Final Results

17 December 2010

Hot Tuna (International) PLC

("Hot Tuna" or "the Group")

Final Results for the year ended 30 June 2010

Hot Tuna (International) PLC (AIM:HTT), a leading surf wear and fashion brand, announces its final results for the year ended 30 June 2010.

OPERATIONS AND FINANCE REVIEW

Overview

This report covers the Company's trading results for the year ending 30 June 2010. Overall we have had a disappointing year with a decrease in sales over the year across all our geographic regions which resulted in a gross loss of £0.03 million and an operational loss prior to exceptional items of £1.4 million.

Operational Review

Within the current sales model, the operational costs are at a level now which cannot be reduced further without negatively impacting on future sales. Further cost saving will be realised going forward should distributorships be appointed in regions where the Company has direct sales structure.

Design & Product

We have retained Hot Tuna's core brand values. All Hot Tuna designs reflect the history and success of the brand and engage its cultural heritage. The brand remains graphically led with products featuring the Piranha, the famous icon for which the brand is known.

The range for the coming season will focus on men's t-shirts and board shorts, and ladies swim wear, fashion tops, bottoms and street and beach wear.

Europe

During the year the European market showed a decrease in turnover from £0.41 million in 2009 to £0.12 million in 2010. This was primarily driven by two major retailers failing to re-order product during the year. The reasoning for their decision was based on poor retail conditions and therefore they decided to limit their product mix to more established brands.

Given the above, the Company focused on diversifying its retail and e-tail business. In this regard we were successful and currently we have more e-tailers and retailer stocking Hot Tuna Product in European markets this year than in 2009. Our retailers reported higher sell though this year on the product to the previous years, however these were on reduced volumes.

In 2011 we have appointed new distributors in some markets, again expanding the presence of the brand across Europe. The 2011 season range was well received by all the retailers we presented to. However, and in particular within the UK, this feedback has not been followed by the expected orders, with retailers citing prevailing economic conditions. Given the above we do not expect our turnover in the European market to increase over the forthcoming year.

Australia

The Australian market, after starting off strongly, was severely hit by a product recall. Working with the retailers and manufacturers the Company was able to recall 95% of the product. The Company reclaimed in full the production cost, shipping and reputational damage expense. This, however, has resulted in product being dropped by both of our major retailers. The manufacturer accepted full liability, a review of quality and assurance with this manufacturer has taken place. This is the first time the brand has had a product recall.

As a result of the above, turnover decreased significantly from £0.48 million in 2009 to £0.29 million in 2010.

The Company released the full line of the adult collection into the Australian market for the 2011 season which stimulated modest early forward sales for delivery in summer 2011. Positive media reports on the adult collection in the Australian trade press post the trade exhibition prompted several requests for regional distribution. We anticipate that this will lead to the appointment of a distributor for Australia and New Zealand in early 2011. The appointment of a distributor in the Australian and New Zealand market will provide a faster growth in sales in a market where the brand is at its strongest. Nonetheless we still expect sales to be lower than in 2010 as we do not have the volume purchases associated with two major retailers.

US

The US market has, like Europe, suffered greatly with the prevailing economic conditions; the modest sales achieved in the US were predominately driven by women's swim collection. Total turnover for the US was £0.06 million in 2010 compared to £0.25 million in 2009.

During the half year ending December 2010 the aim for the Company was to win back customers that we lost in 2008 and 2009. We believe that we have been successful in this regard. Positive reports of our women's swim range launched at Miami Swim trade show 2010, the largest in the US market, secured the brand new orders from our traditional customers of Victoria Secret and Delia's for 2011. Though not reflected in these results, this represents a positive return to the market for the brand in the US market.

The adult men's product is now fully launched into the US market with modest orders placed for delivery in February/March 2011.

Given the level of new orders we have received from our traditional customers in the US we do expect turnover to increase markedly in 2011 compared to 2010.

Financial Review

The operational review has highlighted the specific challenges we faced this year, as result our turnover decreased to £0.46 million (2009: £1.14 million). As a result of the decrease in sales, the cost of sales decreased, however an element of these is fixed and therefore the Company posted a gross loss of £0.03 million (2009:Profit £0.25 million).

Total other operational expenses were reduced to £1.37 million (2009: £1.59 million), this can be mainly attributed to a reduction in general and administrative expenses. As a result of tighter control of costs, losses from operations only marginally increased to £1.40 million (2009: £1.34 million).

Operational cash outflows increased marginally to £1.37 million (2009: £1.35 million), this is mainly attributable to an exceptional write-off of liabilities in our subsidiaries as we settled some historic creditors for less than book value.

After changes in working capital and finance costs the net cash outflow from operating activities was £1.68 million (2009: £0.78 million). The majority of this change can be attributed to a decrease in payables of £0.64 million and a decrease in receivables of £0.22 million. In addition, over the period we paid back the entire balance of our convertible loan note which resulted in a cash outflow of £0.17 million. As a result, over the period the Company had total cash outflow of £1.84 million which was offset by the net proceeds from the placing of £2.47 million resulting in a cash balance at the end of the year of £0.59 million (2009: £0.03 million).

During the year the Company has carried out an impairment review of the Hot Tuna brand and although we do not believe any impairment is required during this year, the accounts for the year ended 30 June 2009 have been reviewed and as a result an impairment charge of £1.47 million, which was originally charged to the merger reserve in 2009 has been re-allocated to the statement of comprehensive income. This has resulted in the impairment charge in the 2009 financial statements being amended from £0.89 million to £2.36 million. Further details of this re-statement are highlighted in the notes to the financial statements.

Outlook

The company still faces significant challenges ahead and further realignment of the structure will be required for 2011, with new markets in stronger economies being sought out. The Company is in negotiations with several distributors in new markets including the Gulf States and South East Asia where stronger economies exist. With the planned change in sales strategy in Europe and Australia, from direct sales to distribution agreements, we will be able to reduce our costs further, increase exposure across a larger spread of retailers and reduce the credit risk associated with a wide spread of small to medium sized retailers.

The branding and direction of the product is agreed by the industry and media to be correct. Going forward we will look at additional expenditure on brand marketing to support the product.

With the change in sales strategy, increases in cotton prices and the increase in VAT in the UK, we anticipate an overall reduction in our margins going forward. Given our assessment of the various business segments we expect our sales in 2011 to remain at the same levels as experienced in 2010.

DIRECTORS' REPORT

The directors submit their report and the financial statements of Hot Tuna (International) PLC ("Hot Tuna") and its subsidiary undertakings ("the Group") for the year ended 30 June 2010.

Hot Tuna (International) PLC is a public company incorporated in England and Wales, and quoted on AIM.

PRINCIPAL ACTIVITIES

The principal activity of the Group during the year was that of design, production and sale of our branded surf and youth lifestyle apparel to specified regions of the world.

PRINCIPAL RISKS AND UNCERTAINTIES

The directors consider the following to be key risks involved in running the day to day business of Hot Tuna (International) PLC and its subsidiaries:

·; protection of intellectual property across the globe and new registrations in emerging markets

·; loss of key executives and members of the staff would affect product offering and have an adverse impact on operations

·; changes to import and export restrictions across the world

·; obsolescence of inventory or product recall, could cause lower than expected margins and large expenditure write offs to the profit and loss

·; general economic climate and consumer sentiment

·; fluctuations in foreign currencies could harm the results of our operations

·; generation of consistent and profitable financial margins

·; liquidity of the market for trading our shares

The directors address these risks by:

·; implementation of internal control policies and global policies and procedures

·; hire of experienced counsel and advisors to provide guidance and advice

·; having an active involvement in day to day operational activities

·; hiring experienced personnel with industry experience

·; offering competitive and rewarding remuneration packages to executives

·; regular board meetings to address general and industry specific risks and concerns

BUSINESS REVIEW AND FUTURE DEVELOPMENTS

The Group trading loss for the year, after taxation and minority interests, was £1.31 million (2009 restated: £3.74 million).

Information on future developments is included in the Operations and Finance Review.

The directors are precluded from declaring a dividend for the year (2009: nil).

KEY PERFORMANCE INDICATORS

Due to Hot Tuna's current business being in the early stages of the growth cycle, the directors do not consider it appropriate to compare against key performance indicators in the market and within the industry.

In the future it is anticipated that the following key performance indicators will be used to monitor the health and profitability of our business:

·; gross profit margins

·; net profit margins

·; sales turnover

·; number of sales doors (customers) in each region

·; customer retention

·; number of distributors globally

·; brand exposure and recognition

·; press releases and exposure

·; industry awards or accolades

FINANCIAL INSTRUMENTS

The financial risk management objectives of the Company and its subsidiaries are disclosed in more detail in the accounting policies and note 21.

DIRECTORS

The following directors have held office during the year.

DIRECTORS' INTERESTS IN SHARES

Directors' interests in the shares of the Company, including family interests, were as follows:

Directors' interests in options are disclosed in the Directors' Remuneration Report.

CREDITOR PAYMENT POLICY

The Group's policy is to agree terms of transactions, including payment terms and to ensure that, in the absence of dispute, all suppliers are dealt with in accordance with its standard payment practice whereby all outstanding trade accounts are settled within the term agreed with the supplier at the time of the supply or otherwise 30 days from receipt of the relevant invoice. The number of days outstanding between receipt of invoices and date of payment calculated by reference to the amount owed to trade creditors at the period end as a proportion of the amounts invoiced by suppliers during the period, was 177 days (2009: 69 days).

POLITICAL AND CHARITABLE CONTRIBUTIONS

No donations for political or charitable purposes have been made by the Group or the Company during the year.

EMPLOYEES

The Group continues to give full and fair consideration to applications for employment made by disabled persons, having regard to their respective aptitudes and abilities. The policy includes, where practicable, the continued employment of those who may become disabled during their employment and the provision of training and career development and promotion, where appropriate. The Group has continued its policy of employee involvement by making information available to employees on matters of concern to them.

SUBSTANTIAL SHAREHOLDINGS

As at 11th November 2010 the Company has been notified of the following interests of 3% or more in the issued ordinary share capital of the Company:

STATEMENT AS TO DISCLOSURE OF INFORMATION TO AUDITORS

The directors who were in office on the date of approval of these financial statements have confirmed that, as far as they are aware, there is no relevant audit information of which the auditors are unaware. Each of the directors have confirmed that they have taken all steps that they ought to have taken as directors in order to make themselves aware of any relevant audit information and to establish that it has been communicated to the auditor.

DIRECTORS' INDEMNITY INSURANCE

Directors' and Officers' liability insurance is held by the Group.

POST BALANCE SHEET EVENTS

At the date these financial statements were approved, being 15 December 2010, the Directors were not aware of any significant post balance sheet events other than those set out in the notes to the financial statements.

AUDITORS

Chapman Davis LLP has indicated its willingness to continue in office.

CORPORATE GOVERNANCE STATEMENT

The policy of the Board is to manage the affairs of the Company in accordance with the principles underlying the Combined Code on Corporate Governance.

The Board of Directors is accountable to shareholders for the good corporate governance of the Group. The principles of corporate governance and a code of best practice are set out in the Combined Code. Under the rules of AIM market the Group is not required to comply in full with the Code nor to state where it derogates from it. The Board considers that the size and nature of the Group does not warrant compliance with all the Code's requirements. This statement sets out how the principles of the Code are applied to Hot Tuna (International) PLC.

BOARD STRUCTURE

The Board comprises a non executive director and one executive director, the Chief Executive Officer (CEO). Given the size of the Group, it is considered that this gives the necessary mix of industry specific and broad business experience necessary for the effective governance of the Group. A replacement Chairman is currently being actively sought.

There are no matters specifically reserved to the Board for its decision, although board meetings are held on a regular basis and effectively no decision of any consequence is made other than by the directors. During the year 5 board meetings were held. All directors participate in the key areas of decision-making, including the appointment of new directors.

The Board is responsible to shareholders for the proper management of the Group. A statement of directors' responsibilities in respect of the accounts is set below. The non-executive director have a particular responsibility to ensure that the strategies proposed by the executive director are fully considered.

To enable the Board to discharge its duties, all directors have full and timely access to all relevant information.

There is no agreed formal procedure for the directors to take independent professional advice at the Company's expense.

All directors submit themselves for re-election at the Annual General Meeting at regular intervals. There are no specific terms of appointment for the non-executive director.

The following committees, which have written terms of reference, deal with specific aspects of the Group's affairs.

AUDIT COMMITTEE

The Audit Committee comprises of Kiran Morzaria (Chairman of the committee) and Geoff O'Connell. Meetings can also be attended by the external auditors.

The remit of the Committee is to review:

·; the appointment and performance of the external auditors

·; the independence of the auditors

·; remuneration for both audit and non-audit work and nature and scope of the audit with the external auditors

·; the interim or final financial report and accounts

·; the external auditors management letter and management's responses

·; the systems of risk management and internal controls

·; operating, financial and accounting policies and practices, and

·; to make related recommendations to the Board

The Audit Committee meets once a year.

REMUNERATION COMMITTEE

The Remuneration Committee comprises Kiran Morzaria (Chairman of the committee), and Geoff O'Connell and is responsible for making recommendations to the Board on the Company's framework of Executive remuneration and its cost. The Committee determines the contract terms, remuneration and other benefits for the directors.

NOMINATION COMMITTEE

There is no separate Nomination Committee at the moment due to the size of the Board. All directors are subject to re-election at regular intervals.

INTERNAL CONTROL 

The Board acknowledges its responsibility for establishing and monitoring the Company's systems of internal control. Although no system of internal control can provide absolute assurance against material misstatement or loss, the Company's systems are designed to provide the directors with reasonable assurance that problems are identified on a timely basis and dealt with appropriately.

The Group maintains a comprehensive process of financial reporting. The annual budget is reviewed and approved before being formally adopted. Other key procedures that have been established and which are designed to provide effective control are as follows:

·; management structure - where the Board meets regularly to discuss all issues affecting the Company; and

·; investment appraisal - the Company has a clearly defined framework for investment appraisal and approval is required by the Board where appropriate.

The Board regularly reviews the effectiveness of the systems of internal control and considers the major business risks and the control environment. No significant control deficiencies have come to light during the period and no weakness in internal financial control have resulted in any material losses, contingencies or uncertainties which would require disclosure as recommended by the guidance for directors on reporting on internal financial control.

The Board considers that in light of the control environment described above, there is no current requirement for a separate internal audit function.

RELATIONS WITH SHAREHOLDERS

The CEO is the Company's principal spokesperson with investors, fund managers, the press and other interested parties. At the Annual General Meeting (AGM), private investors are given the opportunity to question the Board.

This report and its financial statements will be presented to the shareholders for their approval at the AGM. The notice of the AGM will be distributed to shareholders together with the Annual Report.

GOING CONCERN

The directors have considered whether or not it is appropriate to adopt the going concern basis in preparing the 2010 financial statements in view of the substantial operating losses in 2009 and 2010. As at the date of this report, the Company has no available credit facilities. In the event the Company required further funds to continue, a fund raising exercise would be proposed with existing and/or potential new investors, and the Company is of the belief that in this instance any fund raising would be successful. Accordingly, the directors believe the going concern basis to be appropriate.

DIRECTORS' REMUNERATION REPORT

Remuneration Committee

The members of the committee are Kiran Morzaria and Geoff O'Connell. Details of the remuneration of each director are set out below.

Executive remuneration packages are prudently designed to attract, motivate and retain directors of high calibre, who are needed to drive and maintain the Group's position as a market leader and to reward them for enhancing value to the shareholder.

Remuneration Policy

Share options

The directors have options granted to them under the terms of the Hot Tuna (International) PLC Share Option Scheme which is open to other qualifying employees. The reason for the scheme is to incentivise the directors and management personnel and enable them to benefit from the increased market capitalisation of the Company.

Pension arrangements

There are no pension arrangements in the Group.

Directors' contracts

It is the Company's policy that the executive director should have a contract with an indefinite term providing for a maximum of six months notice. In the event of early termination, the directors' contracts provide for compensation, where appropriate, up to a maximum of basic salary for the notice period.

Non-executive directors

The fees of the non-executive director is determined by the Board as a whole having regard to the commitment of time required and the level of fees in similar companies.

The non-executive director is employed on a renewable fixed term contract not exceeding three years.

Directors' emoluments

* David Lenigas resigned on 6 February 2009, and Niels Juuls resigned on 27 April 2009.

DIRECTORS' INTERESTS IN OPTIONS

Aggregate emoluments disclosed above do not include any amounts for the value of options to acquire ordinary shares in the Company or granted to or held by the directors. Details of options held by directors who served during the year are as follows:

All options have been granted under the Hot Tuna (International) PLC Share Option Scheme. Options granted under this scheme are not subject to performance criteria. The market price of the ordinary shares at 30 June 2010 was 0.18 pence (2009: 0.53 pence) and the range during the year was 0.18 pence to 0.55 pence (2009: 0.25 pence to 2.5 pence (average 1.08 pence)).

There was no exercise, forfeiture or waiver of any of the above options during the year.

APPROVAL

This report was approved by the Board of Directors and authorised for issue on 15 December 2010

STATEMENT OF DIRECTORS' RESPONSIBILITIES

The directors are responsible for preparing the Annual Report and the financial statements in accordance with applicable law and regulations.

UK Company law requires the directors to prepare Group and Company Financial Statements for each financial year. Under that law the directors are required to prepare Group financial statements in accordance with International Financial Reporting Standards ("IFRS") as adopted by the EU and have elected to prepare the company financial statements in accordance with International Financial Reporting Standards ("IFRS") as adopted by the EU.

The Group financial statements are required by law and IFRS adopted by the EU to present fairly the financial position and performance of the group; the Companies Act 2006 provides in relation to such financial statements that references in the relevant part of that Act to financial statements giving a true and fair view are references to their achieving a fair presentation.

The Company financial statements are required by law to give a true and fair view of the state of affairs of the company. 

In preparing each of the group and company financial statements, the directors are required to:

a. select suitable accounting policies and then apply them consistently;

b. make judgements and estimates that are reasonable and prudent;

c. state whether they have been prepared in accordance with IFRSs adopted by the EU;

d. prepare the financial statements on the going concern basis unless it is inappropriate to presume that the group and the company will continue in business.

The directors are responsible for keeping proper accounting records which disclose with reasonable accuracy at any time the financial position of the Company and to enable them to ensure that the financial statements comply with the requirements of the Companies Act 2006. They are also responsible for safeguarding the assets of the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

The directors are also responsible for the maintenance and integrity of the Hot Tuna (International) PLC website.

Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF HOT TUNA (INTERNATIONAL) PLC

We have audited the financial statements of Hot Tuna International Plc for the year ended 30th June 2010 which comprise the Group Income Statement, the Group and Parent Company Balance Sheets, the Group and Parent Company Statements of Cash Flows, the Group and Parent Company Statements of Changes in Equity and the related notes 1 to 24. The financial reporting framework that has been applied in their preparation is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union.

This report is made solely to the Company's members, as a body, in accordance with sections 495 and 496 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the Company's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company's members, as a body, for our audit work, for this report, or for the opinions we have formed.

Respective responsibilities of directors and auditors

As explained more fully in the Directors' Responsibilities Statement the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit the financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board's Ethical Standards for Auditors.

Scope of the audit

An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of: whether the accounting policies are appropriate to the group's and the parent company's circumstances and have been consistently applied and adequately disclosed; the reasonableness of significant accounting estimates made by the directors; and the overall presentation of the financial statements.

Opinion on financial statements

In our opinion:

• the financial statements give a true and fair view of the state of the Group's and of the Parent Company's affairs as at 30 June 2010 and of the Group's and the Parent Company's loss for the year then ended;

• the financial statements have been properly prepared in accordance with IFRSs as adopted by the European Union; and

• the financial statements have been prepared in accordance with the requirements of the Companies Act 2006 and, as regards the Group financial statements, Article 4 of the IAS Regulation.

Emphasis of matter - Going concern

In forming our opinion on the financial statements, which is not qualified, we have considered the adequacy of the disclosure made in note 1 to the financial statements concerning the company's ability to continue as a going concern. The group incurred a net loss of £1.31 million during the year ended 30 June 2010 and, at that date, the group's cash assets were £0.59 million, and net cash outflow from operating activities for the year ended 30 June 2010 were £1.68 million. These conditions, along with the other matters explained in note 1 to the financial statements, indicate the existence of a material uncertainty which may cast significant doubt about the company's ability to continue as a going concern. The financial statements do not include the adjustments that would result if the company was unable to continue as a going concern.

Opinion on other matters prescribed by the Companies Act 2006

In our opinion:

• the part of the Directors' Remuneration Report to be audited has been properly prepared in accordance with the Companies Act 2006; and

• the information given in the Directors' Report for the financial year for which the financial statements are prepared is consistent with the financial statements.

Matters on which we are required to report by exception

We have nothing to report in respect of the following:

Under the Companies Act 2006 we are required to report to you if, in our opinion:

• adequate accounting records have not been kept by the Parent Company, or returns adequate for our audit have not been received from branches not visited by us; or

• the Parent Company financial statements and the part of the Directors' Remuneration Report to be audited are not in agreement with the accounting records and returns; or

• certain disclosures of directors' remuneration specified by law are not made; or

• we have not received all the information and explanations we require for our audit.

FINANCIAL STATEMENTS

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 30 JUNE 2010

The Company's loss for the year ended 30 June 2010 was £1.58 million (2009: Restated £2.82 million loss). The Company is exempt from publishing its own income statement under section 408 of the Companies Act 2006.

CONSOLIDATED AND COMPANY STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2010

The financial statements were approved by the board of directors and authorised for issue on 15 December 2010 and are signed on its behalf by:

STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 30 JUNE 2010

CONSOLIDATED AND COMPANY STATEMENT OF CASH FLOWS FOR THE YEAR ENDED FOR THE YEAR ENDED 30 JUNE 2010

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2010

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

1. REVENUE

An analysis of the Group's revenue is as follows:

2. BUSINESS AND GEOGRAPHICAL SEGMENTS

Segment information is presented in respect of the Group's management and internal reporting structure.

Segment results, assets and liabilities include items directly attributable to a segment as well as those that can be allocated on a reasonable basis.

Operating and Geographical segments

All locations operate the same activity - design, production and sale of branded apparel.

The Group's operations are located in Europe, including the United Kingdom, United States and Australia.

Inter-segment sales are charged at prevailing market prices.

3. LOSS FROM OPERATIONS

Loss from operations has been arrived at after charging:

4. STAFF COSTS

The above costs are included in general and administrative expenses.

The highest paid director received £131,042 (2009: £131,034) and no directors received any pension contributions during the year (2009: nil).

5. FINANCE REVENUE  

6. FINANCE COSTS  

7. INCOME TAX EXPENSE  

The group has losses of approximately £11.5 million (2009: £10.2 million) available for carry forward against future trading profits. No provision has been made for deferred tax assets as there is no certainty that future profits will be available to offset these losses.

8. DIVIDENDS

The directors are precluded from declaring a dividend for the year (2009: nil).

9. LOSS PER SHARE

The calculation of the basic and diluted earnings per share is based on the following data:

The denominator for the purpose of calculating the basic earnings per share has been adjusted to reflect all capital raisings. Due to the loss incurred in the period, there is no dilutive effect resulting from the issue of share options, warrants and shares to be issued.

10. GOODWILL

Impairment Review

At 30 June 2010, the directors have carried out an impairment review and have considered that the value of goodwill is to remain at £nil (2009:Impairment £207,000). The directors are of the opinion that the carrying value is stated at fair value. 

11. OTHER INTANGIBLE ASSETS

The "Hot Tuna" brand is considered to have an indefinite life and therefore is not amortised.

At 30 June 2010, the directors have carried out an impairment review and have considered no further write down in the value of the licenses and brand is required (2009: £2.15 million). For the year ended 30 June 2009, £2,155,000 of this impairment charge was expensed during the year through the income statement, however as the merger reserve of £1,474,000 was created on the initial acquisition of these licences, the company has made a reserves transfer through the equity statement from the merger reserve to the retained earnings as is permitted by the Companies Act 2006.

IMPAIRMENT REVIEW

During the period ended 30 June 2009, the Directors impaired the value of the Group's Licences held by Hot Tuna International Inc., Hot Tuna (Australia) Pty Ltd and MAP Print Ltd. The board determined that the full value of the Licenses should be impaired in the year ended 30 June 2009, as a result of a strategic change in the business which focussed entirely on direct sells rather than historic licensees.

This year the directors carried out an impairment review of the Brand. The brands carrying value has been compared to its recoverable amount based on a net present value calculation. The key assumptions therein are those regarding discount rates, growth rates and expected changes to selling prices and direct costs during the period. Management estimates discount rates using post-tax rates that reflect current market assessments of the time value of money and the risks specific to the Hot Tuna brand and the rate used was 9.9%. The forecast cash flows are based on approved annual budget for the next financial year and management projections for the following nine years with a terminal value from the tenth year onwards. This additional forecast period has a compound growth rate of 31%.

The directors have used past experience and an assessment of future conditions, together with external sources of information, to determine the assumptions which were adopted in the preparation of a financial model to estimate the cash flows.

Based on the results from the net present value calculation the directors believe that no impairment of the Brand is required for the perionding June 2010

 12. PROPERTY, PLANT AND EQUIPMENT

13. INVESTMENTS IN SUBSIDIARIES

The following are the Company's subsidiaries:

14. BORROWINGS