MED.L Regulatory News (MED)

26 Feb 2007 07:01

MicroEmissive Displays Group PLC26 February 2007 Strictly embargoed until: 07.00 on 26 February 2007 MicroEmissive Displays Group plc ("MED" or the "Company") Preliminary Results for the Year Ended 31 December 2006 MED, the AIM listed designer and manufacturer of low power light emittingpolymer displays, announces its preliminary results for the year ended 31December 2006. Commenting on the results Christopher Smith, Chairman of MED said: "The management team remains focused on the completion of the volume manufacturing line and is confident that the strategy for building substantial sales and becoming cash generative is now in place." Highlights: •funding for our manufacturing facility secured •successful placing raising £5 million net of expenses •delivery and instillation of the manufacturing toolset completed on time •appointment of new Sales and Marketing Director - Paul Van Eynde •first volume orders agreed: cumulative value now in excess of $10 million •stocking and supply agreement with Cytech Technology Limited in Hong Kong •successful demonstration of the world's first digital plug and play headset solution for mobile phones at the 3GSM conference in Barcelona Bill Miller, Chief Executive said: "MED's primary short term focus remains onthe development of an enabling technology within the wearable headset market.Overall interest in our displays is increasing and there is a broad range ofpotential applications for our technology. We will continue to exploreopportunities to partner with leading technology companies around the globe." He added: "We anticipate that these and other new developments will furtherdrive sales in 2007 and with qualification and integration of the productionfacility on schedule we are looking forward to 2007 with optimism andconfidence." For further information, please visit www.microemissive.com contact: MicroEmissive Displays 0131 650 7764Bill Miller, Chief ExecutiveGraeme N Walker, Finance Director Tavistock Communications 020 7920 3150John WestMatt RidsdaleAndrew Dunn MICROEMISSIVE DISPLAYS GROUP PLC CHAIRMAN'S STATEMENT I am delighted to report to shareholders the results for the year ended 31 December 2006, a period which saw the Company make significant progress towardsattaining its ambition of becoming a leading designer and manufacturer of low power microdisplay technology. Following the steps taken during the period, the Board believes that we have gone a long way to creating a financial, operationaland technical platform upon which we can exploit our technology and create substantial value for shareholders. I would like to thank all the management and staff of the Company, who have worked so hard to get us into a position which enables us to look forward with increased confidence. Board and Management During the period there were a number of changes to our Board. In April 2006, Graeme Walker joined as Finance Director from Freescale and in July 2007, Paul Van Eynde joined the board as Sales and Marketing Director. Their appointments have added weight to our management team and their enthusiasm and effort since joining MED have been of great benefit as we work to commence manufacturing operations. In addition, I would like to thank Ken Sanders and Paul Strzelecki, who steppeddown from the Board in October, for their contribution to the development of MED. Both Ken and Paul joined the board prior to the Company's flotation and we wish them well with their new interests. The Board is currently considering the adoption of a new share incentive plan focussed on creating improved shareholder value by better aligning senior management performance with reward. Operational Review MED made significant progress during the period, securing the necessary fundingfor our manufacturing facility, the delivery of the manufacturing toolset on time and our first volume orders agreed. The new contract wins, one during the period and one after the period end, are the first steps to building a valuable order book in advance of the commencement of volume manufacturing in the second quarter of 2007. The cumulative value of the orders to date are now in excess of $10 million. In January, MED entered into a stocking and supply agreement with Cytech Technology Limited in Hong Kong. Agreements such as this are a cost effective way of developing our sales network and we are currently working on further agreements of this nature. In addition to existing opportunities, the management is aware of a number of new applications for our enabling technologyand are working hard on multiple applications. Outlook Overall this bodes well for the future of the Company. Our strategy to completethe volume manufacturing facility is progressing in line with expectations and the qualification and integration of the Dresden site is on schedule. The manufacturing unit, once up and running, will enable MED to realise the value of the growing number of volume orders and enquires we have received. The management team remains focused on the completion of the volume manufacturing line and is confident that the strategy for building substantialsales and becoming cash generative is now in place. The board are grateful to our loyal shareholders who have been very supportive during the development of our Company and are determined to create significant value for them over the coming years. Christopher SmithChairman CHIEF EXECUTIVE'S STATEMENT Introduction 2006 was a crucial year in the development of the Company and with the infrastructure and manufacturing capability due to be completed in the second quarter of 2007, we expect to generate significant revenues from the high levelsof enquires and orders secured to date. Financial Overview Turnover for the period was £31,175 (2005: £5,911), with an increased overall loss for the year at £6.26m (2005:£5.33m), predominantly as a result of continued research and product development and establishing a manufacturing subsidiary in Dresden, Germany. This facility will allow MED to realise the potential of its growing order book and will be production ready in the second quarter of 2007 and ramp, generating revenues, through the second half of the year. FRS20 'share based payment' was adopted during the year resulting in a charge to profit of £154,000. There is no effect on net assets as there is a corresponding credit to profit and loss reserves. The 2005 comparative figures have been restated to reflect the adoption of FRS20. The financial results for the year were ahead of the Board's expectations and Iam pleased to report that the operating loss for the second half of the year showed improvement over the first half of the year. During 2006 the Company successfully completed a placing, raising £5m net ofexpenses. At the balance sheet date, cash at bank and in hand after fullsettlement for the Dresden toolset was £2.3 million. In addition, we were alsoable to negotiate an inward investment incentive package from the Germanauthorities, which included direct funding in support of the capital costs ofthe volume manufacturing line. Capital grants of £1.2m were received in February2007 with further significant allowances applied for. The Company continues todiscuss the potential benefit of further funding sources including R&D taxcredits, additional inward investment funding, asset finance and venture loans. Sales and Marketing In order to further build our order book, Paul Van Eynde was recruited to join the board with responsibility for Sales and Marketing. Paul joined from Vativ Technology and his industry experience and contacts have generated growing interest in our leading-edge products culminating in the two volume orders secured to date. He has also brought with him a number of important contacts and is in the process of building a truly global distribution and sales network. It is our intention to secure volume orders both directly and through partners, in the form of stocking and supply agreements. These partnerships provide MED with a broad geographical reach to generate interest and obtain orders. We have already announced the signing of a major stocking and distribution deal with Cytech Technology Limited, one of the leading electronic component distributors in Hong Kong and China, and we expect to announce more during the course of the financial year. Cytech will use its extensive network and brand to sell our market-leading eyescreen(TM) technology to Hong Kong and China based manufacturers. Alongside this agreement, Cytech also placed a significant order for our product, taking the total value of the supply contracts signed to date to over $10 million. We believe this underpins the confidence we have in our world leading technology and its potential multiple applications. Manufacturing I am delighted that all elements of the Dresden manufacturing equipment set were delivered and installed on time. We expect the manufacturing line to be capable of volume shipment in the second quarter of 2007, with volume shipment anticipated to commence shortly thereafter. The production output from the manufacturing facility will exclusively be our next generation ME3204 eyescreen(TM) product. The location of our facility is key to the success of our business. The Fraunhofer Institute, in Dresden, is a well established and highly respected centre for semiconductor and polymer innovation. Technology and Product Applications Growth in wireless mobile video content and the convergence of data, video andmusic in new mobile platforms has focussed mobile handset manufacturers on theneed to introduce video-ready platforms for mobile phones. At the 3GSMconference in Barcelona we successfully demonstrated the world's first digitalplug and play headset solution for mobile phones. This was done in collaborationwith a leading design house and a market leading global mobile technologyprovider. Outlook MED's primary short term focus remains on the development of an enablingtechnology within the wearable headset market. The eyescreen TM, with its lowpower consumption and its digital video interface, provides an idealmicrodisplay solution for this market. In addition, we are also seeingconsiderable increase in customer engagement for applications beyond the headsetmarket and later in the year we intend to re-focus on the Japanese market forcamera applications. Overall interest in our displays is increasing and there is a broad range of potential applications for our technology. We regularly receive enquiries from potential customers in a diverse range of markets, including industrial, medical, gaming, sports, emergency services and scientific equipment. We will continue to explore opportunities to partner with leading technology companies around the globe. We anticipate that these and other new developments will further drive sales in 2007 and with qualification and integration of the production facility on schedule we are looking forward to 2007 with optimism and confidence. Bill MillerChief Executive Officer CONSOLIDATED PROFIT AND LOSS ACCOUNTFOR THE YEAR ENDED 31 DECEMBER 2006 Note 2006 2005 Restated £ £ Turnover 31,175 5,911 Administrative expenses (6,575,986) (5,971,280)Other operating income 95,763 234,053 ---------------------------------- Operating loss (6,449,048) (5,731,316) Other interest receivable and similar income 237,545 534,110 Interest payable and similar charges (45,281) (129,929) ---------------------------------- Loss on ordinary activitiesbefore taxation (6,256,784) (5,327,135) Tax on loss on ordinary activities 3 - - ---------------------------------- Loss for the financial year (6,256,784) (5,327,135) ================================== Loss per ordinary shareBasic and diluted loss per share 4 26.4p 31.1p ================================== Turnover and loss on ordinary activities before taxation for the current andprevious year relate wholly to continuing activities. Consolidated Statement of Total Recognised Gains and Losses for the year ended31 December 2006. 2006 2005 Restated £ £ Loss for the financial year (6,256,784) (5,327,135)Net exchange differences on retranslation of overseas subsidiary (16,583) - ----------------------------- Total recognised gains and losses relatingto the financial year (6,273,367) (5,327,135) ============================= CONSOLIDATED BALANCE SHEETAS AT 31 DECEMBER 2006 Note 2006 2006 2005 2005 £ £ £ £Fixed assetsIntangible assets 1,643,170 1,910,039Tangible assets 4,907,013 422,543 --------- --------- 6,550,183 2,332,582Current assetsStocks - 149,940Debtors 3,370,191 129,007Cash at bank and in hand 2,343,623 8,066,034 --------- ---------- 5,713,814 8,344,981 Creditors: amountsfalling due within one year (3,501,893) (875,190) --------- ---------- Net current assets 2,211,921 7,469,791 --------- --------- Total assets less currentliabilities 8,762,104 9,802,373 Creditors: amounts falling dueafter one year (77,172) - --------- --------- Net assets 8,684,932 9,802,373 ========= ========= Capital and reservesCalled up share capital 11,400,934 11,135,934Share premium account 12,788,879 8,052,201Merger reserve 6,814,164 6,814,164Foreign exchange reserve (16,583) -Profit and loss account (22,302,462) (16,199,926) --------- ---------Total Shareholders' funds 5 8,684,932 9,802,373 ========= ========= CONSOLIDATED CASH FLOW STATEMENTFOR THE YEAR ENDED 31 DECEMBER 2006 Note 2006 2005 £ £ Cash flow statement Net cash outflow from operating activities 6 (5,977,502) (4,415,740) Returns on investments and servicing of finance 7 192,264 404,181 Capital expenditure 7 (4,676,755) (172,009) -------------------------- Cash outflow before financing (10,461,993) (4,183,568) Financing 7 4,739,582 (428,422) -------------------------- Decrease in cash in the year (5,722,411) (4,611,990) ========================== Reconciliation of net cash flow tomovement in net funds 8 Decrease in cash in the year (5,722,411) (4,611,990)Cash outflow from decrease in lease financing and debt 357,859 663,093 --------------------------Change in net funds resulting from cash flows (5,364,552) (3,948,897) New finance leases (207,701) - -------------------------- Movement in net funds in the year (5,572,253) (3,948,897) Net funds at the start of the year 7,741,808 11,690,705 -------------------------- Net funds at the end of the year 2,169,555 7,741,808 ========================== NOTES 1. Accounting policies The preliminary financial information has been prepared on the basis of theaccounting policies set out in the most recent set of financial statements forthe year ended 31 December 2005, except that FRS20 'Share-based payments' hasbeen adopted for the first time. The effect of adopting this standard is toincrease employee costs by £154,248 (2005: £145,120). There is no effect on netassets as there is a corresponding credit to profit and loss reserves. 2. Annual Accounts The financial information set out above does not constitute the Company'sstatutory accounts for the years ended 31 December 2006 or 2005 but is derivedfrom those accounts. Statutory accounts for 2005 have been delivered to theregistrar of companies, and those for 2006 will be delivered in due course. Theauditors have reported on those accounts; their report was (i) unqualified, (ii)did not include a reference to any matters to which the auditors drew attentionby way of emphasis without qualifying their report and (iii) did not contain astatement under section 237(2) or (3) of the Companies Act 1985. 3. Taxation No provision for corporation tax is required due to the availability of taxlosses. 4. Loss per share Loss per share is calculated as follows: 2006 2005 Restated £ £ Net loss for the financial period (£) (6,256,784) (5,327,135) -------------------------- Weighted average number of ordinary shares 23,666,453 17,132,015 -------------------------- Basic and diluted loss per share (pence) 26.4p 31.1p ========================== The loss attributable to ordinary shares and the number of ordinary shares forthe purpose of calculating the diluted earnings per share are identical to thoseused for basic earnings per share. The exercise of share options would have theeffect of reducing the loss per share and in accordance with Financial ReportingStandard 14, are consequently not taken into account in the calculation fordiluted loss per share. 5. Reconciliation of movements in shareholders' funds 2006 2005 Restated £ £ Loss for the financial year (6,256,784) (5,327,135)Foreign exchange movement (16,583) -Share capital issued (net of costs) 5,001,678 618Credit in relation to share-based payments 154,248 145,120 --------------------------Net reduction in shareholders' funds (1,117,441) (5,181,397)Opening shareholders' funds 9,802,373 14,983,770 --------------------------Closing shareholders' funds 8,684,932 9,802,373 ========================== 6. Reconciliation of operating loss to operating cash flows 2006 2005 £ £ Operating loss (6,449,048) (5,731,316)Depreciation and amortisation 666,855 900,247Government grants (95,763) (234,053)Decrease/(increase) in stocks 149,940 85,560Decrease/(increase) in debtors (3,241,184) 374,937Increase/(decrease) in creditors 2,837,450 43,765 Share based payment 154,248 145,120 --------------------------Net cash outflow from operating activities (5,977,502) (4,415,740) ========================== 7. Analysis of cash flows 2006 2005 £ £ Returns on investment and servicing of financeInterest received 237,545 534,110Interest paid - (2,649)Interest element of finance lease payment (45,281) (127,280) -------------------------- 192,264 404,181 ========================== Capital expenditurePurchase of tangible fixed assets (4,659,053) (114,404)Purchase of intangible fixed assets (17,702) (57,605) -------------------------- (4,676,755) (172,009) ========================== FinancingShare capital issues (less expenses) 5,001,678 618Grant income 95,763 234,053Bank and other loans repaid - (75,926)Capital element of finance lease payments (357,859) (587,167) -------------------------- 4,739,582 (428,422) ========================== 8. Analysis of net funds At beginning Non cash At end of of year Cash flow changes year £ £ £ £ Cash in hand, at bank 8,066,034 (5,722,411) - 2,343,623 -----------------------------------------------------------Finance leases (324,226) 357,859 (207,701) (174,068) -----------------------------------------------------------Total 7,741,808 (5,364,552) (207,701) 2,169,555 =========================================================== This information is provided by RNS The company news service from the London Stock Exchange