Softcat Regulatory News (SCT)

20 Apr 2006 07:01

Screen Technology Group plc20 April 2006 For immediate release 20 April 2006 Screen Technology Group plc ("Screen Technology" or "the Company") 2005 PRELIMINARY RESULTS Screen Technology Group plc ("Screen Technology" or "the Company" or "the Group") the designer and manufacturer of revolutionary high-resolution large-screen displays for high ambient light environments announces its firstconsolidated results for the year ended 31 December 2005. Highlights • Successful flotation in July 2005 raising £7.1m for production expansion • Successful launch of ITrans to international market • First displays shipped to value added resellers • Orders placed for high speed production equipment • Expanded and strengthened management team Key financial information • Sales £115,500 in line with expectations • Consolidated operating loss before tax £1.9 million • Cash at bank at 31 December 2005 £5.6 million Peter Smyth, Non-executive Chairman, said today: "This year has been a very exciting one for Screen Technology. We have movedfrom being a small research and development based company to being a quotedmanufacturing company. Since our flotation in August of 2005, the workforce hasnearly doubled and we have shipped our first products. We are now concentratingon building up our production resources to capitalise on the growing demand forITrans." For more information please contact Screen Technology Group plc 01223 559600Tom Jarman, CEOSimon Barton, Finance Directorwww.screentechnology.com Buchanan Communications 0207 466 5000Isabel Podda Chairman's statement 2005 has seen a major step forward for Screen Technology. The year has seen thedevelopment of the Group's technology into a product that can be manufactured ona commercial scale, the flotation of the business on AIM, the launch of ITranson the international market to considerable acclaim from the display industry,an expansion and strengthening of the management team, the first productsshipped to customers and the commencement of our planned substantial investmentin production capacity. The Group's key product, ITrans, remains the only solution capable of producinghigh-resolution, large seamless displays viewable over short or long distancesin high brightness environments. The commercial display industry has continuedto show very strong interest in ITrans. Since the flotation the Group's focushas been to increase production capacity to deliver commercial quantities tosatisfy the levels of demand being expressed by the marketplace. By the end of2005, orders had been placed for two additional production machines and twofurther machines have been ordered since the year end. I was delighted to join the Screen Technology team prior to its flotation inJuly 2005. Simon Barton joined the executive board as Finance Director at thetime of the flotation and his extensive experience has made a significantcontribution to the management of the business. Tony Kellett however resignedas CEO in April 2006 and has been replaced by Tom Jarman, previously anon-executive director of the Group. I would like to thank Tony for hiscontribution to Screen Technology's development. Screen Technology's management board has been substantially enhanced andstrengthened during 2005. Alex Suszko joined the management board as ProductionDirector at the end of 2005. His many years of manufacturing experience havebeen invaluable in driving through the changes in the business from being aresearch based technology company to become a manufacturing company deliveringquality product in volume. Andy Holmes joined the management board asCommercial Director in March 2005. His extensive knowledge of the displayindustry and contacts around the world have been valuable in raising the profileof Screen Technology and providing the platform for sales growth. Staff numbers have increased significantly since the beginning of 2005 and rapidgrowth is continuing and I would like to thank all our staff for their hard workand dedication during the period. Business review Flotation On 28 July 2005, Screen Technology Group plc was formed with the acquisition ofScreen Technology Limited and the Group floated on the AIM market on 1 August.This move was made possible with the almost simultaneous launch of ITrans, theGroup's revolutionary high-brightness, high-resolution large seamless displaytechnology, the culmination of nine years of development. First discussionswith key prospective customers in the display industry demonstrated thepotential of the technology and it became clear that the top priority was toincrease production capacity to meet the demand being expressed. £7.1 million was raised (net of expenses) from institutional investors andprivate individuals of which £2.0 million came from MTI Partners, one of ScreenTechnology's early backers. These funds have been earmarked principally forexpenditure on new production machinery to take the Group's existing low volumecapacity to a high-volume fully automated production facility. Funds were alsorequired for an increase in staff numbers as the business grows and also to funda continuing product development process to keep ITrans at the forefront ofcommercial large screen display technology. Expansion in production capacity At the time of the flotation in August 2005, Screen Technology had one machinecapable of low volume production of ITrans tiles that go to make a seamlessITrans display. This machine produced a number of demonstration units and theITrans product was successfully launched to an expectant display industry inSeptember 2005. Further demonstration units have been produced and also thefirst production units were shipped in December 2005. These production unitshave been shipped to value-added resellers, Screen Technology's key route tomarket, in Dubai, Singapore and the UK where they are being used to buildawareness of the ITrans product with end-users such as airports, railwaystations and shopping malls. Between the flotation and the end of the year, the Company placed orders for asecond low-volume machine and for the first of the Group's high-speed productionmachines. The low volume machine was delivered in February 2006 and has begunto contribute towards tile production but the fundamental shift in productioncapacity foreseen at the time of the flotation will not occur until the deliveryof the first high-speed machine, which is expected to be in the mid to latesummer of 2006. Since the end of 2005, two further orders have been placed for high-speedmachines with a total value of almost £2 million. These will have a significanteffect on production capacity towards the end of 2006 and would enable the Groupto meet our expected increase in sales in 2007. Trading in 2005 As disclosed in the Group's trading statement in November 2005, ScreenTechnology has been concentrating primarily on enhancements to productionprocesses and on the manufacture, using the limited production resourcesavailable to it, of demonstrator units for use with potential customers and atinternational display industry exhibitions. Some small sales were however shipped to customers in December 2005 and theCompany is therefore pleased to announce sales of £115,500 for the period ended31 December 2005. Outlook for 2006 The Board of Screen Technology is looking forward with considerable confidenceto 2006, which promises to be another exciting year. The expected delivery ofthree high-speed production machines during the year will transform the Group'sproduction capacity from a small-scale low-volume operation to a high-speedautomated production facility. The Group has, to date, been reluctant to acceptlarge orders as its limited production capacity would inevitably have meant longlead-times leading to frustration amongst customers keen to get hold of the verylatest large display technology. The expected increases in production capacitymean however that the Group is beginning to accept larger orders. As disclosed last month, Screen Technology continues to see strong demand fromthe display industry for ITrans and, has recently received firm orders in excessof £0.5 million to commence shipment in the second half of the year. The Group continues to develop relationships with value-added resellers ("VARs")around the world. These VARs are a key route to market for Screen Technology asthey provide the local contacts and support network for Screen Technology'sproducts. The first products shipped in December 2005 were to VARs and in 2006the Board expects VARs to be a significant source of orders. A key development for 2006 will be the launch of a modular product allowingscreens of any size to be shipped easily to the customer and then assembled andinstalled quickly on site. The modular product design is already in progressand the board expects it to be launched during the third quarter of 2006. Financial review Overview These consolidated results are presented on a merger accounting basis. Althoughthe Group was formed on 28 July 2005 with the acquisition of Screen TechnologyLimited by Screen Technology Group plc, Screen Technology Group plc then floatedon AIM on 1 August 2005, the results are consolidated as though the merger tookplace at the beginning of 2005, presenting a full year's results for ScreenTechnology Limited. Comparable figures for the year ended 31 December 2004 arefor Screen Technology Limited alone. Sales for the year were concentrated in December 2005 as the first productionunits were shipped just before the year end. These were demonstrator unitsshipped to key value-added resellers in the UK and overseas. The displayindustry is truly international with very strong interest being shown in the UK,Europe, the US and the Middle and Far East. The Group expects to focusinitially on Europe and the Middle and Far East in 2006 with expansion into theUS later in 2006. The consolidated loss for the year after the flotation represents the continuingdevelopment of ITrans resulting in the launch of a commercial product in July2005. After the flotation, further significant expenditure using the fundsraised was incurred in moving towards full commercial sales production and thelosses for the five months after the flotation represent 60 per cent. of thelosses for the whole year. This has involved an increase in staffing levels,from 12 at the beginning of 2005 to 23 by the end of December and large increasein the employment of design consultancies and additional external engineeringresources to take the original low volume development machinery to a commercialscale. The loss for the year contains a number of costs that are reflective of ScreenTechnology Limited's status in the first half of the year as a company backed byprivate funds and without significant cash resources. Finance costs includeinterest payable and the costs of negotiating and securing loan funding whichwas no longer required as a result of the flotation. Cash resources The cash position of the business is strong. The £1.65 million of loan stockoutstanding at the beginning of 2005 was converted into shares in ScreenTechnology Limited prior to the flotation. £7.1 million net of expenses wasraised at the time of the flotation and the year end cash position was £5.6million. The bulk of cash expenditure during the period has been on production machinerywith over £350,000 of capital expenditure since August 2005. That investmentwas principally stage payments on machines being designed and built for ScreenTechnology. One of the machines has since been delivered with a second machinedue to be delivered by the mid to late summer of 2006. Since the year end, theGroup has committed to further capital expenditure of almost £2.0 million fortwo more high-speed tile production machines for delivery in late 2006. The high-speed machines represent a significant cash commitment but the boardexpects that they will quickly generate cash as production capacity becomesavailable. The Group does not expect to need to raise any further cash fromexternal sources before the Group becomes cash positive. The Group moved to new premises just after the year end at a very attractiverental. The balance sheet at the year end includes a substantial prepaymentrepresenting the entire rental on the premises for the 18 months that thepremises are available. This enabled the Group to secure the premises duringthis 18 month period which allows time for new purpose built premises to beconstructed close to Cambridge. Consolidated profit and loss statement (unaudited)For the year ended 31 December 2005 Year ended 31 December 2005 2004 Screen Screen Technology Technology Group plc Limited Consolidated £ £ Turnover 115,500 -Cost of sales (65,633) - -------------Gross profit 49,867 - Administrative expenses (2,063,511) (1,239,104)Other operating income - 127,589 ------------- -------------Operating profit / (loss) (2,013,644) (1,111,515) Interest receivable and similar income 115,840 2,705Interest payable and similar charges (43,806) (846) ------------- -------------Loss on ordinary activities before taxation (1,941,610) (1,109,656)Tax on loss on ordinary activities - - ------------- -------------Loss for the financial year (1,941,610) (1,109,656) ------------- ------------- Consolidated balance sheet (unaudited)at 31 December 2005 31 December 31 December 2005 2004 Screen Screen Technology Technology Group plc Limited Consolidated £ £ Fixed assets 364,585 54,604 Current assetsStock & WIP 89,963 -Debtors 475,811 131,170Cash at bank and in hand 5,646,504 14,406 Creditors (amounts falling due within one year)Convertible redeemable loan stock - (1,650,000)Other creditors (478,502) (61,689) ------------- -------------Net current assets 5,733,776 (1,566,113) ------------- -------------Total assets less current liabilities 6,098,361 (1,511,509) Creditors (amounts falling due after more than (7,273) -one year) ------------- -------------Net assets 6,091,088 (1,511,509) ------------- ------------- Capital and reservesCalled up share capital 1,624,449 -Share premium 6,682,989 - ------------- 8,307,438 - Other reserves 7,602,856 6,366,087Profit and loss account (9,819,206) (7,877,596) ------------- ------------- 6,091,088 (1,511,509) ------------- ------------- Consolidated cash flow statement (unaudited)for the year ended 31 December 2005 Year ended 31 December 2005 £ Operating profit (2,013,644)Depreciation 18,347Loss on disposal of fixed assets 32,600(Increase)in stocks (89,963)(Increase)in debtors (344,641)Increase in creditors 414,509 -------------Net cash outflow from operating activities (1,982,792) Returns on investments and servicing of finance 72,034Capital expenditure and financial investment (351,351) -------------Cash (outflow) before management of liquid resources and financing (2,262,109) Flotation proceeds 7,946,697Other movements in reserves (633,018)Share subscription (Screen Technology Limited) 80,528Issue of convertible loan stock 500,000 -------------Increase in cash for the period 5,632,098 ------------- Notes to the preliminary statement of results 1. Earnings per share Earnings per share are calculated using a weighted average number of shares onthe assumption that the shares issued by Screen Technology Group plc on themerger with Screen Technology Limited have been in issue since the beginning ofthe year. Shares in issue after the merger with Screen Technology Limited 19,875,126 Shares issued on flotation 12,613,804 Weighted average number of shares 25,162,556 Loss per share 7.7p 2. Merger accounting The financial information set out above is presented on a merger accountingbasis consistent with FRS6, treating Screen Technology Group plc as havingacquired Screen Technology Limited at the beginning of the year. Comparablefigures for the year ended 31 December 2004 are for Screen Technology Limitedalone. In the consolidated cash flow statement, the flotation proceeds are shown beforeexpenses. The movement on reserves of £633,018 represents that element of theexpenses of the flotation set against the share premium account. 3. Financial information The financial information set out above does not constitute the Company'sstatutory accounts for the year ended 31 December 2005 and 31 December 2004, butis derived from them. The accounting policies set out in the 2004 accounts havebeen applied in preparing the information for 2005. Statutory accounts forScreen Technology Limited for 2004 have been delivered to the Registrar ofCompanies. The Auditors have reported on the accounts to 31 December 2004.Their report was unqualified and did not contain statements under section 237(2) or (3) of the Companies Act 1985. This preliminary announcement wasapproved by the Board on 20 April 2006. The Company will hold its Annual General Meeting in July 2006, following whichthe statutory accounts for 2005 will be posted and delivered to the Registrar ofCompanies. The Annual Report and Accounts will be posted to shareholders in 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. This information is provided by RNS The company news service from the London Stock Exchange