RNS Number:2866Y
3DM Worldwide PLC
14 June 2007
3DM Worldwide plc (the "Company" or "3DM")
Preliminary unaudited results for the year ended 31 December 2006
CHIEF EXECUTIVE OFFICER'S STATEMENT
2006 has been a busy year for the Company culminating in the restructuring of
the business.
COMMERCIAL ACTIVITIES
The development of the Eco Sheet product in conjunction with Bovis Lend Lease
Ltd provided the springboard for commercial discussions. The product is
positioned as a replacement for plywood in temporary works within the
construction industry. Following trials of the board as site safety fencing and
use as concrete forms (moulds), Eco Sheet won the Chartered Institute of
Building Award for Innovation.
Eco Sheet has generated commercial interest within the construction industry
where the focus on recycling is gaining momentum. This has led to advanced
licence negotiations with Express Recycling and Plastics Ltd (Express) for the
Eco-Sheet manufacturing rights in the UK. Express plans to set up a fully
operational production plant in South East England during the second half of
2008.
In South Africa, where 3DM Worldwide plc (3DM) has appointed a marketing agent,
negotiations on Eco Sheet production are underway with a consortium of recycling
and manufacturing companies. Further interest in taking the Eco Sheet product to
market in Europe has also been expressed.
While the prospect of the European Union funded project in Tanzania remains
positive, there has been a delay in obtaining the appropriate permissions from
the Tanzanian Government where there is a considerable backlog in processing
project applications.
The application for European funding for a plastic recycling project in Kenya
has recently been submitted. Again representations to the Kenyan Finance
Minister have been well received and we expect to be able to report on progress
later in the current financial year.
3DM is in the process of forming a joint venture with a local recycling company
to establish a plastic recycling and a Powder Impression Moulding (PIM)
manufacturing plant in East Hungary. The joint venture has made representations
to the Hungarian Finance and Environment Minister for support in funding the
project, which has been positively received. Formal submission of the project
will be made in July 2007.
RJ Plastics Ltd and 2k Manufacturing Ltd, who took up licences earlier this
year, are both in the process of product development and evaluation of their
respective manufacturing strategies.
Environmental Polymer Technologies Ltd (EPT) has successfully developed
prototype surf boards with samples being produced on the Beta line in Bedwas
House. EPT continues to develop pallet applications including a one trip pallet
with sample products being produced at their new Semley facility. Panel products
incorporating recycled tyre rubber have also successfully been produced.
Licence opportunities in the Middle East are under discussion with a number of
parties. The Board has concluded that while opportunities will continue to be
explored, it is vital that the right partners be found to take the PIM
technology forward in China and the Far East.
In the USA product development work utilising the PIM process is successfully
underway through Global Tech. Inc. (GTI), an existing licence holder. Moulds
have been manufactured for James Marine Inc. for the development, and ultimately
production, of river barge covers. These moulds measure 10m long and represent
the largest moulds manufactured for the PIM process to date.
The development work with Kelly Space Technology Inc. for various parts
encapsulating anti-ballistic material for military vehicles continues to
progress satisfactorily.
GTI also continues to work on a range of encapsulated automotive components with
ASIMCO Technologies and USCAR, the United States Council for Automotive
Research, an umbrella organisation for collaborative research between, Daimler
Chrysler Corporation, Ford Motor Company and General Motors Corporation.
RESTRUCTURING
The work completed on Eco Sheet has proven the commercial viability of the PIM
process. This in turn allowed the business to be restructured with the sale on
30 November 2006 of 3DM Europe Ltd and its subsidiary 3DM Group Ltd, including
the Bedwas House facility to EPT. 3DM Worldwide plc will receive 30% of the
revenues generated by EPT through the use of the PIM process.
The disposal has allowed the business to focus on the commercial exploitation of
the PIM process while still having access to the Alpha line and Bedwas House
facility for client demonstrations and conferences. The close working
arrangement with EPT, an existing licence holder, also ensures 3DM can continue
to develop products on behalf of clients. As part of the sale, existing
contracts with 3DM Group transferred to EPT.
The acquisition of 3DM Europe Ltd and its subsidiary 3DM Group Ltd by EPT
provided significant synergies avoiding duplication of effort in process and
material research and development. EPT has undertaken the development of
production systems for large-scale three dimensional products including large
diameter pipes and marine products such as work boats.
This sale has significantly reduced the ongoing overheads of the business.
In line with our stated strategy to simplify the group structure, 3DM has
disposed of the share holding in Longborough Capital plc for a consideration of
#100,000. 3DM has also divested its interest in Highseas Technologies Ltd.
INTELLECTUAL PROPERTY
The intellectual property bank has increased with the following patents being
granted since the beginning of 2006:
PIM process in China (patent no.ZL028045750)
PIM process in New Zealand (patent no. 527461)
PIM Light duty truck dumping mechanism in the United States (patent no.7032977
B2)
The European blow moulding technology patent oral examination was won in 2007
and will proceed to grant later this year. This brings the total number of
patents granted to 10 with another 14 in progress.
3DM has acquired the full licensing rights to processes for recycling
agricultural film, x-ray plates and medical waste into a feedstock for the PIM
process. These licenses form a key part of the funding applications for the
Hungarian and Kenyan projects.
3DM has also taken the lead role in forming a consortium comprising Tesco, Bovis
Lend Lease Ltd, Severnside Recycling, Phillip Tyler Polymers, Brunel University
and Pera for a 2 year project to develop sustainable products made from recycled
plastic using the PIM process. The consortium has recently won a Department of
Trade & Industry grant for #600,000 funding as part of the #1.2 million project.
This is a commercially focused project aimed at developing products for sale
into the retail and construction industry.
DEVELOPMENT ACTIVITIES
To assist in providing clients with turnkey manufacturing solutions for the PIM
process, 3DM has entered into a collaboration agreement with Arup, a global
design and business consulting firm. Arup has a range of skills including
acoustics, construction, material development, sustainable product development,
vehicle design and project management as well as an enviable track record in
delivering major projects. Arup will provide the technical expertise and global
reach to assist 3DM in delivering projects on behalf of our clients.
Initial analysis has shown that the PIM process compares favourably to other
plastics processes in terms of carbon footprint. Compared to other plastics
processes using virgin polymers, preliminary research shows that the PIM process
generates only one quarter of the carbon dioxide when using recycled waste
plastics. This significantly adds to the environmental credentials of the PIM
process.
CHANGES TO THE BOARD OF DIRECTORS
During the year there have been a number of changes to the Board. Having
previously announced his intention to step down as a director, the Board and key
shareholders persuaded Ken Brooks to remain as Non Executive Chairman. Ken has
been instrumental in effecting the restructuring of the business. To build on
the growing opportunity in recycling of waste plastics, Roger Baynham was
appointed Executive Deputy Chairman. Peter Oldham stood down from the Board as
Operational Director and his position has not been replaced. The Board would
like to thank Peter for his contribution to the development of the Company.
OUTLOOK
While sales revenue was disappointing in 2006 the focus on cost control remained
strong throughout the year. This focus will continue with overheads being kept
to a minimum. The company will draw in external expertise on a project by
project basis to deliver turnkey manufacturing solutions to clients.
Moving forward, considerable groundwork has been completed in 2006 to
restructure the business and establish commercially viable projects. While
maintaining the focus on current projects, 3DM will build on the environmental
credentials of the PIM process focusing on recycling the vast amounts of mixed
plastic wastes currently being sent to incineration or landfill. The increasing
public awareness of environmental issues and climate change, particularly in
Europe, presents significant opportunities for the Company. 3DM is uniquely
positioned to take advantage of these opportunities and this will be at the
centre of our marketing campaign.
3DM has never been in as strong a position to exploit the commercial
opportunities presented by the PIM process and deliver value for shareholders.
NIALL MACKAY
Chief Executive Officer
FINANCIAL REVIEW
RESULTS
Turnover in 2006 was #0.36 million compared to #0.40 million in 2005. The
consolidated net operating loss was #5.7 million, up from #4.7 million in 2005.
Consolidated losses before tax were #7.3 million compared to losses of #4.7
million in 2005.
DIVIDENDS AND LOSS PER SHARE
No dividend payment is proposed.
There remained 20.5 million warrants and 4.5 million shares under option at the
year end which produced no effect on the earnings per share. The loss per share
was (9.41) pence compared to (6.94) pence in 2005.
TRADING
Turnover included revenue generated from production work, accrued royalties from
Silkwood and a proportion of licence income which is taken to income over the
expected life of the licence of three years.
Cost of sales covers material purchases for the Alpha and Beta lines used in the
production of samples and a small amount of finished product.
Administration expenses in the year totalled #6.0 million compared to #5.2
million in 2005. Included in administration expenses are all research and
development costs, all operating costs associated with the running of the Alpha
and Beta lines at Bedwas House up to 30 November 2006 (the date of the
disposal), corporate expenses, the legal costs associated with securing the
ongoing intellectual property assets and a number of specific provisions.
Administration costs also include an increase in depreciation on plant and
machinery, a charge in relation to the write off of investments and provisions
against the investments and associated debts which your board considered
prudent.
DISPOSAL OF NON-CORE ASSETS/INVESTMENTS
In line with our stated strategy to simplify the group structure and increase
transparency, the Company's investment in Highseas Technologies Ltd was disposed
of during the year resulting in a charge of #28,750. A provision of #225,000 was
made against the investment in Medical Waste Solutions Limited due to
restructuring of their company.
A provision of #391,850 has been made against the debt due from Silkwood
Financial Corporation Inc. where legal action is now being pursued to recover
the outstanding balance due. A provision of #620,380 was made against balances
owed by Value Plastic Technologies LLC. These have both been treated as
exceptional administration expenses.
A profit of #88,000 was made on the disposal of shares in Longborough Capital
plc during the year.
DISPOSAL OF SUBSIDIARIES
3DM Europe Ltd and its subsidiary 3DM Group Ltd were disposed of as at 30
November 2006 to EPT an existing licence holder for the PIM process. As part of
the deal 30% of the revenue generated by the use of the PIM process by EPT will
be paid to 3DM Worldwide plc. The assets disposed of included the facility at
Bedwas House, the Alpha and Beta lines, the associated staff, overheads and
machinery finance.
The outstanding inter company debt between 3DM Worldwide plc and 3DM Group Ltd
was restructured (effectively writing off the bulk of the inter company loans
that financed 3DM Group Ltd) leaving an outstanding inter company debt of
#598,583 owed by 3DM Group Ltd to 3DM Worldwide plc. This debt is to be repaid
no later than the 31 December 2008. The net asset value of 3DM Europe Ltd after
this adjustment was #598,583. In consideration of EPT taking over the lease,
staff and other liabilities, a payment of #200,000 was made satisfied by the
issue of 3,076,923 ordinary shares in 3DM.
The negative consideration of #0.8m was made up of #4.3m assets less #3.7m
liabilities, together with the #0.2m payable in shares. An additional provision
has been made for #0.2 million to cover the potential loss arising from
contractual obligations currently under dispute, which primarily relates to the
transfer of the lease on the Bedwas House facility.
The operating losses before taxation attributable to the 3DM Europe Ltd for the
eleven months to 30 November 2006 were #3.1 million representing 54% of total
operating losses incurred. Historically, most of the trading had been carried
out through 3DM Group Ltd and financed by 3DM Worldwide plc through the inter
company account. The net effect of writing down the inter company debt and the
charge to 3DM's profit and loss account for the total cost of disposal was #0.9
million.
A further loss on disposal of #0.18 million has been provided for arising from
outstanding finance obligations on fixed assets sold to Medical Waste Solutions
Ltd bringing the total losses on disposal to #1.1 million.
These disposals have enabled the company to return to its original licensing and
royalty model significantly reducing operating overheads and cash outflow.
FINANCING
In late 2005, the Company entered into a convertible loan note with Cornell
Capital Partners, L.P. (Cornell) and Montgomery Equity Partners L.P.
(Montgomery) to provide a #4.75 million draw down facility.
As reported in the Interim Statement, Cornell Capital Partners L.P. ("Cornell")
made a further advance of #1.5m on 29 June 2006 increasing its debenture loan to
#6.25 million including arrangement fees. Since 1 January 2006 to date, Cornell
has converted #3.4 million at an average price of 6.64p per share. Cornell is
entitled to convert up to a maximum of #300,000 per week in to shares in the
company at a price which is the lower of 90% of the volume weighted average
price during either the 10 days prior to the closing date of the deals or the 10
days prior to the conversion date. 3DM has the right to repay all or part of the
combined debenture in cash.
The company also has a Standby Equity Distribution Agreement (SEDA) with Cornell
to the value of #5 million which is due to expire in September 2008. No draw
down has been made against this facility.
With this facility and the reduced overhead base, the company has access to
sufficient funds to operate going forward and to fund the commercialisation of
the PIM process.
DAVID SHEPLEY-CUTHBERT
Finance Director
UNAUDITED CONSOLIDATED PROFIT AND LOSS ACCOUNT
YEAR ENDED 31 DECEMBER 2006
Notes Continuing Discontinued Total Year Total
Operations Operations Ended 31 Year
2006 2006 December Ended 31
2006 December
2006
#'000 #'000 #'000 #'000
Turnover
Continuing operations 319 40 359 404
--------- --------- --------- ---------
319 40 359 404
Cost of sales - (177) (177) (113)
--------- --------- --------- ---------
Gross profit 319 (137) 182 291
Administrative expenses
- exceptional 7 (1,012) - (1,012) -
- other (2,070) (2,976) (5,046) (5,188)
--------- --------- --------- ---------
(3,082) (2,976) (6,058) (5,188)
Other operating income 144 - 144 236
--------- --------- --------- ---------
Operating Loss (2,619) (3,113) (5,732) (4,661)
Loss on disposal of subsidiary
- (1,121) (1,121) -
--------- --------- --------- ---------
(2,619) (4,234) (6,853) (4,661)
Foreign currency gains on investments - 247
Interest receivable 5 -
Interest payable (478) (297)
--------- ---------
Loss on ordinary activities before (7,326) (4,711)
taxation
Tax on loss on ordinary activities - 75
--------- ---------
Loss on ordinary activities after (7,326) (4,636)
taxation --------- ---------
Loss per share
Basic and diluted loss per ordinary share (9.41)p (6.94)p
--------- ---------
Loss per share excluding loss on disposal (7.97)p (6.94)p
of subsidiary --------- ---------
UNAUDITED CONSOLIDATED BALANCE SHEET 31 DECEMBER 2006
Notes 31 31
December December
2006 2005
#'000 #'000
As restated
Fixed Assets
Intangible assets 12,473 11,996
Tangible assets 544 5,158
Investments 97 65
--------- ------------
13,114 17,219
--------- ------------
Current Assets
Debtors 6 974 2,330
Cash at bank 55 4,507
--------- ------------
1,029 6,837
Creditors: amounts falling due within one year (4,867) (7,245)
--------- ------------
Net current liabilities (3,838) (408)
--------- ------------
Total assets less current liabilities 9,276 16,811
Creditors: amounts falling due after more than
one year
(1,708) (5,329)
--------- ------------
Net Assets 7,568 11,482
--------- ------------
Capital and reserves
Called-up equity share capital 2,656 1,670
Share premium account 32,213 29,992
Warrant reserve 468 265
Profit and loss account (27,769) (20,445)
--------- ------------
Shareholders' funds 7,568 11,482
--------- ------------
UNAUDITED CONSOLIDATED CASH FLOW STATEMENT
YEAR ENDED 31 DECEMBER 2006
31 December 2006 31 December 2005
#'000 #'000
Net cash outflow from operating (1,857) (3,133)
activities
Returns on investments and servicing of
finance
Interest received 5 -
Interest paid (369) (270)
----------------- -----------------
Net cash outflow from returns on (364) (270)
investments and servicing of finance
Capital expenditure and financial
investment
Purchase of tangible fixed (220) (3,312)
assets
Sale of investments 100 -
----------------- -----------------
Net cash outflow from capital expenditure (120) (3,312)
and financial investment
----------------- -----------------
Net cash outflow before financing (2,341) (6,715)
----------------- -----------------
Financing
Issue of equity share capital 314 36
(Repayment)/Inception of finance leases (164) 3,320
(Repayment)/Inception of loans (2,031) 7,560
----------------- -----------------
Net cash flow from financing (1,881) 10,916
----------------- -----------------
(Decrease)/Increase in cash (4,222) 4,201
----------------- -----------------
UNAUDITED STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES YEAR ENDED
31 DECEMBER 2006
Year Ended Year Ended
31 December 31 December
2006 2005
#'000 #'000
As restated
Loss for the financial year (7,326) (4,636)
Currency translation differences on foreign - (247)
currency ------------- --------------
Total recognised gains and losses relating (7,326) (4,883)
to the year --------------
Prior period adjustment (254)
-------------
Total recognised gains and losses since the (7,580)
last financial statements -------------
NOTES TO THE ACCOUNTS
UNAUDITED RECONCILIATION OF MOVEMENT IN SHAREHOLDERS' FUNDS
Year Ended Year Ended
31 December 2006 31 December 2005
As restated
#'000 #'000 #'000 #'000
Loss for the financial year (7,326) (4,636)
New equity share capital 986 2
Premium on new equity share 2,221 34
capital
Movement in warrant reserve 203 98
Movement due to share options 2 -
------- -------
3,412 134
-------- --------
Net reduction to funds (3,914) (4,502)
Movement in reserves due to - (247)
foreign exchange differences
Opening shareholders' funds 11,482 16,231
-------- --------
Closing Shareholders' funds 7,568 11,482
-------- --------
1. The calculation of loss per share is based on the loss of #7,326,065 (2005:
#4,635,992) and on 77,862,312 Ordinary shares (2005: 66,802,356) in issue.
2. The financial statements have been prepared on the basis of the accounting
policies set out in the Group's statutory accounts for 2006.
3. The financial information set out above does not constitute the company's
statutory accounts within the meaning of section 240 of the Companies Act 1985.
The 2006 figures are based on unaudited accounts for the year ended 31 December
2006. The auditors do not expect to issue a qualified report on the statutory
accounts which will be finalised on the basis of the financial information
presented by the directors in the preliminary announcement and which will be
delivered to the Registrar of Companies following the company's annual general
meeting.
4. The 2005 comparatives are derived from the statutory accounts for 2005,
except for the prior year adjustments, which have been delivered to the
Registrar of Companies and received an unqualified audit report and did not
contain a statement under the Companies Act 1985, s237(2) or (3).
5. This statement will be made available online at www.3dmworldwide.com and
copies will be made available at the Company's registered office, Regent
House, 316 Beulah Hill, London, SE19 3HF.
6. Included in Debtors is an amount due of #598,583 by 3DM Group Limited. This
amount is not due to be repaid until 31 December 2008.
7. The exceptional item of #1,012,230 is a write off of loans and trade debts
which were owed by Silkwood Financial Corporation Inc. and Value Plastics
Technologies LLC.
8. The Group has adopted FRS 20, 'Share Based Payment' for the first time.
FRS 20 'Share Based Payment' requires the recognition of share based payments at
fair value at the date of grant. Prior to the adoption of FRS 20, the Group
recognised the financial effect of the share based payment in the following way:
when shares and share options were awarded to employees, a charge was made to
the profit and loss account based on the difference between the market value of
the company's shares at the date of grant and the option exercise price in
accordance with UITF Abstract 17 (Revised 2003) 'Employee Share Schemes'. The
credit entry for this charge under both FRS 20 and UITF 17 was taken to the
share option reserve.
In accordance with the transitional provisions of FRS 20 and the latest
interpretations thereof, the standard will be applied in the 2006 annual
accounts from the relevant effective date, being 1 January 2006. This is
different to the manner in which FRS 20 was dealt with in the 2006 interim
accounts.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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