29th Sep 2005 07:00
DDD Group PLC29 September 2005 29 September 2005 DDD GROUP PLC UNAUDITED INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2005 DDD Group plc ("DDD" or "the Company"), the 3D software and content company, ispleased to announce its unaudited interim results for the six months ended 30June 2005. Highlights • Turnover increased 65% to £283,000 (2004: £172,000) • Second development milestone achieved with Arisawa Manufacturing Co., Ltd. ("Arisawa") of Japan yielding revenue of £34,000 which was received during the period • First development milestone achieved with top five mobile telephone handset manufacturer for glasses-free 3D mobile telephone yielding revenue of £150,000 which was received subsequent to the period end • Loss before tax decreased 45% to £578,000 (2004: £1.051 million) • Cash reserves of £721,000 • Expansion of worldwide licensing agreement with Sharp Corporation ("Sharp") to include DDD's TriDef DVD Player real time 2D to 3D conversion software pre-loaded on Sharp's new second-generation ActiusTM AL3D ("AL3D") 3D notebook PC Subsequent to the period end • Signed a two-year, non-exclusive, DDD MobileTM software licensing agreement and a development agreement worth at least £500,000 with one of the world's top five handset manufacturers for a second-generation glasses-free 3D mobile telephone • Signed a memorandum of understanding with Jamster! International Sarl ("Jamster") for the 2D to 3D conversion of images from Jamster's mobile content library using DDD's high quality offline conversion process for publishing to 3D mobile telephone subscribers • Development of DDD MobileTM suite of software completed which enables the conversion, presentation, downloading and sharing of popular mobile telephone content including wallpapers, animations and movies in glasses-free 3D Paul Kristensen, Chairman of DDD Group plc commented, "The momentum and commercial goals achieved in 2004 have now begun to flowthrough into our operating results as evidenced by the increase in turnover andthe even more satisfying decrease in our operating loss. In late 2004, the Company set out to secure its first glasses-free 3D mobiletelephone licensee, an objective that was achieved in July 2005. DDD's realtime 2D to 3D conversion solution was a driving factor for the September 2004strategic investment and development agreement with Arisawa. It also paved theway for the expansion of our licensing agreement with Sharp in March 2005. Mostimportantly, it helped DDD secure its first development and licensing agreementwith a leading handset manufacturer for a glasses-free 3D mobile telephone.DDD's real time 2D to 3D conversion is complemented by the high quality offline2D to 3D conversion processes that are currently being used to develop a premium3D content library based on Jamster's highly successful 2D mobile telephonecontent. DDD's goal is to share in the revenues generated from the download ofpremium 3D content by 3D mobile telephone handset owners. Recent developments in the digital cinema market in North America indicate thatnearly 100 new 3D theatres will open before the end of this year. Walt DisneyPictures, Sony Columbia and leading directors, including James Cameron andRobert Zemeckis, are already creating a new generation of 3D movies for thesescreens. The Company believes that this resurgence of interest from Hollywoodwill further fuel the interest in 3D and create additional opportunities for theCompany's products and services in both the professional and consumerentertainment markets. With highly compelling, mass-market 3D solutions now developed for the PC,mobile telephone and television, the Company intends to build on its marketleading position, and focus on the consumer market where we anticipate growingour development fees, licensing royalties and content revenues." Operational update • Executive Summary Real time 2D to 3D content conversion is now possible on multiple platformsincluding PC, mobile telephone and television. This key development is drivingthe global consumer electronics firms towards developing consumer devices with3D displays since the key constraint, the lack of 3D content, has been removed. The implementation of the Company's real time and off line 2D to 3D conversioncapabilities on the leading mobile telephone development platform has assistedin securing the Company's first licensee in the mobile telephone market. Thisis a significant consumer market that the Company is seeking to further address. Despite the appearance of competitive real time 3D conversion solutions,predominately from suppliers in Asia, DDD's patented image processing techniquescontinue to yield the highest quality 3D images, allowing the Company to competeeffectively for contracts on all platforms. The Company's strategic relationship with Arisawa is expected to continue toprovide many benefits. Arisawa is a successful Tokyo Stock Exchange listedcompany and its financial strength, operations knowledge and Asian businessdevelopment capabilities are expected to continue to supplement the existingskills of DDD's management team and Board of Directors. • Business Review DDD is presently pursuing the deployment of its software and content conversion/creation capabilities on four main platforms. Consumer Handheld Devices, refers to the emerging market for 3D mobiletelephones, personal digital assistants ("PDAs") and personal media players ("PMPs") where the DDD MobileTM suite of software can be used to convert,present, download and share popular mobile content such as wallpapers,animations and video in glasses-free 3D. Consumer Television, refers to an emerging category of flat screen LCD andplasma displays being developed and marketed by major consumer electronicscompanies where DDD's automatic 2D to 3D content conversion solutions areexpected to provide an important bridge towards mass-market consumer adoption. Desktop Displays and Notebook PCs, refers primarily to business users,government agencies and universities who use 3D displays and DDD's relatedsoftware to enhance visual data in the medical, pharmaceutical, education, oil &gas and manufacturing sectors. Public Space Entertainment (Digital Signage), refers to retail advertising,promotions and trade shows where customers either purchase or hire a 3D displayand purchase DDD's related software products and content conversion/creationservices. • Consumer Handheld Devices The consumer handheld devices platform is a new commercial market for DDD andaccounted for 53% of total turnover for the six months ended 30 June 2005 as aresult of the achievement of the first development milestone with a leadinghandset manufacturer yielding £150,000. In response to a number of display manufacturers developing smaller mobile 3Ddisplays, DDD acknowledged the necessity for related software and developed theDDD Mobile suite of software capable of being used on the latest generation of 'smart phones' with advanced handset features. The mobile telephone market is an attractive platform for 3D because: - Sharp successfully launched two handsets into the Japanese market, one inlate 2002 and the other in mid-2003, with combined sales of just under 3 millionunits - The global market is substantial with sales of 780 million handsetsforecast for 2005 (Source: Gartner) - Handset manufacturers are eager to differentiate their product offerings - Mobile telephone network operators ("carriers") are keen to earn datarevenues and the technological performance of advanced handsets is rapidlyprogressing, turning a mobile telephone into a mobile entertainment device The Company is currently working towards completion of the development agreementwith its first mobile telephone licensee and is engaged in discussions withother handset manufacturers to enter into similar development and licensingagreements which may lead to commercial deployment as early as the fourthquarter of 2005. The Company's memorandum of understanding with Jamster isindicative of the type of arrangement the Company is seeking to secure withvarious content providers intended to allow the Company to participate in ashare of the revenues generated from the download of popular mobile contentpre-converted to 3D by DDD. In addition to mobile telephones, the Company is also pursuing discussions withtoy manufacturers and consumer electronics companies where the addition of acompetitively priced 3D display is expected to create a competitive advantage inthe PMP market. • Consumer Television The consumer television platform also represents a new commercial market for DDDby virtue of the development agreement entered into with Arisawa in late 2004.Of the £140,000 development fee, £84,000 was earned in late 2004, £34,000 wasearned during the six months ended 30 June 2005, accounting for 12% of totalturnover, and the £22,000 balance is expected to be earned during the fourthquarter of 2005. The catalyst for this agreement was the development of the Company's real time2D to 3D conversion solution. This was a key technological achievement sincereal time 2D to 3D conversion extends beyond the conversion of DVDs to includemost mass-market media, including videocassettes and broadcast, satellite andcable signals. As the development agreement comes to a conclusion, the initial target marketfor the resulting TriDef Vision+ set top box, will be high-end home theatreowners. In conjunction with Arisawa, the Company will be targeting majorconsumer electronics firms and display manufacturers to produce and globallymarket the combined solution under license. • Desktop Displays and Notebook PCs The desktop displays and notebook PCs platform accounted for 29% of totalturnover at £82,000 (2004: 60% and £104,000). In March 2005, the licensing agreement with Sharp was expanded to include DDD'sTriDef DVD Player, a software product that enables the real time 2D to 3Dconversion of DVD content. The expanded licensing agreement coincided with theintroduction of the Actius AL3D, Sharp's second-generation switchable 2D/3Dnotebook PC. DDD resells the notebook PC and additional TriDef software applications tointernational business users. The AL3D is pre-loaded during manufacture withfive TriDef software products, including the TriDef DVD Player. The Company'squarterly royalty payments per unit doubled for the AL3D due to the inclusion ofthe TriDef DVD Player. Sales of Sharp's switchable 2D/3D desktop display, the LL-151-3D, which wasreleased in August 2004, have been sluggish. We attribute this to the fact thatconsumers are demanding desktop displays in the 17" - 19" range, as opposed to15", and the end-user price of Sharp's 15" display is several times that of astandard 2D display, restricting its sale to professional and business users. • Public Space Entertainment (Digital Signage) The PSE platform accounted for 6% of total turnover at £17,000 (2004: 40% and£68,000). During the first six months of 2005, the Company continued to shift resourcesaway from this platform to focus upon those with greater growth potential. TheCompany will, however, continue to monitor developments within the relevantdisplay manufacturers to ascertain their success, or otherwise, in refining thelarge, multi viewer 3D displays and pricing them competitively. NOTES TO EDITORS DDD, also known as Dynamic Digital Depth, is transforming the viewing experiencewith software applications for glasses-free 3D displays. Its patentedtechnologies enable 3D viewing without glasses; simple integration of computergraphics applications with 3D displays; supply of 3D content through 2D to 3Dconversion; and 3D transmission over existing networks. DDD is quoted on theLondon Stock Exchange's Alternative Investment Market (AIM: DDD). • A new category of flat screen LCD and plasma displays are beingdeveloped and marketed by major consumer electronics companies that providestereoscopic 3D images without the need for the viewer to wear glasses.Stereoscopic 3D images appear to have natural in and off-screen depth. 3Ddisplays have already been included with mobile telephones in Japan and indesktop PC displays and notebook computers in North America and Japan. • In 2003 and 2004, DoCoMo introduced two models of Sharp mobiletelephones that included a 3D LCD display developed by Sharp and softwaredeveloped by Sharp and Mercury 3D. DoCoMo sold approximately 2.8 million 3Dmobile telephones in Japan. • DDD's solutions provide an important bridge between conventionaltwo-dimensional (2D) applications and content and the new 3D displays. Normal2D pictures, video and computer graphics images are manipulated by DDD'spatented software enabling them to be displayed on 3D displays without requiringthe content to be created specially for a 3D display. DDD recently announcedthe ability to automatically convert any media to 3D without any pre processingof the 2D image. • DDD licenses these software applications, marketed under the TriDef(R)and DDD MobileTM brand names, to manufacturers for inclusion with the 3D displayproducts supplied to end users. DDD also licenses the software directly to endusers who already own 3D displays and through an international sales channel.Sharp Corporation and DDD entered into a multi year software licensing agreementin September 2003 that allows Sharp to include a bundle of five of DDD's 3Dsoftware applications with Sharp's Actius range of 3D notebook PCs sold in Japanand America. • DDD expects to license the DDD Mobile software library to additionalhandset manufacturers who wish to include 3D LCD displays in a variety ofwireless devices including next generation smart phones and PDAs. The licensingarrangements are expected to yield per unit royalties. These projects may alsoyield one-time development fees associated with assisting the manufacturer inthe successful integration of the DDD software with the device. • DDD also intends to enter into revenue sharing agreements with mobiletelephone operators (carriers) and various content providers for the conversionand delivery of existing libraries of premium wallpaper, animations and moviesto wireless subscribers who download 3D content that has been converted to 3D byDDD. • DDD is currently expanding its product range to allow its contentsolutions to be used on future 3D display products including consumertelevision. FURTHER INFORMATION Further information on DDD Group plc, its markets and products is available atwww.DDD.com. ENQUIRIES DDD Group plc Chris Yewdall, President and Chief Executive OfficerTel: (+1) 310 566-3340E-mail: [email protected] Mark McGowan, Chief Financial Officer Bell Pottinger Corporate & Financial Nick LambertTel: (+44) 20 7861-3232 DDD GROUP PLC CONSOLIDATED PROFIT AND LOSS ACCOUNT Unaudited Unaudited Audited 6 months ended 6 months ended 12 months ended 30 June 2005 30 June 2004 31 December 2004 Notes £'000 £'000 £'000 Turnover 283 172 322 Administrative expenses 3 (871) (1,235) (2,215) Operating loss (588) (1,063) (1,893) Net interest 10 12 23 Loss on ordinary activities before (578) (1,051) (1,870)taxation Tax on loss on ordinary activities 4 (21) - - Retained loss for the financial (599) (1,051) (1,870)period/year Basic loss per share 5 (1.3p) (2.9p) (4.8p) All transactions arose fromcontinuing operations. DDD GROUP PLC CONSOLIDATED BALANCE SHEET Unaudited Unaudited Audited as at as at as at 30 June 2005 30 June 2004 31 December 2004 Note £'000 £'000 £'000 Fixed assetsIntangible assets 1 36 25Tangible assets 99 137 73 100 173 98 Current assetsDebtors: due within one year 262 159 138Debtors: due after more than one year - 83 -Investment in money market deposits 405 126 -Cash at bank and in hand 316 927 1,429 983 1,295 1,567 Creditors: amounts falling duewithin one year (103) (116) (112) Net current assets 880 1,179 1,455 Net assets 980 1,352 1,553 Capital and reserves 6 980 1,352 1,553 DDD GROUP PLC CONSOLIDATED CASH FLOW STATEMENT Unaudited Unaudited Audited 6 months 6 months 12 months ended ended ended 30 June 2005 30 June 2004 31 December 2004 Note £'000 £'000 £'000 Net cash outflow from operating activities 7 (724) (1,015) (1,761) Returns on investmentsInterest received 10 12 23 Capital expenditurePurchase of tangible fixed assets (65) (13) (18)Sale of tangible fixed assets 26 - -Net cash outflow from capital expenditure (39) (13) (18) Management of liquid resourcesInvestment in money market deposits (612) - -Sale of money market deposit 207 735 861Sale of short-term bank deposit 45 - 33Net cash (outflow)/inflow from management (360) 735 894of liquid resources FinancingIssue of shares - 380 1,480Expenses paid in connection with issue of shares - (118) (135)Net cash inflow from financing - 262 1,345 (Decrease)/increase in cash (1,113) (19) 483 DDD GROUP PLC CONSOLIDATED STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES Unaudited Unaudited Audited 6 months 6 months 12 months ended ended ended 30 June 2005 30 June 2004 31 December 2004 £'000 £'000 £'000 Loss for the financial period/year (599) (1,051) (1,870) Currency differences on foreign currency net 26 (76) (139)investments Total recognised losses for the financial period (573) (1,127) (2,009)/year DDD GROUP PLC NOTES TO THE INTERIM FINANCIAL INFORMATION 1 BASIS OF PREPARATION The interim financial information as at and for the six month periods ended 30June 2005 and 30 June 2004 is unaudited and does not constitute statutoryaccounts for the purposes of section 240 of the Companies Act 1985. The resultsfor the year ended 31 December 2004 are an abridged version of the full accountsfor that year which have been filed with the Registrar of Companies. Theauditors' report on the accounts was unqualified. This interim financial information has been prepared under the historical costconvention and in accordance with applicable United Kingdom accountingstandards. The principal accounting policies of the Group have remainedunchanged during all periods presented and have been consistently applied in allmaterial respects. 2 BASIS OF CONSOLIDATION The Group financial statements consolidate those of the company and of itssubsidiary undertakings drawn up to 30 June 2005. 3 ADMINISTRATIVE EXPENSES During the six-months ended 30 June 2005, one of the Group's Australiansubsidiaries received a refund of research and development expenditures from theAustralian government amounting to approximately £107,000. No such research anddevelopment expenditure refund was received during the six-months ended 30 June2004. 4 TAX ON LOSS ON ORDINARY ACTIVITIES A tax charge of £21,000 has been recorded in connection with foreign withholdingtaxes on a sale recognized during the six-months ended 30 June 2005. No incometax charge or credit has been recorded in light of the tax losses generated bythe Group. There are substantial unrelieved tax losses of approximately £17,000,000, whicharise in the USA, United Kingdom, Canada and Australia which may be subject tolimitations in each country in respect of their availability to offset futuretaxable trading profits. Accordingly, no deferred tax asset has been recognizedfor these losses. 5 LOSS PER SHARE The calculation of the loss per share is based on the losses attributable toordinary shareholders divided by the weighted average number of shares in issueduring each period. The weighted average number of ordinary shares outstandingduring the six month periods ended June 30, 2005 and June 30, 2004 and the yearended 31 December 2004 were 46,566,547, 36,106,328 and 38,657,999, respectively. Potential share issues arising from the Group's share option schemes are notdilutive due to the losses incurred during each financial period. DDD GROUP PLC NOTES TO THE INTERIM FINANCIAL INFORMATION 6 RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS Unaudited Unaudited Audited 6 months ended 6 months ended 12 months ended 30 June 30 June 31 December 2005 2004 2004 £'000 £'000 £'000 Loss for the financial period/year (599) (1,051) (1,870)Exchange differences 26 (76) (139)Issue of shares - 432 1,532Expenses paid in connection with issue of shares - (118) (135)Net decrease in shareholders' funds (573) (813) (612) Shareholders' funds at beginning of period/year 1,553 2,165 2,165 Shareholders' funds at end of period/year 980 1,352 1,553 7 NET CASH OUTFLOW FROM OPERATING ACTIVITIES Unaudited Unaudited Audited 6 months ended 6 months ended 12 months ended 30 June 30 June 31 December 2005 2004 2004 £'000 £'000 £'000 Operating loss (588) (1,063) (1,893)Depreciation and amortisation 62 106 199(Gain)/loss on sale of tangible fixed assets (26) - 5(Increase)/decrease in debtors (169) (19) 47(Decrease)/increase in creditors (9) 10 7Foreign exchange differences 6 (49) (126)Net cash outflow from operating activities (724) (1,015) (1,761) DDD GROUP PLC NOTES TO THE INTERIM FINANCIAL INFORMATION 8 ANALYSIS OF CHANGES IN NET FUNDS At beginning Exchange At end of period Cash flow movement of period £'000 £'000 £'000 £'000Unaudited 6 months ended 30 June 2005Cash at bank and in hand 1,429 (1,113) - 316Investment in money market deposits - 405 - 405Short-term deposits 45 (45) - - 1,474 (753) - 721 Unaudited 6 months ended 30 June 2004Cash at bank and in hand 946 (19) - 927Investment in money market deposits 861 (735) - 126Short-term deposits 84 (33) (6) 45 1,891 (787) (6) 1,098 Audited 12 months ended 31 December 2004Cash at bank and in hand 946 483 - 1,429Investment in money market deposits 861 (861) - -Short-term deposits 84 (33) (6) 45 1,891 (411) (6) 1,474 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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