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
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Sarantel Group PLC |
01933 670 560 |
|
David Wither, Chief Executive Officer |
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Nicola Malyon, Chief Financial Officer
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Beaumont Cornish Ltd (Nominated Adviser) |
020 7628 3396 |
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Roland Cornish/Michael Cornish
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XCAP Securities PLC (Corporate Broker) |
020 7101 7070 |
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Jon Belliss/Karen Kelly
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College Hill |
020 7457 2020 |
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Kay Larsen/Rozi Morris |
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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 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 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 |
|
|
|
|
Interest received and similar income |
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 |
|
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 |
Six months to 31 March |
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