Interim Results

30th Sep 2008 07:00



For Immediate Release: 30 September 2008

MicroEmissive Displays Group plc

("MED", the "Company" or "Group")

Interim Results for the Six Months Ended 30 June 2008

MED, the AIM listed designer and manufacturer of low power light emitting polymer displays, announces its unaudited results for the six months ended 30 June 2008. 

Overview

Good progress at volume manufacturing facility

Nine design wins for our unique eyescreen® product

Ongoing discussions with global digital camera manufacturers

Significant MOU contracts signed with Kaga Components Ltd and Universal Scientific Industrial Co. Ltd 

Appointment of Glenn Collinson as Non-Executive Director

Revenues for the period were £377,000 (2007: £0)

In discussions with interested parties with regard to re-financing the business

Commenting on the results, George Elliott, Chairman of MED, said: "MED's technology provides unique benefits which are being demanded by the market. Progress with our customer base is slower than expected but is progressing and management continue to believe that the market opportunities for the Company remain very significant."

He added: "As announced on 1 August 2008, the Company has, however, experienced slower than anticipated development of the market for consumer head mounted displays. Against this backdrop, the Board is reviewing its strategic options for the financing of the Company, which may include considering proposals for an offer for the Company."

For further information, please visit www.microemissive.com contact:

MicroEmissive Displays Bill Miller, Chief Executive  Graeme N Walker, Finance Director	0131 650 7764
Tavistock Communications Matt Ridsdale  Andrew Dunn	020 7920 3150
Arbuthnot Securities Neil Kirton John Prior	020 7012 2000

  

Chairman's Statement 

Introduction

The period under review has seen good progress at our manufacturing facility and increased activity in developing partner and potential customer relationships. As announced on 1 August 2008, the Company has, however, experienced slower than anticipated development of the market for consumer head mounted displays. Against this backdrop, the Board is reviewing its strategic options for the financing of the Company, which may include considering proposals for an offer for the Company.

Operational Review

Following the opening of our state-of-the-art production facility in Dresden, Germany, volume manufacturing has been achieved, with the quality of yields at the site outperforming our estimates. Over 100,000 units have now been shipped.

Customers/Partners

In May 2008, we announced nine design wins for our unique eyescreen® product. These agreements involve working with partners to design our component into a range of different electronic products. The Board believes that the completion of these projects will lead to the roll-out of new electronic products containing eyescreen® as their cornerstone technology.

Encouraging discussions continue with global digital camera manufacturers, where eyescreen® can be used as an electronic viewfinder for the next generation of cameras for the global market.

MED has continued to develop target markets for our display, with customers and potential partners beginning to recognise the product's superior image quality, lower power demand, lightweight construction and ease of integration, culminating in the signing of two Memorandum of Understanding ("MOU") contracts with leading global partners, post the period end.

Kaga Components Ltd, part of the Kaga Electronics Group, one of Japan's leading electronic component manufacturers, has signed a MOU with MED to use eyescreen® in their designs for electronic view finder modules, intended for the next generation of digital cameras being manufactured in the region. The MOU offers eyescreen® access to a substantial market as 120 million digital cameras were manufactured world wide last year. 

A second MOU was announced with Universal Scientific Industrial Co. Ltd (USI), a leading design and manufacturing services company, producing electronic hardware modules for a wide variety of applications from basic components to PC motherboards. This agreement sets out a collaborative framework for USI and MED to produce display modules for head mounted display units, targeted at the growing mobile media accessories market.

The Board is delighted that the Company is working with partners of this calibre. Both MOUs demonstrate that we are beginning to enjoy traction in the electronic view finder, and head-mounted display markets, two key target areas for the application of eyescreen®.

Management/Board Changes

During the period, we strengthened the Board with the appointment of Glenn Collinson as Non-Executive Director in April 2008. Glenn's knowledge of the semiconductor industry and his enthusiasm has been an asset to the Company and we look forward to his future contribution to the success of MED.

The senior management team has also been strengthened by the appointment of Kaz Okamura as VP of Sales for Japan and Echo Li as VP of Sales for Asia. Both are experienced individuals who bring with them a track record of success in their respective regions.

Following the departure of Paul Van Eynde as Sales and Marketing Director of MED, Bill Miller, Chief Executive, assumed the responsibilities for the sales and marketing function of the business, and Graeme Walker, Finance Director, took on the role of day-to-day management of MED. The Company has identified potential candidates for the role of Sales and Marketing Director and will make an appointment in due course.

Financial Review

Revenues for the period were £377,000 (2007: £0)

Pre-tax losses were £3.8m (2007: £3.1m)

Cash and Cash equivalents as at 30 June 2008: £2.1m (2007: £3.3m)

Cash and cash equivalents as at 29 September was £1.3m

Outlook

MED's technology provides unique benefits which are being demanded by the market. Progress with our customer base is slower than expected but is progressing and management continue to believe that the market opportunities for the Company remain very significant.

The directors have prepared detailed cash flow projections for the period to 31 December 2009 which demonstrate that the Group's cash resources are expected to be sufficient to enable it to continue to trade and meet its liabilities as they fall due for at least twelve months from the date of approval of the half-yearly report. However, a key element underpinning these cash flow forecasts is the completion of a corporate transaction to re-finance the business. Although the directors are in discussions with interested parties, there can be no certainty that a transaction will occur, and should it not go ahead, the Group's existing cash resources are likely to be exhausted by mid-December 2008.

G Elliott

Chairman

  Responsibility Statement of the directors in respect of the half yearly financial report

We confirm that to the best of our knowledge:

the condensed set of financial statements has been prepared in accordance with IAS 34 Interim Financial Reporting as adopted by the EU; 

the interim management report includes a fair review of the information required by: 

(a) DTR 4.2.7R of the Disclosure and Transparency Rules, being an indication of important events that have occurred during the first six months of the financial year and their impact on the condensed set of financial statements; and a description of the principal risks and uncertainties for the remaining six months of the year; and 

(b) DTR 4.2.8R of the Disclosure and Transparency Rules, being related party transactions that have taken place in the first six months of the current financial year and that have materially affected the financial position or performance of the entity during that period; and any changes in the related party transactions described in the last annual report that could do so.

Bill Miller	Graeme N Walker
Chief Operating Officer	Chief Finance Officer

  Condensed consolidated income statement

for the six month period ended 30 June 2008

				6 months		6 months		Year ended
				to 30 June		to 30 June		31 December
				2008		2007		2007
				(un-audited)		(un-audited)		(audited)
		Note		£000		£000		£000
Revenue				377		-		65
Changes in inventories of finished goods and work in progress				(117)		-		213
Raw materials and consumables used				(1,108)		(697)		(2,009)
Employee benefit cost				(1,344)		(1,371)		(2,774)
Depreciation and amortisation expenses				(608)		(166)		(721)
Other expenses				(1,098)		(882)		(1,871)
Operating loss before financing costs				(3,898)		(3,116)		(7,097)
Financial income				96		42		140
Financial expense				(42)		(36)		(152)
Net finance income/(expense)				54		6		(12)
Loss before income taxes				(3,844)		(3,110)		(7,109)
Income tax credit		2		580		883		883
Loss for the period attributable to equity holders of the Company				(3,264)		(2,227)		(6,226)
Loss per ordinary share (pence)
Basic and diluted loss per share (pence)		3		5.5p		5.1p		13.1p

Condensed consolidated statement of recognised income and expense

for the six month period ended 30 June 2008

		6 months		6 months		Year ended
		to 30 June		to 30 June		31 December
		2008		2007		2007
		(unaudited)		(unaudited)		audited
		£000		£000		£000
Foreign exchange translation differences for foreign operations		(44)		(35)		77
Income and expense recognised directly in equity		(44)		(35)		77
Loss for the period		(3,264)		(2,227)		(6,226)
Total recognised income and expense for the period attributable to equity holders of the Company		(3,308)		(2,262)		(6,149)

  Condensed consolidated balance sheet

as at 30 June 2008

		As at		As at		As at
		30 June		30 June		31 December
		2008		2007		2007
		(un-audited)		(un-audited)		(un-audited)
		£000		£000		£000
ASSETS
Property, plant and equipment		5,430		5,521		5,673
Intangible assets		1,909		2,005		2,020
Total non-current assets		7,339		7,526		7,693
Current assets
Inventories		96		-		213
Trade and other receivables		937		273		266
Cash and cash equivalents		2,146		3,330		6,293
Total current assets		3,179		3,603		6,772
Total assets		10,518		11,129		14,465
LIABILITIES
Loans and borrowings		382		1,141		380
Trade and other payables		556		415		927
Deferred income		381		-		380
Total current liabilities		1,319		1,556		1,687
Non-current liabilities
Loans and borrowings		182		546		367
Deferred income		1,907		2,477		2,098
Total non-current liabilities		2,089		3,023		2,465
Total liabilities		3,408		4,579		4,152
Net assets		7,110		6,550		10,313
Equity
Issued capital		11,558		11,401		11,558
Share premium account		20,149		12,789		20,149
Other reserve		6,814		6,814		6,814
Translation reserve		16		(52)		60
Profit and loss account		(31,427)		(24,402)		(28,268)
Total equity		7,110		6,550		10,313

  

Condensed consolidated cash flow statement

for the six month period ended 30 June 2008

		6 months to		6 months to		12 months to
		30 June		30 June		31 December
		2008		2007		2007
		(un-audited)		(un-audited)		(audited)
		£000		£000		£000
Cash flows from operating activities
Loss for the period		(3,264)		(2,227)		(6,226)
Adjustments for:
Depreciation		490		49		466
Amortisation		118		118		255
Foreign exchange loss		(44)		(36)		(366)
Equity settled share based payment transactions		105		127		260
Amortisation of grant income		(190)		-		(188)
Development expenditure capitalised		-		(57)		(57)
Net finance income		(54)		(6)		(60)
Income tax income		(580)		(883)		(883)
Operating loss before changes in working capital		(3,419)		(2,915)		(6,799)
Decrease/(increase) in inventories		117		-		(213)
(Increase)/decrease in trade and other receivables		(671)		697		704
(Decrease)/increase in trade and other payables		(371)		136		(78)
Interest paid		(42)		(36)		(80)
Interest received		96		42		140
Income tax received		580		883		883
Cash used by operations		(3,710)		(1,193)		(5,443)
CASH FLOWS FROM INVESTNG ACTIVITIES
Inward investment grants received		-		2,477		2,667
Acquisition of property, plant and equipment and intangible assets		(254)		(1,085)		(1,365)
Net cash flow from investing activities		(254)		1,392		1,302
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from the issue of share capital		-		-		7,517
Secured loan received		-		1,000		1000
Repayment of borrowings		(158)		(163)		(330)
Repayment of finance lease liabilities		(25)		(50)		(97)
Net cash from investing activities		(183)		787		8,090
Net (decrease)/increase in cash and cash equivalents		(4,147)		986		3,949
Cash and cash equivalents at start of period		6,293		2,344		2,344
Cash and cash equivalents at end of period		2,146		3,330		6,293

  

Notes

(forming part of the financial statements)

1. Accounting policies - basis of preparation

The condensed interim financial statements set out above contain the interim financial information of Microemissive Displays Group PLC ("the Company") and its subsidiaries (together referred to as "the Group") for the six month period ended 30 June 2008. 

The financial information set out in these interim financial statements has been prepared in compliance with IAS 34 Interim Financial Reporting as adopted by the EU. They do not include all of the information required for full annual financial statements and should be read in conjunction with the consolidated financial statements of the Group as at and for the year ended 31 December 2007. The condensed consolidated financial statements were approved by the Board of Directors on 25 September 2008.

The comparative figures for the financial year ended 31 December 2007 are not the Company's statutory accounts for that financial year. Those accounts have been reported on by the Company's auditors and delivered to the registrar of companies. The report of the auditors was i) unqualified ii) did not include a reference to any matters to which the auditors drew attention by the way of emphasis without qualifying their report iii) did not contain a statement under section 237 (2) or (3) of the Companies Act 1985.

The Interim condensed consolidated financial statements for the current and comparative periods are unaudited.

The directors have prepared detailed cash flow projections for the period to 31 December 2009 which demonstrate that the Group's cash resources are expected to be sufficient to enable it to continue to trade and meet its liabilities as they fall due for at least twelve months from the date of approval of the half-yearly report. The key element underpinning the cash flow forecasts is the completion of a corporate transaction and the directors are currently in negotiations with interested parties. Completion of the transaction is, however, not certain and should it not go ahead the directors forecast that the Group's cash resources will be used by mid-December 2008.

The uncertainty in relation to this matter may cast significant doubt on the Group's ability to continue as a going concern. The Group may, therefore, be unable to continue realising its assets and discharging its liabilities in the normal course of business but the half-yearly report does not include any adjustments that would result from the going concern basis of preparation being inappropriate.

2. Taxation

No provision for income taxes is required due to the availability of tax losses. At 30 June 2008, corporation tax losses and other deferred tax temporary differences were approximately £13,000,000. The tax credit is on respect of research tax allowances received.

3. Loss per share

		6 months to		6 months to		Year ended
		30 June		30 June		31 December
		2008		2007		2007
		£000		£000		£000
		(un-audited)		(un-audited)		(audited)
Loss for the period attributable to ordinary shareholders (basic and diluted)		(3,264)		(2,227)		(6,226)
Basic loss per share - pence		5.5p		5.1p		13.1p
Diluted loss per share - pence		5.5p		5.1p		13.1p

3. Loss per share (continued)

The weighted average number of ordinary shares used in the calculation of basic and 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
		2008		2007		2007
		No of Shares		No of Shares		No of Shares
		'000		'000		'000
Issued ordinary shares at start of the period		59,352		43,632		43,632
Effect of shares issued during the period		-		-		3,765
Weighted average number of ordinary shares for the period (basic and diluted)		59,352		43,632		47,397

4. Reserves 

	Share	Share	Translation	Merger	Retained
	Capital	Premium	Reserve	Reserve	Earnings	Total
	£000	£000	£000	£000	£000	£000
Balance at 1 January 2007	11,401	12,789	(17)	6,814	(22,302)	8,685
Total recognised income and expense	-	-	(35)	-	(2,227)	(2,262)
Share based payments	-	-	-	-	127	127
Balance at 30 June 2007	11,401	12,789	(52)	6,814	(24,402)	6,550
Total recognised income and expense	-	-	112	-	(3,999)	(3,887)
Issue of ordinary shares	157	7,360	-	-	-	7,517
Share based payments	-	-	-	-	133	133
Balance at 31 December 2007	11,558	20,149	60	6,814	(28,268)	10,313
Total recognised income and expense	-	-	(44)	-	(3,264)	(3,308)
Share based payments	-	-	-	-	105	105
Balance at 30 June 2008	11,558	20,149	16	6,814	(31,427)	7,110

5. Related parties

Identity of Related Parties

The Company has a related party relationship with its subsidiaries and with its directors.

ENDIR PUUUCBUPRGMB

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Related Shares:

MED.L