Year end trading update and Notice of Results

20 February 2014

DDD Group PLC

Year end trading update and Notice of Results

DDD Group plc (AIM: DDD, OTCQX: DDDGY, 'DDD,' the 'Group'), the 3D solutions company, today issues a trading update for the financial year ended 31 December 2013.

The Group expects total revenue for the full year to be approximately $3.4 million (2012: $8.6m), owing to the previously disclosed fall in demand for the Group's 2D to 3D conversion software as the global PC market continues to decline. 

Gross margin is expected to be 99%, up two percentage points from 2012. Cash and receivables (including earned royalties) at the end of the period were in excess of $3 million of which net cash was $2.7 million (net cash as at 31 Dec 2012: $3.6m) and the Group has no debt.

During the year over 11 million units shipped (2012: 15m) due to fewer PC software licenses shipped and a decline in shipments of chips for use in PC monitors and Blu-ray players. This brings the cumulative number of consumer devices shipped with TriDef 3D to approximately 38 million units worldwide at the end of December 2013 (2012: 26 million). Shipments of the Group's mobile software licenses commenced during the second half of 2013 in the new generation of glasses-free 3D tablets.

More positively, following the strategic investment and collaboration with InterDigital, Inc. which was announced in mid-September, the new video encoding technologies combining DDD's video pre-processing technologies with InterDigital's user adaptive video streaming technology were integrated towards the end of the year. These new technologies were demonstrated at the International CES show in Las Vegas in January 2014 and will be demonstrated at Mobile World Congress in Barcelona next week.

In addition to the application of the Group's new video pre-processing solutions to improve the picture quality of streaming 2D movies, the Group has also begun to explore the application of these new solutions for the large addressable market of video conferencing, in which the very same benefits of bandwidth reduction and picture quality improvements are expected. The latest gesture sensing technologies, such as the Intel RealSense 3D camera which was demonstrated extensively at CES, simplify the creation of 3D depth information in real time for PC and tablet devices. The Group has received a positive response to its proposals from existing and prospective customers who are planning to introduce gesture sensors in their mobile computing products before the end of 2014.

The Group continues to make progress in its initiative to secure a partner to assert the Group's international patent rights and is involved in detailed discussions with multiple parties. The goal of this initiative is to pursue patent licensing opportunities to complement the Group's technology licensing programme. The Group will provide a further update on this initiative in due course.

The Group continues to grow the Yabazam! 3D movie streaming service which has now been downloaded over 700,000 times by users of Samsung and LG Smart TVs. The content library doubled to over 120 3D movie titles (2012: 63 titles), available to US customers as a monthly subscription service and to international customers on a pay-per-view basis.

In recognition of the strong international use of the service, the service will shortly become available in multiple languages including Russian, Portuguese, Polish, German, Spanish and Korean. The Yabazam service has also been introduced on the Google Play store for the new 3D tablets, further expanding the range of 3D content available to 3D tablet users.

The Group has broadened the reach of its popular TriDef® 3D game and video conversion apps to include the latest Smart TVs, with a specific focus on delivering competitively packaged, high quality 3D software solutions for Chinese 3D TV manufacturers. The response to these new TriDef 3D Smart TV apps has been positive and the Group is engaged in active discussions with leading TV suppliers in China to introduce these new Smart TV apps during 2014.

Chris Yewdall, DDD's Chief Executive Officer, said:

"2013 proved to be a challenging year for the Group as the competitive pressures from the tablet market had a material effect on the overall PC market, resulting in a substantial decline in shipments of DDD's TriDef 3D PC software.

"Shipments of our TriDef IP in chips for use in TVs were stable. There was however a small decline in total chip shipments as fewer chips were used in PC monitors and Blu-ray players. At the same time we are encouraged by increasing levels of demand for TriDef 2D to 3D conversion products in the emerging 3D tablet market and also by the positive response to the new TriDef 3D Smart TV apps from TV manufacturers in China.

"In response to the slowdown in demand from the PC market, steps were taken during the year to adjust headcount and expenditures to ensure that resources are available for the development of the new technologies aimed at growth opportunities in the 2D market.

"During the year, we also introduced a new range of innovative solutions aimed at these new markets, which resulted in a strategic partnership with InterDigital Inc. As we continue to expand the scope of these new solutions, we are particularly encouraged at the level of interest being shown in their potential for improving video conferencing on PCs and mobile devices.

"For 2014, we will continue to focus on securing new licensees for the latest 2D video processing solutions, supporting our existing licensees in the 3D market as they introduce new tablet and Smart TV products and securing a partner to expand the licensing of the Group's international patent library."

DDD expects to publish its full year results for 2013 during the week of 14 April 2014.

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About DDD Group

DDD transforms the visual experience. Its advanced imaging and TriDef® solutions are licensed by leading brands including Samsung, LG and Lenovo for use in TVs, tablets and PCs. Over 38 million 3D products have been shipped by DDD's licensees worldwide. DDD's Yabazam® streaming service delivers 3D to smart TVs and tablets everywhere. DDD's shares are quoted on the London Stock Exchange's AIM Market (AIM: DDD) and the OTCQX (DDDGY). For more information please visit www.DDD.com.