Uk Oil & Gas Regulatory News (UKOG)

12 June 2012

Sarantel Group PLC

Interim results for the six months to 31 March 2012

Sarantel Group PLC, (AIM: SLG, "Sarantel" or the Group), a leading manufacturer of high-performance, miniature antennas for mobile and wireless devices, announces unaudited interim results for the six month period ended 31 March 2012.

Highlights:

·; Revenues of £0.9m (H1 2011: £1.0m)

·; Production revenues increased by 9%, with significant growth in military market

·; Several large military development projects successfully completed

·; Cash balance of £0.3m with an additional £0.16m tax credit received after half-year end

·; £2.0m secured loan facility from HSBC announced 1 March 2012

Geoff Shingles, Chairman, said:

"We are beginning to see the fruits of our labour as orders from the large military contracts we announced last year are starting to flow. The largest order in Sarantel's history was announced in February and this will have a material impact on the Group's second half revenues.

"The importance of Sarantel's antenna technology to a number of major US defence contractors validates our technological approach and provides a strong endorsement, helping the Group to build momentum in this very important market."

Enquiries

About Sarantel www.sarantel.com

Sarantel is a leader in the design of high-performance miniature antennas for portable wireless applications. Sarantel's revolutionary ceramic filtering antennas offer dramatically improved performance over existing antenna designs, resulting in a clearer signal, better range and a 90 per cent reduction in the amount of signal radiation absorbed by the body. Because of their smaller size and higher capabilities, Sarantel's antennas enable manufacturers to create innovative wireless products for the GPS, Satellite Radio and Satellite phone markets.

Interim Results

In the six months to 31 March 2012, Group revenues were £0.89m (H1 2011: £1.03m). Production revenues increased by 9% with significant growth in the military market. Development revenues in the first-half reduced by £0.18m as the Group successfully completed several large military development projects with production revenues expected to start in the second half.

Gross margins of 28% (H1 2011: 30%) reflects the increase in product sales and a decrease in development revenues. Gross margins from product sales improved and the trend remains favourable.

The Group continues to maintain tight cost controls, with operating costs of £1.99m (H1 2011: £1.97m).

The Group's loss before depreciation, interest and tax was £1.51m (H1 2011: £1.26m).

Operating cash outflow was £1.27m (H1 2011: £0.85m), as the Group commits resources to the raw materials required to fulfil the large order announced in February.

The Group's cash balance of £0.3m is further supported by the £2.0m HSBC Loan Facility, of which £0.7m has been utilised to date.

Review of operations and markets

Product revenues increased by 9% in the first half due to a favourable shift in product mix. This had a positive impact on product gross margins and the Group expects this trend to continue into the second half. Pricing for Sarantel's products remain stable and the Group is working on a number of cost reduction initiatives that should enable continued margin expansion. The Group received the largest order in its history in early February. This order represents the culmination of many years of effort with one large US based defence contractor. Sarantel expects additional contracts, which have already been announced, to begin production later in this financial year or early next year.

Military market

Sarantel's sales momentum in the military communications equipment market grew in the first half. The Group is now selling its ruggedised antenna products to most of the world's leading military radio suppliers. The integration of GPS into tactical radio equipment is still at a relatively early stage and the Group expects the trend to upgrade existing communications equipment with a new generation containing GPS to continue for many years.

During the first half of the year, Sarantel successfully completed the development of an important antenna for this market and volume production has already begun. This development has expanded the Group's technical capabilities in a number of new areas and it will be the first antenna to use Sarantel's new assembly process.

Mobile Satellite Services ("MSS")

In November 2011, Sarantel announced that its Iridium antenna technology was being used on a compact, portable communications device from NAL called the SHOUT nano TS. This device will be sold to a number of different US Government agencies and should contribute more than one million US dollars in revenues over the next few years. The Group believes this market offers strong potential and will continue to provide opportunities for sales growth for many years to come.

Consumer GPS

In October 2011, Sarantel announced that it had completed successful field trials with a major Japanese consumer electronics customer in Tokyo. While progress in this market has been slower than hoped, the Group is actively engaged in discussions with a number of potential customers and partners in this market. Sarantel is also developing a number of products which it believes will be very attractive to major camera OEMs.

Sarantel continues to identify an enormous opportunity for its technology in a number of high volume consumer markets and will continue to apply the resources available to gain traction in these very high growth markets.

Research and development

Sarantel continues to develop its antenna technology by investing in research and development. During the first half the Group began to ship a product that uses a new, lower cost assembly process. Sarantel is currently developing a series of new products based on this assembly process, including the Group's first dual band antenna product, which it has already started sampling to customers.

Manufacturing

During the period Eolane, a French electronics manufacturing services company, completed its acquisition of Elcoteq in Tallinn. Production has continued as normal through the entire transition period.

Summary and outlook

Sarantel's technology is now a critical component in a number of high visibility military radio programs and the Group is confident that it will maintain its momentum in this rapidly growing market. There are a large number of encouraging new opportunities in the broader GPS market and with a £2.0m secured loan facility, the outlook for Sarantel's technology remains positive.

Unaudited Consolidated statement OF COMPREHENSIVE INCOME

for the six months ended 31 March 2012

All of the activities of the Group are classed as continuing.

Unaudited Consolidated balance sheet

as at 31 March 2012

unaudited CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

for the six months to 31 March 2012

Unaudited CONSOLIDATED CASH FLOW STATEMENT

for the six months ended 31 March 2012

Analysis

notes to the Unaudited interim FINANCIAL STATEMENTS

for the six months ended 31 March 2012

1 Basis of preparation

These unaudited condensed consolidated interim financial statements of Sarantel Group PLC are for the six months ended 31 March 2012. They do not include all of the information required for full annual financial statements, and should be read in conjunction with the consolidated financial statements of the Group for the year ended 30 September 2011. The financial information for the year ended 30 September 2011 set out in these interim consolidated financial statements does not constitute statutory accounts as defined in Section 434 of the Companies Act 2006. The Group's statutory financial statements for the year ended 30 September 2011 have been filed with the Registrar of Companies. The auditor's report on those financial statements was unqualified and did not contain a statement under section 498 (2) or (3) of the Companies Act 2006.

These interim consolidated financial statements have been prepared on the basis of the Group's accounting policies. These are set out in its Annual Report and Accounts for the year ended 30 September 2011 which is available on the Group's website (www.sarantel.com).

2 Revenue

All revenue originates from the UK.

3 Tax

The taxation credit arises in respect of research and development expenditure and is subject to agreement with H M Revenue and Customs.

A deferred tax asset, calculated using a tax rate of 24%, amounting to approximately £7.7m arising from taxable trading losses has not been recognised on the grounds that, at the current time, there is insufficient evidence that the asset will be recoverable in the foreseeable future.

4 Loss per share

The calculation of basic loss per share is based on the loss attributable to ordinary shareholders divided by the weighted average number of shares in issue during the period.

* The effect of options and warrants are anti-dilutive.

5 Share capital

6 Share options

A copy of this announcement is available from the Group's website, www.sarantel.com