UK Oil & Gas Regulatory News (UKOG)

19 Jun 2007 07:01

Sarantel Group PLC19 June 2007 19 June 2007 Sarantel Group PLC INTERIM REsults FOR THE SIX MONTHS ENDED 31 mARCH 2007 Sarantel Group PLC (AIM: SLG.L), the leading manufacturer of revolutionaryfiltering antennas for mobile and wireless devices, today announces itsunaudited results for the six months ended 31st March 2007. Highlights are asfollows: • Turnover of £1.5m (2006: £2.3m) • Loss before tax of £3.2m (2006: £2.7m) • Operating costs reduced by approximately £1.7m following restructuring • Inventories reduced by £0.8m • Three million Sarantel antennas shipped since the company's inception • Cash balances of £2.5m at end March (of which £0.9m is in a blocked account) (2006: £8.4m) • Cash balances of £1.6m at end May (of which £0.8m is in a blocked account) • Conditional placing to raise £2.1m (gross) announced on 6 June 2007. David Wither, Chief Executive Officer, said: "We secured 15 GPS design wins during the period and negotiated a large shipmentof antennas to XM Satellite Radio. We continue to pursue design wins in thehigh- volume GPS PND market and are receiving very positive feedback fromcustomers or potential customers who are developing hand portable GPS products.We believe that the market trend towards hand portability will favour the uniqueproperties of our antenna. "We are pleased that our main investors have agreed to invest an additional£2.1m (subject to shareholder approval) in the business as it demonstrates theirconfidence in Sarantel and its technology. "In order to ensure that we are well positioned to capitalise on the futurehigh-volume market, the board will diversify the business by seeking othernear-term sources of revenue, while taking action to reduce the ongoing costbase. "We remain convinced that our technology advantage is significant and that thelonger-term market trend towards small hand-portable GPS products will providethe company with a sustainable position in the high-volume GPS market." For further information please contact:Sarantel Group PLC 01933 670560 Geoff Shingles, Chairman www.sarantel.com David Wither, CEO College Hill Associates Ltd 0207 457 2020 Carl Franklin Ben Way Ambrian Partners 0207 776 6400 Tim GoodmanPictures are available for the media to view and download from www.vismedia.co.uk Notes to Editors: About Sarantel Sarantel is a leader in the design of high-performance miniature antennas forportable wireless applications including hand-held navigation, satellite radioand laptop computers. Sarantel's revolutionary ceramic filtering antennas offer dramatically improvedperformance over existing antenna designs, resulting in a clearer signal, betterrange and a 90 per cent reduction in the amount of signal radiation absorbed bythe body. Because of their smaller size and higher capabilities, Sarantel's antennasenable manufacturers to create innovative high-volume consumer productsincorporating technologies such as GPS, Wi-Fi, WiMax, 3G, GPRS, Satellite Radioand Bluetooth. More information about the company is available at www.sarantel.com Chief Executive's Statement Trading Results Turnover for the six months to 31st March 2007 amounted to £1.5m (2006: £2.3m). Material cost as a percentage of sales was high due to a number of factors. Weoffered a discount to XM in order to clear the satellite radio inventory, weincurred higher costs in the initial production runs for our new GPS antenna andfinally we expensed the attributable overheads of the antennas sold out ofinventory during the period. Taking these into account, the profitability of ourcore GPS sales were in line with management's expectations and the company'slonger-term profitability objective. As announced on 5 October 2006, the company undertook a restructuring of itsorganisation, which was completed by the end of November. Overall, operatingcharges were reduced by £1.7m (before exceptional costs) compared to the secondhalf of 2006. Staff costs reduced by £0.7m compared to the second half of 2006.As disclosed further under "Accounting Policies" the adoption of FinancialReporting Standard 20 (FRS 20) share-based payment resulted in an increase incosts of £0.1m. Operating losses were £3.3m (2006: £2.8m) showing a reduction of £0.3m (beforeexceptional items) compared to the second half of 2006. Loss before tax were £3.2m (2006: £2.7m) representing an improvement of £0.3m(before exceptional items) compared to the second half of 2006. Inventories reduced by 47% to £0.9m mainly as a result of the shipment of XMsatellite radio antennas by the half year end. Capital expenditure amounted to £0.5m and consisted of £0.3m of small plantadditions and final stage payments for capacity increases in 2006 and £0.2m ofIP filing and prosecution costs. Cash balances at the end of March totalled £2.5m (2006: £8.4m) of whichapproximately £0.9m was held in a blocked account by HSBC as security depositfor lease payments. During the first half-year cash was mainly used to fund theoperations and capital expenditure. Operational Review During the first six months, we won a total of 15 new GPS designs. Theseincluded 4 new design wins in the GPS tracking segment. The company has morethan 25 design wins in this market segment, which we believe is significantbecause it demands robust GPS performance in small, highly integrated,hand-portable GSM phones. Sarantel has demonstrated repeatedly that ourtechnology overcomes this challenge. We also successfully negotiated a largeshipment of antennas to XM Satellite Radio, which substantially reduced ourinventory and generated cash. We believe that the Personal Navigation Devices ("PND") market is continuing toevolve towards devices that will benefit from our technology. The firstgeneration of dash-mounted PNDs was never intended for hand portable use. As aresult, these products are relatively large in size and have access to a powersource which enables the GPS chipset to use additional power to mitigate poorantenna performance. We anticipate that PND vendors will integrate more functionality into theirdevices and will increasingly require these to be hand portable. We believe thatthis will drive greater adoption of our technology. At the same time, the first generation of mobile phones with integrated GPS isstarting to appear on the market but as with other newly introduced features,this first generation GPS will not provide the level of performance that demandsour technology. As mobile GPS applications develop and the Location BasedServices market matures - in part driven by both commercial and consumergenerated content - we expect the need for our technology to increase. Overall we remain confident that the major market opportunities for our antennatechnology are still to come. It is, however, very difficult for the company topredict when these opportunities will materialize. Therefore in order to ensurethat the company remains well positioned to capitalize on future high volumeGPS, we have adjusted the company's immediate strategy. We are working todiversify sources of near term revenue and are currently in discussions with anumber of potential customers on the development of new antenna products forsatellite phones and other applications. In these segments, customers place asufficiently high value on the performance benefits our technology provides andmay be willing to fund development projects. In parallel, the company is takingsteps to further reduce its operational costs. Manufacturing cost reduction is an area of intense focus for Sarantel and thematerial cost of our second generation GPS antenna was 38% lower than the firstgeneration. We are currently developing our third generation GPS antenna and weexpect to achieve a significant break-through in both material cost and improvedmanufacturing processes. We remain confident that our antenna technology will,with more substantial volume deliveries, be an economically viable alternativeto the incumbent technologies. Management and Staff The first half of our financial year 2007 has been challenging and we thank ouremployees for their continued perseverance and we want to express our sincereappreciation and gratitude to all our staff. In a separate statement released today, we are announcing a streamlining of theboard. Outlook It is clear after the first half-year results that our full year sales will notmatch that achieved in 2006. However, our discussions with major OEMs confirmthat our technology is becoming increasingly relevant for the hand-portable GPSmarket. As this market segment develops we expect to be able to resume salesgrowth. David WitherChief Executive Officer 19 June 2007 SARANTEL GROUP PLCCONSOLIDATED SUMMARISED PROFIT AND LOSS ACCOUNT For the six months to 31 March 2007 Note 6 months to 31 6 months to 12 months to March 2007 31 March 2006 30 September 2006 Restated Restated Unaudited Unaudited Audited £ £ £ Turnover 1,541,154 2,275,093 4,021,532 Operating costs Change in stocks of finished goods and work in 267,356 405,591 1,452,526progressRaw materials and consumables (1,847,017) (1,537,565) (3,004,319)Total material cost (1,579,661) (1,131,974) (1,551,793) Other operating expensesOther external charges (3,547) (354,910) (527,650)Staff costs (1,585,862) (1,829,917) (4,139,185)Other operating charges (1,639,184) (1,793,536) (5,022,122)Total operating charges (4,808,254) (5,110,337) (11,240,750) Operating loss before depreciation (2,468,522) (2,101,584) (4,827,591)Depreciation and other amounts written off tangible and intangible assets (798,578) (733,660) (2,391,627) Operating loss (3,267,100) (2,835,244) (7,219,218) Interest receivable and similar income 28,233 163,740 237,551 Loss on ordinary activities before taxation (3,238,867) (2,671,504) (6,981,667) Tax on loss on ordinary activities 2 40,000 65,000 168,920 Loss on ordinary activities after taxation (3,198,867) (2,606,504) (6,812,747)Earnings per share- basic 3 (5.8)p (4.8)p (12.5p) The comparative figures for staff costs have been restated to reflect theadoption of FRS20. SARANTEL GROUP PLC CONSOLIDATED SUMMARISED BALANCE SHEET As at 31 March 2007 As at 31 As at As at March 2007 31 March 2006 30 September 2006 Restated Restated Unaudited Unaudited Audited £ £ £ Fixed assets 5,257,731 6,255,591 5,604,414 Current assetsStocks 895,415 983,081 1,709,683Debtors 1,480,057 1,370,627 795,918Cash at bank and in hand 2,458,621 8,375,522 5,050,123 4,834,093 10,729,230 7,555,724 Creditors: amounts falling due within one year (2,241,066) (1,835,623) (1,969,910) Net current assets 2,593,027 8,893,607 5,585,814 Total assets less current liabilities 7,850,758 15,149,198 11,190,228 Creditors: amounts falling due after one year (369,226) (540,594) (618,844) 7,481,532 14,608,604 10,571,384 Share capital 5,513,039 5,450,380 5,494,039Share premium 14,424,857 14,366,489 14,424,857Other reserve 13,557,551 13,400,540 13,467,536Profit and loss account (26,013,915) (18,608,805) (22,815,048) 7,481,532 14,608,604 10,571,384 The comparative figures for other reserve and profit and loss account have beenrestated to reflect the adoption of FRS20. SARANTEL GROUP PLC CONSOLIDATED SUMMARISED CASH FLOW STATEMENT For the six months to 31 March 2007 Note 6 months to 6 months to 31 12 months to 30 31 March March 2006 September 2006 2007 Unaudited Unaudited Audited £ £ £ Net cash outflow from operating activities 4 (1,936,875) (3,414,064) (6,244,443) Returns on investments and servicing of finance 28,233 163,740 237,551 Corporation tax received - - 149,821 Capital expenditure and financial investment (451,895) (1,423,575) (2,748,392) Net cash outflow before financing (2,360,537) (4,673,899) (8,605,463) Financing (230,964) (84,991) 521,174 Decrease in cash 5 (2,591,501) (4,758,890) (8,084,289) SARANTEL GROUP PLCOTHER PRIMARY STATEMENTS For the six months to 31 March 2007 RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS 6 months to 6 months to 12 months to 30 31 March 2007 31 March 2006 September 2006 Unaudited Unaudited Audited £ £ £Loss for the period as originally stated (2,595,504) (6,734,747)Prior year adjustment (11,000) (78,000) Loss for the period (3,198,867) (2,606,504) (6,812,747)Issue of shares net of expenses 19,000 119,075 221,098Share option expense transferred to reserves 90,015 11,000 78,000Net decrease in shareholders' funds (3,089,852) (2,476,429) (6,513,649) Opening shareholders' funds 10,571,384 17,085,033 17,085,033 Closing shareholders' funds 7,481,532 14,608,604 10,571,384 SARANTEL GROUP PLC NOTES TO THE INTERIM REPORT FOR THE SIX MONTHS TO 31 MARCH 2007 1 BASIS OF PREPARATION The interim financial statements have been prepared in accordance withapplicable accounting standards and under the historical cost convention. Accounting Policies The accounting policies have remained the same as the prior year except for theadoption of Financial Reporting Standard 20 (FRS 20), Share-Based Payments. Inaccordance with the transitional provisions, FRS 20 has been applied to allgrants of equity instruments after 7 November 2002 that were not vested at 1October 2006. The Group operates a share option scheme to allow certain employees to acquireshares in the parent company Sarantel Group PLC. The fair value of optionsgranted is recognised as an employee expense, with a corresponding increase inequity, and spread over the period during which the employees becomeunconditionally entitled to the options. The fair values are calculated using anappropriate option pricing model. The profit and loss charge is then adjusted toreflect expected and actual levels of vesting based on non market performancerelated criteria. The impact of the adoption of FRS 20 on the results for the 6 months to 31 March2007 was a charge of £90,015 with a corresponding increase in equity inshareholders' funds. The impact on the prior period figures, which have beenre-stated accordingly, was £11,000 for the 6 months to 31 March 2006 and £78,000for the year to 30 September 2006. The interim financial information in this report has neither been audited norreviewed by the Company's auditors. 2 TAX ON LOSS ON ORDINARY ACTIVITIES 6 months to 6 months to 12 months to 30 31 March 2007 31 March 2006 September 2006 Unaudited Unaudited Audited £ £ £Current taxUK corporation tax based on the results for 6 months to 40,000 65,000 168,92031 March 2007 The taxation credit arises in respect of research and development expenditureand is subject to agreement with the Inland Revenue. 3 EARNINGS PER SHARE The calculation of the basic earnings per share is based on the earningsattributable to ordinary shareholders divided by the weighted average number ofshares in issue during the year. Shares held in employee share trusts aretreated as cancelled for the purposes of this calculation. Reconciliations of the earnings and weighted average number of shares used inthe calculations are set out below. Basic earnings per share 6 Months to 6 Months to 31 12 Months to 31 March 2007 March 2006 30 Sept 2006 Restated Restated Unaudited Unaudited Audited £ £ £Earnings (3,198,867) (2,606,504) (6,812,747)Weighted average number of shares 55,019,152 53,856,628 54,331,745Per share amount pence (5.8)p (4.8)p (12.5)p 4 NET CASH OUTFLOW FROM OPERATING ACTIVITIES 6 months to 6 months to 12 months to 30 31 March 2007 31 March 2006 September 2006 Restated Restated Unaudited Unaudited Audited £ £ £Operating loss (3,267,100) (2,835,244) (7,219,218)Depreciation 798,578 733,660 2,391,627Share option expense 90,015 11,000 78,000Decrease/(increase) in stock 814,268 (856,800) (1,583,402)(Increase)/decrease in debtors (644,139) (323,972) 269,837Increase/(decrease) in creditors 271,503 (142,708) (181,288)Net cash outflow from operating activities (1,936,875) (3,414,064) (6,244,443) 5 RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET DEBT 6 months to 6 months to 12 months to 30 31 March 31 March 2006 September 2006 2007 Restated Restated Unaudited Unaudited Audited £ £ £Decrease in cash in the period (2,591,501) (4,758,890) (8,084,289)Cash outflow in respect of finance leases and HP 249,964 204,066 484,757New finance leases and HP - (318,026) (784,834)Change in net funds resulting from cash flows (2,341,537) (4,872,850) (8,384,366)Net funds at beginning of period 3,938,638 12,323,004 12,323,004Net funds at end of period 1,597,101 7,450,154 3,938,638 6 ANALYSIS OF CHANGES IN NET FUNDS At 1 Oct 2006 Cash Flows At 31 March 2007Net cash: £ £ £Cash in hand and at bank 5,050,123 (2,591,501) 2,458,622Debt:Finance leases and hire purchase agreements (1,111,485) 249,964 (861,521)Net funds 3,938,638 (2,341,537) 1,597,101 7 PUBLICATION OF NON-STATUTORY ACCOUNTS The financial information set out in this interim report does not constitutestatutory accounts as defined in section 240 of the Companies Act 1985. Thefigures for the year ended 30 September 2006, subject to adjustments resultingfrom the adoption of FRS20, have been extracted from the statutory financialstatements which have been filed with the Registrar of Companies. The auditors'report on those financial statements was unqualified and did not contain astatement under Section 237(2) of the Companies Act 1985. This information is provided by RNS The company news service from the London Stock Exchange