Uk Oil & Gas Regulatory News (UKOG)

6 Jun 2005 07:00

Sarantel Group PLC06 June 2005 Embargoed until 7:00 06 June 2005 SARANTEL GROUP PLC INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 MARCH 2005 Sarantel Group PLC ("Sarantel" or "the Company"), the leading manufacturer ofrevolutionary filtering antennas for wireless devices, today announces itsunaudited results for the six months ended 31st March 2005. Highlights are asfollows: •Turnover increased by 268% to £1.0m (2004: £0.3m) €325,000 antenna units shipped, up 563% year on year •Operating loss before exceptional non-recurring costs of £2.4m (2004: £1.9m) as the Company continues to invest for the future •Loss before tax of £2.7m (2004: £1.9m) •Order book at 31 March 2005 over £2.0m, up 400% year on year •Strong demand for Sarantel's antennas continues to outstrip capacity - New equipment installed- Additional equipment ordered to further expand capacity •Pipeline development for GPS and next generation market sectors on track •TomTom now using Sarantel's antenna in its GPS receiver •Successful flotation on AIM, raising £16.7m net of expenses David Wither, Chief Executive Officer, said: "I am very pleased with the company's progress since listing on AIM in March. Asstated at the time of our IPO, we have spent the first half investing for futuregrowth and continue to increase our capacity to meet strong market demand forour technology. The successful commissioning of the new production equipmentremains critical to achieving the full year expectation of shipping not lessthan 1m units, prospects for which look encouraging. The Board looks to thefuture with confidence." An analyst briefing will be held at 9.30am today at the offices of Smithfield,78 Cowcross Street, London, EC1M 6HE For further information please contact: Sarantel Group PLC www.sarantel.comDavid Wither, CEO/Sitkow Yeung, CFO 01933 670560 Smithfield 020 7360 4900Sara Musgrave/Sarah Richardson Pictures are available for the media to view and download fromwww.vismedia.co.uk NOTES TO EDITORS: ABOUT SARANTEL Sarantel designs, manufactures and sells patented, ceramic, filtering antennasfor use in portable wireless devices such as Personal Digital Assistants (PDAs),laptops and Third Generation (3G) mobile devices. Its current focus is onproducing antennas for the Global Positioning Satellite (GPS) market which allowa clearer signal than conventional antennas whilst reducing the amount of energyabsorbed by the body by approximately 90 per cent. The antennas simplify systemdesign, thus allowing design standardisation and reduced time to market and costfor manufacturers. As well as GPS, Sarantel's antenna technology is capable of servicing multipleemerging high volume markets such as Wi-Fi, 3G, Satellite Radio and Bluetooth.These markets are expected to be key in the future success of mobile networkoperators and device manufacturers. Sarantel's antennas significantly improvethe performance of wireless systems by increasing the range and effectivebandwidth. Sarantel is planning to commence high volume delivery of its antennasinto the satellite radio market within the next 12 months. Sarantel listed on AIM, a market operated by the London Stock Exchange, on 2ndMarch 2005 at an issue price of 82p. Sarantel is included in the IT Hardwaresector (93) within the Telecommunications equipment sub-sector (938) and has aRIC code of SLG.L CHIEF EXECUTIVE'S STATEMENT We are pleased to present our first set of interim results since the admissionof the Company to AIM on 2nd March 2005. The Group continues to make solidprogress in establishing its innovative antenna technology in the marketplaceand management is confident that the business will continue to develop in linewith plans. Trading Results In the six months to 31st March 2005, turnover grew over 268% to approximately£1.0m (2004: £0.3m). The number of units shipped in the first six months was325,000 representing a 563% growth over the same period the previous year andalmost twice the level in the financial year ended September 2004. Passiveantenna products dominated the shipment volumes during the period as a number ofcustomers, who use the higher-priced active antennas, experienced delays intheir own product launches. The order book at 31 March 2005 was over £2.0m, upmore than 400% year on year. The operating loss before exceptional non-recurring costs was £2.4m (2004:£1.9m). The increase in costs reflects the Board's strategy of investing in aworld-class team, capable of executing the significant ramp-up in sales, and thehiring of additional personnel required in order to operate the factory on atwenty-four hour basis. The loss on ordinary activities before taxation was £2.7m (2004: £1.9m). As stated in the Company's prospectus at the time of the flotation, theDirectors will apply the Company's cash resources to invest in the growth of itsoperations and therefore do not propose paying dividends in the near future. Operational Review During the first half-year, Sarantel made steady progress in sales of its GPSproducts and as anticipated, demand for the Company's antennas far outstrippedcapacity. In addition to the Company's existing customers in Taiwan and Korea,Sarantel secured design wins with a number of new customers including a leadingTaiwanese Original Design Manufacturer (ODM). Intellectual property is a major asset of the group and the Board is pleased toreport that during the first six months Sarantel consolidated its IP portfoliowith three new patent applications. In the Company's targeted sectors, including the next generation mobile phonemarket, Sarantel continues to make good progress in developing the orderpipeline. Possibly the most exciting development is in the North Americansatellite radio market where Sarantel is now working on the development of anantenna for this rapidly growing industry. The macro trends in the portable GPS market are also encouraging. A new class ofconsumer product is emerging which is referred to as a Portable NavigationDevice (PND). This device combines the functionality of a PDA with thenavigation capabilities of a stand-alone GPS device. Sarantel's antenna solutionis very well suited for this market because of its compact size and highperformance. The Company is also beginning to see significant activity in the mobile phoneaccessory market. TomTom's recently announced decision to use the Sarantelantenna in its own GPS receiver is a perfect example of the type of innovationSarantel's antenna technology enables in the GPS accessory market. The Sarantelantenna was selected for its small size and exceptional sensitivity. Finally, we are starting to see early development work on the integration of GPSinto GSM phones. While management believes widespread adoption of GPS intomobile GSM phones is still a few years away, it is encouraging to see thisdevelopment activity begin. Manufacturing The Company is accelerating its investment in manufacturing process improvementsand capacity in an attempt to keep up with the rapidly growing demand forSarantel's antennas. As highlighted at the time of the Company's flotation,during the first six months a total of £0.9m was invested in new productionequipment. As previously notified, the first phase of expansion was delayedbecause two key suppliers failed to deliver on schedule. These delays preventedthe Company from expanding its capacity in March, as originally expected, andevery effort will be made to make up for the lost time during this financialyear. The new equipment has now been delivered and the commissioning process isnearly complete. This equipment represents the state of the art in 3Dphotolithography and management anticipates an enormous step forward in terms ofproduction capacity, capability and reliability. In order to meet anticipateddemand for its products in the financial year ending 30 September 2006, theCompany has already ordered additional production equipment. Management and Staff Adding capacity to meet rapidly growing market demand for Sarantel's antennasposes considerable operational challenges and in order to meet this challengethe Company has assembled a world-class team. Bill Taylor joined the Group atthe start of the year as Chief Operating Officer and his experience withMotorola and Jabil Circuits Inc provides the Group with the necessary expertiseto scale up its operations. He has already guided his team through thedevelopment of detailed plans and has implemented a number of systems thatSarantel needs in order to transition the Company from a niche supplier to asuccessful high-volume manufacturer. At the same time, Andrew Christie joined as Director of Engineering. Andrewbrings with him considerable experience from RF MicroDevices. He has begun toimplement the engineering processes necessary to enable Sarantel to successfullymeet the challenges of entering new markets. As announced separately today, we are delighted to announce the appointment ofJohn Uttley as Non-Executive Director and Chairman of the Audit Committee. Johnjoins with a wealth of public company experience having served on the boards ofEnergis, National Grid Group, Stentor Communications plc and Glasgow PrestwickInternational Airport. This appointment is in line with the Company's commitmentto appoint an additional Non-Executive Director as soon as reasonablypracticable following its admission to AIM. These three appointments to an already solid senior management team and Boardprovide the Company with the appropriate level of skill and experience requiredto meet the challenges of the future. We would also like to take this opportunity to thank all of the employees atSarantel for their hard work and remarkable dedication. Accounting Policies The financial statements have been prepared under the historical cost conventionin accordance with applicable United Kingdom accounting standards. The Companyhas begun examining the impact of adopting IFRS in preparation for a move toIFRS for the financial year ending 30 September 2007. Further details will becommunicated in due course. Outlook Demand for the remainder of the financial year remains strong and the Companycontinues to develop the order pipeline required to generate strong growth fromits core GPS market. The Board is very encouraged by the developments in all itstargeted market segments (notably satellite radio) and continues to expect thatthese markets will provide significant growth opportunities for Sarantel. Thesuccessful commissioning of the new production equipment remains critical toachieving the full year expectation of shipping not less than 1m units,prospects for which look encouraging. The Board looks to the future withconfidence. David WitherChief Executive Officer6 June 2005 SARANTEL GROUP PLCCONSOLIDATED SUMMARISED PROFIT AND LOSS ACCOUNT For the period ended 31 March 2005 6 months to 6 months to 12 months to 31 March 31 March 30 September Note 2005 2004 2004 Unaudited Unaudited Audited £ £ £ Turnover 1,012,677 275,100 839,325 _________ _________ __________Operating costs Change in stocks offinished goods and work in progress (64,805) 92,675 74,674Raw materials andconsumables (850,542) (299,000) (364,398)Total material cost (915,347) (206,325) (289,724) ========= ========= ==========Other operating income - - 94,736Other external charges (105,522) 25,200 (141,565)Staff costs (1,326,889) (768,000) (1,500,398)Other operating charges (1,396,728) (1,267,475) (2,992,700) _________ _________ __________ (2,829,139) (2,010,275) (4,539,927) Operating (loss)______________________________________________________________________________before depreciationand exceptionalnon-recurring costs (2,055,325) (1,589,500) (3,069,915)depreciation and otheramounts written offtangible and intangibleassets (371,518) (352,000) (920,411)exceptional non-recurringcosts 2 (304,966) - -______________________________________________________________________________ Operating loss (2,731,809) (1,941,500) (3,990,326) Interest receivable andsimilar income 73,630 14,900 34,617 _________ _________ __________(Loss) on ordinaryactivities beforetaxation (2,658,179) (1,926,600) (3,955,709) Tax on (loss)on ordinaryactivities 3 40,000 - 200,228 _________ _________ __________(Loss) on ordinaryactivities after taxation (2,618,179) (1,926,600) (3,755,481) ========= ========= ==========Earnings per share- basic 4 (7.6)p (6.3)p (12.2)p _________ _________ __________ SARANTEL GROUP PLC CONSOLIDATED SUMMARISED BALANCE SHEET AT 31 MARCH 2005 31 March 2005 31 March 2004 30 September 2004 Unaudited Unaudited Audited £ £ £ Fixed assets 3,795,915 3,423,900 3,137,265 Current assetsStocks 227,905 343,400 363,816Debtors 642,038 382,730 607,282Cash at bank and in hand 16,722,895 611,900 2,069,046 __________ _________ _________ 17,592,838 1,338,030 3,040,144 Creditors: amounts fallingdue within one year (1,509,199) (1,231,130) (804,944) __________ _________ _________Net current assets 16,083,639 106,900 2,235,200 __________ _________ _________Total assets less currentliabilities 19,879,554 3,530,800 5,372,465 Creditors: amounts fallingdue after more than oneyear (74,570) - (27,127) 19,804,984 3,530,800 5,345,338 ========== ========= =========Share capital 5,293,796 3,080,348 3,080,348Share premium 14,330,532 - -Other reserve 13,389,540 9,290,554 12,855,695Profit and loss account (13,208,884) (8,840,102) (10,590,705) 19,804,984 3,530,800 5,345,338 __________ _________ _________ SARANTEL GROUP PLC CONSOLIDATED SUMMARISED CASH FLOW STATEMENTFor the period ended 31 March 2005 6 months to 6 months to 12 months to 31 March 31 March 30 September Note 2005 2004 2004 Unaudited Unaudited Audited £ £ £Net cash (outflow) fromoperating activities 5 (1,598,510) (857,512) (3,095,544) Returns on investmentsand servicing of finance 73,630 14,900 34,617 Research & Developmenttax received 125,000 - 172,000 Capital expenditure (1,024,096) (244,320) (442,881) Acquisitions and disposals - - 850,000 Financing 17,077,825 428,554 3,280,576 Increase/(decrease) in cash 6 14,653,849 (658,378) 798,768 __________ ________ _________ SARANTEL GROUP PLC OTHER PRIMARY STATEMENTSFor the period ended 31 March 2005 RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS 6 months to 6 months to 12 months to 31 March 31 March 30 September 2005 2004 2004 Unaudited Unaudited Audited £ £ £ (Loss) for the period (2,618,179) (1,926,600) (3,755,481) Issue of shares net of expenses(£1,481,737) 17,077,825 434,005 4,077,424 __________ _________ _________Net increase/(decrease) inshareholders' funds 14,459,646 (1,492,595) 321,943Opening shareholders' funds 5,345,338 5,023,395 5,023,395 __________ _________ _________Closing shareholders' funds 19,804,984 3,530,800 5,345,338 __________ _________ _________ SARANTEL GROUP PLC NOTES TO THE INTERIM RESULTS 1 BASIS OF PREPARATION The interim financial statements have been prepared in accordance withapplicable accounting standards and under the historical cost convention. Sarantel Group plc acquired the share capital of Sarantel Limited on a share forshare exchange following a group restructure. This restructure has beenaccounted for using merger accounting. The principal accounting policies of the group have remained unchanged fromthose set out in the group's 2004 annual report and financial statements. The interim financial information in this report has neither been audited norreviewed by the company's auditors. 2 EXCEPTIONAL NON-RECURRING COSTS 6 months to 6 months to 12 months to 31 March 31 March 2004 30 September 2005 2004 £ £ £ Stock write-off (109,198) - -Variation of Share ExchangeAgreement (115,000) - -Non-recurring professional charges (80,768) - -Total exceptional non-recurring costs (304,966) - - _______ __________ ___________Stock write-off The stock write-off relates to one discontinued product and other stock renderedobsolete through continuing process improvements. Variation of Share Exchange Agreement As set out in note 15 to the accounts for the year to 30 September 2004, thecompany entered into a share for share exchange, which resulted in a profit ondisposal of £94,736 which was shown in other operating income. On 23 February2005, the share for share exchange agreement was varied and followingshareholders consents, additional shares were issued to the parties to the shareexchange agreements to the value of the consideration received for the sale ofthe subsidiary amounting to £115,000. 3 TAX ON (LOSS) ON ORDINARY ACTIVITIES 6 months to 6 months to 12 months to 31 March 31 March 2004 30 September 2005 2004 £ £ £Current taxUK corporation tax based on the resultsfor 6 months to 31 March 2005 40,000 - 200,228 ====== ====== ======= The taxation credit arises in respect of research and development expenditureand is subject to agreement with the Inland Revenue. 4 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 31 March 2005Earnings (2,618,179)Weighted average number of shares 34,438,823Per share amount pence (7.6)p 6 months to 31 March 2004Earnings (1,926,600)Weighted average number of shares 30,803,473Per share amount pence (6.3)p 12 months to 30 September 2004Earnings (3,755,481)Weighted average number of shares 30,803,473Per share amount pence (12.2)p 5 NET CASH (OUTFLOW) FROM OPERATING ACTIVITIES 6 months to 6 months to 12 months to 31 March 31 March 30 September 2005 2004 2004 Unaudited Unaudited Audited £ £ £ Operating (loss) (2,731,809) (1,941,500) (3,990,326)Depreciation 371,518 352,000 920,411(Profit) on sale of tangible fixedassets - - (94,736)Decrease/(increase) in stock 26,713 (115,783) (136,199)Decrease/(increase) in debtors (90,244) 96,781 (93,473)Increase in creditors 601,114 750,990 298,779Non-cash exceptional non-recurringcosts 224,198 - -Net cash (outflow) from operatingactivities (1,598,510) (857,512) (3,095,544) _________ __________ _________ 6 RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET DEBT 6 months to 6 months to 12 months to 31 March 31 March 30 September 2005 2004 2004 Unaudited Unaudited Audited £ £ £Increase/(decrease) in cashin the period 14,653,849 (658,378) 798,768Net funds at beginning of period 2,069,046 1,270,278 1,270,278Net funds at end of period 16,722,895 611,900 2,069,046 __________ __________ _________ 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 2004 have been extracted from thestatutory financial statements which have been filed with the Registrar ofCompanies. The auditors' report on those financial statements was unqualifiedand did not contain a statement under Section 237(2) of the Companies Act 1985. This information is provided by RNS The company news service from the London Stock Exchange