Softcat Regulatory News (SCT)

29 Jun 2007 07:02

Screen Technology Group plc29 June 2007 Screen Technology Group plc ("Screen Technology" or "the Company") 2006 PRELIMINARY 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 itsconsolidated results for the year ended 31 December 2006. Overview • Modular product developed with Hantarex / Sambers S.p.a.• Production partnership with Wilden• Displays shipped to Virgin Megastores• First high-speed assembly machine completed in 2007 and in final commissioning phase• Continued strong interest from potential customers• Orders taken for modular products• Significant sales in second half of 2007 are critical Key financial information • 2006 sales of £642,000• Consolidated operating loss before tax £4.8 million• Cash at bank at 31 December 2005 £0.6 million• Lease finance of first high speed machine completed May 2007 Peter Smyth, Non-executive Chairman, said today: "This year has presented both opportunities and challenges. While we have beendisappointed by the delays we have experienced in getting our high-speed tileassembly machinery into full production we are very excited by the modularproduct which the Board believes will be readily taken up by the commercial AVindustry. We continue to see significant interest in ITrans from potentialcustomers. The key challenge for the second half of the year will be totranslate this in interest into sales" For more information please contact Screen Technology Group plc 01223 559600Tom Jarman, CEOwww.screentechnology.comRussell Cook 020 7149 6000Henry Fitzgerald-O'ConnorCharles Stanley Securities (Nominated adviser and broker) Chairman's Statement In 2006 Screen Technology has made a number of significant achievements but hasalso faced a series of challenges. The Group is moving into 2007 with a productthat is finding a positive reception among our customer base although thechallenges we have faced have meant that the expected dramatic increase in theproduction of ITrans displays has been delayed. 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. Thecommercial display industry continues to show very strong interest in ITrans andit is only the time taken to overcome the technical challenges of moving into afull production environment during 2006 that has held back sales of ITrans. Tony Kellett resigned as CEO in April 2006 and Tom Jarman has moved from being anon-executive director to take over the CEO role full time. Simon Barton hasalso resigned as Finance Director as of June 2007. I would like to thank bothTony and Simon for their contributions to Screen Technology's development. Commercial developments 2006 has seen significant developments in a number of areas. The Company hasdeveloped a modular product in conjunction with Hantarex / Sambers S.p.a., amajor international company with extensive interests in the commercial largescreen display market. Hantarex has invested considerable resources in theproject which it is expected will result in Hantarex becoming a significant OEMcustomer for ITrans tiles to manufacture its own displays as well as supplyingmodular components for Screen Technology's own modular display sales. Hantarexhas placed an initial order amounting to about £1 million for ITrans tiles to gointo Hantarex's own sales of modular displays. We have already been shippingtiles for advanced prototype and demonstration models and the Board expects tostart supplying ITrans tiles for commercial sales in the second half of 2007. Screen Technology also formed an important strategic partnership with Wilden AGthe major producer of specialist high-technology injection mouldings for theautomotive, electronic and medical industries. As part of this agreement, Wildenwill produce the injection moulded light guides that form the basis of an ITranstile and will also operate the highspeed machine, manufacturing ITrans tilesfrom the light guides. The Company continued to develop relationships with resellers and potentialcustomers during 2006. However, the lack of available production resources hasmeant that the Company remained reluctant to accept large orders. Production capacity By the end of 2005 the Company had placed orders for two new machines for theassembly of the ITrans tiles that are the key building blocks of an ITransdisplay. The first of these, a duplicate of the existing low-speed machine, wasdelivered in early 2006, doubling production capacity and representing the firststep towards increasing our production capacity to enable Screen Technology tosupply ITrans displays in commercial volumes. By this stage, the construction ofa first high-speed tile assembly machine was underway, due for delivery in thesummer of 2006 and an order had been placed for a further two high-speedmachines for delivery in the third and fourth quarters of 2006. By the middle of 2006 the Company was poised to increase sales in the secondhalf of the year but delays to the first high speed machine meant that theefforts were instead focused on the second high-speed machine which was expectedto be delivered in the early Autumn, reaching full production capacity by theend of the year. Further delays to the availability of the high-speed machines came about as aresult of the unexpected acquisition of Wilden by Gerresheimer Group which heldup the process of setting up the new moulding tool and the production of parts.However the first high-speed machine has been completed in 2007 as discussedbelow. During 2006 the ITrans modular display product continued in development and asdiscussed below is expected to reach full production in 2007. Trading during 2006 Limited production capacity meant sales were restricted to a small number ofmonolithic displays. Screen Technology was delighted to announce in October of2006 that it had received an order from Digital Screen Networks ("DSN") for aninitial 16 displays to provide window-based in-store advertising in VirginMegastores. Three of those displays were installed in late 2006 into the LondonPiccadilly, Manchester Arndale and Birmingham New Street Megastores and theremainder were delivered into DSN's consignment stock before the end of theyear, for installation in early 2007. One further display has since beeninstalled in the Glasgow Megastore but we have recently been informed by DSNthat changes at Virgin have meant that the contract has been scaled back to onlythe four screens that are currently installed. The Company made small sales of monolithic displays to reseller partners for useas demonstrators but also made some significant sales to Ashingo plc althoughthese sales were initially of non-ITrans display equipment. These sales wereimportant for the future relationship with Ashingo, which is expanding itsactivities providing display infrastructure in shopping malls in the UK andAshingo has placed orders for four ITrans displays for delivery in 2007. However, as a result of the production delays experienced during 2006, saleswere disappointingly well below initial expectations. Placing The below expected level of sales has had a considerable effect on the Company'scash position. We had expected to be able to accelerate production in 2007quickly once sales had started with the introduction of a second and then athird high-speed machine. With continuing overheads and expenditure on R&D itbecame apparent that the company's cash flows would not sustain the growth thatwas expected without further funds and in December 2006 the Company raised £1.5million before expenses to enable it to fund the continued expansion inproduction capacity. Outlook for 2007 2007 poses a number of continuing challenges for Screen Technology combined withgreat opportunity. The Company's existing monolithic displays, which are limitedto a maximum size of about an 85" diagonal, face strong competition fromhigh-brightness LCDs. However, from the middle of 2007, the Company has launchedproduction availability of its new modular product. The Company is thereforefocussing its efforts on ITrans modular displays. Unlike monolithic displays,modular displays overcome the size limitations of LCDs offering seamless screensof unlimited size in much higher resolutions than LED, which is currently theonly other practical solution for high ambient light environments. Modularproducts also enable large, seamless displays to be easily transported andinstalled. The first high-speed machine has been completed and, as announced in May 2007,the Company has successfully funded the acquisition of the machine by means oflease finance. The machine is now, as at the middle of 2007, undergoing itsfinal setting up and commissioning process with the expectation that it willenter full production early in the second half of 2007. The high-speed machinewill dramatically increase Screen Technology's ability to supply displays incommercial volumes. The key challenge will be the translation of interest inITrans into actual sales. The board is confident that these sales can beachieved but there can be no certainty at this stage. The Company has historically been reluctant to bid for large orders for ITransin spite of significant interest because of the uncertainties over productiontimetables. The board is now focusing on using existing and newvalue-added-reseller and OEM relationships to turn the sales pipeline intoshipments of modular displays over the coming few months. Financial review Overview The consolidated results are presented on a merger accounting basis. The Groupwas formed on 28 July 2005 with the acquisition of Screen Technology Limited byScreen Technology Group plc and Screen Technology Group plc then floated on AIMon 1 August 2005. The comparative figures for 2005 are presented as though themerger took place at the beginning of 2005. Sales for the year consist of both sales of ITrans displays and sales ofnon-ITrans display equipment. The ITrans sales consisted of two ex demonstratorunits sold during the year and four displays being used in the windows of VirginMegastores, which were concentrated in December 2006. The non-ITrans equipmentamounting to just over £0.5 million was the first part of a relationship with acustomer expecting to take delivery of modular ITrans displays during 2007. The consolidated loss for the year after the flotation represents the continuingdevelopment of ITrans, the development of highspeed production facilities andthe development of modular products. Staff numbers have remained largelyconstant but there has been extensive use of sub-contracted engineering anddevelopment facilities and design consultancies to supplement ScreenTechnology's own technical expertise with the resources necessary to take ITransproduction to a commercial scale. Cash resources Cash resources have been put under some strain by the delays in production,limiting sales while the Company has continued to incur overhead costs anddevelopment costs. The placing in December allowed the Company to continue toincur capital expenditure costs in the construction of both the first high-speedmachine and further machines that will closely follow. However, further delaysin moving into full production have continued to put pressure on cash resources.The business finished the year with cash of about £616,000 although it also hadsubstantial debtor balances from the shipment of equipment late in the year. The funding of the first high-speed machine was expected and was successfullycompleted in May of 2007. As the machine had already been substantially paid forout of the Company's own cash resources in the form of stage payments during itsconstruction, the financing of the machine realised a substantial amount of cashfor the business. It is expected that the business will seek to raise leasefinance on the next two high speed machines which are due to be delivered duringlate 2007. The Company has, as at the date of this report, already paid 50 percent of the cost of both of these machines. The Board expects the high speed machines to be quickly cash generative oncethey enter full production. However, this is critically dependent on thegeneration of sales in the second half of 2007. Directors' Report Principal activities Screen Technology is a designer, manufacturer and seller of display solutions tothe commercial AV market making large format, high-brightness, high-resolutiondisplay screens a reality. The Group sells its display solutions principally through value-added resellersand systems integrators to end-user customers requiring very large, bright,highly visible, high-quality displays for advertising and information displaypurposes in locations such as airport and railway concourses, control rooms andshopping malls. Business review The business has made considerable progress since its flotation on the LondonAIM market on 1 August 2005. A review of the business, current trading andfuture developments is contained within the Chairman's Statement and FinancialReview. Research and development The Group continues to make substantial investment in research and development,keeping the Group's products at the forefront of large-display technology.During 2006, Screen Technology has been continuing to develop its ITrans productincluding the development of modular products that will satisfy the need forvery large seamless screens that can be easily transported and assembled at thecustomer's site. Development of high-speed fully automated production facilitieshas continued with the expectation that full production from these new machineswill begin in mid 2007. Proposed dividend The directors do not recommend the payment of a dividend. Director's interests The directors who held office during the year were as follows: Date appointed Date resignedPeter Francis SmythAnthony Gerard Kellett 17 April 2006Simon Charles Robert Barton 13 June 2007Thomas Bernard JarmanThomas Macklyn Swan OBEErnest Richardson 14 December 2006 The directors who held office at the end of the financial year had the followinginterests in the ordinary shares of Screen Technology Group plc according to theregister of directors' interests: No of ordinary shares of 5p each No of ordinary shares of 5p each Start of year End of yearPeter Smyth 23,809 57,142Tom Jarman - 100,000 Thomas Swan is interested in the share capital of Screen Technology Group plc asa result of his interest in Thomas Swan & Co Ltd. which owns approximately 16.9per cent of the issued share capital of the Company. Both Tom Jarman and Ernie Richardson have carried interests in MTI PartnersLimited which owns approximately 49.9 per cent of the issued share capital ofthe Company. Directors' rights to subscribe for shares in the Company are indicated below: Number of options At start of At end of year Exercise Price yearSimon Barton 200,000 200,000 43.5pPeter Smyth 100,000 100,000 63pTom Jarman - 1,630,449 30p Tom Jarman was granted options over 1,630,449 shares at an exercise price of 30pin November 2006. None of the other directors who held office at the end of the financial year hadany other disclosable interest in the shares of Group companies. Market price The closing mid-market price of the Company's ordinary shares at 31 December2006 was 70p. The closing mid-market price of ordinary shares during the yearranged from 78p on 13 December 2006 to 27p on 28 March 2006. Employees The Group operates a policy of regularly informing all employees of the Group'sperformance and objectives by means of electronic communication and throughinformal meetings at which employees' contributions are welcome. Severalemployees are holders of options over shares in the Company's equity and manyemployees are also shareholders in the Company having subscribed at the time ofthe flotation in 2005. The Group gives full and fair consideration to all applications for employmentmade by disabled persons, having regard to their particular aptitudes andabilities. The Group's policies for training, career development and promotiondo not disadvantage these employees. The Group seeks to recruit, develop andemploy, throughout the organisation, suitably qualified, capable and experiencedpeople irrespective of sex, age, race, religion or sexual orientation. Political and charitable contributions The Group made no political or charitable contributions during the year. Statement of disclosure of information to auditors The Directors who held office at the date of approval of this Directors' reportconfirm that, so far as they are each aware, there is no relevant auditinformation of which the Company's auditors are unaware; and each Director hastaken all the steps that he ought to have taken as a Director to make himselfaware of any relevant audit information and to establish that the Company'sauditors are aware of that information. Auditors In accordance with Section 384 of the Companies Act 1985, a resolution for there-appointment of KPMG Audit Plc as auditors of the Company is to be proposed atthe forthcoming Annual General Meeting. Consolidated profit and loss account for the year ended 31 December 2006 2006 2005 restated Note £ £Turnover 642,713 115,500Cost of sales (606,208) (65,633) -------------- --------------Gross profit 36,505 49,867 Administrative expenses (4,912,061) (2,100,578) -------------- --------------Operating loss (4,875,556) (2,050,711 Interest receivable and similar income 113,868 115,840Interest payable and similar charges (7,845) (43,806) -------------- --------------Loss on ordinary activities before 2 (4,769,533) (1,978,677)taxationTax on loss ordinary activities 3 164,042 - -------------- --------------Loss for the financial year (4,605,491) (1,978,677) -------------- -------------- Loss per ordinary shareBasic 4 (14.06)p (6.09)pDiluted 4 (14.06)p (6.09)p All activities derive from continuing operations. Consolidated statement of total recognised gains and lossesfor the year ended 31 December 2006 2006 2005 Note £ £Loss for the financial year (4,605,491) (1,978,677) ------------ --------------Total recognised losses for the financial year (4,605,491) (1,978,677)Prior year adjustment - FRS 20 6 (37,067) - ------------ --------------Total recognised losses since last annualreport (4,642,558) (1,978,677) ------------ -------------- Consolidated balance sheetat 31 December 2006 2006 2005 Note £ £Fixed assetsTangible assets 2,080,721 364,585 Current assetsStocks 249,534 89,963Debtors 1,117,270 475,811Cash at bank and in hand 10 615,998 5,646,504 -------------- -------------- 1,982,802 6,212,278 Creditors: amounts falling due within oneyear (746,135) (478,502) -------------- --------------Net current assets 1,236,667 5,733,776 -------------- --------------Total assets less current liabilities 3,317,388 6,098,361 Creditors: amounts falling due after morethan one year (4,656) (7,273) -------------- --------------Net assets 3,312,732 6,091,088 -------------- -------------- Capital and reservesCalled up share capital 5 1,755,448 1,624,448Share premium 7 7,997,621 6,682,989 -------------- -------------- 9,753,069 8,307,437 Other reserves 7 7,602,857 7,602,8567Profit and loss account 7 (14,043,194) (9,819,206) -------------- --------------Shareholders' funds 3,312,732 6,091,088 -------------- -------------- Consolidated cash flow statementfor the year ended 31 December 2006 2006 2005 restated Note £ £Reconciliation of operating profit to net cash flow from operating activitiesOperating loss (4,875,556) (2,050,711)Depreciation Charges 163,584 18,347Loss on disposal of fixed assets 2,907 -Impairment losses - 32,600FRS20 share-based payment charge 381,503 37,067Increase in stocks (159,571) (89,963)Increase in debtors (477,417) (419,904)Increase in creditors 267,382 414,509 -------------- -------------Net cash outflow from operating activities (4,697,168) (2,058,055) -------------- ------------- Cash flow statement Cash flow from operating activities (4,697,168) (2,058,055)Returns on investments and servicing of finance 106,023 72,034Taxation - -Capital expenditure and financial investment (1,882,627) (350,583) -------------- -------------Cash outflow before management of liquidresources and financing (6,473,772) (2,336,604) Management of liquid resourcesDecrease/(increase) in short term deposits withbanks 5,400,000 (5,400,000) Financing 9 1,443,266 7,968,702 -------------- --------------Increase in cash for the period 369,494 232,098 -------------- -------------- Reconciliation of net fundsNet funds at beginning of year 10 5,636,927 14,406Increase in cash for the period 369,494 232,098Movement in liquid resources (5,400,000) 5,400,000Movement in borrowings 2,366 (9,577) -------------- --------------Net funds at end of year 10 608,787 5,636,927 -------------- -------------- Reconciliations of movements in shareholders' fundsfor the year ended 31 December 2006 Group Company 2006 2005 restated 2006 2005 restated £ £ £ £ Opening Shareholders'funds 6,091,088 (1,511,509) 8,410,883 -(Loss)/profit for thefinancial year (4,605,491) (1,978,677) 321,413 100,237FRS 20 credit to reserves 381,503 37,067 7,705 3,209Issue of shares onconversion of loan stock - 2,150,000 - -Issue of shares (ScreenTechnology Limited) - 80,528 - -Issue of shares onformation of company - - - 2Issue of shares onacquisition of ScreenTechnology Limited - - - 993,756Issue of shares onplacement (net ofexpenses) 1,445,632 7,313,679 1,445,632 7,313,679 --------- --------- -------- ---------Closing shareholders'funds 3,312,732 6,091,088 10,185,633 8,410,883 --------- --------- -------- --------- Notes Basis of preparation The financial information set out above does not constitute the Company'sstatutory accounts for the year ended 31 December 2006 and 31 December 2005, butis derived from them. Save as disclosed below, the accounting policies set outin the 2005 accounts have been applied in preparing the information for 2006.Statutory accounts for Screen Technology Limited for 2005 have been delivered tothe Registrar of Companies. The Auditors have reported on the accounts to 31December 2006 and to 31 December 2005. Their reports were unqualified butcontained a modified audit opinion relating to the year ended 31 December 2006.The reports did not contain statements under section 237 (2) or (3) of theCompanies Act 1985. This preliminary announcement was approved by the Board on28 June 2007. The Company will hold its Annual General Meeting on 25 July 2007, followingwhich the statutory accounts for 2006 will be delivered to the Registrar ofCompanies. The Annual Report and Accounts will be posted to shareholders on 29 June 2006.Copies of the Annual Report and Accounts and of this announcement will beavailable at the Company's registered office, The Maris Centre, Hauxton Road,Cambridge, CB2 2LQ. 1 Accounting policies The following accounting policies have been applied consistently in dealing withitems which are considered material in relation to the financial statements,except as noted below. In these financial statements the following new standard has been adopted forthe first time: • FRS 20 'Share-based payment' The accounting policies under this new standard are set out below together withan indication of the effects of its adoption. Going Concern The financial statements have been prepared on a going concern basis,notwithstanding the loss for the year of £4.6m (2005:£2.0m), which the directorsbelieve is appropriate for the following reasons. The ongoing activities of the Company are dependent upon sales of ITrans in thesecond half of 2007. During the first six months of 2007, commercial scaleproduction of ITrans displays has been delayed by a number of factors that areset out in the Chairman's Statement. Advanced prototypes have been produced andhave received a very favourable reception in the commercial AV industry anddemonstration units are being shown to potential customers. Orders have beentaken for modular ITrans displays, for delivery in 2007, and scale production isexpected to commence early in the second half of 2007. However no units have yetbeen shipped in 2007. The Board has prepared working capital forecasts for the period ending 12 monthsfrom the date of the approval of these financial statements. These forecasts aredependent upon sales of ITrans in the second half of 2007, which are themselvesdependent both upon the successful manufacture of ITrans tiles from a newhigh-speed machine, which is undergoing its final setting-up and commissioningprocess, and upon sufficient orders from customers for modular ITrans displays.The forecasts also assume that lease funding will be available for the furtherhigh-speed machines that are expected to be delivered in 2007. The Board is confident that commercial scale production of ITrans tiles and ofmodular displays is very close and that, based on the interest expressed by theindustry, the Company's sales revenue forecasts will be met. The board is alsoconfident that lease funding will be available to support growth in thebusiness. On the basis of these forecasts, the Directors consider that theCompany will continue to operate for the foreseeable future. However there canbe no certainty in relation to these matters, which may cast significant doubton the Company's ability to continue as a going concern. The Company may,therefore, be unable to continue realising its assets and discharging itsliabilities in the normal course of business but the financial statements do notinclude any adjustments that would result from insufficient production and salesbeing achieved or lease funding being unavailable. Share-based payments The Group has adopted, in these financial statements, FRS 20 "Share basedpayment" in respect of equity settled share-based payments. The adoption of thisstandard represents a change in accounting policy and the comparative figureshave been restated accordingly. The cost relating to previous years has beenrecognised in these financial statements as a prior-year adjustment andcomparative figures have been restated accordingly. The impact in the yearending 31 December 2006 is a charge of £381,503 and the charge for the periodended 31 December 2005 was £37,067. The impact on reserves as at 31 December 2005 of the prior-year adjustment is acredit to the profit and loss account in respect of FRS 20 equal to the chargefor the year ended 31 December 2005. There is therefore no change to the closingreserves position in the comparative figures for the year ended 31 December2005. The cost of share options awarded to employees under the Group's share optionschemes is measured by reference to their fair value at the date of grant, withfair value being measured with a Black-Scholes pricing model. The cost,recognised over the vesting period in the profit and loss account with acorresponding movement in reserves, of the options is based on the number ofoptions that, in the opinion of the directors, will ultimately vest. The Company has obtained joint elections (or equivalent agreements) from theholders of all options that could trigger a National Insurance liability suchthat the option holder will pay any secondary National Insurance so arising. Asthe liability is formally transferred to employees, there is no liability toappear in the Group's or Company's accounts. 2 Notes to the profit and loss account Loss on ordinary activities before taxation isstated after charging 2006 2005 £ £Depreciation and other amounts written off tangible and intangible fixed assets:Owned 159,791 16,766Leased 3,793 1,581Loss on disposal of fixed assets 2,907 -Charge for share-based payments 381,503 37,067Research and development expenditure 1,457,490 799,606Operating lease rentals - land and buildings 114,838 22,000Impairment losses - 32,600 3 Taxation Analysis of credit in period 2006 2005 £ £UK corporation taxAdjustment for prior year tax credit 164,042 - Factors affecting the tax credit for the current periodThe current tax credit for the period differs from that resulting from applying the standardrate of corporation tax in the UK of 30% (2005:30%). The differences are explained below. 2006 2005 £ £Current tax reconciliationLoss on ordinary activities before tax (4,769,533) (1,978,677) ---------- ----------Current tax at 30% (2005:30%) (1,430,860) (593,603) Effects of:Current tax at 30% (2005:30%) (1,430,860) (593,603)Expenses not deductible for tax purposes 149,732 13,845Capital allowances for period in excess ofdepreciation (175,661) (15,394)Losses carried forward 1,456,789 595,152Adjustment for prior year tax credit (164,042) - ----------- -----------Total current tax charge (see above) (164,042) - ----------- ----------- The group has tax losses of approximately £12,000,000 (2005: £8,200,000)available to utilise against future taxable trading profits. No deferred tax asset has been recognised as there is insufficient evidence thatthe asset will be recovered in the foreseeable future. The amount of the asset,(principally in relation to losses) not recognised at 31 December 2006 isapproximately £3,700,000 (2005: £2,600,000). Future tax credits will be impacted by the announced change in the corporationtax rate from 30% to 28% effective from 1 April 2008 4 Loss per ordinary share The basic loss per ordinary share has been calculated by dividing the retainedloss for the financial year by the weighted average number of ordinary shares of32,760,696 (2005: 32,488,970) in issue during the year. The Company had nodilutive potential ordinary shares in the year that would serve to increase theloss per ordinary share. Accordingly, there is no difference between the basicand diluted loss per ordinary share. 5 Called up share capital 2006 2006 2005 2005 Number £ Number £AuthorisedOrdinary share of 5p each 60,000,000 3,000,000 60,000,000 3,000,000Allotted, called up and fully paidOrdinary share of 5p each 35,108,970 1,755,448 32,488,970 1,624,448 On 1 December 2006 the company placed 2,500,000 ordinary shares of 5p each at aplacing price of 60p per share raising £1,500,000 (£1,439,632 net of expenses).A further £6,000 was raised from the exercise of options at 5p over 120,000Ordinary Shares of 5p. 6 Share-based payments A reconciliation of share option scheme movements for the years ended 31December 2006 and 2005 is set out below: 2006 2006 2005 2005 Weighted Weighted average average exercise price exercise price Number p Number p Outstanding 3,409,320 42.4 821,403 26.2at 1JanuaryGranted 1,830,449 32.2 2,587,917 47.1Exercised (120,000) 5.0 - 5.0Lapsed (827,997) 47.9 - - ---------- --------Outstanding 4,291,772 37.5 3,409,320 42.4at 31 ========== =========== ======== ==========DecemberExercisable 387,997 26.1 761,403 26.1at 31 ========== =========== ======== ==========December The cost of share options awarded to employees under the Screen Technology Groupplc 2005 Enterprise Management Investment Scheme and the Screen Technology Groupplc 2005 Unapproved Share Option Scheme is measured by reference to their fairvalue at the date of grant, with fair value being measured with a Black-Scholespricing model. The Company's effective date for FRS 20 'Share based payment'implementation is 1 January 2006 and therefore FRS 20 has been applied to alloptions granted after 7 November 2002 which have not vested by this effectivedate. The options disclosed below include options that the Company had agreed to grantbefore 31 December 2006 but had not yet granted, showing the date of the grantas the date the agreement was reached. Details of options over ordinary shares of 5p outstanding at 31 December 2006together with the fair value at grant of each option and the assumptions used inthe calculation are as follows: Options granted under the Screen Technology Group plc 2005 Enterprise Management Incentive Scheme and the Screen Technology Group plc 2005 Unapproved Share Option Scheme Date of grant Date first Expiry date Number of Exercise price Expected Risk free Fair value exercisable options (p) volatility rate per option (p) July 2005 15-Jul-08 15-Jul-15 1,408,732 46.5 50% 4.10% 15.6August 2005 01-Aug-08 01-Aug-15 100,000 63.0 55% 4.26% 23.1January 2006 01-Jan-09 01-Jan-16 200,000 50.5 55% 4.20% 17.4November 2006 01-Apr-07 01-Apr-16 543,483 30.0 60% 4.89% 38.7November 2006 01-Apr-08 01-Apr-16 543,483 30.0 60% 4.89% 38.7November 2006 01-Apr-09 01-Apr-16 543,483 30.0 60% 4.89% 38.7 --------Total optionsrelevant toFRS 20 5,228,161 Notes:1. The expected life of options ranges from 3.5 - 5 years according to the date that options were granted.2. The expected dividend yield is nil reflecting the absence of a history of paying dividends.3. There are no performance conditions associated with the exercise of options.4. The leavers rate is assumed to be nil except where leavers during 2005, 2006 and 2007 are already known.5. Expected volatility is derived from a "weighted average volatility", rounded to the nearest 5%, based on actual volatility, calculated by the standard deviation of thenatural logarithm of share price movements, in the relevant period prior to the grant of the options or for options issued at the time of the flotation immediately afterthe flotation6.The risk free rate is determined by the yield from Treasury Gilt Strips with a similar term to the period until the expected exercise of the option. The total charge for the year relating to share based payments was £381,503 which related to the above equity based transactions. The cost relating to the prior year hasbeen recognised in these financial statements as a prior year adjustment and comparative figures have been restated accordingly. The impact in the year ended 31 December2005 is a charge of £37,067. There is no impact on the net assets of the Group. 7 Share premium and reserves Share premium Other Profit and loss account reserves accountGroup £ £ £At beginning of year 6,682,989 7,602,857 (9,819,206)Loss for the year - - (4,605,491)FRS 20 credit to reserves - - 381,503Premium on share issues 1,375,000 - -Expenses written off (60,368) - - ------------ --------- ------------At end of year 7,997,621 7,602,857 (14,043,194) ------------ --------- ------------ Share premium Other Profit and loss account reserves accountCompany £ £ £At beginning of year 6,682,989 - 103,446Profit for the year - - 321,413FRS 20 credit to reserves - - 7,705Premium on share issues 1,375,000 - -Expenses written off (60,368) - - -------------- --------- ------------At end of year 7,997,621 - 432,564 -------------- --------- ------------ 8 Commitments (a) capital commitments at the end of the financial year, for which no provision has been made, are as follows: Group Company 2006 2005 2006 2005 £ £ £ £ Contracted 1,006,867 1,321,832 - - (b) Annual commitments under non-cancellable operating leases are as follows: Land and Other Land and Other buildings buildings 2006 2006 2005 2005Group £ £ £ £Operating leases which expire:Within one year - - 14,667 -In the second tofifth yearsinclusive 100,000 - - -Over five years - - - - ---------- ---------- --------- -------- 100,000 - 14,667 - ---------- ---------- --------- -------- 9 Analysis of cash flows 2006 2005 £ £Returns on investment and servicing of financeInterest received 113,868 115,840Interest paid (7,845) (43,806) ---------- ----------- 106,023 72,034 ---------- -----------Capital expenditure and financial investmentPurchase of tangible fixed assets (1,882,627) (350,583) ---------- ----------- (1,882,627) (350,583) ---------- -----------FinancingIssue of ordinary share capital (net of expenses) 1,445,632 7,313,679Issue of ordinary share capital (Screen TechnologyLimited) - 80,528Issue of convertible loan stock - 500,000Called up share capital paid - 75,263Capital element of finance lease rentals (2,366) (768) ---------- ----------- 1,443,266 7,968,702 ---------- ----------- 10 Analysis of net funds Analysis of net funds At beginning of year Cash flow At end of year £ £ £Cash in hand, at bank 246,504 369,494 615,998Liquid resources 5,400,000 (5,400,000) - --------- ---------- ------------ 5,646,504 (5,030,506) 615,998 --------- ---------- ------------Finance leases (9,577) 2,366 (7,211) --------- ---------- ------------ Total 5,636,927 (5,028,140) 608,787 --------- ---------- ------------ 11 Related party disclosures Thomas Swan & Co. Ltd. charged fees of £25,000 per annum for the provision ofthe services of Thomas Swan as a director of the Company. MTI Partners Limitedhas charged fees of £25,000 per annum for the provision at various times of theservices of Tom Jarman and Ernie Richardson as a non-executive director of theCompany and a further £25,000 for management services. MTI Partners also chargedfees of £65,000 for the services of Tom Jarman as acting Chief Executive Officerfrom April 2006 until he was appointed Chief Executive Officer in November 2006.The fees of £65,000 are included in directors' emoluments in the full financialstatements. Other incidental expenses incurred on behalf of the Company are alsorecharged to the Company. 12 Post balance sheet events In May 2007 the Group completed the acquisition of its first high-speed ITranstile assembly machine and also completed a sale and leaseback transactionvaluing the machine at £1.1 million. Also in May 2007, the Group received an R&D tax credit of £164,042 in respect ofthe year ended 31 December 2005. The receipt of this amount has been accrued inthe accounts for the year ended 31 December 2006 and included under Otherdebtors. This information is provided by RNS The company news service from the London Stock Exchange