MED.L Regulatory News (MED)

15 Apr 2005 07:00

MicroEmissive Displays Group PLC15 April 2005 15 April 2005 MicroEmissive Displays Group plc ("MED") Preliminary Results for the year to 31 December 2004 MicroEmissive Displays plc (MED or "the Company"), a designer and manufacturerof low power microdisplays using light emitting polymers for portable consumerelectronics products, announces its maiden results for the year to 31 December2004. Highlights Financial highlights • First revenue achieved from microdisplay pre-production device sales • Admission to AIM in November 2004 • Placing of ordinary shares raising £13.5m • Cash balances of £12.7m at year end Operating highlights • Two new customers taking total number of customers to three • Improved terms to license light emitting polymer patents • Negotiations at advanced stage for manufacturing partnership • Volume shipments anticipated in H2 05 Board • Christopher Smith joins board of MED Bill Campbell, Chief Executive of MED, said: " MED is making solid progress incommercialising its microdisplays for portable consumer electronics products.The Company enters 2005 with an encouraging order book and is on track to meetDirectors' expectations. We are excited by the new opportunities beingpresented to us." Enquiries to: MicroEmissive Displays Group plcBill Campbell CEO Tel: +44(0)131 650 7764Alan Bennie Finance Director Tel: +44(0)131 650 7764 Corfin CommunicationsHarry Chathli, Neil Thapar Tel: +44 (0)20 7929 8989 Chairman's Statement MicroEmissive Displays is delighted to present its first set of preliminaryresults as a public company. These results mark a turning point in theCompany's history as we move from technology development to full volume ramp upof our unique microdisplays for a variety of portable consumer electronicsproducts. During 2004 MED transformed from a promising University spin-out, to a publiccompany admitted to the AIM market of the London Stock Exchange. Though young,the Company has developed a unique and competitive technology which addressesgrowing mainstream consumer markets. The flotation in November 2004 was not anexit of itself for any of our investors; many of them participated further inthe placing. MED is at an early stage and its most significant challenge will be to rampproduction to meet a share of the projected 29M unit market for microdisplaysin 2006. Recent market updates reinforce this opportunity. None of this can be realised without the skill and dedication of employees. Itis my pleasure to acknowledge the efforts of our staff, and to thank them fortheir continuing exceptional contributions. I have been privileged to act as chairman of MED over the past five years. Iintend to step down from this role at the Annual General Meeting in June butremain as a non executive director where I believe that my semiconductorexperience and knowledge of the consumer imaging market will continue to addvalue to the Company. Christopher Smith has been appointed as a non executivedirector of the Company and it is proposed that his appointment to the role ofchairman of MED is confirmed at the Company's Annual General Meeting.Christopher brings a wealth of experience in directing the boards of privateand publicly quoted companies. Results Turnover for the year to 31 December 2004 was £12 thousand (2003: £12 thousand)which in Q4 2004 included the first revenue from sales of MED's QVGA resolutionmicrodisplay products. During the year the Company continued to promote thedesign-in of its microdisplay into customers' new products through the sale ofdevelopment kits. Operating costs in the year increased by £1.2m (37%) to £4.4m(2003: £3.2m) due to the expansion in MED's operating activities following thecompletion during H1 2004 of its pilot production line. Production staff forthe pilot line were recruited during H2 2004 and average staff numbers for theyear increased to 31 (2003: 23). Costs incurred in the development of theproduction process were a significant factor in the increase in the loss forthe year to £4.4m (2003: £3.3m). Recoverable VAT contributed to the high debtor balance (£0.5m) reported at yearend. Due to the Company's anticipated level of VAT zero rated sales, MED is,and can be expected to remain, in a net repayment position for VAT purposes. MED is a licensee of CDT Ltd with the licence providing access to thefundamental patents for organic light emitting polymer technology. Theexpansion of this licence contributed to an increase in the value of ourintangible assets which after amortisation amounted to £2.1m (2003: £1.9m). On 30 November 2004 MED was admitted to the AIM market of the London StockExchange. At the time of admission, MED increased its share capital by way of aplacing of ordinary shares raising approximately £13.5m cash in net proceeds.Cash balances at 31 December 2004 were £12.7m and will enable the Company tofurther expand its operations and begin to develop a significant share of themicrodisplay market. Markets MED's initial market focus for its EVF and micro panel products is primarily inthe high growth Digital Still Camera sector. Independent market researchers,Insight Media and Techno Systems Research, forecast that this sector willdouble in size over four years to reach 100M unit shipments per annum by 2007.Significantly for MED, it is reported that approximately 30% of these unitswill include an electronic viewfinder. MED's microdisplay feature set of lowestpower, excellent image quality and electronic integration offers our customersa competitive advantage in their markets where these features are critical toadded value and product differentiation. MED's ambition is to service thissector as market leader by 2008. MED's products have also received favourable reviews in two emerging markets:personal viewers (often described as wearable or headset displays) and nightvision products. MED is confident that power consumption, image quality andcost will remain the key drivers in microdisplay applications and that itsproducts provide a platform to secure market leadership. MED have long standing representative and agency agreements with local companiesin Taiwan, Korea and Japan to service demand for its products. These threecountries generate the majority of all Digital Still Camera designs anddevelopment. MED intends to continue to expand its distribution channels during2005. Product definition for the Personal Viewer market is more geographicallydiverse; however, much of the development and manufacturing will be centred inAsia. Customers & applications During 2004 the Company secured its first two design wins with companies whoplan multiple products featuring MED microdisplays. In meeting these multipleproduct requirements MED's display device represents a common platform for thedisplay component in all of these customer product variants. The displaycomponent requires only minor changes to the display lens to meet the specificcustomer end product application. The first customer application for MED's microdisplay is in an ultra-compactUSB-enabled Digital Still Camera which can also operate as a video camera andMP3 music player. Developed by NHJ, a Tokyo-based company, the product is amember of their "Cheez" brand family, which is commonly available worldwide inretail stores and through specialist catalogue distribution channels. The second application is a British designed consumer night vision product used,for example by naturalists and field sports enthusiasts. This product to bemanufactured in Asia is the first in a series of seven variants planned by ourcustomer. Initial response to this product has been better than expected as itslow cost, high resolution night time viewing characteristics is generatingconsiderable interest for security applications. Since the year end, the Company has received an order from a military customerfor devices to be used in the early development of a new personal viewer. Product developments In November 2004 MED initiated the development of a second microdisplay productwhich is planned for market introduction in 2006. This will be targeted at thepersonal viewer market as well as expanding MED's applications in digital stillcameras. IPR At the end of 2004, applications were progressing internationally on 14 MEDpatent families, and during the year, the first of these was granted in onejurisdiction (Europe). Additional applications, and possibly further grants,are likely to be made during 2005. This is a strong showing for a technologycompany at this stage of growth, and demonstrates the quality of ourintellectual property asset base. Following the placing, our licence from CDT Ltd was improved to remove from MEDthe obligation to license back to CDT new developments relevant to LEP devices.This gives MED greater independence and will safeguard and enhance shareholdervalue. Strategy A key component of the Company's strategy, and a major reason for its flotation,is to secure a volume manufacturing capability through partnership, acquisitionor by commissioning new plant. The Company's preference is to enter intopartnership with a company already experienced in display manufacture. Puttingthis resource in place, and ready to contribute revenue in 2006, is a crucialstep for MED. Following an extensive worldwide review of potential partners the Company is infinal discussions with a short list of three organisations that have the skillsand facilities to support MED's volume manufacturing. MED anticipate that thisselection will be finalised in Q2 2005. A supply agreement is in place with Dow Chemical for the supply of polymermaterials and in March 2005 we announced UMC of Taiwan as our volume siliconwafer foundry. Current trading and outlook MED commenced shipment of devices to support pre-production runs at twocustomers during the 1st quarter of 2005. Shipping the preproductionprototyping quantities enabled MED to finalise the customer and productperformance objectives, and our engineering team is now working towards astable manufacturing process to meet those needs. Commencement of volumeshipments is anticipated in the second half of 2005. The Company enters 2005with an encouraging order book. The Company continues to work diligently to optimize production yields andconsiderable progress in this respect has been made since production activitiesbegan in November 2004. Throughout 2005 the Company will ramp volume and yield, though we are unlikelyto maximise our potential until volume manufacturing capacity is brought onstream. The Company is on track to meet Directors' expectations. MicroEmissive Displays Group plc ("MED") Preliminary Results for the year to 31 December 2004 Consolidated profit and loss accountfor the year ended 31 December 2004 Note 2004 2003 £ £ Turnover 12,443 12,321 Administrative expenses (4,478,535) (3,196,170)Other operating income 157,551 58,290 --------- ---------Operating loss (4,308,541) (3,125,559)Other interest receivable and similar income 36,229 9,745Interest payable and similar charges (187,637) (162,145) --------- ---------Loss on ordinary activities before taxation (4,459,949) (3,277,959)Tax on loss on ordinary activities - - --------- ---------Retained loss for the year for equityshareholders (4,459,949) (3,277,959) ========= =========Loss per ordinary share Basic and diluted loss per share 3 56.7p 55.4p ========= ========= There are no recognised gains or losses other then the loss for the current andpreceding financial years. Turnover and loss on ordinary activities before taxation for the current andprevious year relate wholly to continuing activities. Consolidated balance sheetat 31 December 2004 Note 2004 2004 2003 2003 £ £ £ £Fixed assetsIntangible assets 2,129,191 1,876,962Tangible assets 931,629 1,260,996 --------- --------- 3,060,820 3,137,958Current assetsStock 235,500 -Debtors 503,944 140,185Cash at bank and in 12,678,024 1,234,597hand ---------- --------- 13,417,468 1,374,782Creditors: amounts (1,116,588) (1,387,994)falling due withinone year ---------- --------- Net current assets/ 12,300,880 (13,212)(liabilities) ---------- ---------Total assets less 15,361,700 3,124,746current liabilities Creditors: amounts (377,930) (935,766)falling due aftermore than one year ---------- ---------Net assets 14,983,770 2,188,980 ========== =========Capital andreservesCalled up share 4 11,135,524 4,455,290capitalShare premium 5 8,051,993 -accountMerger reserve 5 6,814,164 4,291,652Profit and loss 5 (11,017,911) (6,557,962)account ---------- ---------Shareholders' funds 14,983,770 2,188,980 ========== ========= Consolidated cash flow statementfor the year ended 31 December 2004 2004 2003 £ £Cash flow statement Cash out flow from operating activities (4,512,970) (1,643,258)Returns on investments and servicing of finance (151,408) (152,400)Taxation - 230,798Capital expenditure (829,098) (713,189) ---------- ---------Cash outflow before financing (5,493,476) (2,278,049) Financing 16,936,903 2,639,880 ---------- ---------Increase in cash in the year 11,443,427 361,831 ========== =========Reconciliation of net cash flowto movement in net funds Increase in cash in the year 11,443,427 361,831 Change in net debt resulting from cash flows 475,387 332,355 ---------- ---------Movement in net funds in the year 11,918,814 694,186Net debt at the start of the year (228,109) (922,295) ---------- ---------Net funds/(debt) at the end of the year 11,690,705 (228,109) ========== ========= Notes to the accounts: 1 Basis of preparation The consolidated financial statements include the financial statements of theCompany and its subsidiary undertakings made up to 31 December 2004. On 4October 2004 in return for the issue of new ordinary share capital, the entireshare capital of MicroEmissive Displays Limited was acquired. The acquisitionhas been accounted for in line with the reporting requirements of FinancialReporting Standard No 6 "Acquisitions and Mergers". Under section 230(4) of the Companies Act 1985 the Company is exempt from therequirement to present its own profit and loss account. 2 Financial information The financial information set out above in respect of the years ended 31December 2004 and 31 December 2003 does not constitute the group's financialstatements for those periods but has been derived from the audited statutoryaccounts for those years. Statutory accounts for the year ended 31 December 2004will be delivered to the Registrar of Companies following the Company's AnnualGeneral Meeting. The auditors have reported on those accounts; their reportswere unqualified and did not contain statements under s237(2) or (3) CompaniesAct 1985. 3 Loss per share Loss per share is calculated as follows: 2004 2003 £ £ Net loss for the financial period (4,459,949) (3,277,959) --------- ---------Weighted average number or Ordinary shares inissue 7,862,147 5,916,420 --------- ---------Basic and diluted loss per share 56.7p 55.4p ========= ========= 4 Called up share capital Number 2004 £AuthorisedOrdinary share of £0.65 each 29,000,000 18,850,000 ========== ==========Allotted, called up and fully paidOrdinary shares of £0.65 each 17,131,575 11,135,524 ========== ========== 5 Share premium and reserves Share Merger Profit premium Reserve and loss account accountGroup £ £ £ Arising on Group reconstruction - 4,291,652 (6,557,692)Retained loss for the year - - (4,459,949)Premium on share issues less expenses 8,051,993 - -Arising in the year - 2,522,512 - --------- --------- ----------At end of year 8,051,993 6,814,164 (11,017,911) ========= ========= ========== This information is provided by RNS The company news service from the London Stock Exchange