27th Sep 2010 07:00
Unaudited half yearly report for the period
1 January to 30 June 2010
DDD GROUP PLC
Registered Number: 4271085
FINANCIAL REVIEW
DDD Group plc ("DDD" or "the Company"), the 3D software and content company, announces its unaudited half yearly report for the six months ended 30 June 2010.
Highlights
Operational
·; Achieved first major milestone with more than one million units of the TriDef 2D to 3D conversion solution shipped by licensees in the TV and PC markets during the period
·; A number of licensees launched mass-market 3D products incorporating TriDef technologies:
o Samsung launched range of 3D LED, LCD and plasma TVs worldwide with TriDef 2D to 3D conversion included in every TV
o Acer built upon the success of its 5738DG 3D notebook with an updated 5740DG model
o Lenovo announced the IdeaPad Y560d 3D notebook in mid June.
o Fujitsu debuted an All-In-One PC for the Japanese market in June 2010 that utilizes the TriDef Ignition gaming solution
·; Development of Android™-compatible TriDef software commenced
Financial
·; Turnover £723,000 (June 2009: £726,000)
·; Loss before tax £342,000 (June 2009: £448,000)
·; Loss before tax, excluding share based payments £262,000 (June 2009: £431,000)
·; Net cash outflow from operating activities £525,000 (June 2009: outflow of £119,000)
·; Net cash at 30 June 2010 £3,371,000 (June 2009: £265,000)
·; Placing raising approximately £3,380,000, after expenses and conversion of loan notes to settle £510,000 convertible debt on June 7th 2010
Subsequent to the period end - highlights
·; Signed implementation license agreement with tier-one System-on-Chip manufacturer for next generation 3D TV and Blu-ray chipsets (planned launch during second half of 2011)
·; Delays to essential third party PC graphics hardware have resulted in the likely slippage of OEM TriDef sales to 2011; full-year revenues now expected to be £1.4m to £1.6m vs. market expectations of £3.5m. Delays likely to be resolved in near future with revenues expected to flow in early 2011
Chris Yewdall, Chief Executive said:
"DDD had an excellent first half and through the success of Samsung's 3D TVs, we shipped more than a million TriDef 2D to 3D conversion licenses between March and July.
"The delays to third-party PC hardware have hindered our OEM partners' ability to increase volume of 3D PC products. This has resulted in a slippage of the revenues we had anticipated in 2010, but we are confident the delays will be resolved in the near future and that these revenues will now flow in 2011."
CHAIRMAN'S STATEMENT
The continuing strong growth in demand for 3D consumer products resulted in DDD Group licensees shipping more than a million products with its TriDef 2D to 3D conversion solution in the first half of 2010. Before the period started, DDD had shipped less than 100,000 TriDef units in total. This growth was in a large part helped by the global launch of mass-market 3D TV sets in the second quarter, backed by global advertising campaigns that focused particularly on the World Cup - itself a showcase for 3D TV technology.
Income derived from IP grew approximately 19% year on year and 21% over the second half of 2009, consistent with the focus on technology licensing of the Company's 2D to 3D conversion products. Gross profit margin was approximately 79%, in line with the gross profit margin from the prior year.
DDD's long-standing relationship with Samsung Electronics continues to yield promising results. At the January Consumer Electronics Show in Las Vegas, Samsung demonstrated the widest range of 3D TVs of any manufacturer and announced in late August that they have sold more than one million 3D TVs worldwide from March to July, all of them incorporating DDD's TriDef technology.
Samsung's sales represented approximately 88% of the 3D TVs sold in the US market, which is expected to account for 66% of worldwide 3D TV demand according to market research firm DisplaySearch. Other consumer electronics manufacturers including Panasonic, Sony and LG Electronics commenced shipments of 3D TVs. However, they have struggled to match Samsung's aggressive pace in the 3D TV market due to panel shortages and they lack Samsung's 2D to 3D conversion feature.
DDD's close relationship with Wistron Corporation is also continuing to deliver additional 3D PC products from major brands. Production of the Acer 3D notebook continued, with over 75,000 units produced and sold worldwide since its launch in October 2009. It is the most successful 3D PC product by volume introduced by any manufacturer so far. In late June, Lenovo announced its Ideapad Y560d model featuring TriDef software, again developed through DDD's alliance with Wistron.
DDD further expanded the reach of TriDef PC software beyond the notebook PC platform with the launch of Fujitsu's All-In-One (AIO) PC in Japan, again incorporating TriDef software. The Acer and Lenovo notebooks and the Fujitsu AIO PC all feature a 3D display equipped with Arisawa Manufacturing Company's x-Pol 3D polarising material.
In parallel with the rapid 3D evolution taking place in the TV and PC markets, DDD is experiencing a resurgence of interest in its mobile phone 3D technologies. The Company is presently engaged in a number of promising early stage commercial discussions and technical evaluations with mobile phone chip makers and mobile handset manufacturers.
Complementing the commercial achievements during the first half, the Company successfully completed a placing of 14,000,000 new ordinary shares issued at 25p, raising of £3.5m (before expenses), that included participation from Wistron Corporation, Arisawa Manufacturing, directors Nigel Wray and Hans Snook plus nine institutional funds. The funds will be used to expand the operations of the Company now that the 3D market is showing solid growth potential. Concurrently, DDD completed the conversion of the £510,000 of 2008 Convertible Loan Notes to equity at the pre-approved price of 10p per share.
Following the completion of the funding in mid June, DDD has commenced recruitment of additional staff to manage the rapid growth in business development opportunities and development projects. The Company also expects to move to larger premises in Los Angeles during the later part of the year in order to accommodate the additional staff and new business.
Finally, in recognition of her strong contributions since joining the Company in late 2009, Victoria Stull was promoted to the position of Chief Financial Officer in June.
Paul Kristensen
Chairman
27 September 2010
OPERATIONAL UPDATE
·; Summary
During the period, DDD's licensees successfully launched the first high-volume worldwide consumer products featuring DDD's TriDef 2D to 3D conversion technologies. This was the culmination of almost a decade of advanced technology development by DDD's engineering staff coupled with persistent business development efforts aimed at securing high profile reference customers.
DDD's TriDef 3D products are becoming synonymous with the latest 3D PC and TV devices and the Company's successful design wins with leading brands including Samsung, Acer and Lenovo have positioned DDD at the forefront of this emerging market. As other brand name organisations enter the market, they are seeking out DDD's solutions, not only for existing TV and PC markets, but for new markets including set top boxes, mobile phones and other handheld devices and displays.
DDD implemented a strategy during 2009 to package and market its core capabilities to third-party software companies and chip vendors, allowing them to expand their product offerings based on TriDef 3D conversion. While a number of lower tier chip companies have announced 3D conversion solutions during the period in response to the growth in demand for 3D TVs, DDD has remained focused on securing license agreements with top-tier manufacturers in various markets including PC, TV and mobile telephones. The objective is to ensure that as the 3D market experiences the surge in growth anticipated during 2011, the leading suppliers of high-volume chips and devices are able to supply their customers with embedded TriDef technologies.
In the PC market, growth has been lower than forecast due to the later than expected delivery of graphics chips that are compatible with the electronic 3D glasses favoured by many 3D monitor and OEM PC manufacturers. DDD expects this supply issue to be resolved in the fourth quarter, enabling it to compete more aggressively with the incumbent supplier. Notwithstanding this delay, the Company estimates that TriDef 3D software already represents over 30% of 3D PC market share despite being introduced nearly one year later than the competing solution.
With the advent of glasses-based 3D products in the PC and TV markets, a number of companies including Sharp Corporation have announced the next generation of 'glasses-free' 3D displays for mobile devices. DDD has seen a resurgence in interest in the use of its solution in mobile devices and expects to provide further guidance on opportunities in this sector as the current technical and commercial discussions conclude.
DDD increased the variety of content available on the Yabazam! 3D content portal where demand from PC customers remains steady. Since the majority of 3D TVs being introduced are internet connected, the Company is also in the process of expanding the distribution of Yabazam! 3D content to the TV screen.
·; Business Review
DDD is pursuing the licensing of its patented software, hardware and content conversion/creation solutions as one technology licensing business segment on four main platforms as follows:
Consumer Television, refers to flat screen HDTV displays and set top boxes being developed and marketed by major consumer electronics companies where DDD's real-time 2D to 3D content conversion solution provides an important bridge towards mass-market consumer adoption of 3D capable televisions.
Desktop and Notebook PC Displays, refers primarily to consumer users who use 3D notebook and desktop PCs and monitors, and DDD's related software, to play games in 3D and watch movies and photos in 3D.
Consumer Handheld Devices, refers to the market for 3D mobile telephones, personal digital assistants and personal media players where the TriDef software can be used to convert, present, download and share popular mobile content such as wallpapers, animations and video in glasses-free 3D.
3D Content Aggregation, refers to the distribution of original 3D content made by third parties to end users with 3D PCs, TVs and mobile devices. DDD serves as an aggregator of this content, acquiring the distribution rights and sharing income with the third party copyright holders.
·; Consumer Television
In March 2010, Samsung Electronics launched a range of 3D-capable LED, LCD and plasma TVs capable of displaying 3D content. Under a license agreement from February 2008, each Samsung 3D TV contains a real time 2D to 3D conversion capability based on TriDef technologies.
Samsung quickly emerged as the market leader for 3D TVs, despite competition from Panasonic and Sony. The 2D to 3D conversion feature is an important element of Samsung's 3D TV offering and while other manufacturers initially dismissed the need for such a feature, it has rapidly become a 'must have' feature for the latest 3D TVs. DDD amended the license agreement with Samsung in early 2010, increasing the range of devices with which Samsung can include the TriDef technology and revising the royalty structure to allow Samsung to use TriDef IP in a broader range of devices.
During the period, DDD has seen an increase in the number of competitors offering 2D to 3D conversion solutions, primarily TV chip vendors seeking to use the capability to secure design wins from the larger chip companies. As part of its strategy, DDD has continued to target the larger System on Chip (SoC) makers who are primary suppliers to the tier-1 and tier-2 TV manufacturers such that they can include the TriDef 2D to 3D conversion under license for their next generation 2011 digital TV chips with 3D capabilities. DDD secured one such tier-1 chip license agreement in August 2010 and anticipates announcing the licensee's name once the SoC chip becomes available in the first half of 2011.
DDD also secured a license agreement with a leading US-based set top box manufacturer, delivering a set top box accessory that can be used with virtually any existing 3D TV. This ensures that the end user has access to the high quality TriDef solution irrespective of the capabilities of their 3D TV.
In view of the emergence of competing solutions during the period, DDD also engaged a leading US Intellectual Property law firm to review its patent claims and the features of competing products in order to evaluate the options for patent enforcement.
·; Desktop and notebook PCs
The Company generates income from the sale of software for 3D PC applications in two ways:
·; Direct sales of software to end users via the Company's online website store
·; Licensing of software to OEM partners for inclusion with 3D PC products
As the market for 3D PC products continues to grow, DDD also saw an increase in demand for its pre-packaged PC software, where income grew by 207% over the same period in 2009 and by approximately 87% over the second half of 2009.
DDD continued to resell desktop PC 3D monitors and additional TriDef software applications to international business users, primarily comprised of the Hyundai IT 24" high resolution PC 3D display based on Arisawa's X-pol™ optical solution. In conjunction with the availability of competitively priced, brand-name 3D TVs and PCs from retail outlets, the Company ceased the sale and marketing of 3D TVs, PC monitors and related accessories at the end of June. Income from the sale of 3D displays and accessories was down by 42% from the same period in 2009 in line with management's expectations.
During the period two further OEM PC products were launched featuring the Company's TriDef software; the Lenovo Y560d notebook PC developed through the alliance with Wistron Corporation, and an All-In-One PC for the Japan market developed in conjunction with Fujitsu, one of Japan's leading PC suppliers.
The Company continued the development of the TriDef 3D Experience software and the TriDef Ignition PC game conversion solution, In response to international demand from OEMs, the TriDef 3D Experience now supports 25 languages while nearly 350 of the latest PC games can now be played using TriDef Ignition, compared to just over 100 games that were supported at the end of 2009.
At the Consumer Electronics Show in Las Vegas in January, Paul Otellini, CEO of Intel Corporation, discussed Intel's support for the emerging 3D PC market and featured 3D game conversion created with TriDef Ignition. Later in the year, in March, AMD announced at the Game Developer's Conference that their planned 3D graphics chip solution would be compatible with the Company's TriDef software.
·; Consumer Handheld Devices
With the groundswell of new 3D products being introduced in the TV and PC markets, DDD expects that these products will drive interest and demand for the delivery of 3D enabled mobile devices.
During the period, DDD commenced discussions with a number of international organisations engaged in the development of mobile telephone processors, mobile telephone handsets and mobile phone displays. As a result, the Company is presently updating its TriDef Mobile software to be compatible with the latest mobile phone chipsets and operating systems, including the popular AndroidTM platform. A number of technical evaluations and commercial discussions are presently underway and the Company expects to provide further guidance on the potential of these as these discussions conclude.
Android is a trademark of Google Inc. Use of this trademark is subject to Google Permissions.
·; 3D Conversion & Content Publishing
During the period, DDD continued to expand the range of original 3D content available from the Yabazam! content portal. The latest 3D notebook PCs featuring TriDef software from Acer and Lenovo feature 3D movie trailers drawn from the Yabazam collection that are preloaded on the hard drive during manufacture.
The Company also licensed originally made 3D Yabazam! content to Samsung, which is included on the SCH-W960 3D handset that was announced in April and launched in July.
As the market for 3D TVs starts to grow, DDD is also planning to take advantage of the broadband internet connections in most of the latest 3D TVs to increase the distribution of Yabazam 3D content beyond the PC to the TV screen. One such implementation came earlier in September as DDD signed a distribution agreement with Hybrid TV to support the launch of their new CASPA 3D service for TIVO customers in Australia and New Zealand which features Yabazam! content as a Pay Per View service.
DDD continued its business development activities in conjunction with The Littlefield Company, aimed at the US TV networks. This culminated in focus groups that were conducted in June to evaluate consumer response to popular feature length TV shows that had been converted to 3D by DDD. The results were positive, demonstrating that consumers feel more engaged with the 3D versions of their favourite shows. The Company continues to monitor the opportunities in this market and is in the process of migrating its 2D to 3D content conversion capabilities from Perth to Los Angeles in readiness for the anticipated opportunities to create 3D TV content for the US networks.
·; Outlook
During the first half, adoption of the Company's 2D to 3D conversion IP increased tenfold compared to the end of the prior year, underscoring the demand for 2D to 3D conversion as more consumer 3D devices are launched by OEM manufacturers.
Despite the delay in availability of third party PC graphics hardware that will impact growth of our PC products in the second half of 2010, the Company expects that this delay will be resolved in the fourth quarter of 2010 and that the delay will have no material impact on long term growth.
The placing in early June has provided the Company with the resources to address increased opportunities in existing markets as well as new opportunities in emerging markets such as mobile telephones. Additional business development and engineering staff have been recruited to address the growing number of opportunities and the Company will move to a new office in the US at the end of the year to accommodate the additional staff. The balance sheet remains strong as high margin royalty revenues from existing licensees continues to grow.
The commercial focus remains on developing strategic partnerships with key platform suppliers in the TV, PC and mobile telephone markets. Consequently, the Company expects to announce further OEM design wins and product launches in the TV, PC and mobile markets in the near future.
Chris Yewdall
Chief Executive Officer
27 September 2010
|
Consolidated Statement of Comprehensive Income for the 6 months ended 30 June 2010 |
|
|
|
|
|
|
|
6 months to 30 June |
6 months to 30 June |
12 months to 31 Dec |
|
|
|
2010 |
2009 |
2009 |
|
|
|
£'000 |
£'000 |
£'000 |
|
|
|
(unaudited) |
(unaudited) |
|
|
|
|
|
|
|
|
|
Notes |
|
|
|
|
Revenue |
3 |
723 |
726 |
1,410 |
|
Cost of sales |
|
(154) |
(142) |
(365) |
|
|
|
|
|
|
|
Gross profit |
|
569 |
584 |
1,045 |
|
|
|
|
|
|
|
Administration expenses |
|
(842) |
(988) |
(2,032) |
|
Other income |
|
19 |
15 |
198 |
|
Share based payment |
|
(80) |
(17) |
(51) |
|
|
|
|
|
|
|
Operating loss |
|
(334) |
(406) |
(840) |
|
|
|
|
|
|
|
Finance income |
|
13 |
2 |
9 |
|
Finance expense |
|
(21) |
(44) |
(21) |
|
|
|
|
|
|
|
Loss before taxation |
|
(342) |
(448) |
(852) |
|
Taxation |
|
(30) |
(110) |
(62) |
|
|
|
|
|
|
|
Loss for the period |
|
(372) |
(558) |
(913) |
|
|
|
|
|
|
|
Other comprehensive income for the period:
|
|
|
|
|
|
Exchange differences on translation of foreign operations |
|
(203) |
(36) |
2 |
|
|
|
|
|
|
|
Other comprehensive income for the period, net of tax |
|
(203) |
(36) |
2 |
|
|
|
|
|
|
|
Total comprehensive loss for the period |
|
(575) |
(594) |
(911) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss per share |
|
|
|
|
|
Basic (pence per share) |
4 |
(0.33) |
(0.62) |
(0.98) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated statement of financial position as at 30 June 2010 |
|
|
|
|
|
|
|
30 June |
30 June |
31 Dec |
|
|
|
2010 |
2009 |
2009 |
|
|
|
£'000 |
£'000 |
£'000 |
|
|
|
(unaudited) |
(unaudited) |
|
|
|
|
|
|
|
|
|
Notes |
|
|
|
|
Assets |
|
|
|
|
|
Non-current assets |
|
|
|
|
|
Intangible assets |
5 |
552 |
201 |
448 |
|
Property, plant and equipment |
|
69 |
46 |
71 |
|
|
|
|
|
|
|
Total non-current assets |
|
621 |
247 |
519 |
|
|
|
|
|
|
|
Current assets |
|
|
|
|
|
Inventory |
|
1 |
3 |
7 |
|
Trade and other receivables |
|
426 |
59 |
231 |
|
Cash and bank balances |
|
3,371 |
265 |
902 |
|
|
|
|
|
|
|
Total current assets |
|
3,798 |
327 |
1,140 |
|
|
|
|
|
|
|
Total assets |
|
4,419 |
574 |
1,659 |
|
|
|
|
|
|
|
Equity and liabilities |
|
|
|
|
|
Capital and reserves |
|
|
|
|
|
Issued capital |
6 |
8,015 |
7,606 |
7,813 |
|
Share premium |
6 |
10,259 |
4,976 |
6,456 |
|
Shares to be issued |
6 |
- |
- |
32 |
|
Merger reserve |
|
13,279 |
13,279 |
13,279 |
|
Share based payment reserve |
|
369 |
255 |
289 |
|
Translation reserve |
|
(365) |
(200) |
(162) |
|
Retained earnings |
|
(27,600) |
(26,873) |
(27,228) |
|
|
|
|
|
|
|
Total equity |
|
3,957 |
(957) |
479 |
|
|
|
|
|
|
|
Non-current liabilities |
|
|
|
|
|
Financial liabilities |
6 |
- |
555 |
- |
|
Deferred tax liabilities |
|
155 |
56 |
125 |
|
|
|
|
|
|
|
Total non-current liabilities |
|
155 |
611 |
125 |
|
|
|
|
|
|
|
Current liabilities |
|
|
|
|
|
Financial liabilities |
6 |
- |
- |
510 |
|
Trade and other payables |
|
307 |
920 |
546 |
|
|
|
|
|
|
|
Total current liabilities |
|
307 |
920 |
1,055 |
|
|
|
|
|
|
|
Total liabilities |
|
462 |
1,531 |
1,180 |
|
|
|
|
|
|
|
Total equity and liabilities |
|
4,419 |
574 |
1,659 |
|
|
|
|
|
|
|
Consolidated statement of cash flows for the 6 months ended 30 June 2010 |
|
|
|
|
|
|
|
6 months to 30 June |
6 months to 30 June |
12 months to 31 Dec |
|
|
|
2010 |
2009 |
2009 |
|
|
|
£'000 |
£'000 |
£'000 |
|
|
|
(unaudited) |
(unaudited) |
|
|
|
|
|
|
|
|
Cash flows from operating activities |
|
|
|
|
|
|
|
|
|
|
|
Loss for the period |
|
(372) |
(558) |
(913) |
|
|
|
|
|
|
|
Finance costs in the income statement |
|
8 |
42 |
12 |
|
Tax in the income statement |
|
30 |
110 |
62 |
|
Depreciation of non-current assets |
|
20 |
11 |
26 |
|
Amortisation |
|
123 |
201 |
299 |
|
Share based payments |
|
80 |
17 |
51 |
|
Decrease / (increase) in inventory |
|
6 |
37 |
33 |
|
Decrease / (increase) in trade and other receivables |
|
(195) |
955 |
786 |
|
(Decrease) / increase in trade and other payables |
|
(238) |
(819) |
(1,193) |
|
|
|
|
|
|
|
Net cash (used in) / generated from operations |
|
(538) |
(4) |
(836) |
|
|
|
|
|
|
|
Interest received |
|
13 |
2 |
9 |
|
Income tax (paid)/received |
|
- |
(117) |
- |
|
|
|
|
|
|
|
Net cash (used in) / generated by operating activities |
|
(525) |
(119) |
(827) |
|
|
|
|
|
|
|
Cash flows from investing activities |
|
|
|
|
|
Interest paid |
|
(21) |
(21) |
(44) |
|
Payments for property plant and equipment |
|
(18) |
(23) |
(63) |
|
Payments for intangible assets |
|
(227) |
(160) |
(505) |
|
|
|
|
|
|
|
Net cash (used in) / generated by investing activities |
|
(266) |
(204) |
(612) |
|
|
|
|
|
|
|
Cash flows from financing activities |
|
|
|
|
|
Proceeds from issue of equity shares |
|
3,583 |
575 |
2,338 |
|
Issue costs |
|
(120) |
(47) |
(123) |
|
Deposit withdrawn |
|
- |
1 |
1 |
|
|
|
|
|
|
|
Net cash (used in) / generated by financing activities |
|
3,463 |
529 |
2,216 |
|
|
|
|
|
|
|
Net increase in cash and cash equivalents |
|
2,672 |
206 |
777 |
|
Exchange gains / (losses) |
|
(203) |
(36) |
30 |
|
|
|
|
|
|
|
Total increase in cash and cash equivalents |
|
2,469 |
170 |
807 |
|
Cash and cash equivalents at the start of the period |
|
902 |
95 |
95 |
|
|
|
|
|
|
|
Cash and cash equivalents at the end of the period |
|
3,371 |
265 |
902 |
Consolidated statement of changes in equity for the
6 months ended 30 June 2010
|
|
Share capital |
Share premium |
Shares to be issued |
Merger reserve |
Share based payment reserve |
Foreign exchange |
Retained earnings |
Total equity |
|
|
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
|
|
|
|
|
|
|
|
|
|
|
At 1 January 2009 |
7,442 |
4,612 |
- |
13,279 |
238 |
(164) |
(26,315) |
(908) |
|
|
|
|
|
|
|
|
|
|
|
Transactions with owners |
|
|
|
|
|
|
|
|
|
Share issue |
164 |
364 |
- |
- |
- |
- |
- |
528 |
|
Equity settled share options |
- |
- |
- |
- |
17 |
- |
- |
17 |
|
Total transactions with owners |
164 |
364 |
- |
- |
17 |
- |
- |
545 |
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income |
|
|
|
|
|
|
|
|
|
Loss for the year |
- |
- |
- |
- |
- |
- |
(558) |
(558) |
|
Other comprehensive income |
- |
- |
- |
- |
- |
(36) |
- |
(36) |
|
Total comprehensive income |
- |
- |
- |
- |
- |
(36) |
(558) |
(594) |
|
|
|
|
|
|
|
|
|
|
|
At 30 June 2009 |
7,606 |
4,976 |
- |
13,279 |
255 |
(200) |
(26,873) |
(957) |
|
|
|
|
|
|
|
|
|
|
|
Transactions with owners |
|
|
|
|
|
|
|
|
|
Share issue |
207 |
1,480 |
32 |
- |
- |
- |
- |
1,719 |
|
Equity settled share options |
|
|
|
- |
34 |
- |
- |
34 |
|
Total transactions with owners |
207 |
1,480 |
32 |
- |
34 |
- |
- |
1,753 |
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income |
|
|
|
|
|
|
|
|
|
Loss for the year |
- |
- |
- |
- |
- |
- |
(355) |
(355) |
|
Other comprehensive income |
- |
- |
- |
- |
- |
38 |
- |
38 |
|
Total comprehensive income |
- |
- |
- |
- |
- |
38 |
(355) |
(317) |
|
|
|
|
|
|
|
|
|
|
|
At 31 December 2009 |
7,813 |
6,456 |
32 |
13,279 |
289 |
(162) |
(27,228) |
479 |
|
|
|
|
|
|
|
|
|
|
|
Transactions with owners |
|
|
|
|
|
|
|
|
|
Share issue |
202 |
3,803 |
(32) |
- |
- |
- |
- |
3,973 |
|
Equity settled share options |
- |
- |
- |
- |
80 |
- |
- |
80 |
|
Total transactions with owners |
202 |
3,803 |
(32) |
- |
80 |
- |
- |
4,053 |
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income |
|
|
|
|
|
|
|
|
|
Loss for the year |
- |
- |
- |
- |
- |
- |
(372) |
(372) |
|
Other comprehensive income |
- |
- |
- |
- |
- |
(203) |
- |
(203) |
|
Total comprehensive income |
- |
- |
- |
- |
- |
(203) |
(372) |
(575) |
|
|
|
|
|
|
|
|
|
|
|
At 30 June 2010 |
8,015 |
10,259 |
- |
13,279 |
369 |
(365) |
(27,600) |
3,957 |
|
|
|
|
|
|
|
|
|
|
1. The Company
Dynamic Digital Depth Group Plc ("the Company") is principally involved in the development and licensing of software, the conversion of content from 2D to 3D and the supply of hardware services and IP to enable the viewing of 3D images.
The Company is a public limited liability company incorporated and domiciled in England and Wales. The address of its registered office is 2nd Floor, Vintners Place, 68 Upper Thames Street, London, EC4V 3BJ, United Kingdom.
The Company has its listing on the Alternative Investment Market ("AIM") of the London Stock Exchange.
2. Basis of preparation
This unaudited consolidated half yearly report is for the six month period ended 30 June 2010. It does not include all the information required for full annual financial statements and should be read in conjunction with the consolidated financial statements of the Group for the year ended 31 December 2009, which were prepared under International Financial Reporting Standards ("IFRS") as adopted by the European Union ("EU").
The consolidated financial statements have been prepared under the historical cost convention except for share based payments which are valued at the date of grant.
These interim consolidated financial statements have been prepared in accordance with accounting policies consistent with those set out in the Group's financial statements for the year ended 31 December 2009, which were prepared in accordance with IFRS as adopted by the EU.
The financial information set out in this interim report does not constitute statutory accounts as defined in Section 435 of the Companies Act 2006. The Group's statutory financial statements for the year ended 31 December 2009, prepared under IFRS, have been filed with the Registrar of Companies. The auditor's report on those financial statements was unqualified and did not contain a statement under Section 489(2) - (3) of the Companies Act 2006.
3. Selected segmental reporting data
The Group's operating segments are based upon the Group's revenue streams. At present, given the size of the Group, costs of goods sold and operating expenses cannot be allocated on a reasonable basis to the segments below and, as a result, the segmental analysis is limited to the Group gross profit as presented to the Board of Directors.
Please note that the following data is not an IFRS8 compliant disclosure but selected information.
|
|
6 months to 30 June |
6 months to 30 June |
Year to 31 December |
|
|
2010 |
2009 |
2009 |
|
|
£'000 |
£'000 |
£'000 |
|
REVENUES: |
(unaudited) |
(unaudited) |
|
|
Revenues from intellectual property: |
|
|
|
|
Licensing (a) |
- |
455 |
894 |
|
Royalties (a) |
515 |
- |
- |
|
Software Product Sales |
43 |
14 |
37 |
|
Subtotal |
558 |
469 |
931 |
|
Consulting |
51 |
98 |
175 |
|
Hardware Product Sales (b) |
90 |
156 |
254 |
|
Other Revenue Streams |
24 |
3 |
50 |
|
|
|
|
|
|
Total Revenue |
723 |
726 |
1,410 |
|
COGS |
(154) |
(142) |
(365) |
|
|
|
|
|
|
Gross Profit |
569 |
584 |
1,045 |
|
|
|
|
|
|
Gross Margin |
79% |
80% |
74% |
|
|
|
|
|
a) The revenues generated from licensees of the Company's intellectual property are categorised based on contractual agreement terms. In 2009, the licensing agreements and related revenues earned by the Company were fixed fee, period based license agreements wherein royalty related payments did not begin until after a production level was achieved. In 2010, the revenues recognized in the first half are entirely based on unit production royalties. In the future, the Company anticipates using a combination of fixed, period based licensing fees and per unit royalties.
b) The Company is in the process of discontinuing the Hardware Product Sales group which resells 3D hardware equipment and accessories to end-consumers on an as ordered basis. At June 30, product sales were no longer available via Company websites, however, there were still outstanding orders to be fulfilled in July and therefore the operation will be reclassified as discontinued at fiscal year end.
4. Loss per share
|
|
6 months to 30 June |
6 months to 30 June |
Year to 31 December |
|
|
2010 |
2009 |
2009 |
|
|
£'000 |
£'000 |
£'000 |
|
|
(unaudited) |
(unaudited) |
|
|
|
|
|
|
|
Loss for the year attributable to equity shareholders |
(372) |
(558) |
(913) |
|
|
|
|
|
|
Loss per share |
|
|
|
|
Basic (pence per ordinary share) |
(0.33) |
(0.62) |
(0.98) |
|
|
|
|
|
|
|
Shares |
Shares |
Shares |
|
Ordinary shares |
|
|
|
|
Issued ordinary shares par 1p at start of the period |
111,791,406 |
74,416,547 |
74,416,547 |
|
Unissued ordinary shares at period end |
- |
- |
315,000 |
|
Ordinary shares issued in the period |
19,905,000 |
16,441,625 |
37,059,859 |
|
|
|
|
|
|
Issued ordinary shares at end of the period |
131,696,406 |
90,858,172 |
111,791,406 |
|
|
|
|
|
|
Weighted average number of shares in issue for the period |
113,682,411 |
90,310,118 |
93,103,977 |
|
|
|
|
|
|
|
|
|
|
|
Deferred shares |
|
|
|
|
Issued deferred shares par 9p at start of the period |
74,416,547 |
74,416,547 |
74,416,547 |
|
Deferred shares issued in the period |
- |
- |
- |
|
|
|
|
|
|
Issued deferred shares at end of the period |
74,416,547 |
74,416,547 |
74,416,547 |
|
|
|
|
|
|
|
|
|
|
|
Total share capital (Issued & Outstanding) |
206,112,953 |
165,274,719 |
186,207,953 |
|
|
|
|
|
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.
5. Intangible assets
|
|
Capitalised development costs |
Patents |
Total |
|
|
£'000 |
£'000 |
£'000 |
|
Cost |
|
|
|
|
At January 1 2009 |
1,123 |
192 |
1,315 |
|
Additions |
160 |
- |
160 |
|
|
|
|
|
|
At 30 June 2009 |
1,283 |
192 |
1,475 |
|
Additions |
345 |
- |
345 |
|
|
|
|
|
|
At 31 December 2009 |
1,628 |
192 |
1,820 |
|
Additions |
227 |
- |
227 |
|
|
|
|
|
|
At 30 June 2010 |
1,855 |
192 |
2,047 |
|
|
|
|
|
|
Amortisation |
|
|
|
|
At January 1 2009 |
881 |
192 |
1,073 |
|
Charge for the period |
201 |
- |
201 |
|
|
|
|
|
|
At 30 June 2009 |
1,082 |
192 |
1,274 |
|
Charge for the period |
98 |
- |
98 |
|
|
|
|
|
|
At 31 December 2009 |
1,180 |
192 |
1,372 |
|
Charge for the period |
123 |
- |
123 |
|
|
|
|
|
|
At 30 June 2010 |
1,303 |
192 |
1,495 |
|
|
|
|
|
|
Net book value |
|
|
|
|
At January 1 2009 |
242 |
- |
242 |
|
At 30 June 2009 |
201 |
- |
201 |
|
At 31 December 2009 |
448 |
- |
448 |
|
At 30 June 2010 |
552 |
- |
552 |
|
|
|
|
|
6. Shares in issue
|
|
Shares |
Nominal |
Premium |
Total |
|
|
|
Value |
net of costs |
|
|
|
|
£'000 |
£'000 |
£'000 |
|
|
|
|
|
|
|
In issue 1 January 2009 (1) |
148,833,094 |
7,442 |
4,612 |
12,054 |
|
|
|
|
|
|
|
Share placing January 2009 |
16,441,625 |
164 |
364 |
528 |
|
|
|
|
|
|
|
In issue 30 June 2009 |
165,274,719 |
6 |
4,976 |
12,582 |
|
|
|
|
|
|
|
Share placing July 2009 |
20,000,000 |
200 |
1,425 |
1,625 |
|
Issued option exercises |
618,234 |
6 |
56 |
62 |
|
|
|
|
|
|
|
In issue 31 December 2009 |
185,892,953 |
7,813 |
6,456 |
14,269 |
|
|
|
|
|
|
|
Share placing May 2010 (2) |
14,000,000 |
140 |
3,240 |
3,380 |
|
Loan Note Conversion June 2010 (3) |
5,100,000 |
51 |
459 |
510 |
|
Employee Stock Option Exercises (4) |
1,120,000 |
11 |
104 |
115 |
|
|
|
|
|
|
|
In issue 30 June 2010 |
206,112,953 |
8,015 |
10,259 |
18,274 |
|
|
|
|
|
|
1) This includes 74,416,547 of 9p deferred shares recorded at a nominal value of 6,698 and nil premium. 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.
2) On 14 May 2010, the Company announced that it had raised £3,500,000 before expenses through a placing of 14,000,000 ordinary shares of 1 pence each in the capital of the Company ("May Placing Shares") at a placing price of 25 pence per share. The May Placing Shares were placed with key shareholders as well as existing and new institutional investors. The shares were admitted to AIM on 4 June 2010 following shareholder approval at the Company's Annual General Meeting.
3) On 7 June 2010, the 2008 Convertible Loan Notes totaling £510,000 to certain Directors of the Group and to Arisawa were converted to 5,100,000 ordinary shares of 1 pence each in the capital of the Company ("Loan Note Conversion") at the pre-determined price of 10 pence per share, pursuant to the existing authorities granted to the Board of Directors. The principal value of the debt was extinguished with the issuance of the shares and the remaining interest due of £12,000 was paid.
4) During the first six months, 1,120,000 shares were issued under the Company's Share Option Plan. Of these 315,000 related to exercises held on the books at 31 December 2009 as 'Shares to be issued' and a related Share Option receivable.
7. Related party transactions
One of the Directors of the Company (Mr. Hans Snook) and three substantial shareholders in the Company (Arisawa, Wistron, and Mr. Nigel Wray) subscribed for May Placing Shares, the May Placing Shares transaction is a related party transaction for the purpose of AIM Rule 13. In this regard, having consulted with the Company's nominated adviser, Brewin Dolphin, the Directors of the Company, other than Mr. Hans Snook and Dr. Sanji Arisawa (CEO of Arisawa Manufacturing Corporation), consider that the terms of the May Placing Shares transaction are fair and reasonable insofar as the shareholders of DDD are concerned.
The Loan Note Conversion is a related party transaction as Arisawa (a key shareholder which is run by Dr. Sanji Arisawa who is a member of the DDD Group plc Board of Directors) as well as Messrs. Yewdall, Littlefield, and Snook (all Board of Directors members) were the note holders. The remaining Directors of the Company have consulted with the Company's nominated adviser that the terms of the transaction are fair and reasonable insofar as the shareholders are concerned.
8. Events after the balance sheet date
No significant financial transactions have occurred after the balance sheet date.
Related Shares:
DDD.L