Screen Technology says supplier delays will hit sales this year
Screen Technology (SCT.L) said today that delays by suppliers will hit sales this year and they are now "likely to be significantly below current market expectations".
However, the directors said in a statement to the London Stock Exchange, where it listed on AIM last August, they believed any effect on sales forecasts for 2007 would be small.
Cambridge-based Screen Technology designs and makes revolutionary high-resolution large-screen displays for bright spaces such as shopping centres, railway stations and airport terminals. Its moulded optical fibre tiles produce seamless large displays using standard production LCD panels. The scaleable modular technology enables screen to be built in many shapes and of theoretically unlimited size.
The stock market didn't like the news. In early trading Screen Technology's share price slipped almost 18%, before recovering somewhat to be down 13% to 37p around midday, valuing the company around £12m.
The Board was upbeat about prospects.
New CEO Tom Jarman, appointed in April this year, said: "2006 will be a defining year for Screen Technology. By the end of the year we expect to have high speed production of ITrans, a technology that is unrivalled in a very large and growing international market.
"We expect to have proven the product and our pricing model with customers and to have increased our range of products with modular systems fully available in 2007."
The board said the company's sales pipeline was strong and at the recent exhibition at Infocomm in Orlando Florida in June, the first prototype of its ITrans product was "very well received with extremely high levels of interest from end-users and distribution partners".
The ITrans products enable very large screens to be easily transported to customer sites in modular form and assembled in situ, and the business expects sales of these products to form an increasingly significant part of revenue from early 2007.
Key objective
The Board said the key objective is now to increase production capacity.
It said issues encountered earlier in the year with production have been resolved and yields of ITrans display tiles have improved. The development of the high-speed production machines is continuing with each of the production stages within those machines working well.
"Our strategy during the year has been to concentrate on the production of demonstration units and we have been upgrading existing demonstrator stock with the latest in production quality to ensure that ITrans is shown to high-value end-users in the best possible light".
The business in poised to increase production and sales in the second half of 2006.
However, the Board said it was "mindful that production schedules and therefore sales by the end of 2006 depend critically upon timing and that even with high-speed production running at capacity by the end of the year, some sales previously expected this year are likely to move into early 2007. The unpredictability of production schedules over the next few months might also increase the time between production of tiles and the despatch of finished displays to customers".
The sales forecast for 2006 was heavily dependent on the delivery of the new high speed production machines and on the sale of modular products.
The timing of both has been affected by delays by third party suppliers that will hit sales for 2006.
The directors expect that sales for this year "are likely to be significantly below current market expectations".
However, they were confident that by the start of 2007, high speed tile production would be well underway and modular products would also be in production, supplying a strong order book.
The board therefore believes that any effect on sales forecasts for 2007 will be small.
23rd June 2006
