ANNOUNCEMENT TO AUSTRALIAN SECURITIES EXCHANGE LIMITED

Transcription

1 Registered Office: Unit 10, 62A Albert Street Preston VIC 3072 AUSTRALIA Telephone: National (03) International Facsimile: National (03) International MIKOH Corporation Limited Incorporated in Australia A.C.N Website: ANNOUNCEMENT TO AUSTRALIAN SECURITIES EXCHANGE LIMITED 21 February 2007 The Manager Company Announcements Australian Securities Exchange Limited Dear Sir Appendix 4D and Half-Year Accounts to 31 December 2006 We attached the Company s Appendix 4D together with the Half-Year Report for the six months ended 31 December Yours sincerely Gary Phipps Company Secretary

2 MIKOH Corporation Limited ABN Appendix 4D INTERIM FINANCIAL REPORT FOR THE HALF YEAR ENDED 31 DECEMBER 2006 Period 1 July 2006 to 31 December 2006 (Previous Corresponding Period 1 July 2005 to 31 December 2005)

3 MIKOH Corporation Limited and Controlled Entities Appendix 4D Interim Financial Report Name of entity MIKOH Corporation Limited ABN or equivalent company reference Half yearly (tick) Preliminary final (tick) Financial half year ended ( current period ) 31 December 2006 Results for Announcement to the Market Results $A Revenues from ordinary activities Down 35% to 341,643 (Loss) from ordinary activities after tax attributable to members Down 1% to (955,511) Net (Loss) for the period attributable to members Down 1% to (955,511) Dividends (distributions) Amount per security Franked amount per security Final dividend NIL NIL Previous corresponding period NIL NIL Record date for determining entitlements to the dividend, N/A The Company does not have a dividend reinvestment plan and no dividends are proposed to be declared for the current year. Note: This Appendix 4D should be read in conjunction with the Commentary on the Results of the Interim Financial Report for the half-year ended 31 December 2006 and with the accompanying notes to the Appendix 4D.

4 MIKOH CORPORATION LIMITED and CONTROLLED ENTITIES ABN HALF YEAR REPORT DECEMBER 2006 Directors' Report Your directors present their report on the consolidated entity consisting of MIKOH Corporation Limited and the entities it controlled at the end of, or during, the half-year ended 31 December Directors The following persons were directors of MIKOH Corporation Limited during the whole of the half-year and up to the date of this report: Douglas James Halley (Chairman) John Stanley Keniry James Matthew Blomfield (Managing Director) Richard Owen Holcomb 2. Review of Operations and Results The loss before income tax for the half year ended 31 December 2006 was $1,040,511 compared to a loss before income tax for the previous corresponding period of $1,046,412. Revenue was 200% up on revenue for the second half of the 2005/06 financial year, however was down on the revenue for the corresponding period last year. The slight reduction in the loss before income tax was therefore a result of an improved gross margin, and a small decrease in indirect costs. Sales of Smart&Secure were lower than for the previous period, however Smart&Secure revenue since 31 December 2006 has already exceeded that for the six months to that date. MIKOH s Smart&Secure technology is emerging as a platform technology with broad appeal in a wide variety of markets. These are markets in which MIKOH now has traction and is working on large-scale applications in areas such as high security (government and commercial), agrochemical, supply chain/distribution, retail, asset management and inventory control, transportation, and utilities. Sales for SubScribe increased over the corresponding period last year, when we were still in transition from the previous licensing model. There was a fourfold increase on SubScribe revenue for the second half of the 2005/06 financial year. Revenue was boosted by the contract with Secure Sentinel, as announced in August 2006, along with revenues from the Department of Foreign Affairs and Trade, the Australian Taxation Office, Brother Industries, Microtrace, and various Australian universities, which helped maintain a consistent revenue flow. SubScribe is now tracking profitably and we intend to launch marketing initiatives for SubScribe in the USA. Revenue from digital inkjet printers was low, as expected, as MIKOH repositions its printer technologies to address niche markets that are beginning to show potential see in particular the Note Printing Australia announcement on 10 January The test machine currently being developed for Note Printing Australia will position MIKOH for improved results from this division in the second half of the financial year. MIKOH continues to benefit from the Federal Government's Research and Development Tax Offset scheme, with a tax credit of $85,000 recorded for the half year. The results for the half year are summarised as follows:- Revenue for the period was $341,643 representing a 35.3% decrease over the corresponding period last year of $528,322; Net loss for the period after income tax was $955,511 representing a 0.8% increase over the loss for the corresponding period last year of $947,528; Net cash outflow from operating activities for the half year was $1,342,250, representing a 44.4% increase over the corresponding period last year of $929,390; and

5 Net assets at the end of the half year amounted to $1,338,335 compared to a net asset deficit of $261,304 as at 30 June 2006, with a working capital surplus of $1,210,053 compared to a working capital deficit of $376,166 at 30 June Auditor's Independence Declaration under Section 307C of the Corporations Act 2001 The auditor s independent declaration is set out on the following page and forms part of the directors report for the half year ended 31 December This report is made in accordance with a resolution of the Directors: Doug Halley Chairman Sydney, 21 February 2007

6 DTT NSW ABN Grosvenor Place 225 George Street Sydney NSW 2000 PO Box N250 Grosvenor Place Sydney NSW 1217 Australia 21 February 2007 Mikoh Corporation Limited Unit 10 62A Albert Street Melbourne VIC 3072 DX 10307SSE Tel: +61 (0) Fax: +61 (0) AUDITOR S INDEPENDENCE DECLARATION TO MIKOH CORPORATION LIMITED In accordance with section 307C of the Corporations Act 2001, I am pleased to provide the following declaration of independence to the directors of Mikoh Corporation Limited. As lead audit partner of the review of the financial statements of Mikoh Corporation Limited for the period ended 31 December 2006, I declare that to be best of my knowledge and belief, there have been no contraventions of: (i) (ii) the auditor independence requirements of the Corporations Act 2001 in relation to the review; and any applicable code of professional conduct in relation to the review. Alfred Nehama Partner DTT NSW Liability limited by a scheme approved under Professional Standards Legislation.

7 Mikoh Corporation Limited and Controlled Entities Consolidated Income Statement For the half year ended 31 December 2006 Half year ended 31 December 2006 $ $ Half year ended 31 December 2005 Revenue from ordinary activities 341, ,322 Less cost of goods sold -110, ,786 Gross Profit 230, ,536 Expenses by function:- Manufacturing -85,185-80,457 Administration and general -489, ,888 Marketing and sales -398, ,343 Research and development -298, ,260 Loss before income tax -1,040,511-1,046,412 Income tax benefit 85,000 98,884 Loss for the half year -955, ,528 Weighted basic loss per share for the half year (0.61) cents (0.73) cents Weighted diluted loss per share for the half year (0.61) cents (0.73) cents The accompanying notes form part of these financial statements

8 Mikoh Corporation Limited and Controlled Entities Consolidated Balance Sheet As at 31 December December June 2006 $ $ Current Assets Cash assets 1,268,422 83,594 Trade and other receivables 118,552 56,902 Inventories 209, ,514 Other assets 311, ,714 Total Current Assets 1,907, ,724 Non-Current Assets Plant and equipment 295, ,304 Total Non-Current Assets 295, ,304 Total Assets 2,203, ,028 Current Liabilities Trade and other payables 630, ,086 Provisions 67,659 64,804 Total Current Liabilities 697, ,890 Non-Current Liabilities Trade and other payables 0 0 Provisions 167, ,442 Total Non-Current Liabilities 167, ,442 Total Liabilities 865,261 1,070,332 Net Assets / (Net Liabilities) 1,338, ,304 Equity Contributed equity 24,615,473 22,130,811 Reserves 122,576 52,088 Accumulated losses -23,399,714-22,444,203 Total Equity / (Deficit) 1,338, ,304 Net tangible asset backing per ordinary security 0.80 cents cents The accompanying notes form part of these financial statements

9 Mikoh Corporation Limited and Controlled Entities Consolidated Cash Flow Statement For the half year ended 31 December 2006 Half year ended 31 December 2006 $ $ Half year ended 31 December 2005 Cash Flows from Operating Activities (inclusive of Goods and Services Tax) Receipts from Customers 284, ,432 Payments to suppliers and employees -1,631,567-1,424,489-1,346, ,057 Interest received 4,350 12,667 Net cash outflow from operating activities -1,342, ,390 Cash Flows from Investing Activities Payments for plant and equipment -34,369-15,626 Net cash outflow from investing activities -34,369-15,626 Cash Flows from Financing Activities Proceeds of borrowings 90,134 - Repayment of borrowings -40,259 - Proceeds from the issue of shares 2,604, ,090 Payment for share issue expenses -90,637-17,505 Net cash inflow from financing activities 2,563, ,585 Net decrease in cash held 1,186, ,431 Cash at the beginning of the half year 83, ,311 Effects of exchange rate changes on cash -1, Cash at the end of the half year 1,268, ,785 The accompanying notes form part of these financial statements

10 Mikoh Corporation Limited and Controlled Entities Consolidated Statement of Changes in Equity For the half year ended 31 December 2006 Half year ended 31 December 2006 $ $ Half year ended 31 December 2005 Total equity at the beginning of the period -261, ,433 Exchange differences on translation of foreign operations 3, Loss for the period -955, ,528 Total recognised net expense for the half year -952, ,543 Transactions with equity holders in their capacity as equity holders: Issue of share capital 2,604, ,090 Less share issue expenses -119,338-17,505 Issue of share options 67,007 - Total equity at the end of the period 1,338,335 45,475 The accompanying notes form part of these financial statements

11 BASIS OF PREPARATION OF THE HALF-YEAR FINANCIAL REPORT MIKOH Corporation Limited and Controlled Entities Notes to the financial statements for the half year ended 31 December 2006 This financial report for the interim half-year reporting period ended 31 December 2006 has been prepared in accordance with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Act This interim financial report does not include all notes of the type normally included in an annual financial report. Accordingly, this report is to be read in conjunction with the annual report for the year ended 30 June 2006 and public announcements made by MIKOH Corporation Limited during the interim reporting period in accordance with the continuous disclosure requirements. The functional and presentation currency of the Company is Australian dollars. The principal accounting policies adopted in the preparation of the financial report are set out below. These policies have been consistently applied to all the periods presented, unless otherwise stated. These financial statements have been prepared under the historical cost convention on an accruals basis, as modified by the valuation of available for sale financial assets. 1. SIGNIFICANT ACCOUNTING POLICIES (a) Going Concern As at 31December 2006 the consolidated entity had a surplus of capital and reserves of $1,338,335 (30 June 2006 deficit of $261,304) and a working capital surplus of $1,210,053 (30 June deficit of $376,166). However, the consolidated entity has experienced operating losses during the half year ended 31 December 2006 amounting to $955,511 (up from $947,528 in the same period last year) and negative net operating cash flows of $1,342,250 (up from $929,390 for the same period last year). Accordingly, the continuing viability of the consolidated entity and its ability to continue as a going concern and meet its debts and commitments as they fall due are dependent upon the consolidated entity being successful in the following objectives:- Achieving sufficient future cash flows from its operations to enable its obligations to be met; and/or Establishing strategic alliances to assist in funding the commercialisation of the technologies; and/or Obtaining additional funding or capital raising. As a result of the financial position outlined above, there is significant uncertainty whether the consolidated entity will continue as a going concern and, therefore, whether it will realise its assets and settle its liabilities and commitments in the normal course of business and at the amounts stated in the financial report. However, the directors currently believe that the consolidated entity will be successful in achieving the above objectives and accordingly have prepared the financial report on a going concern basis. At this time, the directors are of the opinion that no asset is likely to be realised for an amount less than the amount at which it is recorded in the financial report as at 31 December Accordingly, no adjustments have been made to the financial report relating to the recoverability and classification of the asset carrying amounts or the amounts and classification of liabilities that might be necessary should the consolidated entity not continue as a going concern. (b) Principles of Consolidation The consolidated financial statements comprise the financial statements of MIKOH Corporation Limited and its subsidiaries (the Group). The financial statements of subsidiaries are prepared for the same reporting period as the parent, using consistent accounting policies. In preparing the consolidated financial statements, all intercompany balances and transactions, and any unrealised profits arising within the consolidated entity, are eliminated in full. (c) Cash and cash equivalents Cash in the balance sheet comprise cash on hand and cash at bank. (d) Employee Benefits Provision is made in the financial statements for all employee benefits, including on-costs, when it is probable that settlement will be required and they are capable of being measured reliably. Liabilities for salaries and wages (including non-monetary benefits), annual leave and long service leave expected to be settled within 12 months of the reporting date are recognised in respect of employees' service up to the reporting date, and are measured at the amounts expected to be paid when the liabilities are settled. The liability for annual leave and long service leave expected to be settled more than 12 months from the reporting date are measured as the present value of the expected future payments to be made in respect of services provided by employees up to the reporting date. Consideration is given to expected future salary and wage levels, experience of employee departures, and periods

12 MIKOH Corporation Limited and Controlled Entities Notes to the financial statements for the half year ended 31 December 2006 of service. Expected future payments are discounted using market yields at the reporting date on national government bonds with terms to maturity and currency that match, as closely as possible, the estimated future cash outflows. Contributions to employee superannuation funds are expensed as the contributions are paid or become payable. (e) Foreign Currency Translation Transactions Both the presentation and functional currency of MIKOH Corporation Limited and its Australian subsidiaries is Australian dollars, whereas the functional currency of MIKOH Corporation Inc. is US dollars. Transactions denominated in foreign currencies (currencies other than the functional currency of an entity) are recorded using the exchange rate ruling at the date of the underlying transaction. Monetary assets and liabilities denominated in foreign currencies are translated using the rate of exchange ruling at the balance sheet date. Non-monetary items measured at fair value in a foreign currency have been translated using the exchange rates ruling when the fair value was determined. Foreign Entities Foreign entities' income statements are translated at the weighted average exchange rates for the period. The exchange differences arising on the translation are taken directly to a separate component of equity. In the consolidated financial statements the balance sheets are translated at the closing rate on the balance sheet date. (f) Goods and Services Tax Revenues, expenses and assets are recognised net of GST except i. where the amount of GST incurred on a purchase of goods or services is not recoverable from the relevant taxation authority, in which case it is recognised as part of the cost of acquisition of the asset or as part of the expense item, as applicable; and ii. for receivables and payables which are recognised inclusive of GST. The net amount of GST recoverable from, or payable to, the taxation authority is included as part of receivables or payables in the balance sheet. Cash flows are included in the cash flow statement on a gross basis, and the GST component of cash flows arising from financing and investing activities which is recoverable from or payable to the taxation authority are classified as operating cash flows. (g) Impairment of Assets At each reporting date, the consolidated entity reviews the carrying amount of its tangible and intangible assets to determine whether there is any indication that the carrying value of those assets has been impaired. Where any such indicator of impairment exists, the recoverable amount of the asset is estimated to determine the extent, if any, of the impairment. Recoverable amount is the greater of fair value less costs to sell, and the 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. Where the asset does not generate cash inflows that are largely independent from those of other assets or groups of assets, the recoverable amount is determined for the cash-generating unit to which the asset belongs. (h) Income Tax Current tax is calculated as the income taxes payable or recoverable in respect of the taxable profit or loss for the period, using tax rates and tax laws enacted or substantively enacted at the reporting date. It includes any adjustment to tax payable or recoverable in respect of previous years. Deferred tax is provided for using the balance sheet liability method, providing for the tax effect of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes, and the amounts used for tax assessment or deduction purposes. Deferred income tax assets are recognised to the extent that it is probable that sufficient taxable profits will be available against which deductible temporary differences, and the carry-forward of unused tax losses and unused tax losses can be utilised. However, deferred tax assets and liabilities are not recognised if the temporary differences giving rise to them arise from the initial recognition of assets or liabilities (other than as a result of a business combination) which, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss. In addition, a deferred tax asset is only recognised in relation to investments in subsidiaries to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilised. (i) Leased Assets Operating lease payments are recognised as an expense on a straight-line basis over the lease term, except where another systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed.

13 MIKOH Corporation Limited and Controlled Entities Notes to the financial statements for the half year ended 31 December 2006 (j) Trade and Other Payables Trade payables and other accounts payable are recognised when the consolidated entity becomes obligated to make future payments resulting from the purchase of goods and services. They are initially recognised at fair value, which is the amount expected to be paid, and subsequently at amortised cost. (k) Plant & Equipment Plant and equipment, and leasehold improvements, are stated at cost less accumulated depreciation and any impairment losses. Cost includes any expenditure that is directly attributable to the acquisition of the item. The depreciation of plant and equipment is calculated to write off the net cost of each asset over its expected useful life. Estimates of remaining useful lives for all fixed assets are reviewed at least annually. The expected useful lives for plant and equipment at acquisition are between 3 and 10 years. Leasehold improvements are depreciated over the shorter of the period of the lease, or the useful life, using the straight line method. (l) Research and Development Expenditure incurred on research and development activities and on patent registration is expensed as incurred on the basis that continuing research is part of the cost of being in business. To the extent that future benefits deriving from development expenditure are expected beyond reasonable doubt to exceed such expenditure, these costs are capitalised and amortised over the period of expected benefit. (m) Revenue Recognition Revenue is recognised to the extent that it is probable that the economic benefits will flow to the consolidated entity and the revenue can be reliably measured. Amounts disclosed as revenue are net of returns, trade allowances, and duties and taxes paid. The following specific recognition criteria must also be met before revenue is recognised: Sale of goods - Revenue is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer, which occurs at the time of delivery to the buyer. Other revenue - Other revenue, such as licensing fees and consulting fees, is recognised as it is earned. In the case of consulting jobs in process at balance date, revenue is recognised by reference to the stage of completion. Income received but not earned as at balance date, as it is expected to be earned within twelve months, is deferred, and treated as a current liability. (n) Share-Based Payments For equity-settled share-based payments, the fair value at grant date of the equity instrument is charged to the income statement on a straight-line basis over the vesting period, based on the consolidated entity's estimate of shares that will ultimately vest. The corresponding accrued employee entitlement is recorded in the Employee Share Options reserve. Fair value is measured by an external valuer using a binomial model, which considers the following factors: exercise price expected life of the award current market price of the underlying shares expected share price volatility expected dividends risk-free interest rate (o) Trade and Other Receivables Trade receivables, which generally have day terms, are recognised initially at fair value, and subsequently at amortised cost, less an allowance for any uncollectable amounts. An estimate for doubtful debts is made when collection of the full amount is no longer probable. Bad debts are written off when identified. 2. Segment Reporting

14 MIKOH Corporation Limited and Controlled Entities Notes to the financial statements for the half year ended 31 December 2006 Half-Year 2006 Security Technologies Digital Marking Technologies Inter- Segment Eliminations/ Unallocated Consolidated $ $ $ $ Segment revenue 274,288 63,005 4, ,643 Segment result -106, , ,349-1,040,511 Half-Year 2005 Security Technologies Digital Marking Technologies Inter- Segment Eliminations/ Unallocated Consolidated $ $ $ $ Segment revenue 248, ,277 8, ,322 Segment result -71,324-77, ,476-1,046, Issued Capital Ordinary Shares Number $ Issued and fully paid 167,481,907 24,615,473 Movements in ordinary shares on issue Balance at 30 June ,223,238 22,130,811 Issued on 16 August 2006, net of costs 5,044, ,305 Issued on 7 September 2006, net of costs 6,111, ,500 Issued on 15 September 2006, net of costs 31,743 2,857 Issued on 6 November 2006, net of costs 3,571, ,000 Issued on 28 December 2006, net of costs 5,500,000 1,045,000 Balance at 31 December ,481,907 24,615,473 Options

15 MIKOH Corporation Limited and Controlled Entities Notes to the financial statements for the half year ended 31 December 2006 Options The following options were granted in the half year ending 31 December Grantee Expiry Date Exercise price per option Number Matthew Blomfield 31 August cents 3,000,000 Matthew Blomfield 31 August cents 3,000,000 Richard Holcomb 31 August cents 500,000 Richard Holcomb 31 August cents 500,000 No options were exercised in the half year ending 31 December The following options lapsed during the half year ending 31 December 2006 Expiry Date Exercise price per option Number 12 July cents 1,666, March cents 500,000 Options outstanding as at 31 December 2006 are: Expiry Date Exercise price per option Number 25 September cents 5,000, December cents 1,000, March cents 2,000, March cents 1,000, March cents 1,000, March cents 500, March cents 250, March cents 250, August cents 3,500, August cents 3,500, Contingent Liabilities There are no contingent liabilities at the report date. 5. Events Subsequent to the Reporting Date There are no events subsequent to the report date.

16 DIRECTORS DECLARATION In the opinion of the Directors: (a) the financial statements and notes of the Consolidated Entity: (i) give a true and fair view of the financial position as at 31 December 2006 and the performance for the half-year ended on that date of the Consolidated Entity; and (ii) comply with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001; and (b) there are reasonable grounds to believe that the company will be able to pay its debts as and when they become due and payable. This report is made in accordance with a resolution of the Directors: Doug Halley Chairman Sydney, 21 February 2007

17 DTT NSW ABN Grosvenor Place 225 George Street Sydney NSW 2000 PO Box N250 Grosvenor Place Sydney NSW 1217 Australia Independent Auditor s Review Report to the Members of Mikoh Corporation Limited DX 10307SSE Tel: +61 (0) Fax: +61 (0) Report on the Half-Year Financial Report We have reviewed the accompanying half-year financial report of Mikoh Corporation Limited, which comprises the balance sheet as at 31 December 2006, and the income statement, cash flow statement, statement of recognised income and expense for the half-year ended on that date, selected explanatory notes and the directors declaration. Directors Responsibility for the Half-Year Financial Report The directors of the company are responsible for the preparation and fair presentation of the half-year financial report in accordance with Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Act This responsibility includes designing, implementing and maintaining internal control relevant to the preparation and fair presentation of the half-year financial report that is free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances. Auditor s Responsibility Our responsibility is to express a conclusion on the half-year financial report based on our review. We conducted our review in accordance with Auditing Standard on Review Engagements ASRE 2410 Review of an Interim Financial Report Performed by the Independent Auditor of the Entity, in order to state whether, on the basis of the procedures described, we have become aware of any matter that makes us believe that the financial report is not in accordance with the Corporations Act 2001 including: giving a true and fair view of the entity s financial position as at 31 December 2006 and its performance for the half-year ended on that date; and complying with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations As the auditor of First Opportunity Fund Limited, ASRE 2410 requires that we comply with the ethical requirements relevant to the audit of the annual financial report. A review of a half-year financial report consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Australian Auditing Standards and consequently does not enable us to obtain assurance Liability limited by a scheme approved under Professional Standards Legislation.

18 that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion. Auditor s Independence Declaration In conducting our review, we have complied with the independence requirements of the Corporations Act Conclusion Based on our review, which is not an audit, we have not become aware of any matter that makes us believe that the half-year financial report of First Opportunity Fund Limited is not in accordance with the Corporations Act 2001, including: (a) giving a true and fair view of the entity s financial position as at 31 December 2006 and of its performance for the half-year ended on that date; and (b) complying with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations Material Uncertainty Regarding Continuation as a Going Concern Without qualification to the opinion expressed above, we draw attention to the following matter. As a result of the matter described in Note 1(a) to the financial statements, there is significant uncertainty whether the entity will be able to continue as a going concern and therefore whether it will realise its assets and extinguish its liabilities in the normal course of business and at the amounts stated in the financial report. DTT NSW ALFRED NEHAMA Partner Chartered Accountants Sydney, 21 February 2007 Liability limited by a scheme approved under Professional Standards Legislation.