Final Results

Comeleon PLC 04 December 2002 FOR IMMEDIATE RELEASE 4 DECEMBER 2002 comeleon plc FULL YEAR RESULTS for the twelve months ended 30th September 2002 2001/2002; Continued growth and development of the business comeleon plc is pleased to announce its final results for the twelve months ended 30th September 2002. Highlights: Sales, Operational & Technical â€¢ Rapid growth in order book in last 12 months â€¢ Order intake for first 2 months of FY 2003 : Â£1.4m â€¢ Continued penetration of US and European markets â€¢ Diversification and Innovation â€¢ Non-mobile production rising - three significant orders during period - Philips for new 'Coolskin' shavers - Geemarc Telecom : fixed line desk top telephone design - Listawood : Computer mice â€¢ ImageBox (desktop machine applying 3D dimensional images on products) - Launched in September - Major distribution licences signed in Europe and US worth over Â£2m â€¢ Global patent application being filed through European Patent Office Financial â€¢ Sales for 12 months grown by 1081% to Â£4.5m â€¢ Loss before tax on plan at Â£3268k â€¢ Cash balances ahead of plan at Â£3m â€¢ Successfully raised Â£4.2m for development and marketing of ImageBox On prospects, Jon Pither, Chairman, said: 'The emphasis over the next year will be on generating a positive bottom line performance by taking advantage of an increasing geographical market and product portfolio and by offering technical licensing opportunities to the potentially large and increasing customer base. As a relatively young business we have succeeded in rising to many challenges and although sales in the summer were disappointing comeleon is now close to breakeven with a strong order book, rapidly diversifying sources of revenue and ample cash resources.'' For further information, please contact: Roy Stanley, Chief Executive Officer Today on: 020 7466 5000 Tim Robinson, Finance Director thereafter on: 01207 523333 comeleon plc www.comeleon-ir.co.uk Tim Anderson Lisa Baderoon Tel No: 0207 466 5000 Buchanan Communications Limited www.buchanan.uk.com CHAIRMAN'S STATEMENT Introduction The company, in a relatively short space of time, has established a strong position within its target markets. It is already recognised as a leader in imaging technology, in the mobile phone market with companies such as Nokia, and increasingly in the wider consumer products arena. For example, comeleon has established a link with Philips as their exclusive imaging partner. Our technology and its application is still new and developing at a fast rate and the potential for our technology seems to increase almost daily. We are working with a number of major manufacturers on new products for launch during the next 12 months. A recent success has been the development during the past year of the ImageBox which, for the first time, allows small businesses or retailers to put full colour images onto a range of 3 dimensional objects, such as computer mice, in less than 10 minutes. The ImageBox is now selling at an encouraging rate. In this rapidly changing environment we are learning fast. In the first half of the calendar year sales moved up to over Â£600,000 per month, bringing comeleon close to its monthly breakeven target of approximately Â£800,000. However, in the third calendar quarter the mobile phone companies launched a number of new models backed by high-profile marketing. This created two issues. The new models were very successful and their production diverted plastic supplies to the primary phone manufacturers creating a supply shortage of secondary product for comeleon. Meanwhile consumption of older models declined. Both factors contributed to a slow down for order intake during the summer months before resuming budgeted levels in the first two months of the new Financial Year. We have taken a number of measures to overcome the plastic supply problem and to ensure it does not reoccur, but in the short-term it inhibited our sales growth. As we diversify in terms of products, markets and geography, our dependence on a single market area, such as mobile phones, will decrease. Financial Review Over the last 12 months the company has successfully grown sales by over 1000%. The order book currently stands at about Â£3.5m and the book to bill ratio is currently running at 1:3, a strong indication that growth is continuing and is sustainable. Sales for the 12 month period were Â£4.5m (2001: Â£0.4m) and losses before taxes were Â£3268k (2001: Â£4702k). Sales in the second six months of the financial year were Â£2.9m compared to Â£1.6m in the first six months. Capital expenditure in the year was Â£1.1m. In July we successfully raised Â£4.2m through a placing of 2,545,758 New Ordinary Shares at a price of 165p per share with existing and several new institutional investors. The funds raised were to support the development and marketing of the Imagebox and Imaging Through Gloss (ITG) projects. The positive cash balance was Â£3m at the period end (2001 : Â£3.8m). In addition the Company has available unused overdraft and lease facilities in excess of Â£3m. Based on our current budgets the Directors believe that we have ample cash resources to fund comeleon through to profitability. Product Development/Sales and Marketing comeleon is maturing and has made considerable progress during its first two years. It has been successful in creating a strong brand awareness with its customers. The company continues to work with a number of major manufacturers on new products either launched into the market over the past year or planned for coming months. This has broadened the product base of the business and means that the company is now imaging a growing range of products. The Company has agreed in principle with Philips an extension of its exclusivity agreement to image shavers under which we have the potential to supply over a quarter of a million items. In September we announced the third major order outside the mobile phone arena. This was with Geemarc Telecom S.A. a French telecoms equipment supplier with strong distribution links to major UK high street retailers such as Dixons, Comet and John Lewis. The agreement is for the supply of fixed line desktop telephones using its on-line design service. Customers will be able to choose their designs in store or on-line. There continues to be a high level of interest within the consumer electronics market for the comeleon technology, for example from computer and games hardware manufacturers. comeleon is making headway in establishing its reputation in this demanding and exciting market. Licensing currently only involves the ImageBox, but we are examining ways that comeleon's manufacturing process can be integrated into other company's production lines as an efficient means of furthering the penetration of our technology into new markets. To this end we have entered a strategic alliance with Virdev USA, a product development company who have close relationships with a number of very large contract manufacturing companies The development of the website and Internet capability of the business has been enhanced by exclusive partnerships with key players in the e-commerce and electronics industries. The principal aim has been to achieve maximum turnover by entering collaborative deals that give partners a commission on internet sales. Consumers may download their own image, which will be returned as an imaged product. Five major telecom companies have adopted the Interactive Design Studio (IDS) onto their websites. The IDS has been adapted to offer this facility for a number of new products, including Geemarc products. Listawood Limited, a company serving the corporate and promotional gift market across Europe, signed contracts worth Â£1 million, cÂ£300k of which fell in the financial year under review and the balance over the next 18 months. The contracts include the first distribution licence for comeleon's ImageBox under a 12 month exclusive agreement and an 18 month agreement to supply imaged corporate mice in the UK and Europe. ImageBox In July 2002 the company raised Â£4.2 million through a placing with existing and new institutional investors. The money was raised to fund the development and marketing of the ImageBox, a development of the patented comeleon process. The first model of the ImageBox has been successfully developed. This allows small businesses or retailers, for the first time to put full colour images onto a range of plastic, glass and ceramic 3 dimensional objects whilst the customer is waiting. This product, which was only officially launched in September 2002, has been exceptionally well received in the market. The company has already concluded license deals for the distribution of the ImageBox across Europe and the USA. The total value of these licenses exceeds Â£2 million, with each distributor committed to delivery of a significant number of ImageBoxes. Operations The company continues to develop and enhance the comeleon technology. Our manufacturing capacity has expanded over the past twelve months from 30,000 to 75,000 products per week. The company has invested further in its new sales, manufacturing and design headquarters based at Tanfield Lea, County Durham, which has 40,000 square feet of office and shop floor space. The training and development of staff represents a major investment. comeleon was formally recognised as an Investor in People in the early part of the year. No major capital expenditure on plant and equipment is currently planned, as there is sufficient capacity to achieve planned targets for the coming year. The company is also in the process of implementing technical improvements that will achieve significant manufacturing cost savings. The company has Patent Pending on the comeleon process and has already satisfactorily completed the UK Patent Office formalities. A global Patent is now being filed through the European Patent Office. Board Changes Brendan Campbell was appointed to the Board as executive director responsible for operations. Brendan has made a very valuable contribution to comeleon's development since the company's conception. I would like to take this opportunity to welcome him to the Board. Prospects Diversification from mobile phones is a prime objective. Last year we started the process with the prestigious contract from Philips for shaver covers. We are now entering the second phase with Philips. Moving into fixed-line telephones with Geemarc takes us further into consumer applications. Additionally, we are at the prototype stage with leading game console and data modem manufacturers. Our imaging technology is ideally suited to these markets and we are confident that the projects will develop into volume orders in due course. The ImageBox has got off to a remarkably fast start. Since September we have received over 1,000 enquiries from Europe and US. Initial distribution agreements are in place and we continue to negotiate further agreements. The first ImageBoxes have been shipped and we have commitments for several hundred over the next twelve months. We have carefully put together a package for the small business or retailer, which enables them to recover their capital outlay quickly. This formula, we believe, will lead to its rapid and enthusiastic uptake. The emphasis over the next year will be on generating a positive bottom line performance by taking advantage of an increasing geographical market and product portfolio and by offering technical licensing opportunities to the potentially large and increasing customer base. As a relatively young business we have succeeded in rising to many challenges and although sales in the summer were disappointing comeleon is now close to breakeven with a strong order book, rapidly diversifying sources of revenue, and ample cash resources. I would like to thank all employees for their great contribution during the last year and to investors for their continued support. The next year promises to be positive and exciting for comeleon. Jon Pither, Chairman 4th December 2002 CONSOLIDATED PROFIT AND LOSS ACCOUNT For the twelve months ended 30th September 2002 Year 18 months ended ended 30 September 30 September Note 2002 2001 Â£ Â£ TURNOVER 4,502,696 416,499 Cost of sales (3,404,025) (718,398) Gross profit/(loss) 1,098,671 (301,899) Administrative expenses (4,378,907) (3,666,725) Exceptional Administrative expenses - (916,619) Total Administrative expenses (4,378,907) (4,583,344) Other operating income 50,000 30,000 OPERATING LOSS (3,230,236) (4,855,243) Interest receivable and similar income 91,243 245,497 Interest payable and similar charges (128,728) (92,244) LOSS ON ORDINARY ACTIVITIES BEFORE TAXATION (3,267,721) (4,701,990) Tax on loss on ordinary activities 24,679 - LOSS ON ORDINARY ACTIVITIES AFTER TAXATION (3,243,042) (4,701,990) Equity minority interest - 68,664 RETAINED LOSS FOR THE FINANCIAL YEAR/PERIOD WITHDRAWN FROM RESERVES (3,243,042) (4,633,326) Basic loss per ordinary shares 3 (24.32p) (63.68p) Basic loss per share before costs in connection with flotation 3 (24.32p) (51.08p) CONSOLIDATED BALANCE SHEET As at 30th September 2002 2002 2001 Â£ Â£ FIXED ASSETS Intangible assets 839,460 828,060 Tangible assets 2,317,683 1,699,107 3,157,143 2,527,167 CURRENT ASSETS Stocks 455,797 189,837 Debtors 4,704,713 596,253 Cash at bank and in hand 2,985,734 3,847,856 8,146,244 4,633,946 CREDITORS: amounts falling due within one year (4,587,070) (1,251,129) NET CURRENT ASSETS 3,559,174 3,382,817 TOTAL ASSETS LESS CURRENT LIABILITIES 6,716,317 5,909,984 CREDITORS: amounts falling due after more than one year (716,912) (588,271) PROVISION FOR LIABILITIES AND CHARGES - - 5,999,405 5,321,713 CAPITAL AND RESERVES Called up share capital 153,021 126,613 Shares to be issued 555,469 666,619 Other reserve 111,150 - Share premium account 12,483,869 8,589,543 Merger Reserve 615,614 615,614 Profit and loss account (7,919,718) (4,676,676) TOTAL EQUITY SHAREHOLDERS' FUNDS 5,999,405 5,321,713 CONSOLIDATED CASH FLOW STATEMENT For the twelve months ended 30th September 2002 Year 18 months ended ended 30 September 30 September Note 2002 2001 Â£ Â£ Net cash outflow from operating activities 2 (3,882,383) (3,725,825) Returns on investments and servicing of finance (37,485) 153,253 Taxation - - Capital expenditure & financial investment (435,491) (1,088,058) Cash outflow before financing (4,355,359) (4,660,630) Financing 3,493,237 8,497,167 (Decrease)/increase in cash in the period (862,122) 3,836,537 NOTES 1. Financial information The financial information set out above does not constitute statutory accounts within the meaning of section 240 of the Companies Act 1985 for the year ended 30 September 2002 or the year ended 30 September 2001, but is derived from those accounts. Statutory accounts for 2001 have been delivered to the Registrar of Companies and those for 2002 will be delivered following the Company's Annual General Meeting. 2. Reconciliation of operating loss to net cash outflow from operating activities 2002 2001 Â£ Â£ Operating loss (3,230,236) (4,855,243) Depreciation on tangible fixed assets 464,864 182,490 Amortisation of intangible fixed assets 70,267 30,741 Increase in stocks (265,960) (189,837) Increase in debtors (4,083,781) (583,653) Increase in creditors 3,162,463 1,023,058 Costs in respect of share options - 666,619 Net cash outflow from operating activities (3,882,383) (3,725,825) 3. Loss per ordinary share Loss per share has been calculated using the weighted average number of shares in issue during the relevant financial periods. The weighted average number of shares in issue is 13,333,577 (2001 - 7,276,233), and the earnings, being loss on ordinary activities after taxation and minority interest are Â£3,243,042 (2001 - Â£4,633,326). No diluted loss per share has been disclosed as the share options are anti-dilutive. Loss per share before costs in connection with flotation have been calculated using a loss on activities after taxation and minority interests of Â£3,243,042 (2001 - Â£3,716,707). This has been presented in addition to the basic earnings per share as permitted by FRS 3 and FRS 14 since, in the opinion of the directors, this presents a better like for like comparison of earnings of the Group. Year 18 months ended ended 30 September 30 September 2002 2001 pence pence Loss per share (24.32) (63.68) Exceptional items: Costs in respect of the flotation of the group - 3.44 Costs arising from share options issued in connection with the flotation - 9.16 - 12.6 Loss per share before costs in connection with flotation (24.32) (51.08) Copies of this report are being forwarded to all shareholders and further copies are available from the Company's Registered Office at comeleon House, North Tanfield Industrial Estate, Tanfield Lea, Co Durham. DH9 9NX. This information is provided by RNS The company news service from the London Stock Exchange ND FR DXLFBLLBXFBL

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