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DDD GROUP PLC

Unaudited half yearly report for the period

1 January to 30 June 2008

FINANCIAL REVIEW

DDD Group plc ('DDD' or 'the Company'), the 3D software and content company, announces its unaudited half yearly report for the six months ended 30 June 2008.

Highlights

Financial

* Turnover of £354,000 (2007: £91,000)

* Loss before tax of £609,000 (2007: £743,000)

* Loss before tax, net of IFRS2 (share based payments) implementation of £603,000 (2007: £728,000)

* Net cash outflow from operating activities of £391,000 (2007: £600,000)

* Net cash as at 30 June 2008 of £207,000 (2007: £722,000)

Operational

* Launch of Hyundai IT 46' 3D LCD HDTV with embedded DDD processor in retail stores in Japan with support for Nippon BS Broadcasting Company's 3D television broadcasts

* Completion of development agreement with Samsung Electronics for next generation 3D TV chip based on DDD's real time 2D to 3D conversion technologies

* Extension of TriDef 3D Experience software license agreement with Samsung Electronics to include Samsung 3-D Ready Plasma HDTVs launched at the Consumer Electronics Show

Subsequent to the period end - highlights

* Commenced 5 year license agreement with Samsung Electronics for the use of DDD real time 2D to 3D conversion solution in custom Samsung chip for Samsung's range of next generation 3D HDTVs

* Hyundai IT selected the TriDef 3D Experience as the gaming and video content solution for Hyundai IT 22' and 24' 3D PC monitors

* Expanded range of 3D TVs supported by TriDef Core embedded HDTV processor to include 32' Hyundai LCD TV

CHAIRMANS STATEMENT

'It is pleasing to see that the licensing relationships in the 3D Television market that were the focus of the Company's development efforts in 2007 are yielding promising results. The Company has recorded its strongest ever first half year revenues, largely driven by growing license and development agreements in the 3D Television market.

We have seen consistent demand for the TriDef 3D Experience software from Samsung 3D HDTV users since its launch in October 2007. We have now shipped in excess of 13,000 licenses of the TriDef 3D Experience, making it DDD's most successful software product to date. Samsung broadened their range of 3D Ready HDTVs in early 2008 to include two plasma models and selected the TriDef 3D Experience as the content solution that now forms part of Samsung's own 3D HDTV accessory pack.

Consistent with the Company's goal of making the 3D television experience as simple as the present day 2D TV experience for the consumer, the Company secured a development agreement with Samsung Electronics to embed the real time 2D to 3D conversion solution into Samsung's own TV chip in preparation for Samsung's next generation 3D plasma and LCD HDTVs. This will mean that, very soon, consumers will be able to use the new Samsung TVs for viewing any content in both 2D and 3D (switchable between both modes) as they will come pre-equipped with DDD's technologies.

DDD also continued the development of the TriDef Core, an embedded 3D processor aimed at the emerging 3D television market. This was successfully launched in Japan in March when Hyundai IT introduced a 46' LCD HDTV based on Arisawa Manufacturing Company's 3D optical materials. The 3D LCD TV is sold in Bic Camera consumer electronics retail stores around Japan. In addition to DDD's built-in 2D to 3D conversion capabilities, the Nippon BS Broadcasting Corporation is broadcasting specially filmed 3D content on the BS-11 3D satellite channel.

In April, the Company completed a debt offering, raising £510,000 before expenses. This has allowed the Company to raise additional working capital without issuing further equity. The debt was placed to our largest shareholder, Arisawa Manufacturing, and several of the directors of the Company. I would like to take this opportunity to express our thanks to Arisawa for their continued support of the Company.

In summary, during the first half of this year, the business development activities in the emerging 3D television market began to bear fruit resulting in an increase in revenues from development and licensing activities that lifted gross margins by approximately 8% over the 2007 levels. We have continued to carefully control costs resulting in no material increase in operating expense from 2007 to 2008, despite the additional costs that were incurred in the 2008 debt placing.

Recent activity by standards bodies towards establishing standards for the delivery of 3D content to the home indicates that the 3D market will continue to develop at a meaningful pace over the coming months. DDD is now well positioned to capitalise on these opportunities and in doing so, to continue to grow the licensing and royalty revenue streams.

Paul Kristensen

Chairman

8th September 2008

OPERATIONAL UPDATE

* Executive Summary

3D movies continue to set box office records with the February release of Disney's Hannah Montana/Miley Cirus: Best of Both World's Tour setting a Superbowl weekend box office record with an opening weekend gross of $31 million from only 683 3D screens*. The film ultimately grossed a total of $65m from its domestic release on 687 screens in the US*. In July, Intel Corporation announced a strategic alliance with DreamWorks Animation to use Intel's latest processors to efficiently develop the slate of 3D movies that DreamWorks is producing.

The Society of Motion Picture and Television Engineers (SMPTE), Consumer Electronics Association (CEA) and the Advanced Television Systems Committee (ATSC) have all formed groups of industry executives to evaluate the most effective means of delivering 3D content to the home, through a variety of means including optical media, broadcast and broadband. These groups will define the standards through which 3D is delivered to consumers. DDD already participates in some of these groups.

Consumer electronics companies including Samsung, Hyundai IT and Mitsubishi have continued their commitment to bringing 3D to their customers. In addition to the Samsung and Mitsubishi 3D Ready rear projection HDTVs that were launched in the US in 2007, Samsung introduced 3D Ready plasma TVs into their worldwide retail channel in February and Hyundai IT launched a 3D LCD TV in Japan in March. Consumers can now enjoy high definition 3D entertainment on all types of flat screen TVs including rear projection, plasma and LCD.

DDD's focus has been to expand on its market leadership and evolve the Company's 3D TV solutions from external PC software into firmware for 3D chips that are embedded in the TV set. The world's first integrated 3D HDTV was delivered by Hyundai IT in March, based on the TriDef Core hardware solution. This was followed by a development and licensing agreement with Samsung Electronics whereby Samsung has implemented DDD's 3D technologies on their own chip.

DDD's high quality real time 2D to 3D conversion solution continues to be a key feature since it assures consumers that they will be available to view all their favourite 2D shows and movies in 3D on their 3D ready HDTVs. DDD's real time 3D conversion is complemented by the ability to play back conventional 3D movie formats, yielding a comprehensive solution for consumer electronics companies and studios alike.

As the market for easy-to-use 3D TVs emerges, the Company is also preparing to deliver content to consumers who own 3D TVs. The production of DDD's 3D content is likely to rely on DDD's 2D to 3D conversion tools that allow large libraries of existing animated and live action content to be reformatted for presentation in 3D. This approach broadens the revenue available to the Company by creating the opportunity to share in the revenue derived from the ongoing consumption of content delivered using optical media, broadcast and broadband.

The Company expects to continue to place the bulk of the business development and technical emphasis on securing additional customers in the 3D TV market and will focus on products and services that increase the profit per licensed device.

* Business Review

DDD is presently pursuing the adoption of its patented software, hardware and content conversion/creation solutions on four main platforms as follows:

Consumer Television, refers to flat screen HDTV displays being developed and marketed by major consumer electronics companies where DDD's real-time 2D to 3D content conversion solution provides an important bridge towards mass-market consumer adoption of 3D capable televisions.

* Source: Boxofficemojo.com

Desktop PC Displays, refers primarily to business users, government agencies and universities and studios who use 3D monitors, and DDD's related software, to enhance visual data in the scientific visualization sectors as well as in the production of 3D movies.

Consumer Handheld Devices, refers to the emerging market for 3D mobile telephones, personal digital assistants and personal media players where the DDD Mobile™ suite of software can be used to convert, present, download and share popular mobile content such as wallpapers, animations and video in glasses-free 3D.

3D Conversion, refers to the process of using DDD's content conversion solution to convert existing 2D productions to 3D and supplement existing 3D content production techniques.

* Consumer Television

In January, Samsung demonstrated their 42' and 50' 3D Ready plasma televisions at the Consumer Electronics Show in Las Vegas, further extending their 3D HDTV product line. In February, DDD announced that Samsung had selected the TriDef 3D Experience as the 3D content solution that is supplied with Samsung's 3D HDTV accessory pack.

During February, DDD also announced a £107,000 development agreement with Samsung whereby Samsung's engineers integrated DDD's real time 2D to 3D conversion technologies into Samsung's prototype next generation 3D HDTVs. The project was completed on schedule in June. Post balance sheet, Samsung confirmed their intent to manufacture a custom chip containing the DDD technologies, and a license agreement yielding per chip royalties became effective resulting in an advance royalty payment of approximately £165,000.

In March, Hyundai IT launched a 46' 3D LCD HDTV based on Arisawa's x-Pol™ optical materials. X-Pol allows consumers to watch LCD TVs in 3D using glasses that are similar to those used in the majority of 3D digital cinemas. The Hyundai IT 46' LCD TV is the first 3D TV that utilizes DDD's TriDef Core onboard 3D processor to simplify the end user experience. When the viewer decides to watch in 3D, they simply activate the 3D functions using their remote control and put on a pair of 3D glasses.

The 46' 3-D LCD HDTVs are available in Bic Camera consumer electronics retail stores in cities around Japan, including Tokyo, Osaka, Nagoya, Hokkaido and Fukuoka. Delivery of 3D broadcast content began this year in Japan on the BS11 network, with specially made 15-minute 3-D programming including sports, fitness and travel shows already being broadcast daily.

As interest has grown with studios and broadcasters seeking to deliver in-home 3D, DDD has been involved in a number of demonstrations using the 46' Hyundai LCD HDTV. The comfortable, lightweight glasses, wide field of view and vibrant HD image have made the Hyundai 46' 3D LCD TV a firm favorite resulting in sales of the monitor to various studios for consumer market research and 3D movie production. Post balance sheet, Hyundai IT and DDD signed a development agreement to extend the range of 3D TVs to include a new 32' model that is expected to become available in Japan in October. The DDD TriDef Core will be expanded to be compatible with Japan, US and European broadcast formats.

Sales of the TriDef 3D Experience to early adopter customers in the 3D TV market have continued at a consistent level since introduction in October 2007. Recent licensing agreements have widened distribution beyond the Company's online store and by late August, over 13,000 copies of this software have been delivered, with the majority being delivered to customers in the emerging 3D TV market. The Company has also continued to increase the number of supported PC games that are 3D enabled using the TriDef 3D Experience in line with popular releases from major games publishers.

In the near term, the Company is actively pursuing additional agreements in the emerging 3D television market that yield one-time development revenues and enable ongoing licensing and royalty revenues over the lifetime of the license agreement. The Company is also actively engaged in discussions with the Hollywood studios to ensure that DDD's embedded 3D HDTV architecture can be used to enable the delivery of the latest 3D movies on standard and high definition DVD disc and over broadcast and broadband networks using the formats that are expected to be nominated by the various standards bodies currently evaluating the 3D consumer market.

* Desktop PC Displays

DDD continues to resell desktop PC 3D monitors and additional TriDef software applications to international business users, primarily comprised of the Hyundai IT 24' high resolution PC 3D display based on Arisawa's X-pol™ optical solution.

With the growing number of 3D movies in production, sales to studios and movie production companies have supplemented sales to scientific users. Key features of the Hyundai IT display for 3D movie makers include its high resolution image and compatibility with 3D digital cinema glasses.

Post balance sheet, Hyundai IT and DDD entered into a license agreement allowing Hyundai IT to bundle DDD's TriDef 3D Experience software with Hyundai's range of 3D PC monitors. The price of high quality PC monitors continues to decrease, placing them within the budget of the consumer for use with games and 3D movies. A minimum license commitment of approximately £171,000 is payable in the first year of the agreement with approximately £26,000 of licenses recognized in the first half.

* Consumer Handheld Devices

Following Samsung's successful launch of the SCH-B710 3D handset in Korea during 2007, several other mobile phone networks and handset makers are showing interest in delivering 3D equipped handsets.

The Company continues to follow these projects that are in their formative stages. As has been the case, the Company will continue to seek additional development, licensing and royalty opportunities in this segment from handset makers and will endeavour to secure ongoing revenue streams through participating in the delivery of premium 3D content to 3D subscribers.

During the period the Company recognised license revenue from the two-year exclusive license for the Korean market that was granted to Samsung in late 2006.

* 3D Conversion

With the imminent arrival of the next generation 3D HDTVs, the Company has been focusing on increasing revenue streams from 3D enabled consumer devices. Historically, the Company has used its 2D to 3D conversion software tools as a service to third parties seeking one time conversion of existing material.

Despite the success of 3D cinema movies, few are available on DVD or Blu-Ray at this stage and if all the recent 3D digital cinema movies were released in either format, there would still be less than ten for consumers to choose from.

DDD's licensees have a clear requirement for expanding the access to high quality 3D content for their customers and the Company is focused on meeting this need using its expertise and tools in 3D content creation and conversion.

During 2007, the TriDef Media Creator was delivered to enable efficient conversion of content for consumer platforms including 3D HDTV. The Company is in the process of redirecting the resources that have supported the 3D conversion service. The Company expects to use these resources to assist content owners and publishers in repackaging a wide variety of animated and live action content for distribution in 3D to TV users in a number of formats including DVD, Blu Ray, broadcast and broadband internet.

Chris Yewdall

Chief Executive Officer

8th September 2008

Consolidated statement of changes in equity