Softcat Regulatory News (SCT)

27 Sep 2006 07:03

Screen Technology Group plc27 September 2006 For Immediate Release 27 September 2006 Screen Technology Group plc ("Screen Technology" or "the Company") 2006 interim results Screen Technology Group plc ("Screen Technology" or "the Company" or "theGroup") the designer and manufacturer of revolutionary high-resolutionlarge-screen displays for high ambient light environments announces itsunaudited results for the six months ended 30 June 2006. Highlights for the year to date • Production process enhancements complete• First large-scale high-speed machines to be operational in October• Modular product in advanced prototype form• Technical and financial partnership with Wilden for moulding and tile manufacture• Increase in staff focusing on technical, production engineering and sales and customer support Key financial information• Consolidated operating loss before tax £1.9 million• Cash at bank at 30 June 2006 £2.6 million• Partnership with Wilden improves cash position Peter Smyth, Non-executive Chairman, commented: "This first half of the year has been a period of intense effort to enhance ourproduction processes and prepare for large-scale high-speed production. Althoughit has taken us longer to get here than we initially envisaged, we have achievedthe key goals we set ourselves midway through the first half of the year. We arenow producing consistently high quality ITrans tiles and are close to thecapacity of our existing production machines. We are very excited by the partnership with Wilden AG, which will give us astrengthened platform for growth. The investment Wilden is putting into thepartnership will give us greater ability to expand to meet expected marketdemand. The potential sales pipeline remains strong and we are looking forwardto the delivery of our first high speed tile manufacturing machine this Autumn." For more information please contact Screen Technology Group plcwww.screentechnology.com Thomas Jarman, CEO 01223 559600Simon Barton, Finance Director Buchanan Communications 020 7466 5000Isabel Podda Charles Stanley Securities 020 7149 6000Dugald Carlean, Henry Fitzgerald-O'Connor Chairman's statement Overview During the first half of 2006 we have made furthersignificant steps forward in the development of ourbusiness. As announced in June, the transition from thefirst production units to a more commercial scale has takenlonger than the Board had initially expected, but we haveachieved our key objectives prior to full high-speedproduction. The issues encountered earlier in the year withthe production of ITrans tiles have been resolved.Production of quality ITrans tiles is now consistent andrunning close to the capacity of existing productionmachinery and we have the technical and sales staff to takethe business forward. Sales The business remained capacity constrained during the firsthalf of the year with the limited production capabilities ofthe first two tile manufacturing machines. The firsthigh-speed production machine is due to start production inthe last quarter of this year and is expected to reach fullproduction capacity in the beginning of next year. Screen Technology has used this time of limited productioncapacity to concentrate on enhancing production processes inthe three main areas of the manufacturing process, theinjection moulding of light guides, the manufacture ofITrans tiles and the assembly of completed displays. The business has also taken the opportunity to strengthenthe existing links with value-added resellers and to developnew sales channels by concentrating the currentmanufacturing resources available on the production of moredemonstration units. Screen Technology opened a London sales office earlier thisyear. Based in the heart of Soho and close to many of ScreenTechnology's key customers, the office has already hostedmany demonstrations. We have also exhibited at keyinternational audio-visual industry exhibitions. Thesedemonstrations have been very successful, furtherunderlining the demand for ITrans displays being expressedby the marketplace. The Board believes that ITrans continuesto be the only solution capable of producing large seamlessdisplays viewable over short or long distances inhigh-brightness environments. Considerable interest has beenshown for applications in exhibition halls, retail windowdisplays, transport concourses, shopping malls and otherspecialist media. As was announced in March of this year, orders have beentaken for ITrans displays starting in the second half of theyear however the Company has delayed acceptance of any majororders with long lead times until large scale production isunderway and the modular product is available. The Company is working on a number of high profile salescontracts for this year and in preparation for modularproduct availability early next year. The Directors expectthat significant sales contracts will be announced in thesecond half of 2006. Product development During the first half of the year, the Company has beendeveloping a modular product in response to market demandfor a flexible method to transport very large displays tocustomer locations and to assemble them on site. We havebeen working closely with Hantarex/Sambers Italy S.p.a, amajor international company with extensive interests in thecommercial large-screen display market to develop a modularproduct. Hantarex has invested considerable resources in the projectwhich will result in Hantarex becoming an OEM customer forITrans tiles to manufacture ITrans displays of its own aswell as being a supplier of modular components for ScreenTechnology's modular displays. The project is progressingvery well and is in an advanced prototype form havingsuccessfully been through early prototype stages. Hantarexwill shortly order tooling to produce the first productionmodels by the end of the year. The Board expects modularproducts to be a significant proportion of sales revenueduring 2007. Increasing production resources In February of 2006, Screen Technology moved into its newpremises in Cambridge. These have provided greatly improvedoffices, facilities, laboratory space and testing anddemonstration areas. We have also strengthened our technical and productionengineering teams as well as sales and customer support inorder to prepare ourselves for manufacturing ITrans displaysin commercial volumes. New technical and financial partnership Screen Technology today has announced that it has signedletters of intent with Wilden AG ("Wilden") to enter into apartnership for the production of injection moulded lightguides and the operation of the Company's first high speedtile assembly machine. Wilden is a major producer of specialist high-qualityhigh-technology injection mouldings for the automotive,electronic and telecommunications and medical industries.Its customers include Daimler Chrysler, Astra Zeneca,Siemens, Sennheiser and Roche. Wilden has a broadinternational presence with facilities located in NorthAmerica, Western and Eastern Europe, and the Middle and FarEast. The agreement provides that Wilden will manufacture two newinjection moulding tools to produce light guides for use inthe manufacture of ITrans tiles and will provide financingto Screen Technology for the tools and also for the firsthigh-speed machine. In addition, Wilden will be investingitself in dedicated injection moulding machinery to producethe light guides on a 24/7 basis. This partnership is a very exciting opportunity for ScreenTechnology. In Wilden, we have found a partner with thetechnical competence and the resources and global reach towork with us through a period of rapid expansion.Furthermore the investment that Wilden is putting into thisproject in time and resources as well as significant cashcommitment underlines the faith we both have in the successof ITrans. Outlook The remainder of 2006 promises to be an exciting time forScreen Technology. In the final quarter, the first of theCompany's high-speed production machines will beoperational. This will dramatically increase the rate ofproduction of ITrans tiles, which has always been thelimiting factor in the production of displays. Theproduction engineering staff at Screen Technology will beworking hard to reach full production capacity by the end ofthe year. At the same time the modular product is expectedto go into full production ready for shipping in commercialquantities during 2007. However, only a small proportion of the increase in capacitybrought about by the new machine is likely to be reflectedin sales for the year. The machine will begin to producetiles during November of 2006 and the Board does not expectit to reach full production until the New Year. Sales forthe year will be dependent upon how many ITrans tiles can beinstalled in displays and shipped in the last few weeks ofthe year. The full impact of the increase in productioncapacity will therefore not be felt until during 2007.Screen Technology began to ship products to third parties inAugust 2006 and expects production during the second half ofthe year to be fully sold with a number of major projectsbeginning in the final quarter of 2006. The prospective order pipeline continues to be strong and assoon as we have the capacity to deliver against large volumeorders we will look forward to confirming some exciting andsubstantial orders during the second half of the year. Theoutlook for 2007 is increasingly positive when we expect tobe able to start delivering products in larger quantities tomeet the significant interest being expressed by customers. Financial review Sales for the first half of the year were £5,680,representing the shipment of an ex-demonstration ITransdisplay to a value added reseller. As discussed above, theremainder of the limited production during the first half ofthe year has been used for the manufacture of new, and therefurbishment of existing, demonstrator stock and forcontinuing development of the Company's modular product. The operating loss reflects continued expenditure on theexpansion of our production resources, both internal staffand at our sub-contracted manufacturing operations as theCompany has prepared for larger scale production and hasbeen improving manufacturing processes. The increase inresearch and development costs is largely due to increasedexpenditure on product development, particularly on theITrans modular system. This is also reflected in increasedstaff numbers in engineering development and the Company hasalso brought in specialist external expertise whereappropriate. The increase in fixed assets since the end of 2005principally represents expenditure on new ITrans tilemanufacturing machinery. By the end of June 2006, paymentsof approximately £342,000 had been made on the first machineand £544,000 on the second and third machines, which will bedelivered next year. Since the half year, a further £342,000has been paid on the first machine and a further £471,000remains to be paid. Cash position As announced in June 2006, the machine due to be deliveredin the summer of 2006 has been delayed into 2007. This hashad an impact on expected sales for the first half and willcontinue to have an impact in the second half also affectingthe cash position of the business. The delay into 2007 willhowever reduce the cash cost that the business was expectingto incur as no further expenditure will be made on thatmachine until delivery in 2007. The Company has also reducedcash costs on the third high speed machine originally due tobe delivered at the end of 2006 by delaying that projectuntil 2007. Screen Technology has also significantly strengthened itscash position with the partnership with Wilden outlinedabove. Wilden is taking over the payment of the finalinstalment for the first high speed machine and is providinginjection moulding tools with extended terms over threeyears. This will boost Screen Technology's cash position byover £500,000 by the beginning of next year and by over£1.2 million in total. This partnership will greatlyincrease Screen Technology's ability to expand productioncapacity by reducing the cash resources required to investin new machinery and tooling. The Board expects that furtheragreements of this nature will be possible with the secondand third high speed machines due to be delivered next year. Consolidated profit and loss statement for the six months ended 30 June 2006 6 months Year ended ended 30 June 31December 2006 2005 (unaudited) £ £ Turnover 5,680 115,500 Cost of sales (8,954) (65,633) ------------- ------------- Gross profit (3,274) 49,867 Administrative expenses (1,962,563) (2,063,511) Other operating income - - ------------- ------------- Operating loss (1,965,837) (2,013,644) Interest receivable and 50,194 115,840 similar income Interest payable and similar (8,178) (43,806) charges ------------- ------------- Loss on ordinary activities (1,923,821) (1,941,610) before taxation Tax on loss ordinary - - activities ------------- ------------- Loss for the period (1,923,821) (1,941,610) ------------- ------------- Loss per ordinary share Basic (5.92)p (5.97)p Diluted (5.92)p (5.97)p All activities derive from continuing operations. There are no recognised gains or loses other than as stated in the profit and loss account. Consolidated balance sheet at 30 June 2006 30 June 31 December 2005 2006 (unaudited) £ £ Fixed assets Tangible assets 1,236,530 364,585 Current assets Stocks 184,925 89,963 Debtors 466,365 475,811 Cash at bank and in hand 2,577,173 5,646,504 ------------- ------------- 3,228,463 6,212,278 Creditors: amounts falling due within one year Other creditors (291,762) (478,502) ------------- ------------- Net current assets 2,936,701 5,733,776 ------------- ------------- Total assets less current 4,173,231 6,098,361 liabilities Creditors: amounts falling due after more than (5,964) (7,273) one year ------------- ------------- Net assets 4,167,267 6,091,088 ------------- ------------- Capital and reserves Called up share capital 1,624,448 1,624,448 Share premium account 6,682,989 6,682,989 ------------- ------------- 8,307,437 8,307,437 Other reserves 7,602,857 7,602,857 Profit and loss account (11,743,027) (9,819,206) ------------- ------------- Shareholders' funds 4,167,267 6,091,088 ------------- ------------- Consolidated cash flow statement for the six months ended 30 June 2006 6 months ended Year ended 30 June 31 December 2006 2005 (unaudited) £ £ Reconciliation of operating profit to net cash flow from operating activities Operating loss (1,965,837) (2,013,644) Depreciation charges 56,544 18,347 Impairment losses - 32,600 (Increase)/decrease in stocks (94,962) (89,963) (Increase)/decrease in debtors 9,446 (419,904) Increase/(decrease) in creditors (186,897) 414,509 ------------- ------------- Net cash outflow from operating activities (2,181,706) (2,058,055) ------------- ------------- Cash flow statement Net cash outflow from operating activities (2,181,706) (2,058,055) Returns on investments and servicing of finance 42,016 72,034 Capital expenditure and financial investment (928,489) (350,583) ------------- ------------- Cash outflow before management of liquid resources and financing (3,068,179) (2,336,604) Management of liquid resources (Increase)/decrease in short term deposits with banks 5,400,000 (5,400,000) Financing (1,152) 7,968,702 ------------- ------------- Increase in cash for the period 2,330,669 232,098 ------------- ------------- Notes to the interim results Analysis of cash flows 6 months ended Year ended 30 June 31 December 2006 2005 (unaudited) £ £ Financing Issue of ordinary share capital (net of expenses) - 7,313,679 Issue of ordinary share capital (Screen - 80,528 Technology Limited) Issue of convertible loan - 500,000 stock Called up share capital paid - 75,263 Capital element of finance (1,152) (768) lease rentals ------------- ------------- (1,152) 7,968,702 ------------- ------------- Segmental information 6 months ended Year ended 30 June 31 December 2006 2005 (unaudited) £ £ Turnover by destination UK 5,680 38,500 Rest of world - 77,000 ------------- ------------- Total 5,680 115,500 ------------- ------------- This information is provided by RNS The company news service from the London Stock Exchange