company analyses default risks and customer relations
regularly in order to minimize credit risk of trade receivables.
The credit risk on liquid funds islimited because the counterparties are
banks with high credit-ratings assigned by international credit-rating
agencies.
The Company has a concentration of credit risk, with exposure spread
overonly severalcounterparties and customers.
Financial risk-The Company has no significant interest risk. The Company
is exposed to transactions
16 SHARE CAPITAL
2009 2009 2008 2008
Number JPY'000 Number JPY'000
Ordinary shares with no
nominal value
Authorised: 125,600,000 N/A 125,600,000 N/A
Issued andfullypaid: 18,740,000 79,220 20,531,595 154,000
Balance at the year end 78,723,821 946,834 59,983,821 867,614
On 5 March 2008, the Company issued 1,500,000 shares and allocated them to
the management bya Board resolution. After such issuance, the aggregate
number of issued shares was 40,952,226.50% of the total paid amount of JPY
15,000,000 was allocated to share capital and the rest was allocated to
share premium.
On 26 June 2008, the Company issued 6,625,000 shares and allocated them to
an institutional investor and the management by a Board resolution. After
such issuance, the aggregate number of issued shares was 47,577,226. 50%
of the total paid amount of JPY 53,000,000 was allocated to share capital
and the rest was allocated to share premium.
On 25 September 2008, the Company issued 714,285 shares and allocated them
to the management bya Board resolution. After such issuance, the aggregate
number of issued shares was 48,291,511. 50% of the total paid amount of JPY
10,000,000 was allocated to share capital and the rest was allocated to
share premium.
On 21 November 2008, the Company issued 11,6
Details of share options granted during the year ended 31 December 2006, and
the assumptions used in the Black-Scholes model are as follows:
Number of Number of shares
Options
Number of share options 900 900,000
granted as of 31
December 2008
Forfeited during the (320) (320,000)
year
Outstanding as of 31 580 580,000
December 2009
Fair value of share at 10 JPY/share
measurement date
Equity-settled 3.14 JPY/share
share-based payment
fair value
Exercise price 10 JPY/share
Weighted average 10 JPY/share
exercise price
Expected volatility 23.26 % p.a.
Option life 120 Month
Expected dividends nil
Risk-free interest rate 0.8 %
The expected volatility is based on historical volatility of similar listed
entities since the Company was not listed when the options were granted. The
options are granted under a service condition. There are no market conditions
associated with the option granted.
Details of share options granted during the year ended 31 December 2007 and the
assumptions used in the Black-Scholes model are as follows:
Number of Number of
Options shares
Number of share options as 820 820,000
of 31 December 2008
Forfeited during the year (420) (420,000)
Outstanding as of 31 400 400,000
December 2009
Fair value of share at 53.8 JPY/share
measurement date
Equity-settled share-based 31.0313 JPY/share
payment fair value
Exercise price 107 JPY/share
Weighted average exercise 107 JPY/share
price
Expected volatility 128.6 % p.a.
Option life 30 Month
Expected dividends nil
Risk-free interest rate 1.0 %
The options are granted under a service condition. There are no market conditions
associated with the option granted.
17 DEFICIT
JPY'000
Balance at 1January2008 (826,272)
Net loss for theyear (537,923)
Balance at 1January2009 (1,364,195)
Net loss for theyear (380,667)
Balance at 31 December 2009 (1,744,862)
18 DEFERRED TAX
As of 31 December 2009, the Company has unused tax losses of JPY 1,210,860,000 available to
offset against future profits. No deferred tax asset has been recognized in respect of such
unused tax losses due to the unpredictability of future profit streams. The unrecognized
tax losses of JPY8,742,000, JPY 137,271,000, JPY319,834,000,*JPY469,987,000 and
JPY275,026,000 will expire in 2012, 2013, 2014, 2015 and 2016 respectively.
Details of deferred tax assets and liabilities
are as follows:
JPY'000
Year ended Year ended
31/12/09 31/12/08
Tax loss carry forward 492,820 393,998
Impairment loss onreceivables 58,847 58,848
Impairment loss on investment securities - 9,480
Impairment loss on tangible assets - 770
Impairment loss and loss on disposal of 537 11,754
intangible assets
Inventory reserve 40,904 35,206
Differences in depreciation and amortization for 8,984 1,994
tax purposes
Liabilities for expenses disallowed until paid 19,706 3,450
Equity-settled share-based transactions - 7,211
Loss of share of equity method investee 36,915 9,224
Provision for asset retirement obligation 651 -
Others - 70
Deferred tax assets total 659,364 532,005
Share issuance costs 17,535 14,827
Deferred tax liabilities total 17,535 14,827
Net of deferred tax assets and liabilities 641,829 517,178
Valuation allowance (641,829) (517,178)
Deferred tax assets on statement of financial - -
position
Tax reconciliation:
Reported loss before taxation (380,667) (537,923)
Tax rate at 40.7% (154,931) (218,934)
Impact of non-deductible expenses 30,280 454
Impact of prior year's reported loss before (517,178) (298,698)
taxation
Valuation allowance 641,829 517,178
Tax charge for the period - -
19 OTHER FINANCIAL LIABILITIES
Trade and other payablescomprise the followingitems.
JPY'000
Year ended Year ended
31/12/09 31/12/08
Trade accounts payable 5,118 979
Accrued expenses 9,096 8,844
Withholding income tax for employees 13,722 3,295
Miscellaneous tax payable 2,895 2,886
Due to employees and directors (Note 24) 4,977 4,929
Other payables (Note 24) 107,796 60,313
Total 143,604 81,246
The average credit period for trade purchases is 45 days.
The Directors consider that the carrying amount of trade payables and other payables approximates to their fair value.
20 RECONCILIATION OFLOSSFROM OPERATIONS TO NET CASH USED IN OPERATING ACTIVITIES
JPY'000
2009 2008
Lossfor the year (380,667) (537,923)
Adjustments for:
Depreciation of property, 1,081 3,541
plant & equipment
Amortisation of intangible 430 26,977
assetsand long-term prepaid
expense
Loss on disposal of 3,681 -
intangible assets
Impairment loss of tangible - 1,929
assets
Impairment loss of goodwill 7,200 34,604
and other intangible assets
Impairment loss of investment 64,869 -
in associate company
Loss on sale of investment 23,076 1,724
security
Loss on devaluation of 1 23,292
investment security
Finance costs, net 36 (77)
Share option expense (9,917) 13,630
Foreign exchange (gain) / (12) 55
loss on cash held
Share of loss of equity 6,167 19,484
method investee
Operating cash flows before (284,055) (412,764)
movements in working capital
Decrease in inventories 34,046 65,742
Decrease in receivables 15,394 106,492
Increase in allowance of 16,287 -
doubtful receivable
Increase in payables 62,358 15,425
Increase in provision for 1,600 -
asset retirement obligation
Cashused inoperations (154,370) (225,105)
21 CONTINGENT LIABILITIES
The Company is subject to 3 legal proceedings and claims, which arise,
in the ordinary course of their business. If the defence against the
action is unsuccessful, legal damages could totally be estimated to
JPY48, 800,000. The Company believes that adequate provision has been
made in the financial statements for any liability. The Company
expects to have a sufficient ground to successfully defend these legal
actions or the outcome of the action. In the opinion of management,
the amount of ultimate liability with respect to theses actions will
not materially affect the financial position of the Company.
22 PROVISIONS
Asset Retirement Obligation
The Company made a provision for asset retirement obligation amounted
to JPY1,600,000 during the fiscal year ended 31 December 2009 in
respect of the Company's obligation to the landlord to dismantle and
remove leasehold improvements from a leased office at the end of the
lease contract.
23 OPERATING LEASE
The Company leases its office premises and warehouse under cancellable
lease terms. Such contracts may be cancelled with 3 months advance
notice. All other lease agreements are non-cancellable contracts. The
total lease expense for the years ended 31 December 2009 and 2008
amounted to JPY 12,821,000 and JPY 13,219, respectively.
Future minimum lease payments including other operating lease contract
for the years ended 31 December 2009 and 2008 amounted to JPY 7,080,000
and JPY 7,760,000, respectively.
JPY'000
2009 2008
No later than 1 year 6,865 7,044
Later than 1 year and not later than 5 years 215 716
Later than 5 years - -
7,080 7,760
24 RELATED PARTY
TRANSACTIONS
Transactions between the Company and its related parties are disclosed below.
2009 Mr. Kashiwa- Mr. Kunieda Mr. Mr. Mr. Fuji Digital Imaging Techno-imagia Beyond LSI, Inc.
bara (Director) Li Evans Kiyomoto
(Director) (Director) (Director) (Director)
(Unit:JPY'000)
Sales of goods - - - - - - 1,064 1,560
Purchase of goods - - - - - 4,170 - -
Interest earned - - - - - - - 294
Interest incurred 1 - - - - - - -
Long-term lending - - - - - - - 2,888
made to related
party
Short-term borrowing 35,500 - - - - - - -
due form related
party
Investment - - - - - - - -
Patent purchased - - - - - - - 19,048
Allocation of new 85,240 - - - - - - -
shares to third
party
Amounts owed by - - - - - - 1,117 16,288
related parties
at year end
Allowance for - - - - - - (1,117) (16,288)
doubtful receivable
Amounts owed to 166 3,000 2,500 2,435 13,548 9,286 - 361
related parties
at year end
2008 Mr. Kashiwa- Mr. Kiyomoto Mr. Mr. Mr. Takahashi Fuji Digital Imaging Techno-imagia I-O Network Finger- Beyond LSI, Inc.
bara (Director) Evans Cho (ex-Director) Print Cards AB
(Director) (Director) (ex-Director)
(Unit:JPY'000)
Sales of goods in - - - - - - 1,325 - - 3,896
the year
Purchase of goods or - - - - - - - - - -
services
in the year
Consulting fee - - - - - 6,667 - - - -
charged to income
Short-term lending - - - - - - - - - 13,400
made to related
party
in the year
Patent returned - - - - - - - 20,400 - -
Interest earned - - - - - - - - - 12
Amounts owed by - - - - - - - - - 13,400
related parties
at year end
Amounts owed to 9,255 15,415 - 8,800 6,375 - - - - -
related parties
at year end
Technoimagia is one of the related parties of the Company because Mr. Taketoshi Kashiwabara owns the Company at 54.9% (54.4% in 2008) and also owns Technoimagia at 37.5% (37.5% in 2008) directly and indirectly through his controlling company, Fuji Digital Imaging.
Other related parties include:
* Fuji Digital Imaging: Mr Taketoshi Kashiwabara owns 20.1% (20.1% in 2008) but substantially controls Fuji Digital Imaging
* Fingerprint Cards AB (Sweden): Technoimagia owns 23.3% (23.3% in 2008) through Technoimagia Sweden AB
* I-O Network: Mr. Shoichi Kiyomoto was a representative Director of the Company until February 2009 and he owns 66.6% of I-O Network (66.6% in 2008).
l Sales of goods to related parties were made at the Company's usual list prices.
l Purchases were made at market price discounted to reflect the quantity of goods purchased or service rendered.
l All short-term borrowings/lending bear interests, which are subject to the loan rate offered by Japanese banks.
l Amounts owed to directors/ex-directors at 31 December 2008 and 2007 mainly consist of unpaid directors remuneration.
Remuneration of key management personnel
The remuneration of theDirectors, who are the key management personnel of the
Company, is set out below in aggregate for each of the categories specified in
IAS 24 Related Party Disclosures.
JPY'000
2009 2008
Short-term employee 38,537 39,348
benefits
Share-based payment - 8,327
Total remuneration 38,537 47,675
to directors
There were no Directors' transactionsexcept for remuneration, stock issuance
subscription and short-term borrowing by the Company (see above).
25 SUBSEQUENT EVENTS
Sale of associate company
The Company has decided to sold all the shares of Beyond LSI Inc which is
its associate company to a third party in 1stquarter 2010. It results in
JPY1,465,000 of revenue on sale of investment in associate company.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR EANDKFSLEEEF
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RNS Number : 2044G BgenuineTec Inc. 27 January 2010
FOR IMMEDIATE RELEASE 27 January 2010 BgenuineTec Inc
FUNDRAISING Further to the announcement on 29 December 2009, BgenuineTec Inc ("BgenuineTec" or the "Company") the Japanese developer of biometrics fingerprint authentication technology, announces that the plans to raise JPY 60 million (£416,727) through the issue of 10 million new ordinary shares at JPY 6 (4.17p) have been postponed while the company reviews certain strategic alliances and new funding arrangements. There is no certainty that that any alliance will proceed and that new funds will be raised. The Company will update shareholders in due course. Exchange Rate Used 1GBP:143.98 JPY For further information, please contact: BgenuineTec Inc
(Chairman)
(Chief Financial Controller)
Nominated Adviser Russell Cook / Freddy Crossley
Brian Coleman-Smith / Chris Lane /James Verstringhe Background Note on BgenuineTec Inc. On 14 July 2006, BgenuineTec Inc.(AIM; BGTI) 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. This information is provided by RNS The company news service from the London Stock Exchange END
IOEUBRURRSAAUAR More |
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| 29-12-09 | RNS |
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RNS Number : 7608E BgenuineTec Inc. 29 December 2009
FOR IMMEDIATE RELEASE 29 December 2009 BgenuineTec Inc Issue of equity Planned issue of 10 million new ordinary shares at JPY 6 (4.11p) per share Further to the announcement on 16 December 2009, BgenuineTec Inc ("BgenuineTec" or the "Company") the Japanese developer of biometrics fingerprint authentication technology, announces that the plans to raise JPY 60 million (£411,720) through the issue of 10 million new ordinary shares at JPY 6 (4.11p) have been delayed until late January 2010. However, there is still no certainty that the full amount will be raised and the Company will update shareholders in due course. Exchange Rate Used 1GBP:145.73 JPY For further information, please contact: BgenuineTec Inc Taketoshi Kashiwabara Japan +81-3-5652-0321 (Chairman)
(Chief Financial Controller)
Nominated Adviser Russell Cook / Freddy Crossley
Brian Coleman-Smith / James Verstringhe Background Note on BgenuineTec Inc. On 14 July 2006, BgenuineTec Inc.(AIM; BGTI) 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. This information is provided by RNS The company news service from the London Stock Exchange END
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| 29-06-07 | ||||
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All very quiet here.Are there still people in is share.
Something may be happening due to the spread tightening up |
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| 12-05-07 | ||||
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Came across these articles.
http://www.fingerprint.se/page.asp?newsID=282§ion=news http://www.fingerprints.com/page.asp?newsID=284§ion=news Implications not good. Does anyone have better news? |
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what a blip for this company. But the Japanese are confident about this one, so it should recover from here now.
Buy at low. good luck |
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I have been watching sdkk for a couple of weeks and with todays RNS felt it was time to buy a few.So today bought a few but shows on iii as a sell.
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The contents of the postings summarised here represents the opinions of the authors and not of Interactive Investor Trading Limited.
They have not been approved or issued by Interactive Investor Trading Limited.
They have not been approved or issued by Interactive Investor Trading Limited.
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