DDD.L Regulatory News (DDD)

7 February 2011

DDD Group PLC

Year end trading update

DDD Group (AIM: DDD, 'the Group'), the 3D software and content company, announces a trading update for the financial year ended 31 December 2010.

Trading for the second half of 2010 is in line with expectations. During 2010, over 2.5 million units of DDD's TriDef 2D to 3D conversion solution were shipped by licensees in the TV and PC markets, compared to less than 100,000 units shipped up to the end of 2009, and just over a million in the first half of 2010.

DDD expects full year 2010 turnover of approximately £1.4 million, in line with turnover in 2009 before the effect of the discontinued 3D TV and accessories sales operation. Gross profit margins improved by 12 percentage points from 74% to 86%.

As previously announced, the Group successfully transitioned from the monthly recognition of up-front license fees to quarterly reporting of royalties generated by software and chips shipped by licensees. Additionally, DDD completed its withdrawal from direct sales of low-margin 3D TVs and related accessories, helping to improve gross margins.

Royalty income from software and video-processor licenses grew strongly and demand for direct-to-consumer software downloads nearly doubled. In October, the Group announced a collaboration with AMD on its new Radeon™ HD3D PC graphics processor, which opened significant new opportunities for the Group's TriDef software to be used with 3D PC displays using 3D active shutter glasses. Revenue from the use of the TriDef software with 3D active glasses and PC products is expected to commence in early 2011.

As previously announced, a number of brand-name licensees launched mass-market 3D products incorporating TriDef 2D to 3D conversion solutions. These included:

·; Samsung, which introduced a range of 3D LED, LCD and plasma TVs worldwide incorporating the Group's IP in a video-processing chipset.

·; Acer built upon the success of its 5738DG 3D notebook with an updated 5740DG model.

·; Lenovo introduced the IdeaPad Y560d 3D notebook in mid June.

·; Fujitsu debuted an All-In-One PC for the Japanese market in June that utilizes the TriDef Ignition gaming solution and followed this with a 3D notebook PC at the end of the year.

·; LGE introduced three 3D notebook PC models in September.

·; Finally the first active shutter glasses product was introduced at the end of the year when HP began promoting the Group's game conversion solution for their Envy 17 3D notebook PC.

During the second half, the Group also secured a license agreement with a Taiwan-based fabless semiconductor manufacturer, which anticipates launching video processors equipped with DDD's 2D to 3D conversion solution in the second half of 2011.

Following the completion of a £3.5 million fund raising in June, the Group began investing in staff to support engineering and operational needs. The US offices completed a move into a larger facility in Los Angeles in mid January 2011.

DDD's financial position continues to strengthen. At the year end, the Group had had just over £3.1 million in cash and receivables.

Since the year end, at CES in January 2011, Samsung announced its intent to extend the 3D feature beyond its 7000, 8000, and 9000 series products to include the 5000 and 6000 series 3D TVs. It also demonstrated a Blu-ray® disc player and PC monitors with built in 2D to 3D conversion. These developments are a direct result of restructuring of the Group's license agreement with Samsung to enable broader use of the 2D to 3D conversion technology.

In addition, DDD and Intel demonstrated TriDef conversion technology working with a variety of applications on Intel's new 2nd Generation Intel® Core Processor platforms.

Chris Yewdall, DDD Chief Executive Officer said:

"With more than two and a half million units of our TriDef 2D to 3D conversion IP shipped in 2010, we have established the business as the leading supplier of this critical content component in the rapidly growing 3D consumer device market.

"Now that manufacturers are adopting TriDef software for use with 3D active shutter glasses in the PC market, we anticipate stronger adoption of the TriDef software in this segment, along with continuing growth of embedded TriDef solutions in the TV market.

"Finally, the TriDef 2D to 3D conversion software is now running on the latest mobile phone processors and we anticipate adoption of this Android™ based solution as the 3D mobile phone market emerges during 2011."

DDD expects to publish results for the fiscal year 2010 in the week commencing 18 April 2011.

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, LG Electronics, Fujitsu, Lenovo, Wistron Corporation and Arisawa Manufacturing Company.