By Martin Flitton.

Button End in Harston may, on the face of things neither sound, or look like the kind of place where you would encounter ground breaking technology. However, that is exactly what I viewed last week when I was fortunate enough to drop in on Screen Technology, a local company (soon to move to larger premises) which floated on AIM just last month, raising around £8 million in the process. In fact, the Company which began its life back in 1996 more as a research programme within Cambridge University has developed, and now evolved, a new type of large format display screen which is set to make serious in roads into a market which at the moment is worth an annual £1billion and estimated to rise to £1.5billion by 2010.

While many companies have attempted to achieve a high quality large format display screens to rival existing LED and Plasma products, most have failed to deliver, while others still seek to find the industry equivalent of the Holy Grail. That is, until now, as Screen Technology appears to have made the all important breakthrough with its ITrans product which is able to meet the industry requirements in an unrivalled way. Any person who has encountered existing large screens in retail outlets, airport and railway departure lounges or pop concerts will be aware of their limitations. Seen close up, they become distorted or grainy while background lighting can all but obscure the all important message that is being conveyed. However, with ITrans the advantages are clear as I witnessed during my visit. The image is not only sharp and precise from a distance but is clearly visible from close proximity, something which at this moment in time puts Screen Technology’s patented technology at a considerable advantage to existing offerings.

While present with Chief Executive, Tony Kellett, I was treated to a view of some pretty impressive photographs showing ITrans in various high profile places including an airport in Hong Kong where it clearly stood out against other technologies which it will now compete against. The beauty of ITrans though is that it allows the seamless tiling of existing LCD panels something which has taken nine years to develop and has eluded other would be contenders, the result of which will see the meeting of individual customer requirements in a new way, as a screen can be built to various shapes and sizes. The target markets include retail and advertising, indoor venues and transportation where screens of more than 80" and a minimum of 1024x768 pixels are required. Although Screen Technology is starting to supply customers, Finance Director, Simon Barton explained to me that the biggest problem at the moment is that demand is currently greater than their current production capacity. That however, will be rectified, as in 2006 Screen Technology will ramp up production in a serious way with the addition of new and larger machines to take its production capacity from its current 11sq metres per month up to circa 80sq metres per month. The result should be a serious jump in turnover from this years Charles Stanley estimate of £400k to more than £5 million in 2006, rising to £18 million by 2007.

This represents serious growth potential and if achieved is likely, in my opinion, to see the shares considerably outperform the market over the next few years and given that the company has already provided quotations of more than £3 million in the last four months to potential customers, underlines the massive future potential. Although Screen Technology clearly has to move quickly to capitalise on its technology, it appears to have an excellent Board with a strong pedigree which places it in an enviable position. Tony Kellett managed teams at Rolls Royce and Racal while later headed UK and Asia operations for Peek, where he was responsible for staff of five hundred. Then there is Director of Operations, Barbara Needham, who boasts a long and successful record in the screen business joining Andy Holmes, Commercial Director, who likewise, has been involved in the industry across the globe for many years. Importantly still on board is Dr Paul Bayley, the Technology Director who has been involved in ITrans from its embryonic days with Cambridge University. Screen Technology also boasts some pretty impressive backers who have pumped in more than £8 million prior to the floatation, namely MTI and Thomas Swan who have now been joined by various institutions including Herald Investment Fund, headed by the shrewd Katie Potts, along with Legal & General, Britannic and Schroeders.

Although the shares have somewhat surprisingly remained around the floatation price 0f 63p, it has presented me with the opportunity to take a position at what appears to be a modest market valuation, currently £20 million given the undoubted huge potential. Although the company will be loss making for the first few years Simon Barton dismissed my suggestion that they may have to raise further funds before turning cash positive, underlining the confidence that the team has at Screen Technology and the belief in its business model. This includes the appointment of a network of resellers and distributors across the globe which will aid growth but keep the technology in the hands of Screen Technology.

Although the shares are treading water at present, any future announcements from the company, particularly deals with high profile clients is, in my opinion, likely to see the shares move sharply northwards.