DDD Group PLC Year end trading update

DDD Group PLC Year end trading update

DDD Group plc, the 3D solutions company, announces a trading update for the financial year ended 31 December 2011.

Trading is in line with the Board's expectations as the Group continues to benefit from increased momentum in license agreements signed during the year. Approximately 9.1 million units of the TriDef 2D to 3D conversion solution were shipped by licensees in the TV, PC and mobile phone markets in 2011, up approximately 250% over 2010.

The Group expects total revenue for the full year to be approximately $5.5 million, up 173% from 2010 (excluding discontinued operations). This increase was driven by a 193% increase in royalty revenues from OEM licensees to $4.5 million. Gross margin is expected to be 94%, up two percentage points from 2010. Cash at the year-end was approximately $3.1 million.

In 2011, DDD developed a more balanced revenue mix from TV, PC and mobile phone manufacturers.

Shipments by TV chip manufacturers grew 194%. Demand for the Group's higher value products in the PC market grew at a compound quarterly growth rate of 141%, reaching approximately 600,000 units per quarter in the fourth quarter. For the whole of 2011, PC software shipments grew 1,199%. Mobile phone shipments, which began in June 2011, represented approximately 10% of unit shipments.

DDD signed 10 new license agreements during the year with PC OEMs, mobile handset makers and TV chip manufacturers, bringing the total number of license agreements signed to 21. At the end of the year, 14 licensees were actively shipping royalty-bearing products, up from 7 at the end of 2010.

At the Consumer Electronics Show in Las Vegas in January 2012, a number of the Group's licensees, including Sony, LG Electronics, Samsung and Lenovo, demonstrated current and future products incorporating TriDef 3D solutions. These products included PCs, TVs, set top boxes and smartphones.

DDD continued to develop its engineering and support team in response to growing demand for the Group's TriDef 3D solutions. Headcount increased by 9 staff to 31, including the addition of local support resources in Taiwan, where many of the Group's PC licensees undertake product development and manufacturing.

The Group also expanded its patent library, adding further patents awarded in the United States, Japan, China and the Philippines for its 2D to 3D conversion and 3D encoding technologies. The total number of issued patents is now 53 across 24 countries.

Chris Yewdall, DDD's Chief Executive Officer said:

"During the second half of the year, we established a greater balance of revenue contribution from the TV, PC and smartphone markets. This reduces our dependency on any single customer and on seasonal demand in any specific market.

"Our TriDef 3D solutions continue to lead the field in the rapidly growing 3D consumer device market, shipping in more than nine million products in 2011.

"The growth in PC software shipments reflects our focus on signing agreements in this market since late 2010. We expect 2012 growth to continue as existing license agreements become active, as we develop opportunities in the emerging smartphone and tablet market, and as shipments by our existing licensees develop in the PC, TV and smartphone markets."

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