Interim Results

RNS Number : 5537C

Kenetics Group Limited

02 September 2008

 

For immediate Release

Kenetics Group Limited

2 September 2008

Kenetics Group Limited

Unaudited Interim Results for 30 June 2008

Kenetics Group Limited ('Kenetics' or 'the Company' or 'the Group'), the Radio Frequency Identification (RFID) company focused on Security and RFID systems and products, announces its interim report for the 6 months ended 30 June 2008.

Key Points

• Consolidated turnover versus the comparable period fell by 17% to £235,000 (H1 2007: £283,000).

• Consolidated loss on ordinary activities after tax and expenses was £289,000 (H1 2006: £177,000). Material costs, employee benefits and marketing expenses have increased, resulting in greater losses.

• The Company participated in 3 major RFID trade shows in Las Vegas (USA), Hanover (Germany) and Tokyo (Japan)

• The Company is continuing its efforts in expanding its sales and distribution network. A major step forward is the appointment of a distribution partner in Japan. Sales enquiries have been received and we are expecting to turn some of these enquiries into sales orders in the second half of the year.

• The Company is pleased to announce that in the last week of August it has secured a substantial contract with the Singapore Land Transport Authority ('LTA'). The contract calls for the supply of a Contactless Smart Card ('CSC') Reader capable of reading both the current public transport fare card and a new CSC. The tender requires the design, development and supply of an initial number of readers to be used in the public transport systems.

•  The contract allows the LTA the option to purchase additional card readers, reportedly requiring a number of 22,000 card readers on buses and at train stations with the implementation of the new CSC.

•  The directors believe that this contract will enable the Company to offset the earlier uncertainty of its project business which affected its overall business performance in the first half of the year.

Commenting on the results Ken Wong, Chairman and CEO said:

'Although the first half year performance has been disappointing, the project contract that we gained in the last week of August is a milestone for the Company and a successful outcome of this initial contract would leave Kenetics well-placed to compete for any related work which this project may generate. Notwithstanding this contract, we will be continuing our push towards less dependence on our project business and concurrently, working to improve our product sales. Our participation in 3 major RFID trade shows in USA, Europe and Japan has enabled us to create greater visibility on our new Gen 2 products. We are beginning to establish distribution channels in new market segments predominantly in the USA and Japan. Initial indications and interests in our products in these two markets are encouraging, as sales enquiries have come in. Although there will be a lead-time before the sales orders are generated, we are optimistic that these enquiries will lead to greater sales revenue in the second half of the year as we build up our market share in Europe, USA and Japan.'

For more information, please contact:

Kenetics Group Limited

Ken Wong - Chairman, Tel: [phone]

Hin Yuen Yeong - Chief Operating Officer, Tel: [phone]

www.kenetics-group.com

Zimmerman Adams International Ltd. 

Nominated Advisor/Broker

Graeme Thom/Dominique Doussot, Tel: [phone]

www.zimmint.com

   Kenetics Group Limited - Interim financial information

   Six months ended 30 June 2008

  CONSOLIDATED INCOME STATEMENTS

		6 months	6 months	12 months
		Ended	Ended	Ended
		30 June	30 June	31 December
		2008	2007	2007
		(Unaudited)	(Unaudited)	(Audited)
		£’000	£’000	£’000
Continuing operations
Revenue		235	283	700
Other operating income		-	-	50
Changes in inventories of finished
goods and work-in-progress		(13)	(74)	80
Raw materials and consumables used		(83)	(36)	(408)
Employee benefits expenses		(245)	(217)	(492)
Depreciation of plant and equipment		(35)	(24)	(60)
Other operating expenses		(145)	(109)	(301)
Finance costs		(3)	-	(2)
Loss before tax		(289)	(177)	(433)
Income tax expense		-	-	6
Loss for the period		(289)	(177)	(427)
Attributable to:
Equity holders of the Company		(282)	(177)	(427)
Minority interests		(7)	-	-
		(289)	(177)	(427)
Loss per share (pence) – Basic and diluted		(1.07)	(0.67)	(1.62)

   Kenetics Group Limited - Interim financial information

   Six months ended 30 June 2008

   CONSOLIDATED BALANCE SHEETS

	30 June	30 June	31 December
	2008	2007	2007
	(Unaudited)	(Unaudited)	(Audited)
	£’000	£’000	£’000
Non-current assets
Plant and equipment	124	123	143
Available for sale financial asset	24	136	22
Total non-current assets	148	259	165
Current assets
Stocks and work-in-progress	248	234	237
Trade receivables	55	125	139
Other receivables	41	41	32
Cash and cash equivalents	107	187	173
Total current assets	451	587	581
Total assets	599	846	746
Equity
Share capital	264	264	264
Share premium	280	280	280
Share option reserve	28	27	27
Merger reserve	370	370	370
Foreign currency translation reserve	(33)	(24)	(27)
Accumulated losses	(914)	(383)	(632)
Total equity	(5)	534	282
Non-current liabilities
Amount owing to director	-	32	-
Obligations under finance leases	-	3	-
Total non-current liabilities	-	35	-

   Kenetics Group Limited - Interim financial information

   Six months ended 30 June 2008

   CONSOLIDATED BALANCE SHEETS (continued)

	30 June	30 June	31 December
	2008	2007	2007
	(Unaudited)	(Unaudited)	(Audited)
	£’000	£’000	£’000
Current liabilities
Excess of progress billings over contract
work-in-progress	-	31	-
Trade payables	76	116	147
Other payables	132	109	138
Amount owing to directors	223	16	51
Obligations under finance leases	4	5	6
Bank overdraft - secured	169	-	122
Total current liabilities	604	277	464
Total liabilities	604	312	464
Total equity and liabilities	599	846	746

KENETICS GROUP LIMITED

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR 6 MONTHS ENDED 30 JUNE 2008

Kenetics Group Limited - Interim financial information

Six months ended 30 June 2008

CONSOLIDATED CASH FLOW STATEMENTS

	6 months	6 months	12 months
	Ended	Ended	Ended
	30 June	30 June	31 December
	2008	2007	2007
	(Unaudited)	(Unaudited)	(Audited)
	£’000	£’000	£’000
Cash flows from operating activities
Loss before taxation	(289)	(177)	(433)
Adjustments for:
Depreciation	35	24	60
Interest paid	4	-	3
Interest received	(1)	(1)	(2)
Impairment loss	-	-	122
Provision for inventory obsolescence	-	-	10
Share options expenses	1	1	1
Unrealised translation loss	-	2	-
Operating loss before working capital changes	(250)	(151)	(239)
Decrease/(increase) in contract work-in- progress/ excess of contract work-in-progress over progress billings	-	4	(29)
Decrease/(increase) in trade and other receivables	85	(3)	3
Decrease/(increase) in inventories	3	(83)	(84)
(Decrease)/increase in trade and other payables	(116)	64	106
Cash used in operations	(278)	(169)	(243)
Interest paid	(4)	-	(4)
Income tax refunded	-	-	6
Net cash flows used in operating activities	(282)	(169)	(241)

Kenetics Group Limited - Interim financial information

Six months ended 30 June 2008

CONSOLIDATED STATEMENT OF CASH FLOWS (continued)

	6 months	6 months	12 months
	Ended	Ended	Ended
	30 June	30 June	31 December
	2008	2007	2007
	(Unaudited)	(Unaudited)	(Audited)
	£’000	£’000	£’000
Cash flows from investing activities
Purchase of plant and equipment	(6)	(5)	(56)
Capital contribution from minority interest	8	-	-
Interest received	1	1	1
Net cash flows generated from/ (used) in investing activities	3	(4)	(55)
Cash flows from financing activities
Receipt/ (Repayment) of loan from director	168	(8)	(8)
Repayment of hire purchase loan	(3)	(2)	(5)
Difference of fixed deposit balance due to accumulation of interest	(1)	(2)	(2)
Net cash flows generated from/ (used in) financing activities	164	(12)	(15)
Net decrease in cash in hand and at bank	(115)	(185)	(311)
Effect of exchange rate changes	(5)	(4)	(19)
Cash in hand and at bank at beginning of period	(39)	291	291
Cash in hand and at bank at end of period	(159)	102	(39)
Fixed deposit	97	85	90
Bank overdraft	169	-	122
Cash and cash equivalents per balance sheet	107	187	173

Kenetics Group Limited - Interim financial information

Six months ended 30 June 2008

Kenetics Group Limited – Interim financial information

Six months ended 30 June 2008

 

 

1.            Business of Kenetics Group Limited

 

The Company was incorporated in Jersey on 22 June 2006. The consolidated financial statements of the Company for the six months ended 30 June 2008 comprise the Company and its subsidiaries, Kenetics Innovations Pte Ltd and Kenetics Innovations (Beijing) Co., Ltd.

 

The registered office of the Company is located at Walker House, 28-34 Hill Street, St Helier, Jersey JE4 8PN.

 

The Group is in the business of electronics design and manufacturing and producing of electrical and electronic goods.

 

 

2.            Basis of preparation of interim financial statements

 

The interim financial statements for the six months ended 30 June 2008 has been prepared in accordance with the accounting policies set out in the annual report and financial statements for the year ended 31 December 2007.

 

 

3.      Loss per share

 

         Basic loss per share has been calculated on the basis of the losses attributable to ordinary shareholders divided by 26,349,466 (30/06/07: 26,349,466, 31/12/07: 26,349,466), being the weighted average number of ordinary shares issued by the Company.

        

         In accordance with IAS 33 and as the Group has reported a loss for the period, the potential

         ordinary shares are not dilutive.

 

 

4.    Exchange rates

 

The reporting currency of the Company is deemed to be Sterling Pounds. The functional currencies of Kenetics Innovations Pte Ltd and Kenetics Innovations (Beijing) Co Ltd are in Singapore dollars and Chinese Renminbi respectively. The following exchange rates have been used in preparing this financial information:

	S$1 = £	RMB1 = £
30 June 2008	0.3680	0.07318
Average rates	0.36472	0.07185

 

Kenetics Group Limited - Interim financial information

Six months ended 30 June 2008

5.            Income tax

 

There was no income tax expense for the 6 months ended 30 June 2008 and the 6 months ended 30 June 2007 as the Group has been loss making during these periods. The income tax credit for the year ended 31 December 2007 amounted to £6,000 and was an over-provision of tax provision in prior year.

 

 

6.     Nature of financial information

 

The interim financial information set out above is neither audited nor reviewed and does not represent the statutory financial statements for Kenetics Group Limited or for any of the entities comprising the Kenetics Group for the period ended 30 June 2008. The figures for the year ended 31 December 2007 were extracted from the consolidated financial statements which have been presented to the shareholders. The auditors’ report on those financial statements was unqualified.

 

The Board approved the interim financial information for the period ended 30 June 2008 on 2 September 2008. 

These interim results are available on the Company's website www.kenetics-group.com. 

7.         Subsequent event

On 28 July 2008, the Company entered into a convertible loan agreement with Wong Kai Yun, sister of the Chairman of the Company, to obtain a principal loan of S$1,000,000 (approximately £372,000). The loan may be converted on written notification at any time from 1 August 2008 in whole or in part. The principal loan will be due for repayment on 30 June 2009 if it is not converted to shares. Interest will be payable at the rate of six per cent per annum if the Company fails to repay the loan on the due date.

The loan amount of S$1,000,000 has been received in cash by the Company.

For the terms of conversion of the above loan, please refer to the announcement made by the Company on 30 July 2008.

 

END

 

 

IR SSEFEESASELU