DDD.L Regulatory News (DDD)

2 August 2010

DDD Group PLC

Trading update

DDD Group (AIM: DDD, 'the Group'), the 3D software and content company, announces a trading update for the six months ended 30 June 2010.

Trading is in line with the Board's expectations as the Group continues to benefit from strong demand for 3D systems and content. In the first half of 2010, more than a million units of the TriDef 2D to 3D conversion solution were shipped by licensees in the TV and PC markets. This compares with less than 100,000 units shipped up to the end of 2009.

During the period, the Group successfully transitioned its financial model from the monthly recognition of up-front license fees to quarterly reporting of royalties generated. Accordingly, DDD expects to report first half revenue of approximately £723,000, on a like for like dollar basis and after conversion, compared to £726,000 for the same period in 2009. The gross margin for the first half of 2010 is expected to be 79%.

Royalties grew strongly from software and video processor licenses and demand for pre-packaged software more than doubled. In addition, as part of its focus on a licensing and royalty business model, at the end of the period, the Group completed its withdrawal from direct sales of low-margin 3D TVs and related accessories.

The first half saw a number of key licensees launching mass-market 3D products incorporating TriDef technologies. Samsung launched a range of 3D LED, LCD and plasma TVs worldwide. Acer built upon the success of its 5738DG 3D notebook with an updated 5740DG model while Lenovo announced the IdeaPad Y560d 3D notebook in mid June. Fujitsu debuted an All-In-One PC for the Japanese market in June 2010 that utilizes the TriDef Ignition gaming solution.

In the television market, DDD is completing the development of a set-top-box solution that will allow its 2D to 3D conversion technology to be used with virtually any 3D TV set. A market-ready product is likely to begin customer trials in the second half of 2010.

In addition, market interest in 3D technology has driven an increase in engagement with mobile handset manufacturers keen to explore how glasses-free 3D can be incorporated into next-generation phones. DDD pioneered automatic 2D to 3D video conversion in mobile phones with the introduction of the SCH-B710 by Samsung in Korea in 2007 and is therefore in a strong position to address the industry's needs now that interest in 3D handset displays has returned.

In order to capitalise on this increasing demand for 3D products, DDD raised £3.5 million in June to fund expansion. The Group established a Product Development unit to deliver customer projects in the PC, TV and mobile phone markets, enabling its R&D unit to focus on advances in DDD's core IP and technologies. In addition, DDD will launch a content creation and 2D to 3D conversion service in its Santa Monica office later this year.

The Group made a number of key hires as part of its expansion, with Larry Wang and Chris Choe joining DDD in senior business development roles. Larry Wang has extensive experience in IP licensing having worked with Olympus, while Chris Choe was formerly based in Korea with Samsung's Digital TV and Semiconductor businesses.

Chris Yewdall, DDD Chief Executive Officer said:

"Shipping a million units of TriDef is a significant milestone that shows how quickly the 3D market is growing. As a 3D pioneer, we are seeing significantly increased interest in our technology from major names in consumer electronics, computing and mobile handsets.

We expect to secure further licensing contracts in the second half as technical evaluations and commercial discussions come to fruition and remain confident of a good outcome to the year."

DDD expects to publish results for the first six months of 2010 in the week commencing 27 September 2010.

Enquiries

About DDD Group

DDD, also known as Dynamic Digital Depth, is transforming the viewing experience with applications for 3D displays. Its patented technologies enable: 3D viewing with and without glasses; simple integration of computer games applications with 3D displays; supply of 3D content through 2D to 3D conversion; and 3D transmission over existing networks. DDD's shares are quoted on the London Stock Exchange's AIM Market (AIM: DDD).

Technology background

A new category of flat screen LCD and plasma displays is being developed and marketed by major consumer electronics companies that provide stereoscopic 3D images both with and without the need for the viewer to wear glasses. Stereoscopic 3D images appear to have natural in and off-screen depth. 3D displays can now be found in desktop PC displays, notebook computers, and HDTVs worldwide and have also been included in mobile phones in Japan and Korea.

DDD's solutions provide an important bridge between conventional two-dimensional (2D) software applications and content and the new 3D displays. Normal 2D pictures, video and computer graphics images are manipulated by DDD's patented software enabling them to be displayed on 3D displays without requiring the content to be created especially for a 3D display. DDD's solutions also enable automatic conversion of virtually any media from 2D to 3D without any pre-processing of the 2D image.

DDD licenses these software applications, marketed under the TriDef® and DDD Mobile™ brand names, to consumer electronics manufacturers for inclusion with the 3D display products supplied to their end users. DDD also licenses its software directly to end users who already own 3D displays and through an international sales channel. Some of DDD's customers include: Samsung, Acer, Fujitsu, Lenovo, Sharp, Wistron Corporation and Arisawa Manufacturing Company.