DDD Group Releases 2012 Financial Results
Maiden full year profit; diversified revenue growth
LOS ANGELES, April 8, 2013 (GLOBE NEWSWIRE) -- DDD Group plc (AIM:DDD)
(OTCQX:DDDGY) ("DDD" or "the Group"), the 3D solutions company, has published
its full year results for the year ended 31 December 2012.
*Over 15m units of TriDef 2D to 3D conversion solutions shipped by TV, PC
and mobile licensees
*Turnover up 56% to $8,620,000 (2011: $5,534,000)
*Adjusted* EBITDA up 132% to $3,213,000; 37% margin (2011: $1,383,000, 25%
*Profit from continuing operations before tax of $1,314,000 (2011: loss of
*Profit per share of 0.57c (2011: loss of 0.43c)
*Net cash inflow from operating activities of $2,217,000 (2011: $120,000
*Net cash at 31 December 2012 of $3,595,000 (2011: $3,143,000)
* Adjusted for non-cash share based payments
*Licence deals and licence renewals totaled 7 in 2012
*16 licensees shipping royalty bearing products by year-end
*First patent IP licence agreement completed during the year
*Yabazam streaming 3D video business model beginning to create recurring
revenue following launch of VOD and subscription services for Smart TVs
during the second half of the year
*Attained market leading position in 3D PC market
*Listed ADRs on OTC-QX exchange to enable US investors to access DDD shares
Chris Yewdall, Chief Executive of DDD, said:
"The Group has recorded its second consecutive year of strong revenue growth
as the 3D consumer market continues to develop internationally. More than 15
million products with DDD's 2D to 3D solution were manufactured during the
year, delivering the Group's maiden full year profit after tax, following our
transition into profitability in the second half of 2011.
"In addition to strong shipments of the Group's TriDef technology licences,
Samsung signed a patent licence to use the Group's intellectual property for a
2D to 3D conversion application aimed at the growing number of 3D consumer
devices marketed by Samsung.
"During the year, we also launched the Yabazam 3D streaming movie service on
Samsung and LG Smart TVs, providing a further opportunity for the Group to
generate recurring revenues from the fast growing installed base of 3D Smart
"In 2013, the Group plans to build upon its growing technology licensing
income, expanding onto new 3D devices including glasses-free tablet PCs. The
Group also plans to further augment the Yabazam streaming service by adding
new content, delivering solutions to additional brands of Smart TV and
expanding the service to new categories of 3D products including tablet PCs."
DDD GroupChris Yewdall, President & CEO
Victoria Stull, Chief Financial Officer +1 310 566 3340
Canaccord Genuity (UK Nomad)
Simon Bridges +44 (0) 207 523 8000
College Hill (UK IR)
Kay Larsen / Adrian Duffield +44 (0) 207 457 2020
Berns and Berns (US PAL)
Jim Berns +1 212 332 3320
About DDD Group
DDD transforms the visual experience by bringing 3D to the consumer. Its
TriDefTM3D solutions convert 2D to 3D automatically, and enable delivery to 3D
TVs, PCs and mobile devices. Leading brands including Samsung, LG Electronics,
Lenovo and Sony license these solutions. Over 26 million TriDef 3D products
have been shipped by DDD's licensees worldwide. DDD's shares are quoted on the
London Stock Exchange's AIM Market (AIM: DDD; OTCQX: DDDGY). For more
information please visit www.DDD.com.
During 2012, the Group built upon the momentum established in 2011 to deliver
another consecutive year of record revenues together with the Group's first
net profit after tax. The Group's licensees shipped over 15 million units of
TriDef® 2D to 3D conversion technology during the year, bringing the
cumulative total to over 26 million units shipped at the end of 2012.
The Group also added two additional licensees in the PC market and one new
licensee in the TV market. Existing software licence agreements with four
licensees including LG, AOC and Lenovo were also renewed during the year.
DDD continued to focus on developing the market for its TriDef 3D PC software
products, which resulted in an increase in annual OEM shipments of 172% to
approximately 2.4 million units. Additionally the Group focused on developing
opportunities for its TriDef 3D PC software in the sizeable internet café
market in China and formed an alliance with the i-Café market leader, ShunWang
Technology Co. Ltd, towards the end of the year.
Shipments of the Group's 2D to 3D video conversion solution for the new
'glasses-free' smartphone and tablet products fell during the year as
expected, as the LG Optimus 3D smartphone reached end of life. This temporary
decline in shipments was due to the longer time required by 3D display
manufacturers to perfect the larger 7" and 10" glasses-free 3D displays that
are expected to be introduced in tablet PCs in 2013.
The Group also introduced the Yabazam! 3D movie streaming service to LG and
Samsung Smart TVs in six countries including the United Kingdom, United States
and Germany, achieving over 175,000 Smart TV app downloads during the year.
The service was upgraded to video on demand in the fourth quarter, allowing
viewers to download feature length 3D movies on demand for a fee.
DDD signed its first patent licence with Samsung in 2012. This agreement
allows Samsung to exploit DDD's extensive international patent library to
perform offline 2D to 3D conversion of high definition video content. This is
the first such licence for the Group and augments the licence and royalty
income that is presently derived from the Group's technology licences.
In response to the increasing interest in the Group being shown by US
investors, an American Depository Receipts listing of the Group's AIM shares
was completed on the OTC-QX stock exchange in December. This cost effective
program is expected to simplify the process of trading the Group's shares for
Significantly, the Group achieved positive cash flow from operations for the
full year and improved upon the profitability achieved in the second half of
2011. The Group expects its technology-based licensing and royalty revenue,
coupled with further patent licensing opportunities, to deliver further growth
Revenues for the year ended 31 December 2012 were $8,620,000 (2011:
$5,534,000), an increase of 56%. The increase was driven by growth in
shipments of 3D devices including: televisions, Blu-ray players, PCs and
smartphones incorporating the Group's TriDef 3D solutions.
Recurring TriDef technology royalty revenues (including direct to consumer
software sales) increased to $8,549,000 (2011: $4,686,000) as shipments across
TV, PC and mobile grew from 9.1 million to 15 million units. The mix of unit
shipments by volume was: 82% TV, 16% PC and 2% mobile devices. Royalties
from OEM agreements increased to $8,339,000 (2011: $4,556,000) while software
licensing sales were $210,000 (2011: $130,000) for the year.
Other licensing royalties were $64,000 (2011: $60,000). This includes
royalties received from IP patent licensing as well as royalties from other
licence agreements which are non-unit bearing in nature. Revenues from
one-time licence fees were nil (2011: $374,000).
Consulting revenues attributable to one-time development fees were nil (2011:
$407,000) as custom development work required for licensees had been performed
and completed in earlier periods. Other revenues were $7,000 (2011: $7,000).
Gross profit increased by 60% to $8,376,000 (2011: $5,219,000) and gross
margin to 97% (2011: 94%) as a result of the continued shift in revenue mix
towards higher margin royalties.
Administration expenses increased to $5,242,000 (2011: $4,259,000), with the
full year impact of the 2011 hiring and routine cost increases. The Group also
added an OTC-QX listing of a new Level I ADR program late in the year.
Other income decreased to $79,000 (2011: $423,000). The majority of other
income is normally derived from the Australian R &D cash incentive; however
rule changes applicable to the year did not allow the Group to receive a cash
incentive during the period. A future tax credit for fiscal year 2012 was
granted instead and the Group expects to receive the cash incentive in 2013
following a further change in the rules.
The non-cash share-based incentive cost was $733,000 (2011: $621,000)
reflecting the additional expense from share options granted during 2012.
Adjusted Group profit before tax and share-based incentive costs was
$2,047,000 (2011: profit $525,000). The reported pre-tax profit was
$1,314,000 (2011: loss $96,000).
Given continued profitability in the Australian subsidiary and the likelihood
of profits in 2013 for the US subsidiary, the deferred tax asset increased to
$1,096,000 (2011: $476,000), which results in a benefit of $620,000 recognised
through the consolidated statement of income during the period. The total
taxation charge was $550,000 (2011: $486,000). Taxation includes foreign
withholding taxes withheld at source as well as local sales taxes, offset by
the movement in the Deferred Tax Asset and Liability accounts.
The Group recorded a profit per share during the year of $0.57 cents (2011:
loss 0.43 cents).
During the year the Group simplified its legal structure removing the dormant
US entity (Dynamic Digital Depth TV, Inc) and the quasi-dormant Canadian
holding company (Dynamic Digital Depth, Inc), which was the predecessor parent
company prior to the creation of DDD Group plc. The result was a non-taxable
distribution of the Canadian holding company's assets and liabilities to DDD
Group plc as part of the wind-up. The assets primarily consisted of the loans
to the subsidiary operating companies as well as the subsidiary share
certificates in issue on the date of wind-up.
Net cash generated by operating activities was $2,217,000 (2011: inflow of
$120,000). Capitalised expenditure was $1,873,000 (2011: $1,545,000). This
cash flow was supplemented by $72,000 raised from the issue of new shares
through employee stock option exercises during the year (2011: $291,000),
resulting in cash of $3,595,000 at the end of 2012 (2011: $3,143,000).
During 2012, the Group realised the value of the licensing relationships and
new product development that had been undertaken during 2011. With continued
growth in the shipments of IP for television products and a full year of PC
software shipments by multiple licensees, the Group's licensees achieved a 65%
annual increase in IP shipments.
The largest volume of shipments came from the TV market where Samsung
continued to deploy the Group's 2D to 3D conversion solution in its
market-leading range of 3D televisions and 3D Blu-ray players. ATEN Technology
Inc. also commenced shipment of its IOGear 3D Complete+ video processor that
incorporates the Group's TriDef 3D conversion technology. Despite earlier
setbacks, DDD's other licensees in the TV chip market continued to make
progress towards introducing their next generation video processing chips that
include TriDef 3D conversion and the Group believes these additional licensees
may become active during 2013.
The design of video processing chips for TVs continues to evolve with the
latest chips including single and dual core ARM-based processors. This
evolution has allowed the Group to develop ARM-compatible implementations of
the TriDef 3D conversion for these next generation TV processors and the Group
expects that this new packaging may allow new devices to include the TriDef 3D
conversion feature implemented as lower risk software. The software approach
is expected to reduce delivery times (compared to conventional chip
development projects) and reduce technical risk and cost for OEM licensees.
In the PC market, the Group added two additional PC software licensees during
the year and continued to expand the range of games supported by the TriDef 3D
software, which totalled 740 by the year end, including the leading games in
China, Korea and Japan.
As part of its focus on developing opportunities in China in the Internet Café
market, the Group partnered with market leader Shunwang Technology Co. Ltd. to
demonstrate 3D PC games at their annual franchisee conference in Hangzhou
China. Shunwang's 90,000 i-Café franchisees own over five million PCs and this
represents a very attractive upgrade market for DDD's PC monitor licensees
including AOC, LG Electronics and Lenovo.
Based on the increased interest being shown by game developers in the growing
installed base of 3D displays, the Group also introduced a software developer
toolkit that enables game developers to include support for 3D features
directly from within the game. The toolkit was used by game developer Ubisoft
to add 3D support to the PC version of Tom Clancy's "Ghost Recon: Future
Soldier" that was released in September. Players can enable 3D from specially
designed menus within the game while the 3D version of the game is generated
by the TriDef 3D software.
The introduction of Windows 8 in October 2012 is likely to slow the growth of
new 3D PC shipments by OEMs in 2013 since Windows 8 is a touch driven user
experience and there are few large 3D PC displays currently available that
also include the touch screen capability. The arrival of Windows 8 is not
expected to impact the Group's i-Café market development activities in China,
since Windows 8 is not used in Shunwang's i-Cafes.
The quality of 'glasses-free' 3D screens in the mobile phone and tablet market
continues to make good progress. During 2012, cost and yield issues delayed
the introduction of next generation 3D tablets however the Group is now seeing
a steady increase in OEM interest, particularly in China.
During the year, the Group continued to develop the TriDef 3D Mobile software
for Android, resulting in the debut of a new mobile game conversion feature at
the Consumer Electronics Show in January 2013. OEMs now have a wider choice of
3D content capabilities that are available for licence including video
conversion, photo conversion and game conversion for the latest popular mobile
and tablet games. The Group expects to conclude licence agreements for these
products during the first half of 2013 for the emerging 3D tablet market as
evidenced by the licence agreement with Chinese manufacturer Qingyuan Gadmei
Electronics Technology Co. Ltd for its new glasses-free 3D tablets that was
announced on 27 March 2013.
LG continued to ship its Optimus 3D smartphone during the year, introducing
the second generation Optimus 3D Max version. IP shipments for the Group's
Android software were lower in 2012, however, as the LG Optimus 3D smartphone
reached end of line towards the end of the year. IP shipments of the TriDef 3D
Mobile software are expected to recover during 2013 as the new 3D tablets are
As the installed base of 3D televisions, personal computers and mobile devices
continues to grow, the Group is broadening the reach of the Yabazam 3D movie
streaming service. Industry research suggests that around 400 million 3D
capable TVs will be in living rooms by the end of 2015, most of which will
have the Smart TV internet capabilities. The latest Smart TV trend in the
television market allows Yabazam 3D to be delivered as an app from the Smart
TV app store.
In February 2012, the Yabazam 3D app was launched for LG's range of 3D Smart
TVs and in June the app was introduced on Samsung's range of 3D Smart TVs. In
September, the Group launched the Yabazam video on demand service allowing
Yabazam 3D users to download movies for a pay per view fee. At the end of the
year, the Yabazam service in the United States was upgraded to a subscription
model allowing users to pay a fixed monthly fee and download as many of the
Yabazam movies as they wish.
In 2013, the Group expects to continue to expand the reach of the Yabazam 3D
streaming service, both geographically by introducing the service in more of
the 154 countries where Smart TV services are now available, and also by
delivering the Yabazam app for new brands of 3D Smart TV and additional 3D
devices. Currently the service is available in 17 countries. The Group debuted
the Yabazam app for Android-based smartphones and tablets at the Consumer
Electronics Show in January 2013 and 3D tablet manufacturers are already
showing solid interest in carrying the service in their new products.
At the end of 2012, the Group had increased the number of originally made 3D
movies under contract from 32 to 83 titles and had expanded the international
content partner network from 13 to 24 3D content producers. Driven by the
popularity rankings achieved by the Yabazam Smart TV app, it had been
downloaded over 175,000 times by the end of the year and was being used by
approximately 1,500 viewers each day to stream 3D content to their Smart TVs.
To date, the majority of the Group's licensing revenue has been derived from
the technology licensing program, whereby the Group provides a software
application or reference design to the licensee for inclusion with the
licensee's 3D products. During 2012, the Group concluded its first patent
licence agreement with Samsung that allows Samsung to undertake offline 2D to
3D conversion using the patent claims owned by DDD. Unlike a technology
licence, the patent licence does not require any software or reference design
to be provided by DDD to the licensee since the licensee has the skills to
develop its own implementation.
With over 26 million 3D consumer products that include the Group's TriDef 3D
technologies shipped by leading manufacturers since early 2010, there is now
an established value for the internationally registered patent claims on which
DDD's solutions have been founded. As new revenue streams continue to be
developed, the Group expects that patent licensing revenue will grow as the
Group establishes its patent rights with prospective licensees. The patent
licensing program also has the potential to create licence and royalty revenue
from applications in 3D markets that are outside the scope of the current
technology licensing program. The Group is also in discussions with third
party licensing specialists regarding partnerships that may help accelerate
the contribution and growth of the patent licensing program.
Current trading and outlook
For 2013, the Group expects to derive revenue from existing and new TriDef
technology licensees in the TV, PC and mobile markets, supplemented by a more
active approach to patent licensing within the consumer electronics industry
and other 3D consumer markets. As the 3D market continues its strong growth,
the Group is transitioning from a company that generates the majority of its
income solely from technology licensing, to one that generates a diversified
range of revenue from the emerging opportunities in the broader 3D consumer
market, including content distribution.
DDD has maintained its market leadership position, with over 15 million new 3D
consumer products produced with the Group's TriDef 3D technologies during
2012. The Group expects that shipments of IP in the TV market and
mobile/tablet markets will grow in 2013 while shipments in the PC market will
likely slow as more licensees introduce Windows 8 based PC products for which
the larger 3D touchscreens are not yet available.
Building on the momentum established from over 26 million products that have
been shipped in the past three years with the Group's patented TriDef 3D
technologies, the Group also plans to place more emphasis on the patent
licensing program to augment the revenues that are currently derived from the
technology licensing program.
The Group will continue to invest in the Yabazam 3D movie streaming service,
adding more 3D movies, expanding onto new Smart TV platforms in more countries
and delivering Yabazam to new devices such as the emerging glasses-free 3D
tablet market. As subscriber growth for Yabazam continues to grow, the Group
is exploring the acquisition of rights to 2D content libraries that can be
converted to 3D to deliver unique 3D programming exclusive to the Yabazam
The current year has started in line with the Board's expectations and the
Board is confident it can build further on the momentum achieved to date to
maintain its profitable growth in 2013.
For full release including financial statements, click here.
CONTACT: Michelle LaPaglia
310 566 3346
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