RNS Number : 1858D
Secure Design KK
11 September 2008
FOR RELEASE
7.00 AM
11 September 2008
Secure Design KK
Amendments to Annual Report
Please be advised that the following amendments have been made to the annual report, which was sent to shareholders on 30 June 2008. The
main amendment is to the auditors report disclosure and includes the addition of 'Amendments to IFRS standards and interpretations'. No
financial figures have been altered or updated in the amended version of the annual report.
Copies of the full report and accounts are available at http://www.sd-institute.com.
List of amendments:
(1) Independent Auditor's report
Before amendments (page 1)
Independent Auditor's Report
To the shareholders and directors of
Secure Design KK
We have audited the accompanying consolidated balance sheets of Secure Design KK as at December 31, 2007 and 2006, and the related
consolidated statements of income, changes in equity and cash flows for the years then ended. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with International Standards on Auditing. Those Standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing
the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated balance sheets of
Secure Design KK as of December 31, 2007 and 2006, and its consolidated statements of income, its changes in equity and its cash flows for
the years then ended in accordance with International Financial Reporting Standards.
Supplemental Information
The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As
discussed in the Note "Going-concern" to the financial statements, the Company has suffered recurring losses. These conditions raise
substantial doubt about its ability to continue as a going concern. Management's plans in regard to these matters are also described in the
Note "Going-concern". The consolidated financial statements do not include any adjustments relating to the recoverability and classification
of asset carrying amounts or the amount and classification of liabilities that might result should the Company be unable to continue as a
going concern.
Tokyo, Japan, May 27, 2008
Kainan Audit Corporation
After amendments (page 1)
Independent Auditor's Report
To the shareholders and directors of
Secure Design KK
We have audited the accompanying consolidated balance sheet of Secure Design KK as at December 31, 2007, and the related consolidated
statement of income, changes in equity and cash flows for the year then ended. These financial statements in accordance with International
Financial Reporting Standards, as adopted by the EU, are the responsibility of the Company's management. Our responsibility is to express an
opinion on these consolidated financial statements based on our audit.
We conducted our audit in accordance with International Standards on Auditing. Those Standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing
the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated
balance sheet of Secure Design KK as of December 31, 2007, and its consolidated statement of income, its changes in equity and its cash
flows for the year then ended in accordance with International Financial Reporting Standards, as adopted by the EU.
Supplemental Information
The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As
discussed in the Note "Going-concern" to the financial statements, the Company has suffered recurring losses. These conditions raise
substantial doubt about its ability to continue as a going concern. Management's plans in regard to these matters are also described in the
Note "Going-concern". The consolidated financial statements do not include any adjustments relating to the recoverability and classification
of asset carrying amounts or the amount and classification of liabilities that might result should the Company be unable to continue as a
going concern.
Tokyo, Japan, May 27, 2008
Kainan Audit Corporation
(2) Summary of significant accounting policies
Before amendments (page 6)
Basis of consolidation
Equity method
The Company acquired 40% of shares of Beyond LSI, Ltd. at December 2007 and
categorised it as associate company. Associates are those entities in which
the Company has significant influence, but not control, over the financial
and operating policies. Associates are accounted for using the equity method
(equity accounted investees). . 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 control 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.
After amendments (page 6)
Basis of consolidation
Equity method
The Company acquired 40% of shares of Beyond LSI, Ltd. at December 2007 and
categorised it as associate company. Associates are those entities in which
the Company has significant influence, but not control, over the financial
and operating policies. Associates are accounted for using the equity method
(equity accounted investees). . 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.
(3) Financial instruments
Before amendments (page 9)
Financial instruments
Financial assets and financial liabilities are recognised on the Company's
balance sheet when the Company has become a party to the contractual
provisions of the instrument.
Trade receivables
Trade receivables are recognised at fair value and subsequently measured at
amortised cost using the effective interest method.
Investments securities
Investments 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 to 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 its quoted bid price at the balance sheet
date. Other investment securities are remeasured also to fair value. When, in
individual cases, these values are not available or cannot be determined
reliably, other investment securities are measured at cost.
In accordance with IAS 39, assessments are made regularly as to
Trade payables
Trade payables are recognised at fair value and subsequently measured at
amortised cost using the effective interest method.
Equity instruments
Ordinary shares are classified as equity instruments and are recorded at the
fair value, net of direct issue costs. Equity instruments are not
subsequently measured.
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.
After amendments (page 9)
Financial instruments
Financial assets and financial liabilities are recognised on the Company's
balance sheet when the Company has become a party to the contractual
provisions of the instrument.
Trade receivables
Trade receivables are recognised at fair value and subsequently measured by
estimating the present value of cash flows discounted using the effective
interest rate if impaired.
In accordance with IAS 39, assessments are made regularly as to whether there
is any objective evidence that trade receivables may be impaired. Impairment
losses identified after carrying out an impairment test are recognised as an
expense.
Investments securities
Investments 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 time frame established by the market concerned, and
are initially measured at cost, including transaction costs.
Investment securities classified as available-for-sale are remeasured to 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. Other investment securities are remeasured
also to 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
Trade payables
Trade payables are recognised at fair value and subsequently measured at
amortised cost using the effective interest method.
Equity instruments
Ordinary shares are classified as equity instruments and are recorded at the
fair 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.
(4) Amendments to IFRS standards and interpretations
Added (pages 11 - 12)
Amendments to IFRS standards and interpretations
First-time application of standards or interpretations
IFRS 7 (Financial Instruments: Disclosures) published by the IASB in August 2005 requires information on the importance of financial
instruments for the net assets, financial position and results of operations of companies and also includes new requirements with regard to
qualitative and quantitative reporting on risks associated with financial instruments. The standard was adopted by the European Union in
January 2006 and its application is binding for financial years starting on or after January 1, 2007. As a result of IFRS 7, the Company
extended the information in the Notes on risks relating to financial instruments.
The amendment to IAS 1 (Presentation of Financial Statements:Capital Disclosures) published in August 2005 was adopted by the European
Union in January 2006. The change provides for additional disclosures, which enable the target company of the financial statements to assess
the targets, methods and processes when managing their capital. The supplements to IAS 1 must be applied to financial years which commence
on or after January 1, 2007. The first-time application in the Company resulted in additional disclosures in the notes.
IFRIC 10 (Interim Financial Reporting and Impairment), published in July 2006 and adopted by the European Union in July 2007, focuses on
the interaction between the provisions of IAS 34 (Interim Reporting) and the regulations on reporting impairments relating to goodwill and
specific financial assets. IFRIC 10 stipulates that impairments, which were reported in interim financial statements and for which a
prohibition of reversal exists according to IAS 36 and IAS 39 respectively, cannot be reversed in subsequent interim financial statements,
year-end financial statements and consolidated financial statements. The interpretation applies to financial years starting on or after
November 1, 2006. In the past, the Company has not reversed such impairments in subsequent financial statements if they were first reported
in interim financial statements. IFRIC 10 therefore supports the practice used by the Company to date and no further consequences result for
the accounting of the Company.
Standards or interpretations adopted by the EU and not yet applied
As a result of IFRS 8 (Operating Segments), segment reporting has switched from what was known as the "risk and reward approach" to the
"management approach" in terms of segment identification under IAS 14. Here the information regularly made available to the "chief operating
decision maker" for decision-making purposes is the decisive factor. At the same time, the valuation of the segments has been switched from
the "risk and reward approach" to the "management approach". IFRS 8 was published in November 2006 and adopted by the European Union in
November 2007. The standard is binding for financial years starting on or after January 1, 2009. Early application is permitted. So far, the
Company has only a single segment and this regulation will have no impact to the Company..
IFRIC 11 (IFRS 2 - Group and Treasury Share Transactions) deals with the issue of how group share-based remuneration should be reported,
which are the effects of staff changes within a group and how share-based payment should be treated when the company issues its own shares
or needs to acquire shares from a third party. IFRIC 11 was published in November 2006 and adopted by the European Union in June 2007. The
interpretation is to be applied for financial years starting on or after March 1, 2007. Early application is recommended. IFRIC 11 is not
expected to have any impact on the future consolidated financial statements of the Company.
Standards or interpretations not yet adopted by the EU and not yet applied
In September 2007 the IASB published a revised version of the IAS 1 (Presentation of Financial Statements: A revised Presentation),
which is intended to make it easier for users to analyze and compare financial statements. Under this, all non-equity holder related changes
in equity have to be shown in one single "statement of comprehensive income" or in two separate reporting components with an income
statement taken from the previous statement of comprehensive income. The corresponding income tax effect is to be shown for the individual
components of other comprehensive income. The new version of IAS 1 is to be applied to financial years starting on or after January 1, 2009.
Adoption by the European Union is currently outstanding. The presentation of changes in equity will be amended accordingly by the Company in
line with the requirements of IAS 1.
Through the publication of the revised version of IFRS 3 (Business Combinations) and the amendments to IAS 27 (Consolidated and Separate
Financial Statements) in January 2008, IASB completed the second phase of the "Business Combinations" project. The main changes include the
accounting treatment of minority interests and the re-measurement, through profit or loss, of already existing shares at the time control
was gained for successive company acquisitions. Changes in the participation quota without loss of control are to be recorded solely as
equity transactions. In future, acquisition-related costs are to be recognized as expenses. For possible adjustments to acquisition costs,
as a result of future events which are to be recognized as liabilities at the time of acquisition, no adjustment to goodwill in subsequent
valuations is possible. The new version of IFRS 3 is to be applied to company mergers commencing on or after July 1, 2009. Early application
is permitted, but is limited to reporting periods beginning on or after June 30, 2007. The amendments to IAS 27 are to be applied to financial years which start on or after July 1, 2009,
whereby early application is permitted. However, early application of one of the two standards is contingent on the simultaneous early
application of the respective other standard. Adoption by the European Union is currently outstanding. The Company expects that the
treatment of acquisition-related costs in the event of company acquisitions as expenses will lead to additional expense, the level of which
depends on several factors, including the size of the acquisition. The impact of reporting adjustments in acquisition costs contingent on
future events, which at the time of acquisition are to be treated as liabilities in the income statement, depends on the individual case.
In January 2008, the IASB published the amendment to IFRS 2 (Share-based Payment: Vesting Conditions and Cancellations). The amendments
clarify that exercise conditions are only service and goal fulfillment conditions. As a result of the changes in the definition of exercise
conditions, non-exercise conditions are now to be taken into account when measuring the fair value of the equity instruments granted. The
changes are to be applied for financial years starting on or after January 1, 2009. Early application is permitted where indicated. Adoption
by the European Union is currently outstanding. Application will not have a material impact on the earnings position of the Company.
In February 2008 in a document entitled "Puttable Financial Instruments and Obligations Arising on Liquidation", the IASB published the
amendments to IAS 32 (Financial Instruments: Presentation) and IAS 1 (Presentation of Financial Statements). The amendments relate
essentially to questions relating to the demarcation between equity and liability. In particular, the revision now permits, under certain
circumstances, the option of classifying puttable instruments as equity. The amendments are to be applied to financial years starting on or
after January 1, 2009. Early application is permitted. Adoption by the European Union is currently outstanding. This regulation has no
impact on the Company.
In addition to the outlined standards, interpretations and amendments, the following statements have been issued by the IASB and IFRIC:
IFRIC 12 (Service Concession Arrangements) addresses accounting for infrastructure services by private companies and was published in
November 2006.
IFRIC 13 (Customer Loyalty Programmes) was published by the IASB in June 2007 and deals with the treatment and measurement of customer
loyalty programs.
The amendment to IAS 23 (Borrowing Costs) was published by the IASB in March 2007 and deals with capitalization of borrowing costs.
These accounting principles are not presently relevant to the financial statements of the Company and are therefore not explained in
detail here.
(5) 13 Equity Accounted Investee
Before amendment (page 16)
13
EQUITY ACCOUNTED INVESTEE
The Company's share of loss in its equity accounted investee for the year was JPY 3,180 thousand (2006: nil). During the year the Company
acquired 40 % shares in Beyond LSI Ltd. Based on an evaluation of the extent of control on the investee, it is not fully consolidated but
accounted for using the equity method by the Company.
Summary financial information for equity accounted investees, not adjusted for the percentage ownership held by the Company:
2007 Ow Cu No Total assets Current liabilities Non- Total liabilities
ne rr n- current
r- en cu liabilities
sh t rr
ip As en
se t
ts as
se
t
(Unit: JPY'000)
Beyond LSI Ltd. 40 19 30 50,856 72,319 167,901 240,220
% , ,
88 97
5 1
Revenues Ex Lo
pe ss
ns
es
13,297 46 32
, ,
03 74
8 1
After amendment (page 18)
13
EQUITY ACCOUNTED INVESTEE
The Company's share of loss in its equity accounted investee for the year was JPY 3,180 thousand (2006: nil). During the year the Company
acquired 40 % shares in Beyond LSI Ltd. Based on an evaluation of the extent of control on the investee, it is not consolidated but
accounted for using the equity method by the Company.
Summary financial information for equity accounted investees, not adjusted for the percentage ownership held by the Company:
2007 Ow Cu No Total assets Current liabilities Non- Total liabilities
ne rr n- current
r- en cu liabilities
sh t rr
ip As en
se t
ts as
se
t
(Unit: JPY'000)
Beyond LSI Ltd. 40 19 30 50,856 72,319 167,901 240,220
% , ,
88 97
5 1
Revenues Ex Lo
pe ss
ns
es
13,297 46 32
, ,
03 74
8 1
(6) 18 Deferred Tax
Before amendment (page 21)
18 DEFERRED TAX
At the balance sheet date, the Company has unused tax losses of JPY523,924 thousand
available to offset against future profits. No deferred tax asset has been recognised
in respect of such unused tax losses due to the unpredictability of future profit
streams. The unrecognised tax losses of JPY8,742 thousand, JPY137,271 thousand and
JPY377,911 thousand will expire in 2013, 2014 and 2015, respectively.
Details of deferred tax assets
and liabilities are as
follows:
JPY'000
2007 2006
Tax loss carry forward 183,444 58,027
Allowance for doubtful 101,796 -
receivables
Liabilities for expenses 8,855 8,176
disallowed until paid
Differences in depreciation 5,814 4,403
and amortisation for tax
purposes
Equity-settled share-based 5,021 951
transactions
Loss of share of equity method 1,294 -
investee
Others 1,973 1,710
Deferred tax assets total 308,197 73,267
Share issuance costs 9,499 4,623
Deferred tax liabilities total 9,499 4,623
Net of deferred tax assets and 298,698 68,644
liabilities
Valuation allowance (298,698) (68,644)
Deferred tax assets on balance - -
sheet
Tax reconciliation:
Reported loss before taxation (648,959) (162,024)
Tax rate at 40.7% (264,126) (65,888)
Impact of non-deductible 31,372 3,461
expenses
Impact of prior year's (65,944) (6,217)
reported loss before taxation
Valuation allowance 298,698 68,644
Tax charge for the period - -
After amendment (page 23)
18 DEFERRED TAX
At the balance sheet date, the Company has unused tax losses of JPY523,924 thousand
available to offset against future profits. No deferred tax asset has been recognised
in respect of such unused tax losses due to the unpredictability of future profit
streams. The unrecognised tax losses of JPY8,742 thousand, JPY137,271 thousand and
JPY377,911 thousand will expire in 2013, 2014 and 2015, respectively.
Details of deferred tax assets
and liabilities are as
follows:
JPY'000
2007 2006
Tax loss carry forward 183,444 58,027
Impairment loss on receivables 101,796 -
Liabilities for expenses 8,855 8,176
disallowed until paid
Differences in depreciation 5,814 4,403
and amortisation for tax
purposes
Equity-settled share-based 5,021 951
transactions
Loss of share of equity method 1,294 -
investee
Others 1,973 1,710
Deferred tax assets total 308,197 73,267
Share issuance costs 9,499 4,623
Deferred tax liabilities total 9,499 4,623
Net of deferred tax assets and 298,698 68,644
liabilities
Valuation allowance (298,698) (68,644)
Deferred tax assets on balance - -
sheet
Tax reconciliation:
Reported loss before taxation (648,959) (162,024)
Tax rate at 40.7% (264,126) (65,888)
Impact of non-deductible 31,372 3,461
expenses
Impact of prior year's (65,944) (6,217)
reported loss before taxation
Valuation allowance 298,698 68,644
Tax charge for the period - -
For further information, please contact:
Secure Design KK
Taketoshi Kashiwabara Japan +81-3-5652 -0321
(Chairman)
Toshiya Kurita` Japan +81-3-5652 -0321
(Chief Financial Controller)
Charles Stanley Securities +44 (0) 20 7149 6000
Nominated Adviser
Russell Cook / Freddy Crossley
Cubitt Consulting +44 (0) 20 7367 5100
Brian Coleman-Smith / James Verstringhe
Background Note on Secure Design
On 14 July 2006, Secure Design was the first Japanese company to be admitted to trading on AIM. It offers fingerprint authentication
products to companies and individuals that wish to establish high levels of security using biometrics. Biometrics uses a physical attribute
of the body, such as a fingerprint to identify and verify the individual with the aim of making individual authentication efficient and
secure.
The Company offers a range of fingerprint authentication products and systems, from an integrated system to a mobile device. The Company
designs and outsources the production of these products and can tailor them to individual client specific needs and applications.
Biometric applications provide convenient and reliable security which reduces the cost associated with the failure of conventional
authentication methods. The principal factor which distinguishes biometrics from conventional password based authentication is the enhanced
security level it provides while maintaining the privacy of individual users.
The worldwide demand for biometrics is estimated to increase from just over $3 billion in 2007 to over $5.6 billion by 2010.*
*Biometrics Market and Industry Report 2007-2012
This information is provided by RNS
The company news service from the London Stock Exchange
END
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