RNS Number : 1389F
Sarantel Group PLC
12 June 2012
 



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

 

Sarantel Group PLC

  01933 670 560

David Wither, Chief Executive Officer


Nicola Malyon, Chief Financial Officer

 


Beaumont Cornish Ltd (Nominated Adviser)

020 7628 3396

Roland Cornish/Michael Cornish

 


XCAP Securities PLC (Corporate Broker)

020 7101 7070

Jon Belliss/Karen Kelly

 


College Hill

  020 7457 2020

Kay Larsen/Rozi Morris


 

 

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

 


Note

Six months to 31 March

 2012

Six months to
31 March

 2011

12 months to

30 September 2011



£'000

£'000

£'000






Revenue

2

888

1,030

2,195






 Cost of sales 


635

721

1,704






Gross profit


253

309

  491






Research and development costs


665

603

1,268






Selling and distribution costs


283

288

625






Administration costs


1,042

1,082

1,592






Total operating costs


1,990

1,973

3,485

Operating loss


(1,737)

(1,664)

(2,994)






Operating loss before depreciation and  amortisation


(1,513)

(1,259)

(2,273)

Depreciation and amortisation


(224)

(405)

(721)






Finance and other income


5

4

5

Finance and other costs


(6)

(31)

(24)






Loss before tax 


(1,738)

(1,691)

(3,013)






Tax

3

125

66

160






Loss for the period


(1,613)

(1,625)

(2,853)

Other comprehensive income


-

-

-

Total comprehensive loss for the period


(1,613)

(1,625)

(2,853)

 

Basic and diluted loss per share

4

(0.2)p

(0.4)p

(0.6)p

 

 

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

 

Unaudited Consolidated balance sheet

as at 31 March 2012

 


 

 

Note

As at

31 March

 2012

As at
31 March

 2011

As at

30 September 2011



£'000

£'000

£'000

Assets





Non-current assets





Intangible assets


1,684

1,617

1,623

Property, plant and equipment


209

480

288






Total non-current assets


1,893

2,097

1,911






Current assets





Inventories


545

269

346

Trade and other receivables


580

703

684

Current tax


279

226

154

Cash and cash equivalents


262

431

1,197

                                                





Total current assets


1,666

1,629

2,381

Total assets


3,559

3,726

4,292











Current liabilities





Trade and other payables


1,124

1,055

832

Amounts due under finance leases and HP agreements


-

126

13

Amounts due under invoice financing facility


108

156

253

Total current liabilities


1,232

1,337

1,098

 

Non-current liabilities





Other payables


702

-

3

Total liabilities


1,934

1,337

1,101






Equity





Share capital

5,6

11,318

10,889

11,318

Share premium


18,969

17,388

18,969

Share scheme reserve


775

708

728

Warrant reserve


76

76

76

Merger reserve


13,390

13,390

13,390

Retained loss


(42,903)

(40,062)

(41,290)

Total equity


1,625

2,389

3,191






Total liabilities and equity


3,559

3,726

4,292

 

unaudited CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

for the six months to 31 March 2012

 


Share capital

Share premium

Share scheme reserve

Warrant reserve

Merger reserve

Retained earnings

Total

 equity


     £'000

     £'000

  £'000

     £'000

   £'000

        £'000

     £'000

For the six months to

31 March 2012








At 1 October 2011

11,318

18,969

728

 

76

13,390

(41,290)

3,191

Loss after tax

-

-

-

-

-

(1,613)

(1,613)

Total comprehensive income for the period

-

-

-

-

-

(1,613)

(1,613)

Share based payments

-

-

47

-

-

-

47

Transactions with owners

-

-

47

-

-

-

47









At 31 March 2012

11,318

18,969

775

76

13,390

(42,903)

1,625









For the six months to

31 March 2011








At 1 October 2010

9,789

17,234

669

 

76

13,390

(38,437)

2,721

Loss after tax

-

-

-

-

-

(1,625)

(1,625)

Total comprehensive income for the period

-

-

-

-

-

(1,625)

(1,625)

Shares issued

1,100

275

-

-

-

-

1,375

Cost of share issue

-

(121)

-

-

-

-

(121)

Share based payments

-

-

39

-

-

-

39

Transactions with owners

1,100

154

39

-

-

-

1,293









At 31 March 2011

10,889

17,388

708

76

13,390

(40,062)

2,389









For the 12 months to

30 September 2011








At 1 October 2010

9,789

17,234

669

 

76

13,390

(38,437)

2,721

Loss after tax

-

-

-

-

-

(2,853)

(2,853)

Total comprehensive income for year

-

-

-

-

-

(2,853)

(2,853)

Shares issued

1,529

1,993

-

-

-

-

3,522

Cost of share issue

-

(258)

-

-

-

-

(258)

Share based payments

-

-

59

-

-

-

59

Transactions with owners

1,529

1,735

59

-

-

-

3,323








At 30 September 2011

11,318

18,969

728

76

13,390

(41,290)

3,191

 

Unaudited CONSOLIDATED CASH FLOW STATEMENT

for the six months ended 31 March 2012

 


Six months to 31 March

 2012

Six months to 31 March

 2011

12 months to 30 September

 2011


£'000

£'000

£'000

Operating activities




Loss before tax

(1,738)

(1,691)

(3,013)

Adjustments for non-cash items:




Depreciation and amortisation

199

382

644

Depreciation absorbed to cost of sales

25

23

77

Investment revenue

(5)

(2)

(5)

Finance lease interest

6

19

32

Share based payment

47

39

59

(Increase)/decrease in inventories

(199)

39

(39)

Decrease in trade and other receivables

104

118

138

Increase/(decrease) in trade and other payables

292

224

(2)

Taxation received

-

-

166

Net cash outflow from operating activities 

(1,269)

(849)

(1,943)





Investing activities




5

2

5

Payments to acquire intangible assets

(179)

(129)

(253)

Payments to acquire property, plant and equipment

(27)

(95)

(101)

Net cash used in investing activities

(201)

(222)

(349)

Cash outflow before financing

(1,470)

(1,071)

(2,292)





Financing activities




Finance lease interest paid

(6)

(19)

(32)

Loans received

700

-

7

Issue of shares

-

1,375

3,522

Expenses paid in connection with issue of shares

-

(121)

(258)

Capital element of finance lease rentals

(14)

(219)

(333)

Net cash inflow from financing activities

680

1,016

2,906





Net (decrease)/increase in cash and cash equivalents

(790)

(55)

614





Cash and cash equivalents at start of period

944

330

330





Cash and cash equivalents at end of period

154

275

944

 

Analysis

Cash and cash equivalents

262

431

1,197

Amounts due under invoice financing facility

(108)

(156)

(253)

Net cash and cash equivalents

154

275

944

 

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


Six months to

31 March
2012

Six months to

31 March
2011

12 months to

30 September 2011


Unaudited

Unaudited

Audited


£'000

£'000

£'000





Sales of antennas

781

719

1,702

Sale of Non-Recurring Engineering services (NRE)

21

206

   386

Sales of consumables

86

105

107





Total revenue

888

1,030

2,195

All revenue originates from the UK.

3          Tax


Six months to 31 March

 2012

Six months to 31 March

 2011

12 months to 30 September

 2011


£'000

£'000

£'000





UK corporation tax based on the results for six months to 31 March 2012

(113)

(66)

(160)

Adjustment in respect of prior year

(12)

-

-





Total tax credit

(125)

(66)

(160)





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. 

 


Six Months to 31 March

 2012

Six Months to 31 March

 2011

12 Months to 30 September

 2011


£'000

£'000

£'000





Loss for the period

(1,613)

(1,625)

(2,853)

Weighted average number of shares (thousands)

830,476

362,859

483,559

Basic and diluted loss per share*

(0.2)p

(0.4)p

(0.6)p

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

 

5          Share capital


As at  31 March

2012

As at  31 March

2012

As at  31 March

2011

As at  31 March

2011

 

As at  30 September

2011

 

As at  30 September 2011


Number

£'000

Number

£'000

Number

£'000








Allotted, called-up and fully paid:

 






A ordinary shares of £0.001 each

(31 March 2011 £0.01 each)

 

829,439,991

829

399,899,991

3,999

829,439,991

829

B ordinary shares of £0.001 each

(31 March 2011 £0.01 each)

 

1,036,340

1

1,036,340

11

1,036,340

1

Deferred shares of  £0.001 each

(31 March 2011 £0.09 each)

 

10,487,624,769

10,488

76,435,531

6,879

10,487,624,769

10,488


11,318,101,100

11,318

477,371,862

10,889

11,318,101,100

11,318

6          Share options


As at 31

March

2012

As at 31

March

2012

As at 31

March

2011

As at 31

March

2011

 

As at 30 September

2011

 

As at 30 September 2011


Number

Weighted average exercise price (p)

Number

Weighted average exercise price (p)

Number

Weighted average exercise price (p)








Number of share options at beginning of period

85,715,130

0.8

36,650,744

2.4

36,650,744

2.2

Options granted during the period

-

-

15,867,968

2.5

73,420,084

0.7

Options lapsed and surrendered

-

-

(9,638,815)

1.1

(24,355,698)

2.6

Balance at end of the period

85,715,130

0.8

42,879,897

1.7

85,715,130

0.8








 

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


This information is provided by RNS
The company news service from the London Stock Exchange
 
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