Final Results

RNS Number : 3591K

DDD Group PLC

19 April 2010

 

19 April 2010

 

DDD GROUP PLC

 

 

AUDITED RESULTS FOR THE YEAR ENDED 31 DECEMBER 2009

 

DDD Group plc ("DDD" or the "Company"), the 3D software and content company, announces its results for the twelve months ended 31 December 2009.

 

Highlights

 

Financial

 

·; Turnover increased 138% to £1,410,000 (2008: £592,000)

 

·; Loss before tax decreased 41% to £852,000 (2008: £1.441 million)

 

·; Placing of 20,000,000 ordinary shares of 1p each at a price of 8.5p each per ordinary share raising approximately £1,625,000 after expenses, on 9 July 2009. Directors and existing large shareholders subscribed to the placing.

Operational

 

·; First Quarter launch of TriDef Ignition game solution which allows 3D conversion of the very latest PC Games to 3D. The TriDef Ignition solution now supports over 200 popular games.

 

·; United States Patent and Trademark office granted DDD's Dynamic Depth Cueing 3D encoding and transmission patent in July 2009.

·; Retail launch of the Acer 5738-DG notebook PC in October 2009 which were developed under the December 2008 agreement signed with Taiwan based Wistron Corporation.

 

·; Launch of YABAZAM.com online 3D movie portal in November 2009.

 

 

Post balance sheet events - highlights

 

·; The 2008 Convertible Loan Notes due 16 April 2010 have been approved for conversion at the request of the note holders. Under AIM Rule 21, directors are not permitted to deal in the Company's securities during a close period. This restriction prevented certain directors being able to convert the loan stock into ordinary share at the conversion date. As a result, the Company has deferred the conversion of the loan notes for all note holders until June or an earlier date as mutually agreed. The loan note holders have also agreed not to levy any interest during the deferral period.

 

 

Enquiries:

 

DDD Group

Chris Yewdall, President & CEO +1 310 566-3340

Victoria Stull, Vice President Finance +1 310 566-3340

e-mail: [email protected]

 

Brewin Dolphin

Sandy Fraser, Managing Director - Corporate Finance +44 (0) 131 529 0272

Paul Mason, Assistant Director - Corporate Finance +44 (0) 141 314 8208

 

CHAIRMAN'S STATEMENT

 

Dear Shareholder,

 

DDD's results for 2009 show tangible evidence of the increasing importance and acceptance of the Company's technologies by our industry customers and consumers alike, a trend we expect to accelerate in 2010 and beyond.

 

The Company's revenue of £1.4 million is a strong improvement over the previous year's £0.6 million. At the same time, expenses were only marginally higher. The Company's gross margins showed an increase from already high levels. The improved results have had a considerable impact on the Company's share price, sold down during the global financial crisis at the end of 2008, then recovering in the second half of 2009.

 

The Company undertook an oversubscribed share placing in July 2009, raising approximately£1.7 million before expenses at 8.5 pence per share, above the market price at the time. This placing was strongly supported by DDD's largest shareholders, including Arisawa Manufacturing and Wistron Corporation. Several of the directors also participated. Pleasingly, six UK-based institutional investors also took part. This placing has allowed the Company to accelerate activities aimed at generating further revenue growth.

 

Generally, 2009 has been notable as the year when 3D emerged as a 'hot' new topic, receiving a great deal of attention in the media. This was due to the increasing number of 3D movies being released. Among those, 'Avatar' will probably come to stand as the enduring symbol of the modern 3D era, enticing masses of movie goers around the world with its impressive 3D. The January 2010 Consumer Electronics Show further confirmed that 3D will be a strong focus for most TV and PC makers this year.

 

In the television market, an increasing number of companies are seeking to incorporate DDD's technology in their products, be it TV's or set-top boxes. To address these opportunities, DDD has implemented a tiered licensing strategy not unlike that pioneered by Dolby. This should lead to a range of licensees and royalty streams from a number of different 3D products destined for the consumer market.

 

Currently Samsung remains the most important DDD licensee in the 3D TV market, having announced plans to produce up to 2.5 million 3D sets during 2010 across their entire range of LED, LCD and Plasma models. The Company expects that all of these will have DDD's real-time 2D to 3D conversion built in, thereby countering the crucial 'not enough 3D content' problem that otherwise faces early 3D adopters.

 

A significant milestone for DDD was the release in November of the Acer 3D notebook, produced by Wistron, with over 50,000 having been manufactured in 2009. This notebook, which is used in 2D for normal office work, is very competitively priced and comes installed with 3D software, mediaplayer and a broad variety of 3D demonstration content from DDD. The TriDef® player converts from 2D to 3D in real time, allowing the viewing in 3D of standard 2D DVD's. DDD generates earnings in the form of per-unit royalties and paid demo content pre-loaded on the notebook.

 

During October 2009, DDD negotiated an Implementation Licence with Quartics, a US-based company that will now produce a sophisticated video chip incorporating DDD's technology. This Qvu/TriDef® chip will be made available to a number of manufacturers that do not have, or do not plan to use, their own in-house chip manufacturing. The Qvu/TriDef® 3D solution is applicable to practically any 3D display technology for TV's and PC's.

 

Looking to 2010, DDD expects to conclude further licensing contracts for 3D PC's, 3D television sets and 3D TV peripherals.

 

The market adoption of 3D TV's and 3D PC's depends to a large degree on the availability of affordable and popular 3D content. To this end, the company has entered into a partnership with The Littlefield Co. to promote DDD's high performance, low cost 3D content conversion solution to a number of leading US and international television content owners. The re-issue in 3D of existing TV programs provides content owners with further revenue from a given title at low risk and limited expense to the owners.

 

The conversion process makes use of DDD's proprietary conversion software and know-how. Test conversions of a number of high-rating television shows are already under way.

 

The conversion of 3D content for media companies is likely to be required if dedicated 3D channels are to be successful financially.

 

During the year in review, the Company's own dedicated website for 3D content, Yabazam.com, was launched. Yabazam aims to become a leading distribution platform for High Definition 3D content, offering independent access to all 3D content owners.

 

Toward the end of the year, Victoria Stull joined the Company as Vice President of Finance. Her professional background is an ideal match for DDD and her contribution is already being felt. R&D personnel were also added and the Company is seeking further executives and staff to take advantage of the increasing number of business opportunities available to DDD.

 

The Company is justifiably proud of its highly competent and committed staff. I applaud the manner that everyone has worked very hard as a team to produce the results that I have only too briefly been able to summarise here. My thanks also go to my fellow directors for their valuable contributions.

 

Finally, to our shareholders I express my confidence that DDD will reap the deserved rewards for its sustained investment in developing and marketing its leading 3D solutions.

 

 

Yours faithfully,

 

 

 

 

Paul Kristensen

Chairman

16 Apr 2010

 

 

CHIEF EXECUTIVE'S REPORT

 

It is my pleasure to present this review of the operations of the Company for the financial year to 31 December 2009. The continued growth in license and royalty income as the Company expanded into the PC market allowed the Company to record another substantial increase in revenues of approximately 138% while improving gross margins by approximately 10% compared to the prior year. Following the agreement with Wistron Corporation that was concluded at the end of 2008, income from licensing in the PC market grew substantially and represented approximately 60% of the licensing income recognised during the year.

 

A significant milestone in the 3D industry was achieved in October 2009 as a direct result of the Company's close collaboration with Wistron during the year. Acer introduced the Aspire 5738DG 3D notebook computer with a retail price of $775. At less than $1,000, this represents the arrival of the first mass market 3D PC product with such comprehensive features and performance, as evidenced by the shipment of over 50,000 units worldwide in the final months of 2009. The Acer Cinereal software is based on DDD's TriDef 3D Experience allowing games, photos, videos and DVDs to be automatically converted from 2D to 3D. The Acer notebook's 3D LCD monitor is based on the x-Pol™ polarizing 3D material developed by Arisawa Manufacturing Company, DDD's largest shareholder.

 

During the year, a significant amount of development effort was invested in evolving the 2D to 3D PC game conversion capabilities, resulting in the release of TriDef Ignition, the Company's solution for OEM PC manufacturers seeking a high performance 3D solution for entry-level PC products. TriDef Ignition allows hundreds of the latest PC games to be played in 3D on a wide range of 3D PC displays. In addition to the game profiles provided by DDD, end users have the option of creating their own game profiles that can be shared with other players using the online forums on the Company's website. TriDef Ignition also includes a unique 'Virtual 3D' high performance 3D rendering technology that is based on the Company's 2D to 3D video conversion approach. Using Virtual 3D mode, players can enjoy 3D games with minimal impact on performance on entry-level PC platforms with low cost graphics capabilities. This point is perhaps best demonstrated when comparing alternative 3D notebooks announced in late 2009 from vendors such as ASUSTeK that utilise competing 3D game conversion solutions and carry a price tag of more than twice that of the Acer variant due to the inclusion of higher end graphics processors and more expensive display technologies.

 

In addition to 2D to 3D conversion for games, the Company also collaborated closely with Intel Corporation to optimise the performance of the TriDef 3D video processing software for Intel's Arrandale range of Core i5 and Core i7 desktop and notebook PC chips. Intel's engineers worked closely with the Company's engineers to improve the performance of the TriDef software by over 30% when running on PCs based on Intel's Duo Core architecture. Intel frequently demonstrated DDD's 3D capabilities at various conferences and events during the year including the Intel Developer Forum, the Intel CEO Summit and at the 2010 Consumer Electronics Show where DDD's game conversion capabilities were used in the keynote presentation delivered by Paul Otellini, Intel's Chief Executive Officer.

 

At the Consumer Electronics Show (CES) at the beginning of 2009, Samsung demonstrated a prototype 55" 3D plasma TV that included the Company's 2D to 3D conversion technology that was licensed to Samsung in 2008. Owing in part to the prevailing economic climate and also the objective to introduce 3D for their much broader LCD HDTV product line, Samsung delayed the launch of their next generation 3D HDTVs until early 2010. Consequently, this also delayed the income from royalties derived from the license agreement with Samsung, resulting in lower than expected contribution from TV to the year's licensing revenues. At the Consumer Electronics Show in Las Vegas in early January 2010, Samsung demonstrated the broadest line up of all 3D HDTV manufacturers and confirmed their plans to ship between 2 and 2.5 million 3D TVs during 2010.

 

At the 2009 CES, the Company also partnered with chipmaker Altera to demonstrate the Company's IP embedded in a video processing chipset. The Company used Altera's reprogrammable processor in the delivery of the custom TriDef 3D video processing solution for the Hyundai IT 3D HDTVs. In response to the increasing interest from consumer electronics manufacturers and suppliers seeking embedded chip-based solutions, the Company migrated the 2D to 3D video processing technologies to Altera's latest Stratix IV development system in the second half of the year. The migration to Altera's Stratix platform allows the Company to create reference designs that can be more readily deployed to smaller chipsets when compared to the time taken to create custom solutions such as the one used in the Hyundai IT HDTVs. During the Consumer Electronics Show in January 2010, the results of this development work were seen for the first time when one of the world's leading set top box suppliers demonstrated a set top box accessory for cable and IPTV customers capable of performing automatic 2D to 3D conversion.

 

Migrating from custom to generic hardware platforms is part of the Company's strategy to simplify access to the core 3D image processing technologies for prospective customers and licensees. The Company expects that many of the key suppliers of video processing chipsets for HDTVs will seek to incorporate 3D features into their product ranges to meet a growing demand for 3D image processing solutions from their customers. In parallel with this, the Company also introduced a two tier licensing model whereby suppliers of intermediate products such as TV video processing chips can access the Company's technologies at very low cost, thereby creating products that can be sold to OEMs by the chip maker that enable license and royalty income for the Company from the OEM.

 

One such example of this strategy was the demonstration by Quartics at the 2010 CES. Quartics and DDD worked closely towards the end of the year to enable Quartics to implement DDD's 3D image processing technologies on the Quartics Qvu video processing chips. This in turn provides Quartics with a 3D solution that can be marketed by Quartics to their key customers in the TV and PC markets.

 

In recognition of the increased demand for originally made 3D content, the Company launched the Yabazam.com website in late 2009. Yabazam is an online portal dedicated to the delivery of originally made high definition 3D movies for both PC and TV customers. The Acer 3D notebook includes a range of 3D movie trailers as well as full-length 3D content drawn from the Yabazam collection. In addition to increasing the value of the royalties from embedding content on the notebook PCs, the number of visitors to the Yabazam website from around the world has increased progressively since the launch, with revenue also being derived from the direct download of the full length movies available on the site.

 

Despite the global economic instability, DDD again increased turnover at triple-digit rates. The demonstrated progress allowed the Company continued access to investment capital through equity issues, with major shareholders continuing to show strong support alongside several new institutional shareholders who participated in the July 2009 placing.

 

DDD's team of dedicated staff has continued to deliver market-leading solutions and grow the Company's stable of high profile licensees, allowing the Company to remain competitive in this evolving and growing market. I would like to again express particular thanks to Julien Flack, DDD's Chief Technology Officer, who continues to guide the development team to the successful delivery of many of these latest products.

 

Finally, I would like to once again thank the shareholders for their continued support during the year, and look forward to a very promising future for the 3D market and for DDD.

 

 

 

 

 

Chris Yewdall

President and Chief Executive Officer

16 April 2010

 

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
		12 months to  31 Dec	12 months to  31 Dec
		2009	2008
		£'000	£'000
	Notes
Revenue		1,410	592
Cost of sales		(365)	(208)
Gross profit		1,045	384
Administration expenses		(2,032)	(1,958)
Other income		198	197
Share based payment		(51)	(23)
Operating loss		(840)	(1,400)
Finance income	2	9	12
Finance expense	2	(21)	(53)
Loss before tax	1	(852)	(1,441)
Income tax expense	3	(62)	60
Loss for the year		(913)	(1,381)
Other comprehensive income for the year:
Exchange differences on translation of foreign operations		2	(109)
Other comprehensive income for the year, net of tax		2	(109)
Total comprehensive loss for the year		(911)	(1,490)
Loss per share from both total and continuing operations
Basic and diluted (pence per share)	4	(0.98)	(1.86)

 

All transactions arose from continuing operations.

 

 

 

 

 

CONSOLIDATED STATEMENT OF FINANCIAL POSITION
		31 Dec	31 Dec	31 Dec
		2009	2008	2007
		£'000	£'000	£'000
	Notes
Assets
Non-current assets
Intangible assets	5	448	242	441
Property, plant and equipment	6	71	34	43
Deposit		-	1	1
Total non-current assets		519	277	485
Current assets
Inventory	7	7	40	13
Trade and other receivables	8	231	1,014	111
Cash and cash equivalents	9	902	95	286
Total current assets		1,140	1,149	410
Total assets		1,659	1,426	895
Equity and liabilities
Capital and reserves
Issued capital	13	7,813	7,442	7,442
Share premium	13	6,456	4,612	4,612
Shares to be issued	13	32	-	-
Merger reserve		13,279	13,279	13,279
Share based payment reserve		289	238	215
Translation reserve		(162)	(164)	(55)
Retained earnings		(27,228)	(26,315)	(24,934)
Total equity		479	(908)	559
Non-current liabilities
Financial liabilities	12	0	532	0
Deferred tax liabilities	11	125	63	123
Total non-current liabilities		125	595	123
Current liabilities
Financial liabilities	12	510	0	-
Trade and other payables	10	546	1,739	213
Total current liabilities		1,045	1,739	213
Total liabilities		1,180	2,334	336
Total equity and liabilities		1,659	1,426	895

 

 

 

CONSOLIDATED STATEMENT OF CASH FLOWS
		12 months to  31 Dec	12 months to  31 Dec
		2009	2008
		£'000	£'000
Cash flows from operating activities
Loss for the year		(913)	(1,381)
Finance costs in the income statement		12	41
Tax in the income statement		62	(60)
Depreciation of non-current assets		26	25
Amortisation		299	526
Share based payments		51	23
Decrease / (increase) in inventory		33	(27)
Decrease / (increase) in trade and other receivables		786	(903)
(Decrease) / increase in trade and other payables		(1,193)	1,546
Net cash used in operations		(836)	(213)
Interest received		9	12
Net cash used in operating activities		(827)	(201)
Cash flows from investing activities
Interest paid		(44)	(53)
Payments for property plant and equipment		(63)	(12)
Payments for intangible assets		(505)	(326)
Net cash used in investing activities		(612)	(391)
Cash flows from financing activities
Proceeds from issue of equity shares		2,338	-
Issue costs		(123)	-
Deposit withdrawn		1	-
Loan note issue		-	510
Net cash generated by financing activities		2,216	510
Net increase/(decrease) in cash and cash equivalents		777	(82)
Exchange gains / (losses)		30	(109)
Total increase/(decrease) in cash and cash equivalents		807	(191)
Cash and cash equivalents at the start of the year		95	286
Cash and cash equivalents at the end of the year		902	95

 

 

  

NOTES TO THE CONSOLIDATED ACCOUNTS

 

 

1. Loss before tax

	2009	2008
Loss before tax has been arrived at after charging/(crediting):	£'000	£'000
Depreciation and amortisation:
Depreciation of property, plant and equipment	25	25
Amortisation of intangible assets	299	526
Employee benefits expense:
Employee costs	1,304	855
Land and buildings held under operating leases
Other operating leases	181	160
Audit and non-audit services:
Fees payable to the Company's auditor for the audit of the Group accounts	60	47
Fees payable to the Company's auditor and its associates for other services:
The audit of the Company's subsidiaries pursuant to legislation	2	3
Tax services	36	9
Other services pursuant to legislation	4	1

 

During the year the Group's Australian subsidiary received a refund of research and development expenditures from the Australian Government amounting to £184,240 (2008: £171,300). The research and development refund comprises the majority of the income reported as Other income in the consolidated statement of comprehensive income.

 

 

2. Finance income and expense

	2009	2008
	£'000	£'000
Finance income	(9)	(12)
Reversal of discount for convertible loan note	(23)	25
Interest charges	44	28
Total finance charges	21	53
Net finance charges	12	41

 

 

3. Income tax

	2009	2008
	£'000	£'000
Current tax:
Corporation tax on loss for the year	-	-
Overseas tax	124	28
Adjustment in respect of previous years	-	-
Total current tax	124	28

 

NOTES TO THE CONSOLIDATED ACCOUNTS (CONTINUED)   Deferred tax:
Origination and reversal of timing differences
-current year	62	(60)
-attributable to the reduction in the rate of domestic income tax	-	-
Total income tax on loss for the year	186	(32)

 

The tax assessed for the year differs from the standard rate of corporation tax as applied in the respective trading domains where the Group operates. The tax charge on ordinary activities is explained below:

 

	2009	2008
	£'000	£'000
Loss for the year before tax	(852)	(1,441)
Loss for year multiplied by the respective standard rate of corporation tax applicable in each domain - 28% (2007 - 28%).	(239)	(403)
Effects of:
Higher foreign tax rates	(32)	-
Expenses not deductible for tax purposes	76	45
Tax losses carried forward	156	310
Other temporary differences	101	(12)
Foreign withholding tax	124	28
Total income tax on loss for the year	186	(32)

 

There are substantial unrelieved tax losses of £23,729,000 (2008: £21,863,000) across the Group companies as set out below:

 

	USA	UK	Canada	Australia	Total
	£'000	£'000	£'000	£'000	£'000
At 31 December 2009
Unrelieved tax loss	10,277	2,185	105	11,162	23,729
Local rate of tax	34%	28%	30%	30%
Unprovided potential deferred tax asset	3,494	612	31	3,349	7,486

 

At 31 December 2008
Unrelieved tax loss	7,982	1,793	1,514	10,574	21,863
Local rate of tax	34%	28%	30%	30%
Unprovided potential deferred tax asset	2,714	502	454	3,172	6,842

 

At 31 December 2009, the availability to offset unrelieved tax losses against future taxable trading profits may be subject to restrictions in the respective tax jurisdictions. The potential deferred tax asset of £7,486,000 (2008: £6,842,000) has not been recognised due to the uncertainty of the timing and recoverability of the asset. The asset will be recovered in line with future profits.

 

 

NOTES TO THE CONSOLIDATED ACCOUNTS (CONTINUED)

 

4. Loss per share

	2009	2008
	£'000	£'000
Loss for the year attributable to equity shareholders	(913)	(1,381)
Loss per share
Basic & diluted (pence per share)	(0.98)	(1.86)
	Shares	Shares
Issued ordinary shares par 10p at the start of the year	-	74,416,547
Share split July 2008	-	(74,416,547)
Issued ordinary shares par 10p at the end of the year	-	-
Issued ordinary shares par 1p at start of the year	74,416,547	-
Share split July 2008	-	74,416,547
Unissued ordinary shares at 31 Dec (1)	315,000	-
Ordinary shares issued in the year	37,059,859	-
Total outstanding ordinary shares at end of the year	111,791,406	74,416,547
Weighted average number of ordinary shares for the year	93,103,977	74,416,547
Deferred shares (2):
Deferred shares par 9p at the start of the year	74,416,547	-
Share split July 2008	-	74,416,547
Issued deferred shares in the year	-	-
Deferred shares at the end of the year	74,416,547	74,416,547
Total share capital (Issued & Outstanding)	186,207,953	148,833,094

(1) In addition to the ordinary shares issued during the year an additional 315,000 share options were exercised and due for issue after the balance sheet date. The value of this transaction is held in the 'Shares to be issued' line of Equity on the consolidated statement of financial position.

 

(2) On 5 July 2008 the share capital of the Company was split so that a total of 74,416,547 ordinary shares of par value 10 pence became 74,416,547 deferred shares of par value 9 pence plus 74,416,547 new ordinary shares of par value 1 penny.

 

The holders of the deferred shares shall not be entitled to receive any dividend out of the profits of the Company available for distribution. On a distribution of assets on a winding-up or other return of capital (otherwise than on conversion or redemption or purchase by the Company of any of its shares) the holders of the deferred shares shall be entitled to receive the amount paid up on their shares after distribution (in cash or in specie) to the holders of the new ordinary shares the amount of £100,000,000 in respect of each new ordinary share held by them. The deferred shares shall not entitle their holders to any further or other right of participation in the assets of the Company. The holders of deferred shares shall not be entitled to receive notice of or to attend (either personally or by proxy) any general meeting of the Company or to vote (either personally or by proxy) on any resolution to be proposed. No certificates will be issued in respect of the deferred shares. The diluted loss per share does not differ from the basic loss per share as these shares are anti-dilutive.

 

The diluted loss per share does not differ from the basic loss per share as the exercise of share options would have the effect of reducing the loss per share and is therefore not dilutive under the terms of IAS 33.

 

NOTES TO THE CONSOLIDATED ACCOUNTS (CONTINUED)

 

5. Intangible assets

	Capitalised development costs	Patents	Total
	£'000	£'000	£'000
Cost
At 1 January 2008	796	192	988
Additions	327	-	327
At 31 December 2008	1,123	192	1,315
Additions	505	-	505
At 31 December 2009	1,628	192	1,820
Amortisation
At 1 January 2008	355	192	547
Charge for the year	526	-	526
At 31 December 2008	881	192	1,073
Charge for the year	299	-	299
At 31 December 2009	1,180	192	1,372
Net book value
At January 1 2008	441	-	441
At 31 December 2008	242	-	242
At 31 December 2009	448	-	448

 

NOTES TO THE CONSOLIDATED ACCOUNTS (CONTINUED)

 

6. Property, plant and equipment

	Leasehold improvements	Furniture fittings and equipment	Total
	£'000	£'000	£'000
Cost or valuation
At 1 January 2008	13	261	274
Additions	-	8	8
Exchange rate differences	1	38	39
At 31 December 2008	14	307	321
Additions	-	63	63
Exchange rate differences	2	1	3
At 31 December 2009	16	371	387
Depreciation
At 1 January 2008	9	222	231
Provided in the year	1	24	25
Exchange rate differences	1	30	31
At 31 December 2008	11	276	287
Provided in the year	2	24	26
Exchange rate differences	-	2	3
At 31 December 2009	14	302	316
Net book value
At 1 January 2008	4	39	43
At 31 December 2008	3	31	34
At 31 December 2009	2	69	71

 

All assets listed above are free of any mortgage and charge.

 

7. Inventory

	2009	2008	2007
	£'000	£'000	£'000
Finished goods	7	40	13

 

The cost of inventory recognised as an expense and included in 'cost of sales' amounted to £191,000 (2008: £145,000; 2007: £64,000). Stock write offs amounted to £13,000 (2008: £nil; 2007: £nil).

 

There has been no impairment charge recognised in relation to inventory.

 

 

NOTES TO THE CONSOLIDATED ACCOUNTS (CONTINUED)

 

8. Trade and other receivables

	2009	2008	2007
	£'000	£'000	£'000
Trade receivables	72	989	79
Share option receivable (employees)	31	-	-
Prepayments	66	13	21
Other receivables	62	12	11
	231	1,014	111

 

 

The following financial assets are overdue for receipt. The fair value of receivables is not materially different from the carrying value shown. The group's receivables are unsecured. The receivables are overdue by:

 

	2009	2008	2007
	£'000	£'000	£'000
Trade receivables
Not more than 3 months	63	985	76
More than 3 months but not more than 6 months	9	4	2
More than 6 months but not more than 1 year	-	-	-1
More than one year	-	-	-
	72	989	79

£71,700 of the trade receivables were invoiced in US dollars with the balance of £300 was invoiced in Australian dollars. £60,000 (83.3%) of the trade receivables was owed to the US operation with the balance of £12,000 (16.7%) owed to the Australian operation.

 

The trade receivables in 2008 included £913,000 in licence fees from Wistron Corporation that fell due on 30 December 2008 and were collected in February 2009.

 

No material receivables are past due or currently judged to be impaired and therefore there are no allowance account balances.

 

 

9. Cash and cash equivalents

	2009	2008	2007
	£'000	£'000	£'000
Cash at bank and in hand	902	95	286

 

 

 

NOTES TO THE CONSOLIDATED ACCOUNTS (CONTINUED)

 

10. Trade and other payables

	2009	2008	2007
	£'000	£'000	£'000
Non-current liabilities
Deferred tax liabilities	125	63	123

 

Current liabilities
Trade payables	16	304	44
Accrued expenses	530	1,435	169
	546	1,739	213

 

The accrued expenses include £207,000 (2008: £1,166,000) in prepaid licence fees and advance royalty payments from licensees for software and hardware products in the TV, PC and mobile phone markets.

 

The Group's payables are unsecured, none are past due and the Directors consider that the carrying value approximates their fair value.

 

11. Deferred tax

	2009	2008	2007
	£'000	£'000	£'000
1 January	63	123	106
Temporary differences	62	(60)	26
Change in income tax rate on deferred tax	-	-	(9)
31 December	125	63	123

 

12. Convertible loan note

 

	2009	2008	2007
	£'000	£'000	£'000
Financial liability element of loan note	510	532	-

 

On 23 April 2008, the Company issued Convertible Loan Notes ("Notes") totalling £510,000 to certain Directors of the Group and to Arisawa, pursuant to the existing authorities granted to the board of Directors. The Notes have an annual interest rate of 8%. The Notes can be converted by the holders into ordinary shares of 10 pence each in the capital of the Company ("Shares") at a conversion price of 10 pence nominal amount of Notes per Share. The Company has the option to redeem the Notes at any time at a 5% premium to their nominal value plus accrued interest. Any Notes outstanding on 16 April 2010 will at the option of the Company be repaid in cash or settled by the issue of Shares at the conversion price; in both cases accrued interest will be payable in cash.

 

Interest payments were made during 2009 to cover all amounts accrued up to and including 31 December 2009. In November 2009, the 2008 interest payable was paid. Then, in December 2009, the 2009 interest payable as well as the penalty for the past-due 2008 payment were paid. This interest payment had not been planned at the time the loan note was issued and was made at the discretion of executive management. The valuation of the loan note therefore includes not only the unwinding discount value which appears in finance costs in the consolidated statement of comprehensive income but also the cash payment of interest.

 

 

NOTES TO THE CONSOLIDATED ACCOUNTS (CONTINUED)

 

The loan notes have conversion rights to equity and mature in April 2010 (2 years from the date of issue). As such they are treated as compound instruments. The valuation of the liability is achieved by discounting the maturity value of the note at the rate available to the Group on a simple loan. The residual value is the equity element of the instrument. The present value of the convertible bond's equity element is considered an immaterial amount at the time of the establishment of the loan and therefore the financial liability element is £510,000 (2008: £532,000). The change in the valuation is charged to the consolidated statement of comprehensive income as finance charges. Included in the valuation of the financial liability is an element of derivative value for the ability to settle the liability early as described by the Loan Note schedule.

 

Given that the loan notes mature in April 2010, they are presented as current liabilities at 31 December 2009.

 

13. Issued share capital

	Shares	Nominal	Premium	Total
		Value	net of costs
		£'000	£'000	£'000
In issue 1 January & 31 December 2007	74,416,547	7,442	4,612	12,054
74,416,547 deferred shares  9 p par	74,416,547	6,698	-	6,698
74,416,547 ordinary shares 1 p par	74,416,547	744	4,612	5,356
In issue 31 December 2008	148,833,094	7,442	4,612	12,054
Share placing January 2009	16,441,625	165	373	538
Share placing July 2009	20,000,000	200	1,415	1,615
Issued option exercises (1)	618,234	6	56	62
In issue 31 December 2009	185,892,953	7,813	6,456	14,269

(1) In addition to the options exercised during the year an additional 315,000 shares were exercised and due for issue after the balance sheet date. The additional share capital will amount to £3,150 and the additional share premium will be £28,350. The value of this transaction is held in the 'Shares to be issued' line of Equity on the consolidated statement of financial position. Total share capital issued& outstanding would then be 186,207,953.

 

2008 Share Capital Restructure

On 5 July 2008 the share capital of the Company was split so that a total of 74,416,547 ordinary shares of par value 10 pence became 74,416,547 deferred shares of par value 9 pence plus 74,416,547 new ordinary shares of par value 1 penny.

 

The holders of the deferred shares shall not be entitled to receive any dividend out of the profits of the Company available for distribution. On a distribution of assets on a winding-up or other return of capital (otherwise than on conversion or redemption or purchase by the Company of any of its shares) the holders of the deferred shares shall be entitled to receive the amount paid up on their shares after distribution (in cash or in specie) to the holders of the new ordinary shares the amount of £100,000,000 in respect of each new ordinary share held by them. The deferred shares shall not entitle their holders to any further or other right of participation in the assets of the Company. The holders of deferred shares shall not be entitled to receive notice of or to attend (either personally or by proxy) any general meeting of the Company or to vote (either personally or by proxy) on any resolution to be proposed. No certificates will be issued in respect of the deferred shares.

 

January 2009 Share Placing

On 5 January 2009, the Company announced that it had raised £575,457 before expenses through a placing of 16,441,625 ordinary shares of 1 pence each in the capital of the Company ("Placing Shares") at a placing price of 3.5 pence per share.

 

NOTES TO THE CONSOLIDATED ACCOUNTS (CONTINUED)

 

The Placing Shares were placed with Mr. Christopher Yewdall and Dr Sanji Arisawa (existing Directors of DDD), Mr. Michael Stubbs (an existing shareholder) and Wistron Corporation (listed on the Taiwan Stock Exchange under symbol 3231) which made this strategic investment at the same time as entering into a memorandum of understanding in relation to license agreements with DDD. Under the terms of the agreement with Wistron Corporation, Wistron Corporation is restricted from selling its shares for the earlier of (i) a period of 2 years from the date of issue or (ii) such time as the exclusive rights to be separately licensed by DDD to Wistron Corporation to use DDD's software revert to non-exclusive rights.

 

July 2009 Share Placing

On 9 July 2009, the Company announced that it had raised £1,700,000 before expenses through a placing of 20,000,000 ordinary shares of 1 pence each in the capital of the Company ("July Placing Shares") at a placing price of 8.5 pence per share.

 

The July Placing Shares were placed with Mr. Hans Snook and Mr. Nicholas Brigstocke (existing Directors of the Company), Arisawa Manufacturing Company Limited, Wistron Corporation and Mr. Nigel Wray (existing shareholders) as well as other institutional shareholders.

 

 

EVENTS AFTER THE BALANCE SHEET DATE

 

Loan Note Conversion

The 2008 Convertible Loan Notes due 16 April 2010 have been approved for conversion at the request of the note holders. Under AIM Rule 21, directors are not permitted to deal in the Company's securities during a close period. This restriction prevented certain directors being able to convert the loan stock into ordinary share at the conversion date. As a result, the Company has deferred the conversion of the loan notes for all note holders until June or an earlier date as mutually agreed. The loan note holders have also agreed not to levy any interest during the deferral period.

 

 

 

NOTE TO THE ANNOUCNEMENT

The Group's consolidated financial statements on which this financial information is based, have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted for use by listed companies in the European Union and also in accordance with those parts of the Companies Act 2006 applicable to companies reporting under IFRS. The financial information set out in this announcement does not constitute statutory accounts as defined in Section 435 of the Companies Act 2006 in respect of 2009 accounts or Section 240(3) of the Companies Act 1985 in respect of 2008 accounts.

 

This announcement includes extracts from the audited statutory accounts for the year to 31 December 2009. The comparative figures relating to the year to 31 December 2008 and/or 31 December 2007 are taken from the audited statutory accounts for those years.

 

END

 

 

 

 

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