18th Sep 2006 08:59
3DM Worldwide PLC18 September 2006 3DM Worldwide plc Interim Results for the six months ended 30 June 2006 3DM Worldwide plc ("3DM" or "the Company"), which has developed and is nowexploiting a patented plastic polymer moulding process, announces its interimresults for the six months ended 30 June 2006. HIGHLIGHTS • Three contracts with initial annual sales value of £750,000 won; previously announced projects continue to progress well. • Scale production to commence at the end of September • Rationalisation savings amounting to £766,000 achieved in the half year • Turnover £160,000 (1H 2005: £567,000), full year 2005: £404,000 • Operating loss £2.2 million (H1 2005 £1.43 million, full year 2005: loss £4.78 million) Niall Mackay, Chief Executive, comments: "The first half of 2006 has seen a change in focus from the technicalcommissioning of the Alpha line, completed at the end of 2005, to marketing andpromoting the PIM process. The work completed has stimulated significantinterest around the globe. We are confident of further contract wins, and I lookforward to being able to report continued good progress at the end of the year." ENQUIRIES: 3DM Worldwide 02920 885858Niall Mackay, Chief ExecutiveDavid Shepley-Cuthbert, Finance Director College Hill 020 7457 2020Gareth David 3DM Worldwide plc Interim Results for the six months ended 30 June 2006 OPERATIONAL REVIEW The first half of 2006 has seen a change in focus from the technicalcommissioning of the Alpha line, completed at the end of 2005, to marketing andpromoting the PIM process. The work completed has stimulated significantinterest around the globe and it is particularly pleasing that this has beenachieved on a low level of marketing expenditure. As we prepare for scale production we have been developing our understanding ofthe role of various waste plastic streams utilised within PIM products. Thishas enabled us to ensure the appropriate raw material supply lines areavailable. The carbon foot print of the PIM process has been evaluated and comparesfavourably with other polymer processes a key consideration for customers intheir assessment of the environmental impact of their products. Contracts Won The projects announced in the AGM statement, dated 15 August 2006, continue toprogress well, notably the work in the retail sector and the recycling projectin Hungary. Following the China Plas exhibition in April a number ofencouraging leads have materialised. Collectively, the product development completed and in the progress of beingcompleted for clients resulted in the signing of three contracts with a totalinitial sales value of £750,000. This revenue will be recognised over the next15 months and it is expected that production for the first of these contractswill commence at the end of September. • Waste plastic will be utilised to produce sheet material for use aseco hoarding to protect construction sites. This product has been developed inconjunction with Bovis Lend Lease and Land Securities who have madecontributions to the cost of one of three moulds. Subject to satisfactorytrials of the finished product both companies have committed to take significantinitial production. It is anticipated that the first project to trial the ecohoarding will generate revenue of £50,000. The ability to produce sheetmaterial in volume will allow 3DM to supply test pieces and initial volumes forexisting enquiries for use as concrete forms and for use as floor linings forvans. The market for sheet material is significant and 3DM expects to supplycommercial volumes from the end of this year. • Close the Loop, a leading global recycler of imaging consumables isworking with 3DM to develop a range of pallet products utilising recycledstyrenic polymer material. Close the Loop are committed to selling 50% of theannual production from 3 moulds which is estimated as generating revenues of£400,000 per annum based on anticipated volumes. • 3DM has won the contract to produce a range of bathroom products. Theclient does not wish to be named for reasons of commercial confidentiality.Work is underway on product and mould designs and based on initial estimates ofvolumes this contract will generate revenues of £300,000 per annum. Funded development work continues with two other clients and discussions areadvancing with a number of other clients for contract production. 3DM has joined Build Off Site, an industry-wide organisation promoting the uptake of off site techniques, which has established relationships with keyplayers in the UK Construction Industry raising awareness of the benefits ofadopting the PIM process in the provision of alternative building materials andthe synergy with prefabrication off site. Rationalisation and Restructuring During the six months to 30 June 2006 steps have been taken to simplify thestructure of the business and reduce overhead costs. The process of closingdown a number of the subsidiary companies, which are no longer operational, isunderway The Camco operation in the Kyrgyz Republic has now been closed down.The Group accounting and administrative function has been successfullytransferred to Bedwas House. The cost savings which have been implemented represent a reduction of £766,000compared with the second half of 2005 and this, in turn, has helped reduce theoperating loss from £3.36 million in the second half of 2005 to £2.2 million inthe first half of this year. Outlook A number of parties are considering the purchase of a PIM production line withfour projects at advanced stages of discussion. When combined with the interestgenerated in licensing the PIM technology is particularly encouraging at thisstage in the commercialisation of the technology. Your board is confident of further contract wins in the remainder of this yearand looks forward to being able to report continued good progress at the end ofthe year. NIALL MACKAY Chief Executive Officer 18 September 2006 FINANCIAL REVIEW Results Turnover for the six months to 30 June 2006 was £0.16 million compared to £0.57million in the first half of 2005 and £0.40 million in the full year of 2005(the full year figure in 2005 reduced versus the first half of 2005 due tore-negotiation of the Silkwood royalty payments). The consolidated net operating loss was £2.2 million (H1 2005: loss £1.43million, full year 2005: loss £4.78 million). Consolidated losses before taxwere £2.45 million (H1 2005: loss £1.16 million) giving a loss per share of 3.55pence (H1 2005: loss 1.75 pence per share). Dividends No dividend payment is proposed. Trading Turnover included royalties from Silkwood and a proportion of licence incomewhich is being taken to income over the three year life of the licence. Cost ofsales covers material purchases for the Alpha and Beta lines used incommissioning and the production of samples. Administration expenses totalled £2.38 million compared to £2.1 million in H12005 and £3.21 million in H2 2005. The majority of the additional cost comparedto H1 2005 is accounted for by an increase in the depreciation incurred on plantand machinery and a charge of £28,750 in relation to the write-off of the costof investment in Highseas Technologies Limited which was disposed of during theperiod. Financing As reported in the annual accounts, Cornell Capital Partners L.P. ("Cornell")made a further advance of £1.5 million on 29 June 2006 increasing its debentureloan to £6.25 million including arrangement fees. Since 1 January 2006 to date,Cornell have converted £1.35 million at an average share price of 15.92p pershare. The currently outstanding debenture amounts to £4.9 million. Cornell isentitled to convert up to a maximum of £300,000 per week in to shares in thecompany at a price which is the lower of 90% of the volume weighted averageprice during either the 10 days prior to the closing date of the deals or the 10days prior to the conversion date. 3DM has the right to repay all or part ofthe combined debenture in cash. The Company also has a Standby Equity Distribution Agreement with Cornell to thevalue of £5,000,000 (SEDA) which is due to expire in September 2008. No drawdown has been made against this facility. DAVID SHEPLEY-CUTHBERT Finance Director 18 September 2006 INDEPENDENT REVIEW REPORT TO 3DM WORLDWIDE PLC Introduction We have been instructed by the company to review the financial information forthe six months ended 30 June 2006 on pages 5 to 10. We have read the otherinformation contained in the interim report and considered whether it containsany apparent misstatements or material inconsistencies with the financialinformation. Our report has been prepared in accordance with the terms of our engagement toassist the company in meeting the requirements of rules of the London StockExchange plc for companies trading securities on the AIM market and for no otherpurpose. No person is entitled to rely on this report unless such a person is aperson entitled to rely upon this report by virtue of and for the purpose of ourterms of engagement or has been expressly authorised to do so by our priorwritten consent. Save as above, we do not accept responsibility for this reportto any other person or for any other purpose and we hereby expressly disclaimany and all such liability. Directors' responsibilities The interim report, including the financial information contained therein, isthe responsibility of, and has been approved by the directors. The directors areresponsible for preparing the interim report in accordance with the rules of theLondon Stock Exchange plc for companies trading securities on the AIM marketwhich require that the half yearly report be presented and prepared in a formconsistent with that which will be adopted in the Company's annual accountshaving regard to the accounting standards applicable to such annual reports. Review work performed We conducted our review in accordance with guidance contained in Bulletin 1999/4issued by the Auditing Practices Board for use in the United Kingdom by auditorsof fully listed companies. A review consists principally of making enquiries ofgroup management and applying analytical procedures to the financial informationand underlying financial data and based thereon, assessing whether theaccounting policies and presentation have been consistently applied unlessotherwise disclosed. A review excludes audit procedures such as tests ofcontrols and verification of assets, liabilities and transactions. It issubstantially less in scope than an audit performed in accordance withInternational Standards on Auditing (U. K. and Ireland) and therefore providesa lower level of assurance than an audit. Accordingly we do not express anaudit opinion on the financial information. Review conclusion On the basis of our review we are not aware of any material modifications thatshould be made to the financial information as presented for the six monthsended 30 June 2006. BDO STOY HAYWARD LLP Chartered Accountants 125 Colmore Row Birmingham B3 3SD 15 September 2006 3DM Worldwide plc Interim Results for the six months ended 30 June 2006 UNAUDITED INTERIM ACCOUNTS FOR THE SIX MONTHS ENDED 30 JUNE 2006 The financial information contained within these accounts has been prepared bythe Directors who accept responsibility for the financial information presentedbelow and confirm that it has been properly presented in accordance withapplicable law. Except as stated in note 7, the interim accounts have beenprepared on the basis of the accounting policies set out in the group's 2005annual accounts. The financial information covers the six months ended 30 June 2006. Group Profit and Loss account Unaudited Unaudited Six Months ended Six Months ended 30 June 30 June Year ended 2006 2005 31 December 2005 £'000 £'000 £'000 As restated As restated TurnoverContinuing operations 4 160 567 404 160 567 404 Cost of sales (48) (63) (113)Gross profit 112 504 291 Administrative expenses (2,380) (2,102) (5,311)Other operating income 72 172 236 Operating Loss - continuing operations (2,196) (1,426) (4,784) Foreign currency gains on investments 5 - 269 247Interest receivable 1 - -Interest payable (252) (6) (297) Loss on ordinary activities before (2,447) (1,163) (4,834)taxation Tax on loss on ordinary activities - - 75 Loss on ordinary activities after (2,447) (1,163) (4,759)taxation Basic and diluted loss per ordinary 6 (3.55) p (1.75) p (7.15) pshare 3DM Worldwide plc Interim Results for the six months ended 30 June 2006 Group balance sheet at 30 June 2006 Unaudited Unaudited 30 June 30 June 31 December 2006 2005 2005 £'000 £'000 £'000 As restated As restated Fixed AssetsIntangible assets 11,615 12,373 11,996Tangible assets 4,864 4,293 5,158Investments 335 564 65 16,814 17,230 17,219 Current AssetsStock & work in progress 15 - -Debtors 7 2,177 2,776 2,330Cash at bank 1,401 654 4,507 3,593 3,430 6,837Creditors: amounts falling due withinone yearBank overdraft (2) (49) (229)Other loans (4,321) - (5,304)Trade creditors (762) (840) (1,047)Accruals and deferred income (317) (434) (392)Lease purchase (285) (247) (247)Other creditors (32) (957) (26) (5,719) (2,527) (7,245) Net current (liabilities)/assets (2,126) 903 (408) Total assets less current liabilities 14,688 18,133 16,811 Creditors: amounts falling due after oneyearLease purchase (2,546) (2,997) (3,073)Other loans (1,656) - (2,256)Net assets 10,486 15,136 11,482 Capital and reservesCalled-up share capital 1,865 1,670 1,670Share premium 31,248 29,992 29,992Share option reserve 8 1,310 1,200 1,310Profit and loss account (23,937) (17,726) (21,490) Shareholders' funds 10,486 15,136 11,482 3DM Worldwide plc Interim Results for the six months ended 30 June 2006 Cashflow statement Unaudited Unaudited 30 30 31 June June December 2006 2005 2005 £'000 £'000 £'000 Net cash outflow from operating activities (1,810) (984) (3,133) Returns on investments and servicing of financeInterest paid (252) (6) (270)Interest received 1 - - Net cash outflow from returns on investments (270)and servicing of finance (251) (6) Capital expenditure and financial investmentPurchase of tangible fixed assets (197) (1,761) (3,312) Net cash outflow from capital expenditure and (3,312)financial investment (197) (1,761) Net cash outflow before financing (2,258) (2,751) (6,715) FinancingIssue of equity share capital 1,451 36 36(Repayment)/Inception of finance leases (489) 3,244 3,320(Repayment)/Inception of loans (1,583) - 7,560 Net cash (ouflow)/inflow from financing (621) 3,280 10,916 (Decrease)/increase in cash in the period (2,879) 529 4,201 3DM Worldwide plc Interim Results for the six months ended 30 June 2006 STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES Unaudited Unaudited 30 30 31 June June December 2006 2005 2005 £'000 £'000 £'000 As restated As restated Loss for the period (2,447) (1,163) (4,759)Exchange translation differences onconsolidation - (79) (247) Total recognised gains and losses (2,447) (1,242) (5,006)for the period Prior period adjustment (see note 7) (1,265) Total gains and losses recognisedsince last financial statements (3,712) NOTES 1. Reconciliation of operating loss to net cash outflow from operating activities Unaudited Unaudited 30 30 31 December June 2006 June 2005 2005 £'000 £'000 £'000 As restated As restated Operating loss (2,196) (1,426) (4,784)Depreciation and amortisation 861 596 1,402Increase in stocks (15) - -Profit/(loss) on disposal of fixed assets 2 (64) (70)Foreign exchange movements - (3) -(Increase)/decrease in debtors 189 (707) 50(Decrease)/increase in creditors (351) 509 48Share option charge - 111 221 (1,510) (984) (3,133) 2. Reconciliation of net cash flow to movement in net (debt)/funds Unaudited Unaudited 31 30 30 December June 2006 June 2005 2005 £'000 £'000 £'000 (Decrease) /increase in cash in period (2,879) 529 4,201Cash (outflow)/inflow from changes in debt 1,583 - (7,560)Repayment/(inception) of finance leases 489 (3,245) (3,320)Movement in net debt arising from cash flows (807) (2,716) (6,679) Opening net (debt)/funds (6,602) 77 77 Closing net debt (7,409) (2,639) (6,602) 3. Analysis of changes in net (debt)/funds At 1 January At 30 June 2006 Cashflow 2006 £'000 £'000 £'000 Cash at bank 4,507 (3,106) 1,401Bank overdraft (229) 227 (2) 4,278 (2,879) 1,399 Debt less than one year (5,304) 983 (4,321)Debt more than one year (2,256) 600 (1,656)Finance leases (3,320) 489 (2,831) (10,880) 2,072 (8,808) Total (6,602) (807) (7,409) 4. Turnover The turnover for H1 2005 reflects accruals based on the original SilkwoodFinancial Corporation Inc. ("Silkwood") royalty payments of $2 million perannum. The Silkwood royalty payments were subsequently renegotiated to $500,000per annum and this revised amount has been reflected in the full year accounts. 5. Foreign currency gains/(losses) on investments The exchange movement on loans to group undertakings arises from a loan made bythe company to a US subsidiary in US dollars. The loan payable in thesubsidiary accounts is translated at the closing rate as part of the group's netinvestment in the US subsidiary. As such any gains or losses arising on theloan payable are taken directly to reserves as required by SSAP 20. 6. Loss per share The basic loss per share is calculated on the loss attributable to theshareholders of £2,447,375 (2005 - loss of £1,162,902) divided by the weightedaverage number of ordinary shares in issue during the period of 68,953,041 (2005- 66,524,950). 7. Debtors At 30 June 2006, there were amounts due from Value Plastics Technologies LLC of£553,013. These amounts have not been received and there is uncertainty as tothe timing of these receipts, however the directors have not made any provisionagainst those debts as they anticipate collection in full in due course. Debtors includes £92,628 in respect of amounts due from Medical Waste SolutionsLimited ("MWS"). This amount has been converted into a loan repayable to 3DMGroup Ltd over 24 months at an annual interest rate of 5%. Also included in debtors is £500,000 being an option fee for licenses that thecompany expects to exercise prior to expiry date 21 September 2007. 8. Prior year adjustment The group has adopted FRS 20 'Share based payment' for the first time. FRS 20 'Share based payment' requires the recognition of share based payments atfair value at the date of grant. Prior to the adoption of FRS 20, the grouprecognised the financial effect of the share based payment in the following way:when shares and share options were awarded to employees, a charge was made tothe profit and loss account based on the difference between the market value ofthe company's shares at the date of grant and the option exercise price inaccordance with UITF Abstract 17 (revised 2003) 'Employee Share Schemes'. Thecredit entry for this charge under both FRS 20 and UITF 17 was taken to theshare option reserve. In accordance with transitional provisions of FRS 20, the standard was appliedretrospectively as of 1 January 2005. For the half year to 30 June 2005 the impact of the adoption of FRS 20 is anadditional charge against income of £111,000. The impact of the adoption of FRS 20 on the results for the year to 31 December2005 was an additional charge against income of £210,000. The total prior year adjustment (including the amounts stated above) amounted to£1,265,000 and the accounts for the year ended 31 December 2005 have beenrestated to reflect this. There have been no share based payments in the six months to 30 June 2006. 9. Financial information The comparatives for the full year ended 31 December 2005 are not the Company'sfull statutory accounts for that year. A copy of the statutory accounts forthat year has been delivered to the Registrar of Companies. The auditors, BDOStoy Hayward LLP, report on those accounts was unqualified and did not contain astatement under section 237(2)-(3) of the Companies Act 1985. 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