Uk Oil & Gas Regulatory News (UKOG)

24 May 2006 07:01

Sarantel Group PLC24 May 2006 Embargoed until 7:00 24 May 2006 SARANTEL GROUP PLC INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 MARCH 2006 Sarantel Group PLC (AIM: SLG.L), the leading manufacturer and supplier offiltering antennas for wireless devices, today announces its unaudited resultsfor the six months ended 31st March 2006. Highlights are as follows: •Turnover more than doubled to £2.3m (2005: £1.0m) •Loss before tax narrowed to £2.7m (2005: £2.8m) •Successful production ramp up of new satellite radio antenna •Quadrupled manufacturing capacity •Roll out of new second generation GPS product on track •Cash balances of £8.4m (2005: £16.7m) David Wither, Chief Executive Officer, said:"Sarantel continues to experience strong revenue growth and posted a solidperformance for the first half. We made demonstrable gains in all areas of thebusiness and are very pleased with the successful production launch of our newsatellite radio antenna. We are encouraged by the level of new design activitywith XM Satellite Radio and our new GPS antenna. We expect to convert a numberof these designs to new business as we expand our customer base in the comingyear, although near term order visibility remains limited and it is still tooearly to determine how much revenue we can expect from satellite radio thisyear. Regardless of these near term issues, we expect revenue growth to continueand believe that our technology is well positioned to capitalise on markettrends towards thinner, more highly integrated portable devices." An analyst briefing will be held at 9.30am today at the offices of Smithfield,10 Aldersgate Street, London, EC1A 4HJ. For further information please contact:Sarantel Group PLC 01933 670560David Wither, CEO/Sitkow Yeung, CFO www.sarantel.com Smithfield 020 7360 4900Sara Musgrave/Tania Wild Pictures are available for the media to view and download from www.vismedia.co.uk NOTES TO EDITORS: ABOUT SARANTEL Sarantel designs, manufactures and sells patented, ceramic, filtering antennasfor use in portable wireless devices. These antennas allow a clearer signal thanconventional antennas whilst reducing the amount of energy absorbed by the bodyby approximately 90 per cent. They also simplify system design, thus allowingdesign standardisation and reduced time to market and cost for manufacturers.Sarantel's antennas significantly improve the performance of wireless systems byincreasing their range and effective bandwidth. The Company supplies antennas to the Global Positioning Satellite (GPS) marketand the North American satellite radio market and Sarantel's antennas have beensuccessfully designed into Personal Navigation Devices (PNDs), laptops andPersonal Digital Assistants (PDAs). Sarantel's antenna technology is alsocapable of servicing multiple high volume markets such as Wi-Fi, 3G andBluetooth. Sarantel is listed on AIM, a market operated by the London Stock Exchange and isincluded in the IT Hardware sector (93) within the Telecommunications equipmentsub-sector (938) and has a RIC code of SLG.L CHIEF EXECUTIVE'S STATEMENT We are pleased to present our interim results for the six months to 31 March2006. The Company posted a solid performance for the first half and we continueto make demonstrable gains in all areas of our business. Trading Results In the six months to 31st March 2006, revenues more than doubled to £2.3m (2005:£1.0m). Demand for Sarantel's innovative antennas continued to increase andduring the first half, approximately 20 per cent. of our revenues came from newproduct shipments to the North American satellite radio market. Due to thenature of our markets and existing customers we continue to face limited nearterm visibility of orders. Operating losses reduced to £2.8m (2005: £2.9m) during the period under review.Material costs were lower while operating charges increased as a result of theplanned investment in staff, research and development activities as well as theincrease in the level of activity. The trend for both material and overheadcosts is in line with management's plans. Loss before tax narrowed to £2.7m from£2.8m. As stated in the announcement of the XM Satellite Radio order delay in December,Sarantel focused on producing antennas for stock. This resulted in increasedspend on working capital as stock levels increased to £1.0m (2005: £0.2m) whiledebtors increased in line with the level of shipments. Operating cash outflowduring the first six months was £3.4m, of which £1.3m arose from this higherworking capital requirement. Capital expenditure amounted to approximately £1.4m, (2004: £1.0m) as wecontinued to increase production capacity. The Board is confident that theCompany will have sufficient installed capacity at the end of this financialyear to reach profitability. During the first half year, approximately £0.3m of the Company's capitalexpenditure was funded through hire purchase or lease agreements. At the end ofMarch, the Company had in place further leasing and hire purchase facilitiesamounting to approximately £1.8m worth of new equipment. Cash balances at 31 March 2006 were £8.4m. Operational Review Following the delay to the commencement of the XM Satellite Radio order at thestart of the financial year, we were pleased to confirm in March that we hadsuccessfully commenced volume deliveries of our satellite radio antennas. Wehave received excellent feedback regarding the performance and form factor ofthese antennas and the initial product reviews have been very positive. Thesuccessful production ramp up of the new satellite radio antenna validated asignificant manufacturing process improvement that was introduced for our newgeneration of antenna products. This innovation dramatically improves thescaleability of our manufacturing process while reducing unit cost. Prototype production of our second generation GPS antenna has commenced and weare encouraged by the broad market interest in this product, which providesbetter performance in a smaller package at a better cost. As planned, we have significantly improved our operational capability byachieving a four-fold increase in our capacity at Wellingborough over the pasttwelve months. The Company continues to investigate potential partners forfuture outsourced manufacturing capacity. Management and Staff We would like to take this opportunity to thank all of Sarantel's employees fortheir continued hard work and dedication. Accounting Policies The financial statements have been prepared under the historical cost conventionin accordance with applicable United Kingdom accounting standards. The principalaccounting policies of the Company have remained unchanged from those set out inthe Company's 2005 annual report and financial statements. The Company hasprepared an initial IFRS conversion plan and is taking professional advice withregard to the appropriate timing for adopting IFRS, at the latest by the yearending 30th September 2008. Outlook Sarantel has experienced strong revenue growth and we expect this trend tocontinue. The board decided to build manufacturing capacity in advance of ordersto ensure the Company is positioned to capitalise on potential market demand. Weare encouraged by the level of new design activity with XM Satellite Radio andGPS and expect to convert a number of these designs to new business. Near termorder visibility however remains limited and it is still too early to determinehow much revenue we can expect from satellite radio this year. Regardless ofthese near term issues, we believe our technology is well positioned to captureopportunities presented by market trends towards thinner, more highly integratedportable devices and expect order visibility to improve as we continue thesuccessful expansion of our customer base. David WitherChief Executive Officer24th May 2006 Note 6 months to 6 months to 12 months to 31 March 31 March 30 September 2006 2005 2005 Unaudited Unaudited Audited Restated £ £ £ Turnover 2,275,093 1,012,677 2,802,454 ------------ ------------ ------------Operating costs Change in stocks of finished goods and work in progress 405,591 (64,805) (92,319)Raw materials and consumables (1,537,565) (850,542) (1,464,061) ------------ ------------ ------------Total material cost (1,131,974) (915,347) (1,556,380) ============ ============ ============ Other operating expenses - (115,000) (115,000)Other external charges (354,910) (105,522) (677,930)Staff costs (1,818,917) (1,326,889) (3,034,483)Other operating charges (1,793,536) (1,438,164) (3,308,919) ------------ ------------ ------------Total operating charges (3,967,363) (2,985,575) (7,136,332) -------------------------------------------------------------------------------Operating loss before depreciation andexceptional non-recurringcosts (2,090,584) (2,055,325) (4,497,310)Depreciation and other amountswritten off tangible and intangible assets (733,660) (527,954)* (1,087,982)Exceptional non-recurring costs 2 - (304,966) (304,966)------------------------------------------------------------------------------- Operating loss (2,824,244) (2,888,245) (5,890,258) Interest receivable andsimilar income 163,740 73,630 328,447 ------------ ------------ ------------ Loss on ordinary activitiesbefore taxation (2,660,504) (2,814,615) (5,561,811) Tax on loss on ordinary activities 3 65,000 40,000 150,215 ------------ ------------ ------------ Loss on ordinary activitiesafter taxation (2,595,504) (2,774,615) (5,411,596) ============ ============ ============Earnings per share- basic 4 (4.8)p (8.1)p (12.3)p ============ ============ ============ * The comparative figure for depreciation for the 6 months to 31 March 2005 hasbeen restated to reflect the change in estimated useful economic life of certainfixed assets effected in the statutory financial statements for the year ended30 September 2005. 31 March 2006 31 March 2005 30 September Unaudited Unaudited 2005 Restated Audited £ £ £ Fixed assets 6,255,591 3,639,479* 5,247,650 Current assetsStocks 983,081 227,905 126,281Debtors 1,370,627 642,038 1,046,655Cash at bank and in hand 8,375,522 16,722,895 13,134,412 ------------ ------------ ------------ 10,729,230 17,592,838 14,307,348 Creditors: amounts fallingdue within one year (1,835,623) (1,509,199) (2,009,708) ------------ ------------ ------------ Net current assets 8,893,607 16,083,639 12,297,640 ------------ ------------ ------------ Total assets less currentliabilities 15,149,198 19,723,118 17,545,290 Creditors: amounts fallingdue after one year (540,594) (74,570) (460,257) ------------ ------------ ------------ 14,608,604 19,648,548 17,085,033 ============ ============ ============ Share capital 5,450,380 5,293,796 5,355,891Share premium 14,366,489 14,330,532 14,341,907Other reserve 13,389,540 13,389,540 13,389,536Profit and loss account (18,597,805) (13,365,320) (16,002,301) ------------ ------------ ------------ 14,608,604 19,648,548 17,085,033 ============ ============ ============ * The comparative figure for fixed assets at 31 March 2005 has been restated toreflect the change in estimated useful economic life of certain fixed assetseffected in the statutory financial statements for the year ended 30 September2005. Note 6 months to 6 months to 31 12 months to 30 31 March March 2005 September 2005 2006 Unaudited Audited Unaudited Restated £ £ £ Net cash outflowfrom operating activities 5 (3,414,064) (1,598,510) (3,950,835) Returns on investmentsand servicing of finance 163,740 73,630 328,447 Corporation tax received - 125,000 165,215 Capital expenditure andfinancial investment (1,423,575) (1,024,096) (2,248,525) ------------ ------------ ------------Net cash outflow before financing (4,673,899) (2,423,976) (5,705,698) Financing (84,991) 17,077,825 16,771,064 ------------ ------------ ------------(Decrease)/Increase in cash 6 (4,758,890) 14,653,849 11,065,366 ============ ============ ============ RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS 6 months to 31 6 months to 12 months to 30 March 2006 31 March September 2005 2005 Unaudited Unaudited Audited Restated £ £ £ Loss for the period (2,595,504) (2,774,615) (5,411,596)Issue of shares net of expenses 119,075 17,077,825 16,617,450Issue of share in subsidiary prior to reconstruction 533,841 ------------ ------------ ------------Net increase/(decrease) inshareholders' funds (2,476,429) 14,303,210 11,739,695 Opening shareholders' funds 17,085,033 5,345,338 5,345,338 ------------ ------------ ------------Closing shareholders' funds 14,608,604 19,648,548 17,085,033 ============ ============ ============ 1 BASIS OF PREPARATION The interim financial statements have been prepared in accordance withapplicable accounting standards and under the historical cost convention. Accounting PoliciesThe principal accounting policies of the group have remained unchanged fromthose set out in the group's 2005 annual report and financial statements. Inthose financial statements the useful estimated economic life of certain fixedassets was shortened and therefore the comparative figure for depreciation forthe 6 months to 31 March 2005 has been restated to reflect that change. Theimpact on the results for that period is to increase the loss and reduce netassets by £156,954. 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 31 6 months to 12 months to 30 March 2006 31 March 2005 September 2005 Unaudited Unaudited Audited £ £ £ Stock write-off - (109,198) (109,198)Variation of Share Exchange Agreement - (115,000) (115,000)Non-recurring professionalcharges - (80,768) (80,768) ------------ ------------ ------------Total exceptional non-recurring costs - (304,966) (304,966) ============ ============ ============ 3 TAX ON LOSS ON ORDINARY ACTIVITIES 6 months to 31 6 months to 12 months to 30 March 2006 31 March 2005 September 2005 Unaudited Unaudited Audited £ £ £Current taxUK corporation tax based onthe results for 6 months to 31 March 2006 65,000 40,000 150,215 ============ ============ ============ 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 6 Months to 31 12 Months to 30 March 2006 March 2005 Sept 2005 Unaudited Unaudited Audited Restated £ £ £Earnings (2,595,504) (2,774,615) (5,411,596)Weighted averagenumber of shares 53,856,628 34,438,823 43,867,040Per share amount pence (4.8)p (8.1)p (12.3)p 5 NET CASH OUTFLOW FROM OPERATING ACTIVITIES 6 months to 31 6 months to 12 months to 30 March 2006 31 March 2005 September 2005 Unaudited Unaudited Audited Restated £ £ £Operating loss (2,824,244) (2,888,245) (5,890,258)Depreciation 733,660 527,954 1,087,982(Increase)/decrease in stock (856,800) 26,713 237,534(Increase)/decrease in debtors (323,972) (90,244) (448,303)(Decrease)/increase in creditors (142,708) 601,114 947,210Non-cash exceptionalnon-recurring costs - 224,198 115,000 ------------ ------------ ------------Net cash outflow fromoperating activities (3,414,064) (1,598,510) (3,950,835) ============ ============ ============ 6 RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET DEBT 6 months to 31 6 months to 12 months to 30 March 2006 31 March 2005 September 2005 Unaudited Unaudited Audited Restated £ £ £(Decrease)/increase in cash in the period (4,758,890) 14,653,849 11,065,366 Cash outflow in respect offinance leases and HP 204,066 - 191,586New finance leases and HP (318,026) - (949,842) ------------ ------------ ------------Change in net funds resulting from cash flows (4,872,850) 14,653,849 10,307,110Net funds at beginning ofperiod 12,323,004 2,069,046 2,015,894 ------------ ------------ ------------Net funds at end of period 7,450,154 16,722,895 12,323,004 ============ ============ ============ 7 ANALYSIS OF CHANGES IN NET FUNDS At 1 Oct 2005 Cash Flows At 31 March 2006Net cash: £ £ £Cash in hand and at bank 13,134,412 (4,758,890) 8,375,522Debt:Finance leases and hirepurchase agreements (811,408) (113,960) (925,368) ------------ ------------ ------------ Net funds 12,323,004 (4,872,850) 7,450,154 ------------ ------------ ------------ 8 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 2005 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