18th Sep 2007 07:02
MicroEmissive Displays Group PLC18 September 2007 Strictly embargoed: 7am, 18 September 2007 MicroEmissive Displays Group plc ("MED" or the "Company") Unaudited Interim Results For the six months ended 30 June 2007 MED, the AIM listed designer and manufacturer of low power microdisplays usinglight emitting polymers for portable consumer electronics products, announcesits unaudited results for the six months ended 30 June 2007 and its intention toraise approximately £7.5 million (net of expenses) by way of a conditionalplacing. Highlights: •Manufacturing facility in Dresden officially opened •First working samples produced and shipped •Sales and distribution network extended across Europe and Asia •Projected capital grants totalling £2.4 million now received Commenting on the results, George Elliott Chairman of MED said: "The objective of installing the manufacturing line in Dresden and preparing itfor volume production has been achieved. MED is now in a position to commencevolume production and extract value from its sales pipeline. The Company isbuilding traction with potential customers, the order book is growing and theprospects for the second half of 2007 and in particular for 2008 are promising." On the fundraising, he added: "These additional funds will ensure that on completion of the conditionalplacing, MED has the financial resources required to ramp production and executemanagement's strategy for growth." For further information, please contact: MicroEmissive Displays 0131 650 7764Bill Miller, Chief ExecutiveGraeme Walker, Finance Director Tavistock Communications 020 7920 3150Matt RidsdaleAndrew Dunn Arbuthot Securities 020 7012 2000Neil KirtonJohn Prior Chairman's Statement Introduction This is my first statement as your new Chairman and I join the Company at anexciting time in its development. I am pleased that during the reported periodthe Company made significant progress towards its goal of achieving volumeproduction. During the period, MED took very important steps towards volume production withour tool set installed and qualified, negotiation of sales distributionagreements and additional loan finance secured. Importantly, ourstate-of-the-art manufacturing facility in Dresden, Germany, was officiallyopened in May and the first working samples of our next-generation eyescreenTMwere produced and shipped to potential customers in July. Good progress has beenmade in all aspects of the business and the operational milestones set out inthe Company's preliminary results statement have been achieved. MED continues to enjoy support from its partners and shareholders and I ampleased to announce a conditional placing by Arbuthnot Securities with certaininstitutional investors to raise £7.5 million (net of expenses), conditionalupon, inter alia, shareholder approval at an EGM to be held on 12 October 2007.Further details of the placing are outlined in a separate announcement to beissued this morning and a circular to be sent out to shareholders todaycontaining a notice convening the EGM. The proceeds pursuant to this placing will be used to strengthen the Company'sbalance sheet and fund the working capital requirements anticipated as a resultof the ramping of production, providing comfort to existing and prospectivecommercial partners. Operational Review During the period, MED has further strengthened its position with substantialprogress at the operational level. As mentioned above, our manufacturingfacility in Dresden was opened in May and includes a 396 square metre clean roomand is situated alongside the Fraunhofer Institute, recognised internationallyas a centre of excellence for polymer and organic semiconductor innovation. Ourstaff in Dresden now number 23 and we will continue to hire for the productionramp through the remainder of 2007 and 2008. The development of a sales network is a key element of creating demand for oureyescreenTM product. In January, the Company signed a stocking and distributionagreement with Cytech Technology Limited, one of the leading distributors ofelectronic components in China and Hong Kong. Alongside this agreement, theCompany announced in May that it had secured further exclusive distributionagreements covering Hong Kong, China, Taiwan, Singapore, Malaysia, India, Korea,Israel and much of Europe. Broadening and enhancing our sales network remains apriority and MED will continue to seek further agreements of this nature. Financial Review In line with our expectations, product shipments commenced in the second half of2007, as a result, no revenues were generated during the period (2006: £42,000)and we are reporting pre-tax losses for the six months at £3.1 million (2006: £3.4 million). Cash and cash equivalents as at 30 June were £3.3 million (30 June2006: £ 4.1 million). In April, MED successfully secured an asset financing loan facility of up to£3.5 million with Noble Venture Finance Limited, part of Noble Group Limited. £1million of this facility was drawn down during the period. In conjunction with this additional financing facility, I am pleased to reportthat all grants have been received from the State of Saxony totalling £2.4million. In addition, £0.9 million was also received from HMRC in respect ofresearch and development tax credits for the financial years 2004 and 2005. The interim financial information has been prepared on the basis of therecognition and measurement requirements of International Financial ReportingStandards (IFRSs) in issue that are either endorsed by the EU and effective at31 December 2006 or are expected to be endorsed and effective at 31 December2007, the company's first annual reporting date at which it is required to adoptIFRSs. There are a number of presentational changes but there are no changes tothe previously reported results. Development costs from the point of producingthe first working samples of our next-generation eyescreenTM have beencapitalised in line with our accounting policy for research and developmentcosts. Appointments At the Company's AGM, held on 30 May 2007, I was appointed to the role ofChairman of MED, replacing outgoing Chairman Christopher Smith. During his tenure, Christopher helped guide the Company through a critical stagein its development and assembled our management team led by Chief Executive,Bill Miller. On behalf of the board, staff and shareholders I would like toreiterate our thanks to Christopher for his hard work and commitment to MED andwish him well for the future. A number of additions and changes have been made to the executive managementteam over the past two years and I believe that the calibre of the new team isextremely high and their collective experience will be invaluable as thebusiness moves forward. I would like to thank all of the Company's staff in both Edinburgh and Dresdenfor their commitment and efforts in driving MED forward in this exciting phaseof its development. Outlook With our objective of installing the manufacturing line and preparing it forvolume production having now been achieved, MED is now in a position to commencevolume production and extract value from its sales pipeline. The Company isbuilding traction with potential customers, the order book is growing, and theprospects for the second half of 2007 and in particular for 2008 are promising. Consolidated income statement for the six month period ended 30 June 2007 6 months to 6 months to Year ended 30 June 30 June 31 December 2007 2006 2006 (un-audited) (un-audited) (un-audited) Note £000 £000 £000 Revenue - 42 31 Administrative expenses (987) (837) (1,922) Research and development (1,863) (2,439) (4,003) Sales and marketing (266) (280) (651) Other operating income - 38 96 ------- ------- ------- Operating loss before (3,116) (3,476) (6,449)financing costs Financial income 42 146 238 Financial expenses (36) (36) (45) ------- ------- ------- Loss before taxation (3,110) (3,366) (6,256) Taxation 2 883 - - ------- ------- ------- Loss for the period (2,227) (3,366) (6,256)attributable to equityholders of the parent ------- ------- ------- Loss per ordinary shareBasic and diluted loss 3 5.1p 19.6p 26.4pper share ------- ------- ------- Turnover and loss on ordinary activities before taxation for the current andprevious year relate wholly to continuing activities. Consolidated statement of recognised income and expensefor the six month period ended 30 June 2007 £000 £000 £000 Loss for the period (2,227) (3,366) (6,256) Net exchange differences on restatement of (35) - (17)overseas subsidiary ------- ------- ------- Total recognised income and expense for the (2,262) (3,366) (6,273)period attributable to equity holders of theparent ------- ------- ------- Consolidated balance sheet as at 30 June 2007 As at As at As at 30 June 30 June 31 December 2007 2006 2006 (un-audited) (un-audited) (un-audited) £000 £000 £000 Non-current assets Property, plant and 5,521 1,009 4,830equipment Intangible assets 2,005 1,777 1,720 ------- ------ ------Total non-current assets 7,526 2,786 6,550 ------- ------ ------ Current assets Trade and other 273 162 3,370receivables Cash and cash 3,330 4,138 2,344equivalents ------- ------ ------Total current assets 3,603 4,300 5,714 ------- ------ ------ Total assets 11,129 7,086 12,264 ------- ------ ------ Current liabilities Trade and other payables 1,141 561 1,005 Loans and overdrafts 314 - - Obligations under 101 8 97finance leases ------- ------ ------ Total current 1,556 569 1,102liabilities ------- ------ ------ Non-current liabilities Loans and overdrafts 523 - - Obligations under 23 - 77finance leases Deferred income 2,477 - 2,400 ------- ------ ------ Total non-current 3,023 - 2,477liabilities ------- ------ ------Total liabilities 4,579 569 3,579 ------- ------ ------ Net assets 6,550 6,517 8,685 ------- ------ ------ Equity Called up share capital 11,401 11,135 11,401 Share premium account 12,789 8,052 12,789 Other reserve 6,814 6,814 6,814 Foreign exchange reserve (52) - (17) Profit and loss account (24,402) (19,484) (22,302) -------- -------- -------- Total Equity 6,550 6,517 8,685 -------- -------- -------- Consolidated cash flow statement for the six month period ended 30 June 2007 6 months to 6 months to 12 months to 30 June 30 June 31 December 2007 2006 2006 (un-audited) (un-audited) (un-audited) £000 £000 £000 Cash flows from operating activities Loss for the period (3,110) (3,366) (6,256) Adjustments for: Depreciation 49 181 382 Amortisation 118 140 285 Foreign exchange (gains)/losses (36) - (17) Share option expense 127 81 154 Grant income - (38) (96) -------- --------- --------- Operating loss changes before changes (2,852) (3,002) (5,548)in working capital Decrease in inventories - 150 150 Decrease/(increase) in trade and other 697 (33) (3,241)receivables Increase in trade and other payables 136 9 2,854 -------- --------- --------- Cash used by operations (2,019) (2,876) (5,785) Income taxes received 883 - - -------- --------- --------- (1,136) (2,876) (5,785) -------- --------- --------- Investing activities Inward investment grants received 2,477 - - Acquisition of property, plant and (1,142) (774) (4,677)equipment and intangible assets -------- --------- --------- Net cash flow from investing 1,335 (774) (4,677)activities -------- --------- --------- Cash flows from financing activities Proceeds from the issue of share - - 5,002capital New finance raised 1,000 - - Repayment of borrowings (163) - - Repayment of finance lease liabilities (50) (278) (262) -------- --------- ---------- Net cash inflow from financing 787 (278) 4,740activities -------- --------- ---------- Net increase / (decrease) in cash and 986 (3,928) (5,722)cash equivalents Cash and cash equivalents at start of 2,344 8,066 8,066period -------- --------- ---------- Cash and cash equivalents at the end 3,330 4,138 2,344of period -------- --------- ---------- Notes (forming part of the financial statements) 1 Accounting policies - basis of preparation Microemissive Displays Group PLC ("the Company") is registered in Scotland. Thisinterim report contains the financial information of the Company and itssubsidiaries (together "the Group") for the six month period ended 30 June 2007.It was approved by the directors on 17 September 2007. The financial information is prepared on the historic cost basis. The comparative figures for the financial year ended 31 December 2006 are notthe company's statutory accounts for that financial year. Those accounts, whichwere prepared under UK GAAP, have been reported on by the company's auditors anddelivered to the registrar of companies. The report of the auditors was (i)unqualified, (ii) did not include a reference to any matters to which theauditors drew attention by way of emphasis without qualifying their report, and(iii) did not contain a statement under section 237(2) or (3) of the CompaniesAct 1985. The AIM Rules require that the next annual consolidated financial statements ofthe company, for the year ending 31 December 2007, be prepared in accordancewith International Financial Reporting Standards (IFRSs) as adopted by the EU("adopted IFRSs"). This interim financial information has been prepared on the basis of therecognition and measurement requirements of adopted IFRSs as at 30 June 2007that are effective (or available for early adoption) at 31 December 2007, theGroup's first annual reporting date at which it is required to use adopted IFRSs. Based on these adopted IFRSs, the directors have applied the accountingpolicies, which they expect to apply when the first annual IFRS financialstatements are prepared for the year ending 31 December 2007. However, the adopted IFRSs that will be effective (or available for earlyadoption) in the annual financial statements for the year ending 31 December2007 are still subject to change and to additional interpretations and thereforecannot be determined with certainty. Accordingly, the accounting policies forthat annual period will be determined finally only when the annual financialstatements are prepared for the year ending 31 December 2007. The accounting policies set out below in note 4 have been applied consistentlyto all periods presented in this interim financial information and in preparingan opening IFRS balance sheet at 1 January 2006 for the purposes of thetransition to IFRS. As required by IFRS 1, the impact of the transition from UK GAAP to IFRSs isexplained in note 5. 2 Taxation No provision for corporation tax is required due to the availability of taxlosses. The tax credit represents research and development tax credits received.At 30 June, corporation tax losses and other deferred tax temporary differenceswere approximately £22,000,000. 3 Loss per share 6 months to 6 months to Year ended 30 June 30 June 31 December 2007 2006 2006 £000 £000 £000 (un-audited) (un-audited) (un-audited) Loss for the period attributable to (2,227) (3,366) (6,256)ordinary shareholders (basic anddiluted) ------- ------- ------- Basic loss per share - pence 5.1p 19.6p 26.4p ------- ------- -------Diluted loss per share - pence 5.1p 19.6p 26.4p ------- ------- ------- The weighted average number of ordinary shares used in the calculation of basicand diluted earnings per share for each period were calculated as follows: 6 months to 6 months to Year ended 30 June 30 June 31 December 2007 2006 2006 No of No of No of Shares Shares Shares Issued ordinary shares at start of the 43,632,206 17,132,206 17,132,206period Effect of shares issued during the period - - 6,534,247from the exercise of employee share options ---------- ---------- ----------Weighted average number of ordinary 43,632,206 17,132,206 23,666,453shares at the end of the period (basicand diluted) ---------- ---------- ---------- 4 Group accounting policies The Basis of preparation of the interim financial information is stated in note1. The significant policies of the Group which have altered as a result of theadoption of IFRSs are set out below. (a) Intangible assets (i)Research and Development Expenditure on research activities undertaken with the prospect of gaining newscientific or technical knowledge and understanding is recognised in the incomestatement. Where a product is technically feasible, production and sale are intended, amarket exists and sufficient resources are available to complete the project,development costs are capitalised and amortised on a straight line basis overthe estimated useful life of the respective product. The Group believes itscurrent process for developing products is essentially completed when workingsamples are produced and available to ship which confirms technical feasibilityof the products to be manufactured and sold to the commercial marketplace. Whereno internally generated intangible asset can be recognised, developmentexpenditure is recognised as an expense in the period in which it occurs. (ii) Computer Software Acquired computer software licences are capitalised on the basis of the costsincurred to acquire and bring into use the specific software. These costs areamortised over two years. Costs associated with developing or maintaining computer software programmes arerecognised as an expense as incurred. Costs that are directly associated withthe production of identifiable and unique software items controlled by theGroup, and that will probably generate economic benefits exceeding costs beyondone year are capitalised as intangible assets. Computer software development costs recognised as assets are amortised over twoyears. 5 Explanation of transition to IFRSs As stated in note 1, these are the Group's first consolidated interim financialstatements for part of the period covered by the first IFRS annual consolidatedfinancial statements to be prepared in accordance with adopted IFRSs. The accounting policies set out above have been applied in preparing theconsolidated financial statements for the six month period ended 30 June 2007,the comparative information for the six month period ended 30 June 2006, for theyear ended 31 December 2006 and in the preparation of the opening IFRS balancesheet at 1 January 2006 (the Group's date of transition). In preparing its opening IFRS balance sheet, comparative information for the sixmonths ended 30 June 2006 and for the year ended 31 December 2006, the Group hasadjusted amounts reported previously in financial statements prepared inaccordance with its old basis of accounting (UK GAAP). An explanation of how the transition from UK GAAP to IFRSs has affected theGroup's financial position, financial performance and cash flows is set out inthe following tables and the notes that accompany the tables. 5 Explanation of transition to IFRSs (continued) (a) Reconciliation of Equity 1 January 2006 30 June 2006 31 December 2006 UK GAAP IFRS UK GAAP IFRS UK GAAP IFRS in IFRS re- in IFRS re- in IFRS re- format classification IFRS format classification IFRS format classification IFRS £000 £000 £000 £000 £000 £000 £000 £000 £000 AssetsProperty 1,910 - 1,910 1,009 - 1,009 4,907 (77) 4,830plant andequipment Intangibles 423 - 423 1,777 - 1,777 1,643 77 1,720 ------ ------- ------- ------- ------- ------- ------- ------ -------Total non 2,333 - 2,333 2,786 - 2,786 6,550 - 6,550currentassets ------ ------- ------- ------- ------- ------- ------- ------ -------Inventories 150 - 150 - - - - - - Trade and 129 - 129 162 - 162 3,370 - 3,370otherreceivables Cash and 8,066 - 8,066 4,138 - 4,138 2,344 - 2,344cashequivalents ------ ------- ------- ------- ------- ------- ------- ------ -------Total 8,345 - 8,345 4,300 - 4,300 5,714 - 5,714currentassets ------ ------- ------- ------- ------- ------- ------- ------ -------Total 10,678 - 10,678 7,086 - 7,086 12,264 - 12,264assets ------ ------- ------- ------- ------- ------- ------- ------ -------LiabilitiesTrade and 552 - 552 561 - 561 1,005 - 1,005otherpayables Loans and - - - - - - - - -overdrafts Obligations 324 - 324 8 - 8 97 - 97underfinance leases ------ ------- ------- ------- ------- ------- ------- ------ -------Total 876 - 876 569 - 569 1,102 - 1,102currentliabilities ------ ------- ------- ------- ------- ------- ------- ------ -------Deferred - - - - - - 2,400 - 2,400Income Obligations - - - - - - 77 - 77underfinance leases ------ ------- ------- ------- ------- ------- ------- ------ -------Total non - - - - - - 2,477 - 2,477currentliabilities ------ ------- ------- ------- ------- ------- ------- ------ -------Net assets 9,802 - 9,802 6,517 - 6,517 8,685 - 8,685 ------ ------- ------- ------- ------- ------- ------- ------ -------Equity 11,136 - 11,136 11,136 - 11,136 11,401 - 11,401Called upsharecapital Share 8,052 - 8,052 8,052 - 8,052 12,789 - 12,789premiumaccount Other 6,814 - 6,814 6,814 - 6,814 6,814 - 6,814reserve Foreign - - - - - - (17) - (17)exchangereserve Profit and (16,200) - (16,200) (19,485) - (19,485) (22,302) - (22,302)lossaccount -------- ------- -------- ------- ------- -------- -------- ----- -------- 9,802 - 9,802 6,517 - 6,517 8,685 - 8,685 -------- ------- -------- ------- ------- -------- -------- ----- -------- (a) Computer software costs were capitalised as tangible fixed assets under UKGAAP. In accordance with IFRS, computer software costs are capitalised asintangible assets. This resulted in the reclassification from property plant andequipment to intangible assets. (b) Reconciliation of profit 6 months ended 30 June 2006 Year ended 31 December 2006 UK GAAP in UK GAAP in IFRS format IFRS IFRS format IFRS £000 £000 £000 £000 Revenue 42 42 31 31 Administration (837) (837) (1,922) (1,922)costs Research and (2,439) (2,439) (4,003) (4,003)developmentcosts Sales and (280) (280) (651) (651)marketing Other 38 38 96 96operatingincome ------- ------- ------- -------Operating loss (3,476) (3,476) (6,449) (6,449)beforefinancingcosts Financial 146 146 238 238incomeFinancial (36) (36) (45) (45)expenses ------- ------- ------- -------Loss before (3,366) (3,366) (6,256) (6,256)taxationTaxation - - - - ------- ------- ------- -------Loss for (3,366) (3,366) (6,256) (6,256)period ------- ------- ------- ------- (c) Reconciliation of cash flows IAS7 prescribes both the definition of cash and cash equivalents and the formatfor analysing the changes in cash and cash equivalents in the cash flowstatement. (i) Definition of cash and cash equivalents: Under UK GAAP, the Group netted bank overdrafts against cash balances andanalysed the movement in net debt in the cash flow statement. IAS7 is focussedon the movement in cash and cash equivalents rather than net debt and requiresthat bank overdrafts should be netted against cash balances only if they areshort term in nature, repayable on demand and form an integral part of theGroup's cash management practices. The borrowings of the Group do not meet thistest and so movements in borrowings are analysed, as required, within financingactivities. (ii) Cash flow format: Under IFRS, cash flows are analysed between operating, investing and financingactivities. There are therefore a number of presentational differences with UKGAAP which have no overall effect on cash flows. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
MED.L