Softcat Regulatory News (SCT)

28 Sep 2007 07:04

Screen Technology Group plc28 September 2007 Screen Technology Group plc ("Screen Technology" or "the Company") 2007 Interim Results Screen Technology 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 2007. Chairman's statement In June we reported that the Company was moving into the phase where conversionof sales opportunity was of key importance, and that the business was no longerproduction constrained. In August we launched our own version of the fullyscaleable ITrans(R) modular product demonstrating a 200" (5m) diagonal displayfor the first time. This product is now available from our own manufacturingpartner Shearline, with availability of a similar product from our OEM partnerHantarex also expected in the next few weeks. Interest in this modular product has been very significant and the marketopportunity confirmed, however this interest is proving slower to convert intosales orders than expected. The Company now expects sales in 2007 to be small.The Board considers that the Company will need further funding to execute on itspotential and is taking appropriate actions to secure this. ITrans continues to be the only technology capable of delivering large seamlessdisplays that can be seen in high-brightness environments, offering highresolution and high image quality over a wide range of viewing distances. Commercial developments The Company has commissioned independent research into the professional displaysand digital signage market. The Worldwide Signage and Professional Displaysmarket is currently $8Bn and forecast to grow to over $13Bn by 2010. The RetailDigital Signage sector alone is estimated to be worth $1.4Bn and in terms ofunit growth the number of digital retail displays is expected to growsignificantly by 43% CAGR from 498,668 units in 2006 to 2.1 million units in2010 (source: iSuppli Corporation). Furthermore, in the traditional OutdoorAdvertising market (e.g. 6 sheet through to full size Billboards) large digitaldisplays are expected to represent up to 10% of the overall High Impact/OutdoorAdvertising sector within the next 3 to 5 years. ITrans displays have a unique and compelling offer in this market. For displaysof between 60" to 300" diagonal, and those with unusual aspect ratios, ITransoffers resolution, scalability and sunlight readability that no other displaytechnology can match. The Company is pleased to report that the new modular product was fully launchedin August with the demonstration of the world's first 200" (5m) diagonal,sunlight readable, high resolution display. This version of the product is nowavailable from our UK production partner, with availability of a similar productfrom Hantarex, our major Italian partner following soon after. The Company hasconducted a series of demonstrations to major OEM and distribution partners,together with some representatives of early end user applications. Reaction hasbeen extremely positive, with the size, quality and brightness of the displaycreating a real 'wow' effect. In August we also showed for the first time an outdoor enclosed '6 sheet poster'format of the ITrans display made with the support of a further OEM partner.This version of the product has created great interest and the Board believesthis is the only sunlight readable digital display of its size and resolutionavailable in the world. The 'sunlight readable' nature of the ITrans technologywas confirmed by testing at the UK's National Physical Laboratory. The Boardexpects that this version of the product will become a significant part of itssales from early 2008. The conversion of this interest and opportunity into sales has been slower thanexpected. The Board believes that this is a consequence of a lack of comparableproducts to establish market expectations, "growth pains" of a young andemerging digital signage market and the natural early adopter reticence with anyrevolutionary new product. In addition, Hantarex are behind expected schedulefor the availability of their modular product. Nevertheless the opportunity isgreat and ITrans offers a compelling product, so sales growth is expected to bevery significant once early momentum has been achieved. Product capacity The Company has established strong trading relationships with GerresheimerWilden in Germany and the Czech Republic, Hantarex in Italy and Shearline inEly. Two high speed machines are available for installation over the comingmonths as demand comes on stream, one is due to be installed in the Czechrepublic and one in Ely. This is a highly scaleable production business modelwhich enables volume manufacture but controls working capital need. This putsthe business in a position where it can quote for larger orders, the first ofwhich is now anticipated in early 2008. Interim financial statements The condensed consolidated interim financial statements for the six months ended30 June 2007 have been prepared in accordance with IAS 34 "Interim FinancialReporting" and the requirements of IFRS 1 "First-time Adoption of InternationalFinancial Reporting Standards" relevant to interim reports. Cash position The funding of the first high-speed machine was successfully completed in May2007. As the machine had already been part paid for out of the Group's own cashresources in the form of stage payments during its construction, the financingof the machine realised a substantial amount of cash for the business. Afurther two high-speed machines are in the course of construction and the Grouphas already paid 50% of the cost of both of these machines. It is anticipatedthat the business will seek to raise lease finance on these machines in duecourse but availability of this finance will be critically dependent on thegeneration of sales. Outlook The Board is encouraged by the high level of interest expressed in the ITrans(R)product by a number of existing and new potential customers. However, while theCompany remains confident of significant sales in 2008 and beyond the Board nowbelieves that sales in 2007 will be small. The Board now considers that afurther fund raising is necessary to support the company through this earlyadoption phase and this is being pursued. Peter SmythChairman27 September 2007 For more information please contactScreen Technology Group plc www.screentechnology.comThomas Jarman, CEO 01223 559600 Charles Stanley SecuritiesNominated AdviserRussell Cook/ Henry Fitzgerald O'Connor 020 7149 6000 Group Condensed Income Statementfor the six months ended 30 June 2007 Unaudited Restated Audited 6 months Unaudited Year ended ended 30 June 6 months 31 December ended 30 June 2007 2006 2006 £ £ £ Revenue 33,919 5,680 642,713Cost of sales (10,566) (8,954) (606,208) ------------- ------------- -------------Gross profit /loss 23,353 (3,274) 36,505Administrative expenses - other (1,348,473) (2,068,070) (4,912,061) ------------- ------------- -------------Operating loss before exceptional items (1,325,120) (2,071,344) (4,875,556)Administrative expenses - exceptional items (437,916) - - ------------- ------------- -------------Operating loss after exceptional items (1,763,036) (2,071,344) (4,875,556) Finance revenues 28,818 50,194 113,868Finance costs (47,004) (8,178) (7,845) ------------- ------------- -------------Loss before taxation (1,781,222) (2,029,328) (4,769,533)Income taxes 324,207 - 164,042 ------------- ------------- -------------Retained loss for the period attributable (1,457,015) (2,029,328) (4,605,491)to ordinary shareholders ------------- ------------- -------------Loss per ordinary shareBasic (4.14)p (6.24)p (14.06)pDiluted (4.14)p (6.24)p (14.06)p All activities derive from continuing operations. There are no recognised gains or losses other than as stated in the profit andloss account. Group Condensed Balance Sheetat 30 June 2007 Unaudited Restated Restated 30 June Unaudited Audited 2007 30 June 31 December 2006 2006ASSETS £ £ £Non-current assetsProperty, plant and equipment 2,555,714 1,236,530 2,080,721 ------------- ------------- -------------Current assetsInventories 531,707 184,925 249,534Trade receivables 28,222 112,398 722,674Other receivables 80,513 353,967 230,554Current tax assets 324,207 - 164,042Cash at bank and in hand 798,680 2,577,173 615,998 ------------- ------------- ------------- 1,763,329 3,228,463 1,982,802 ------------- ------------- -------------TOTAL ASSETS 4,319,043 4,464,993 4,063,523 ------------- ------------- ------------- LIABILITIESNon-current liabilitiesObligations under finance leases 747,249 5,964 4,656 ------------- ------------- -------------Current liabilitiesTrade payables 1,091,986 157,963 285,809Other payables 532,783 131,338 457,771Obligations under finance leases 329,211 2,461 2,555 ------------- ------------- ------------- 1,953,980 291,762 746,135 ------------- ------------- -------------Total liabilities 2,701,229 297,726 750,791 ------------- ------------- -------------EQUITYShare capital 1,760,573 1,624,448 1,755,448Share premium account 7,998,121 6,682,989 7,997,621Other reserve 7,602,857 7,602,857 7,602,857Share based payment reserve 175,042 142,574 418,570Retained losses (15,918,779) (11,885,601) (14,461,764) ------------- ------------- ------------- 1,617,814 4,167,267 3,312,732 ------------- ------------- -------------TOTAL EQUITY AND LIABILITIES 4,319,043 4,464,993 4,063,523 ------------- ------------- ------------- Group Condensed Cash Flow Statementfor the six months ended 30 June 2007 Unaudited Restated Restated 6 months Unaudited Audited ended 30 June 6 months Year ended ended 30 June 31 December 2007 2006 2006 £ £ £Cash flow from operating activitiesLoss for the period (1,457,015) (2,029,328) (4,605,491)Depreciation and other non-cash items: Depreciation charges 117,440 56,544 163,584 Loss on disposal of property, plant and 40,000 - 2,907equipment Share based payment (credit)/charge (243,528) 105,507 381,503Decrease/(increase) in operating receivables 844,493 9,446 (477,417)Increase in inventories (282,173) (94,962) (159,571)Increase/(decrease) in operating payables 881,189 (186,897) 267,382Finance revenues (28,818) (50,194) (113,868)Finance costs 47,004 8,178 7,845Income taxes (324,207) - (164,042) ------------- ------------- -------------Cash generated from operations (405,,615) (2,181,706) (4,697,168)Income taxes received 164,042 - - ------------- ------------- -------------Net cash flow from operating activities (241,573) (2,181,706) (4,697,168) ------------- ------------- -------------Cash flows from investing activitiesPurchase of property, plant and equipment (1,777,433) (928,489) (1,882,627)Disposal of property, plant and equipment 1,145,000 - -Decrease in short term deposits - 5,400,000 5,400,000 ------------- ------------- -------------Net cash flows from investing activities (632,433) 4,471,511 3,517,373 ------------- ------------- -------------Cash flows from financing activitiesProceeds from issue of share capital 5,625 - 1,445,632Payment of finance lease liabilities (75,751) (1,152) (2,366)Proceeds from finance leases 1,145,000Interest received 28,818 50,194 113,868Interest paid (47,004) (8,178) (7,845) ------------- ------------- -------------Net cash flows from financing activities 1,056,688 40,864 1,549,289 ------------- ------------- ------------- Increase in cash and cash equivalents for the 182,682 2,330,669 369,494periodCash and cash equivalents at the start of the 615,998 246,504 246,504period ------------- ------------- -------------Cash and cash equivalents at the end of the 798,680 2,577,173 615,998period ------------- ------------- ------------- Group Condensed Statement of Changes in Equityfor the six months ended 30 June 2007 Share based Share Share payment Retained capital premium Other reserve reserve losses Total £ £ £ £ £ £ Balance at 31 December 2005 1,624,448 6,682,989 7,602,857 37,067 (9,856,273) 6,091,088 Changes in equity for thefirst half of 2006:Total recognised income and expense - - - - (2,029,328) (2,029,328)Issue of share capital - - - - - -Share based payment charge - - - 105,507 - 105,507 ------------- ------------- ------------- ------------- ------------- -------------Balance at 30 June 2006 1,624,448 6,682,989 7,602,857 142,574 (11,885,601) 4,167,267 Changes in equity for thesecond half of 2006:Total recognised income and expense - - - - (2,576,163) (2,576,163)Issue of share capital 131,000 1,314,632 - - - 1,445,632Share based payment charge - - - 275,996 - 275,996 ------------- ------------- ------------- ------------- ------------- -------------Balance at 31 December 2006 1,755,448 7,997,621 7,602,857 418,570 (14,461,764) 3,312,732 Changes in equity for thefirst half of 2007:Total recognised income and expense - - - - (1,457,015) (1,457,015)Issue of share capital 5,125 500 - - - 5,625Share based payment credit - - - (243,528) - (243,528) ------------- ------------- ------------- ------------- ------------- -------------Balance at 30 June 2007 1,760,573 7,998,121 7,602,857 175,042 (15,918,779) 1,617,814 ------------- ------------- ------------- ------------- ------------- ------------- Notes to the Interim Report 1. Nature of operations and general information Screen Technology Group plc ("the Company") and its subsidiaries' ("the Group")principal activity is to design, manufacture and sell display solutions to thecommercial AV market making large, high-brightness, high-resolution displayscreens a reality. Screen Technology Group plc is the Group's ultimate parent company. It isincorporated and domiciled in England and Wales. The address of the registeredoffice of the Company is The Maris Centre, Hauxton Road, Cambridge CB2 9FT. Ittrades through a wholly owned subsidiary, Screen Technology Limited, whose placeof business is at the registered office. Screen Technology Group plc's sharesare listed on the AIM Market of the London Stock Exchange. The consolidated interim statements of Screen Technology Group plc are presentedin Pounds Sterling (£), which is also the functional currency of the parent. These consolidated interim financial statements have been approved for issue bythe Board of Directors on 27 September 2007. The financial information set out in the interim report does not constitutestatutory accounts as defined in Section 240 of the Companies Act 1985. TheGroup's statutory financial statements for the year ended 31 December 2006,prepared under UK GAAP, have been filed with the Registrar of Companies. Theauditor's report on those financial statements was unqualified and did notcontain a statement under Section 237(2) of the Companies Act 1985. 2. Basis of preparation These interim consolidated financial statements are for the six-month periodended 30 June 2007. They have been prepared in accordance with IAS 34 "InterimFinancial Reporting" and the requirements of IFRS 1 "First-time Adoption ofInternational Financial Reporting Standards" relevant to interim reports,because they are part of the period covered by the Group's first IFRS financialstatements, and should be read in conjunction with the consolidated financialstatements of the Group for the year ended 31 December 2006. These financial statements have been prepared under the historical costconvention. These consolidated interim financial statements have been prepared in accordancewith the accounting policies set out below which are based on the recognitionand measurement principles of IFRS in issue as adopted by the European union(EU) and are effective at 31 December 2007 or are expected to be adopted andeffective at 31 December 2007, our first annual reporting date at which we arerequired to uses IFRS Accounting Standards adopted by the EU. Screen Technology Group plc's consolidated financial statements were prepared inaccordance with United Kingdom Accounting Standards (United Kingdom GenerallyAccepted Accounting Practice) until 31 December 2006. The date of transition toIFRS was 1 January 2006. The comparative figures in respect of 2006 have beenrestated to reflect changes in accounting policies as a result of adoption ofIFRS. The Group has taken advantage of exemptions under IFRS and no restatementhas been made to the accounting treatment of previous business combinations,including the acquisition of Screen Technology Limited by Screen TechnologyGroup plc on 28 July 2005. The accounting policies have been applied consistently throughout the Group forthe purposes of preparation of these consolidated interim financial statements. The financial statements have been prepared on a going concern basis,notwithstanding the loss for the six months ended 30 June 2007 of £1.5m, whichthe Directors believe is appropriate for the following reasons: • The iTrans modular screen was launched over the summer and the Grouphas received encouraging expressions of interest, particularly from a number ofthe specialist screen marketing companies. The Group's enquiry pipeline hasrecently been strengthened significantly as a result. • The time frame in which these enquiries will translate into ordersremains uncertain and, as a consequence, the Group is now required to seekfurther funding. As announced on 21 September 2007 the Board is exploringvarious alternatives in this regard and a further announcement will be made assoon as possible. • On the basis that adequate funding is available the Board considerthat the Company will continue to operate for the foreseeable future and iscapable of achieving a very significant level of sales of iTrans in 2008.However, there can be no certainty in relation to these matters, which may castsignificant doubt on the Company's ability to continue as a going concern. TheCompany may, therefore, be unable to continue realising its assets anddischarging its liabilities in the normal course of business. These interimfinancial statements do not include any adjustments that would result if theGroup was unable to continue as a going concern. 3. Share based payments In accordance with IFRS 2 the fair value of equity-settled share based paymentsto employees is determined at the date of grant and is expensed on astraight-line basis over the vesting period based on the Group's estimate ofwhen share options will eventually vest. In the case of options granted, fairvalue is measured by a Black-Scholes pricing model. All share based payment arrangements granted after 7 November 2002 that had notvested prior to 1 January 2006 are recognised in the financial statements inaccordance with IFRS 1. All goods and services received in exchange for the grant of any share basedpayment are measured at their fair value. Where employees are rewarded usingshare based payments, the fair values of employees' services are determinedindirectly by reference to the fair value of the instrument granted to theemployee. This fair value is appraised at the grant date and excludes the impactof non-market vesting conditions (for example, profitability and sales growthtargets). All equity-settled share based payments are ultimately recognised as an expensein the profit and loss account with a corresponding credit to the share basedpayment reserve. If vesting periods or other non-market vesting conditions apply, the expense isallocated over the vesting period, based on the best available estimate or thenumber of share options expected to vest. Estimates are revised subsequently ifthere is any indication that the number of share options expected to vestdiffers from previous estimates. Any cumulative adjustment prior to vesting isrecognised in the current period. No adjustment is made to any expenserecognised in prior periods if share options that have vested are not exercised. Upon exercise of share options, the proceeds received net of attributabletransaction cost are credited to share capital, and where appropriate sharepremium. 4. Seasonal fluctuations The Group has not yet made sufficient sales for seasonal fluctuations to havebecome clear. 5. Exceptional items All exceptional items are included within administrative expenses. Unaudited Unaudited Audited 6 months 6 months Year ended ended 30 June ended 30 June 31 December 2007 2006 2006 £ £ £ Write off of bad debt 437,916 - - ------------- ------------- ------------- 6. Segmental information The Group's principal activity (and its primary business segment) is the design,manufacture and sale of display solutions to the commercial AV market. As suchits primary segmental information is the income statement. Whilst the Directors recognise there is no requirement to disclose withininterim financial statements any further secondary segmental analysis the Groupgives an additional geographic analysis of revenue by destination. Unaudited Unaudited Audited 6 months 6 months Year ended ended 30 June ended 30 June 31 December 2007 2006 2006 £ £ £Turnover by destinationUK - 5,680 586,149Rest of world 33,919 - 56,564 ------------- ------------- -------------Total 33,919 5,680 642,713 ------------- ------------- ------------- 7. Loss per share The calculation of the basic loss per share is based on the loss attributable toordinary shareholders divided by the weighted average number of shares in issueduring the year. The share options in issue are anti-dilutive in respect of the basic loss pershare calculation and have therefore not been included. Unaudited Restated 6 months Unaudited Audited ended 30 June 6 months Year ended ended 30 June 31 December 2007 2006 2006 £ £ £ Attributable loss(£) (1,457,015) (2,029,328) (4,605,491) ------------- ------------- -------------Average number of ordinary shares inissue for basic and diluted earnings pershare 35,189,315 32,496,976 32,760,696 ------------- ------------- ------------- Basic and diluted loss per share (pence) (4.14)p (6.24)p (14.06)p ------------- ------------- ------------- 8. Share issues During the period to 30 June 2007, 102,500 shares were issued to satisfy shareoptions previously granted under Screen Technology Group plc's employee shareoption schemes. The shares issued in the six months ended 30 June 2007 yielded £5,625 in cashand increased equity also by £5,625. 9. Additions and disposals of property, plant and equipment Fixtures, Leasehold fittings, tools Plant and Motor improvements and equipment machinery vehicles Total £ £ £ £ £ Carrying amount at 1 January 2007 72,319 76,809 1,925,472 6,121 2,080,721Additions - 11,192 1,766,241 - 1,777,433Disposals - - (1,185,000) - (1,185,000)Depreciation (29,258) (12,949) (73,337) (1,896) (117,440) ------------- ------------- ------------- ------------- -------------Carrying amount at 30 June 2007 43,061 75,052 2,433,376 4,225 2,555,714 ------------- ------------- ------------- ------------- ------------- Carrying amount at 1 January 2006 - 30,033 324,638 9,914 364,585Additions - 56,856 871,633 - 928,489Disposals - - - - -Depreciation - (15,941) (38,707) (1,896) (56,544) ------------- ------------- ------------- ------------- -------------Carrying amount at 30 June 2006 - 70,948 1,157,564 8,018 1,236,530 ------------- ------------- ------------- ------------- ------------- Carrying amount at 1 January 2006 - 30,033 324,638 9,914 364,585Additions 117,031 72,455 1,693,141 - 1,882,627Disposals - (2,907) - - (2,907)Depreciation (44,712) (22,772) (92,307) (3,793) (163,584) ------------- ------------- ------------- ------------- -------------Carrying amount at 31 December 2006 72,319 76,809 1,925,472 6,121 2,080,721 ------------- ------------- ------------- ------------- ------------- 10. Taxation Income tax represents amounts recoverable in respect of Research and Developmenttax credits. At 30 June 2007, the Group has tax losses of approximately £12 million that areavailable for offset against future profits arising from the same trade. Noprovision has been made for deferred tax on losses carried forward in the Group.These losses will only be available for offset when the Group makes taxableprofits. As the timing of these profits is not certain it has been assumed thelosses will not be recoverable in the foreseeable future 11. Explanation of transition to IFRS As stated in the Basis of Preparation, these are the Group's first consolidatedinterim financial statements for part of the period covered by the first IFRSannual consolidated financial statements prepared in accordance with IFRS. An explanation of how the transition from UK GAAP to IFRS has effected theGroup's financial position, financial performance and cash flows is set outbelow. IFRS 1 permits companies adopting IFRS for the first time to take certainexemptions from the full requirements of IFRS in the transition period. Theseinterim financial statements have been prepared on the basis of taking thefollowing exemptions: • cumulative translation differences on foreign operations are deemed tobe nil at 1 January 2006. Any gains or losses recognised in the consolidatedincome statement on subsequent disposal of foreign operations will excludetranslation differences arising prior to the transition date; • only share based payment arrangements granted after 7 November 2002that had not vested prior to 1 January 2006 are recognised in the financialstatements; and • Business combinations prior to 1 January 2006, the Group's date oftransition to IFRS have not been restated to comply with IFRS 3 "BusinessCombinations". Accordingly there has been no adjustment to the accountingtreatment adopted by the Group on the acquisition of Screen Technology Limitedby Screen Technology Group plc on 28 July 2005 which was accounted for at thatdate as a merger under UK GAAP. Application of IFRS has resulted in reclassification of certain items in thecash flow statement as follows: • Under UK GAAP, payments to acquire property, plant and equipment wereclassified as part of "Capital expenditure and financial investment". UnderIFRS, payments to acquire property, plant and equipment have been classified aspart of "Investing activities"; • Income taxes received by the Group in respect of Research andDevelopment tax credits are now classified as an operating cash flow under IFRS,however these were included in a separate category of tax cash flows under UKGAAP; and • The definition of cash is narrower under UK GAAP than under IAS 7"Cash Flow Statements". Under IFRS highly liquid investments, readilyconvertible to a known amount of cash with an insignificant risk of changes invalue are regarded as cash equivalents. Explanation of reconciliation from UK GAAP to IFRS for the balance sheet andincome statement The adoption of IFRS by the Group has resulted in some reordering of thepresentation of certain balances within both the income statement and thebalance sheet. However there has been no impact on previously reported equity,liabilities or assets at 31 December 2006 or 30 June 2006, or comparativeamounts disclosed in the income statement for the year ended 31 December 2006 orthe six months. 12. Interim Report The interim report will be circulated to all shareholders and copies will beavailable from the Company's head and registered office: The Maris Centre,Hauxton Road, Cambridge, CB2 9FT This information is provided by RNS The company news service from the London Stock Exchange