Final Results

Sarantel Group PLC 30 November 2005 Embargoed until 7:00 30th November 2005 Sarantel Group PLC ('Sarantel') Preliminary results for the year ended 30 September 2005 Sarantel Group PLC ('Sarantel' or 'the Company'), the leading manufacturer of revolutionary filtering antennas for wireless devices, today announces its audited results for the year ended 30th September 2005. Highlights are as follows: •Turnover increased by 234% to £2.8m (2004:£0.8m) •937, 000 antenna units shipped, up 450% year on year •Loss before tax of £5.6m (2004: £4.0m) as the company invests for the future •New wins with satellite navigation companies such as TomTom and Medion •Successful expansion into non GPS markets •Senior management team in place •Net cash at the year end of £13.1m David Wither, Chief Executive Officer, said: '2005 has been a challenging year, but we have resolved the issues in our manufacturing processes, made progress in the design of our products, penetrated new markets and strengthened the senior management team. Our priority in 2006 is to successfully launch our new GPS products with existing customers and expand the business with new customers. We look forward to another year of strong growth.' For further information please contact: Sarantel Group PLC www.sarantel.com David Wither, CEO/Sitkow Yeung, CFO 01933 670560 ----------------------------------------------------------------------------------- Smithfield 020 7360 4900 Sara Musgrave/Jo Thomas ----------------------------------------------------------------------------------- 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 antennas for use in portable wireless devices such as PDAs, laptops and smart phone devices. These antennas solve a performance impairment problem that is faced by conventional antennas, by reducing the amount of energy that is absorbed into the body by approximately 90 per cent. The Sarantel technology therefore provides a stronger and clearer signal to enable better product performance and also more attractive product styling. The antennas simplify system design, thus allowing design standardisation and reduced time to market and cost for manufacturers. In April 2005, Sarantel announced an agreement with TomTom to supply its GeoHelix GPS antenna for use in TomTom's newest navigation solutions, TomTom MOBILE 5 for mobile phones and TomTom NAVIGATOR 5 for PDAs. The GPS receiver is so sensitive it can be placed in a pocket or bag, without line of sight required, ensuring reliable reception in urban areas or next to the body. As well as GPS, Sarantel's antennas can service multiple wireless markets including; Wi-Fi, 3G, satellite radio, and Bluetooth. In September 2005, Sarantel announced a substantial order to supply its antenna technology to a North American satellite radio Company. Sarantel listed on AIM, a market operated by the London Stock Exchange, on 2nd March 2005. Sarantel is included in the IT Hardware sector (93) within the Telecommunications equipment sub-sector (938) and has a RIC code of SLG.L CHAIRMAN'S STATEMENT Introduction I am pleased to present my first report as Chairman of Sarantel Group PLC for the year ended 30th September 2005, the Company having achieved a successful quotation on the Alternative Investment Market (AIM) on 2 March 2005. Sarantel designs, manufactures and sells patented, ceramic, filtering antennas for use in portable wireless devices such as Personal Digital Assistants (PDAs), laptops and smart phone devices. These antennas solve a performance impairment problem that is faced by conventional antennas, by reducing the amount of energy that is absorbed into the body by approximately 90 per cent. The antennas simplify system design, thus allowing design standardisation and reduced time to market and cost for manufacturers. Results We shipped over 937,000 units in the year, compared with 170,000 in 2004 and our revenue increased by 234% to £2.8m. Operating loss before taxation increased to £5.6m from £4.0m in 2004 as the Company continued to invest for the future. The greatest challenge during the year was to build very robust manufacturing systems to achieve the quality, yield and volumes to meet customer demand. Sarantel has worked with suppliers to design and build specialised equipment, including the three-dimensional photo-lithography equipment required to produce our antennas. These processes and tools are unique in world-wide high-tech manufacture and give us significant additional protection in addition to our strong patents. Customer demand continued to grow throughout the past year as the two major applications for our original GPS antenna, that is navigation and asset tracking, became significant industries. In addition, as announced on 5th September, we achieved a major breakthrough in winning our largest ever single order which can now be disclosed as a satellite radio order for the North American satellite radio market. This confirmed that the Sarantel antenna technology can bring real benefits to major industries beyond the GPS market. The Board Following the flotation, in June 2005 we appointed John Uttley to the Board. John's previous positions include Finance Director of the National Grid and more recently Chairman of a number of smaller public and private companies. His active involvement provides the Company with very deep and valuable experience in many areas. I am pleased to welcome our Chief Operating Officer, Bill Taylor, who joins the Board today. Bill brings with him extensive experience of high volume sub-contract manufacturing and his experience will be invaluable as Sarantel moves to the next stage of its development. Employees On behalf of the Board I would like to thank all our employees for their enormous contribution, hard work and support during our first year as a listed Company. My thanks also go to my fellow Board members and senior management for all their efforts. Summary In the face of manufacturing frustrations earlier this year, your Board has learned and responded to those difficulties and is very proud of the achievements of the Sarantel team. We believe a foundation has been built for continued success in the years ahead. David Dey Chairman CHIEF EXECUTIVE'S STATEMENT The Initial Public Offering 2005 was an exciting year, for both the Company and its employees. We became a Quoted Company in March 2005, following a successful listing on AIM. Our admission to AIM was completed on 2 March 2005 raising £18m before expenses, giving a free float of 41.6% of the shares in issue. We joined AIM to raise the Company's profile and take advantage of the growing opportunities in our target markets. Financial Results Sarantel grew its turnover by 234% to £2.8m as shipments rose by 450% year-on-year to 937,000 units. Loss before taxation increased to £5.6m compared with £4.0m in 2004 as the Company made investments in the resources necessary to address the targeted volume markets. Cash balances at the end of September were £13.1m. Year in Review New Customers, Markets and Products The satellite navigation market continues to grow strongly and GPS remains our core market. We are very proud of the business we have won with leading satellite navigation companies such as TomTom and Medion. During the year we developed a number of new customer relationships and we expect these to lead to future growth in our share of the rapidly growing navigation market. We have also been successful in winning a very significant design-in for the North American satellite radio market. Although this is an emerging market, it is growing at a very fast rate and this win confirms the capability of our technology to provide substantial improvements in antenna performance to markets beyond GPS. We have continued to develop new products and improve existing ones to target new markets and applications, and during the first half of 2006 in addition to the satellite radio antenna, we plan to release a new GPS antenna which has a smaller footprint. Manufacturing Sarantel manufactures antennas at its factory in Wellingborough. During 2005 output was increased over three-fold from 50,000 units per month to 160,000 units per month by the end of the financial year. We worked with our key suppliers to design and develop new high volume manufacturing equipment capable of producing up to 200,000 units per month. The first set of such equipment was delivered late by our suppliers but was in full production in July and the second set is already installed as scheduled and will be producing at full capacity by the end of December. The process to produce the Sarantel antenna is unique, innovative and leading edge. We have overcome many challenges during 2005 and have been successful in stabilising the manufacturing process, increasing throughput and making significant gains in productivity. We believe that we now own a scaleable production process that is capable of high volumes. These significant improvements achieved in our production processes have eliminated the need to move to a larger facility and provided the Company with the ability to explore outsourcing additional manufacturing capacity to meet future growth in demand. Selecting the right outsourcing partner is critical in order to ensure that our intellectual property is protected and to gain credibility with potential top tier customers. Patented Technology The Board places great emphasis on the importance of the quality, proper maintenance and growth of its intellectual property. During 2005, Sarantel filed five new patent applications to protect our existing position and extend the application of our products. As the scope of our business grows, we naturally address new technical problems which require adaptations of our existing intellectual property to provide new solutions. These innovations are particularly interesting as they are stimulated by real-market needs and complement the original research based intellectual property of the Company. Management and staff During the year, we strengthened the senior management team with the recruitment of Bill Taylor as Chief Operating Officer, Andrew Christie as Vice President of Engineering and Ben Sandford as Vice President of Sales. We increased our engineering resources both for product development and manufacturing process development and recruited 2 direct sales managers. The total number of staff at the end of the financial year was 93 (including 46 direct labour) compared with 44 (including 15 direct labour) at September 2004. Strategy Sarantel's strategy is to continue developing its core technology to become the leading antenna supplier in those sectors of the wireless market where its products have clear competitive advantages. We believe that our technology can bring substantial benefits to many emerging markets and we will continue to develop our technology and design new products to enable us to enter these new market segments. The higher profile and additional customer confidence achieved through our flotation on AIM will greatly support the execution of this strategy. Summary Sarantel has had a very challenging year, but we have emerged a stronger and more capable Company: • We have built a world-class management team that is capable of taking the Company to a leadership position in the supply of electronic antenna components; • We have stabilised and developed our manufacturing process to give us a scaleable production process capable of high volumes; • We have continued to develop our well-protected core technology, and added engineering talent that will enable us to enter new high growth markets; and • We have built up the direct sales team and strengthened our relationship with our customers and distributors around the world. Outlook The Company's top priority is to successfully launch its new GPS products with existing customers and expand the business with new customers. The initial response to our new GPS product has been positive and we expect to see increasing price pressure in our core GPS markets as volumes grow. However, we believe that during 2006 we will be able to meet this challenge by reducing our costs through further design improvements and supply chain management, while continuing to explore increased use of outsourcing. We look forward to another year of strong growth. David Wither Chief Executive Officer FINANCE DIRECTOR'S STATEMENT Review of operations Turnover increased to £2.8m representing a 234% increase over 2004 turnover (£0.8m). The Company shipped around 40% of its turnover in the final quarter, in line with the build-up of stocks for the Christmas period and the timing of the increase in production capacity. Our customers were mainly in the GPS personal navigation and asset tracking sectors. The average selling price achieved for 2005 was higher than expected although lower than in 2004 as the Company transitioned from a niche to a more mainstream volume supplier of antennas. The Company continued to face significant price pressure, but in the face of restricted supply, was able to contain price erosion to around 6% for the largest volume product and customer. In 2005, material and consumables costs as a percentage of turnover were continuously reduced to end the year at 56%. This was achieved mainly by improving yields and reducing material cost. The comparative percentage for 2004 of 35% is much lower due to the different mix of products sold in that year, particularly niche, higher-priced products. Cost reduction is a key element of the Company's strategy and overall, the Company continued to make strong progress in reducing unit cost. As the Company is addressing fast growing markets, investment in resources needs to be made in advance in order to win designs for our antenna that will generate orders in future periods. Overall, costs excluding raw material rose by 60% compared with 2004. Staff costs doubled as the Company strengthened the senior management team and recruited additional sales, engineering and production staff. Whilst units shipped grew by 450%, external costs, which represent sub-contractors costs grew by only 379% and direct labour costs increased by 109% to £0.9m, reflecting the beginnings of productivity gains from investments in automation and higher throughput. Other Operating charges were constant between the two years Operating loss before taxation was £5.6m compared with £4.0m in 2004 after a depreciation charge of £1.1m compared with £0.9m in 2004. During 2005, the Company has continued to invest in resources and infrastructure to build the capability and capacity to address volume customers and new markets, including new product development and manufacturing process improvements. Exceptional costs The exceptional non-recurring costs of £0.3m arose during the first half year and relate to the write-off of raw materials amounting to £0.1m for a discontinued product, £0.1m for professional costs for an aborted fund raise and £0.1m of additional consideration in shares for an investment which was disposed of during the previous financial year. Depreciation and amortisation Depreciation and amortisation amounted to £1.1m and includes a net additional charge of £0.3m arising on a change in the estimated useful lives of certain categories of plant and Intellectual Property. The Directors have reviewed the fixed assets and are of the opinion that it would be more prudent to write off certain categories of production equipment over 5 years instead of 10 years previously, and that the investment in Intellectual Property should be written off over 10 years instead of 5 years. Interest Net interest receivable increased to £0.3m following the receipt of funds from the IPO in March. Taxation The Company estimates that it is entitled to a refund for Research and Development tax credit amounting to approximately £0.15m for 2005. Loss per share The loss per share was 12.3 pence compared with 17.1 pence for 2004. Capital Expenditure The total capital expenditure for the year amounted to £3.2m, of which £3m was invested in Plant and machinery to increase production capacity and to automate and improve production processes. The Company plans to continue to invest in further plant capacity during 2006. A total of £0.2m was invested in Intellectual Property. Movement in cash and liquid resources The Company raised £16.7m net of expenses from the proceeds of the flotation in March 2005. During the year, net cash used amounted to £5.7m, of which £2.2m was used to pay for capital items, hence net cash used by operations was £3.5m compared with £2.8m during 2004. The cash balances at the year end amounted to £13.1m. Accounting Policies The financial statements have been prepared under the historical cost convention in accordance with the applicable United Kingdom accounting standards. The Company has begun examining the impact of adopting IFRS in preparation for a move to IFRS by the financial year ending 30th September 2008. Further details will be communicated in due course. Sitkow Yeung Finance Director Principal accounting policies Basis of accounting The financial statements have been prepared under the historical cost convention, and in accordance with applicable accounting standards. The principal accounting policies of the group have remained unchanged from those used in the previous period by Sarantel Limited. Changes in the estimates of the useful economic lives of certain tangible fixed assets and patents are described below. Basis of consolidation The consolidated financial statements incorporate the financial statements of the company and all group undertakings (see note 12). Merger accounting has been applied in respect of the acquisition of Sarantel Limited via a share for share exchange on 23 February 2005 as part of a group reconstruction. The investment has been recorded in the Company's balance sheet at the nominal value of the shares issued. As Sarantel Group Plc was not incorporated until 30 November 2004, these financial statements are proforma financial statements which have been prepared as though the company and the group had existed throughout the current and prior year. Statutory financial statements are required for the period from incorporation to 30 September 2005. This information is given in note 32. The comparative information for 2004 is derived from the statutory financial statements of Sarantel Limited for the year ended 30 September 2004. The share capital has been restated as though the merger had been in effect throughout the period. The difference between this and the nominal value of Sarantel Limited's actual shares has been taken to other reserves. Turnover The turnover shown in the profit and loss account represents amounts receivable for goods supplied during the year, exclusive of Value Added Tax. Research and development Research and development expenditure is written off in the year in which it is incurred. Intangible fixed assets Patents are included at cost, representing third party costs of registering. Purchased goodwill representing the excess of the fair value of the consideration given over the fair value of the identifiable net assets acquired, is capitalised and is amortised on a straight line basis over its estimated useful economic life. Amortisation Amortisation is calculated so as to write off the cost of an asset, less its estimated residual value, over the useful economic life of that asset as follows: Goodwill - 5 years Patents - 10 years from year following acquisition From October 2004, the Company reviewed its amortisation policy on patents and has revised its estimate of the useful economic lives of patents from 5 years to 10. The impact on the loss for the period is detailed in note 3. Depreciation Depreciation is calculated so as to write off the cost of an asset, less its estimated residual value, over the useful economic life of that asset as follows: Leasehold improvements - 10% Plant and machinery - 20%-33% from date asset is put into use Fixtures and fittings - 20% Computer equipment - 33% From October 2004, the Company reviewed its depreciation policy on all tangible assets, and has reduced its estimate of the useful economic life of heavy plant and machinery from 10 years to 5. The impact on the loss for the period is detailed in note 3. Stocks Stocks are valued at the lower of cost and net realisable value, after making due allowance for obsolete and slow moving items. Leasing and hire purchase commitments Assets held under finance leases, which are leases where substantially all the risks and rewards of ownership of the asset have passed to the company, and hire purchase contracts, are capitalised in the balance sheet and are depreciated over their useful lives. The capital elements of future obligations under the leases and hire purchase contracts are included as liabilities in the balance sheet. The interest elements of the rental obligations are charged in the profit and loss account over the periods of the leases and hire purchase contracts and represent a constant proportion of the balance of capital repayments outstanding. Rentals payable under operating leases are charged in the profit and loss account on a straight line basis over the lease term. Deferred taxation Deferred tax is recognised on all timing differences where the transactions or events that give the company an obligation to pay more tax in the future, or a right to pay less tax in the future, have occurred by the balance sheet date. Deferred tax assets are recognised when it is more likely than not that they will be recovered. Deferred tax is measured using rates of tax that have been enacted or substantively enacted by the balance sheet date. Deferred tax is measured on an undiscounted basis at the tax rates that are expected to apply in the periods in which timing differences reverse, based on tax rates and laws enacted or substantially enacted at the balance sheet date. Foreign currencies Assets and liabilities in foreign currencies are translated into sterling at the rates of exchange ruling at the balance sheet date. Transactions in foreign currencies are translated into sterling at the rate of exchange ruling at the date of the transaction. Exchange differences are taken into account in arriving at the operating loss. Pensions The company operates a group personal pension plan (a money purchase arrangement) for the benefit of certain directors and employees. Pension costs are charged to the profit and loss account in the period to which they relate. Financial instruments Financial assets are recognised in the balance sheet at the lower of cost and net realisable value. Interest receivable and payable is accrued and charged or credited to the profit and loss account in the period to which it relates. Consolidated profit and loss account 2005 Restated 2004 Note £ £ Turnover 2 2,802,454 839,325 Operating costs: Change in stocks of finished goods and work in progress 92,319 (74,674) Raw materials and consumables 1,464,061 364,398 Other operating income 4 115,000 (94,736) Other external charges 677,930 141,565 Staff costs 5 3,034,483 1,500,398 Other operating charges 2,220,937 2,072,289 Depreciation and other amounts written off tangible and intangible assets 10/11 1,087,982 920,411 --------- -------- 8,692,712 4,829,651 --------- --------- Operating loss 3 (5,890,258) (3,990,326) ------------------------------------------------------------------------------ Operating loss before depreciation, (4,497,310) (3,164,651) amortisation and exceptional items Exceptional non-recurring costs 4 (304,966) 94,736 Depreciation and other amounts (1,087,982) (920,411) written off tangible and intangible assets -------------------------------------------------------------------------------- Net interest 6 328,447 34,617 --------- -------- Loss on ordinary activities before (5,561,811) (3,955,709) taxation Tax on loss on ordinary 7 150,215 200,228 activities --------- -------- Loss for the financial year 23 (5,411,596) (3,755,481) ========= ======== Basic loss per share 9 (12.3)p (17.1)p ========= ======== During the year the group carried out a corporate restructuring including the introduction of a new holding company. The consolidated profit and loss account has been prepared using merger accounting and is presented on a proforma basis as if the group has been in existence throughout both the current and prior periods. Further information is given in note 1. Certain costs in the comparatives have been reclassified to be consistent with the current year format and analysis. A consolidated profit and loss account from the date of incorporation of the new holding company is given in note 32. There were no recognised gains or losses other than the loss for the financial year. All the activities of the group are classed as continuing. Fixed assets Intangible assets 10 576,619 543,914 Tangible assets 11 4,671,031 2,593,351 -------- ------- 5,247,650 3,137,265 Current assets Stock 13 126,281 363,816 Debtors 14 1,046,655 613,352 Cash at bank and in hand 27 13,134,412 2,069,046 -------- ------- 14,307,348 3,046,214 Creditors: amounts falling due 15 2,009,708 811,014 within one year -------- ------- Net current assets 12,297,640 2,235,200 -------- ------- Total assets less current liabilities 17,545,290 5,372,465 Creditors: amounts falling due 16 460,257 27,127 after more than one year Provisions for liabilities and 19 - - charges -------- ------- 17,085,033 5,345,338 ======== ======= Capital and reserves Called-up equity share capital 22 5,355,891 3,064,477 Share premium account 23 14,341,907 - Other reserves 23 13,389,536 12,871,566 Profit and loss account 23 (16,002,301) (10,590,705) --------- -------- Shareholders' funds 24 17,085,033 5,345,338 ======== ======== These financial statements were approved by the board of directors on 29 November 2005 and are signed on their behalf by: Director Fixed assets Investments 12 3,080,348 - -------- -------- Current assets Debtors 14 6,154,394 Cash at bank and in hand 10,914,530 - -------- -------- 17,068,924 Creditors: amounts falling due 15 107,769 - within one year -------- -------- Net current assets 16,961,155 - -------- -------- Total assets less current liabilities 20,041,503 - ======== ======== Capital and reserves Called-up equity share capital 22 5,355,891 - Share premium account 23 14,341,907 - Profit and loss account 23 343,705 - -------- -------- Shareholders' funds 20,041,503 - ========= ======== These financial statements were approved by the board of directors on 29 November 2005 and are signed on their behalf by: Director Consolidated cash flow statement Note 2005 2004 £ £ Net cash outflow from operating 25 (3,950,835) (3,064,036) activities Returns on investments and servicing of finance Interest received 406,803 34,617 Interest paid (31,980) - Finance lease interest paid (46,376) - -------- ------- Net cash inflow from returns on investments and servicing of finance 328,447 34,617 -------- ------- Taxation received 165,215 235,228 Capital expenditure Payments to acquire tangible fixed assets (2,007,309) (338,671) Payments to acquire intangible fixed assets (241,216) (145,794 -------- ------- Net cash outflow from capital expenditure (2,248,525) (484,465) -------- ------- Cash outflow before financing (5,705,698) (3,278,656) Financing Issue of shares 18,099,187 4,077,424 Expenses paid in connection with issue of shares (1,481,735) - Issue of shares in subsidiary prior to 345,198 - reconstruction Capital element of finance lease rentals (191,586) - -------- ------- Net cash inflow from financing 16,771,064 4,077,424 -------- ------- Increase in cash 26 11,065,366 798,768 ======== ======= Notes to the financial statements 1 Corporate restructuring During the year the Group carried out a corporate restructuring including the introduction of a new holding company, Sarantel Group Plc, incorporated on 30 November 2004. On 23 February 2005, the Company acquired the full share capital of its subsidiary, Sarantel Limited, by way of a share for share exchange. On 2 March 2005 the Company was admitted to AIM following a successful placing. 2 Turnover An analysis of turnover by geographical market or segmental information has not been disclosed as in the opinion of the directors it would be seriously prejudicial to the group. 3 Operating loss Operating loss is stated after charging: 2005 2004 £ £ Amortisation of intangible fixed assets 208,511 235,734 Depreciation of owned tangible fixed assets 811,991 412,383 Impairment of owned tangible fixed assets 271,802 Depreciation of assets held under finance leases and hire purchase agreements 67,480 492 Depreciation and amortisation includes a net charge of £296,059 arising on the change in estimated useful lives of certain categories of fixed assets. The additional depreciation arising in the year on certain categories of Plant and Machinery was £352,442 and the reduced level of amortisation arising from the change to the useful life of Patents amounted to £56,383. Auditors' fees: Audit 18,000 12,500 Tax compliance 1,800 1,447 Tax advisory 21,150 3,600 Other non-audit services 6,820 - In addition, remuneration paid to the auditors in respect of the flotation, totalling £84,500 has been included within the share premium account. Research and development costs 259,949 787,213 Operating lease costs: Land and buildings 101,170 101,170 ======== ======= 4 Exceptional non-recurring items charged in arriving at operating loss 2005 2004 £ £ Stock write-off 109,198 - Non-recurring professional charges 80,768 - Variation of Share Exchange Agreement 115,000 (94,736) -------- ------- 304,966 (94,736) ======== ======= Stock write-off: The stock write-off relates to one discontinued product and other stock rendered obsolete through continuing process improvement. Professional charges: Non-recurring legal and professional charges re aborted fundraising prior to flotation. Variation of Share Exchange Agreement: During the year ended 30 September 2004 Sarantel Limited purchased and subsequently sold a company, recognising a profit on disposal, after associated costs, of £94,736. The purchase was via a share for share exchange which on 23 February 2005 was varied, following shareholders' consent, and additional shares were issued to the parties to the Share Exchange Agreement to the value of the consideration received for the sale of the subsidiary amounting to £115,000. This has been recognised as an exceptional cost in the current year. 5 Directors and employees The average number of staff employed by the group during the financial year amounted to: 2005 2004 No No Management 2 1 Technical 6 6 Finance and administration 5 3 Sales and marketing 4 2 Operation 55 21 -------- ------- 72 33 ======== ======= 5 Directors and employees (continued) The aggregate payroll costs (including Directors emoluments) were: 2005 2004 £ £ Wages and salaries 2,654,923 1,367,327 Social security costs 299,488 133,071 Pension costs 80,072 - -------- -------- 3,034,483 1,500,398 ======== ======== Remuneration in respect of directors was as follows: 2005 2004 £ £ Emoluments 377,002 291,116 Compensation for loss of directorship - 61,528 Pension contributions to money purchase pension scheme 26,350 - Payment to third parties for directors services 22,083 45,000 -------- -------- 425,435 397,644 ======== ======== The amounts set out above include remuneration in respect of the highest paid director as follows: 2005 2004 £ £ Emoluments 183,887 146,447 Pension contributions to money purchase pension schemes 17,186 - -------- -------- 201,073 146,447 ======== ======== No director exercised any share options during the year or the prior year. Details of the share options granted to directors in the year, together with further details of their remuneration, will be shown in the Remuneration Committee Report. During the year 2 directors (2004: nil ) participated in money purchase pension schemes. 6 Net interest 2005 2004 £ £ Interest receivable and similar income 406,803 34,617 Finance changes in respect of finance leases (46,376) - Other interest payable and similar charges (31,980) - -------- -------- 328,447 34,617 ======== ======== 7 Taxation on ordinary activities 2005 2004 £ £ Current tax: UK Corporation tax based on the results for the year at 19% (2004 - 19%) (150,000) (165,000) Adjustment in respect of prior year (215) (35,228) -------- -------- Total current tax (150,215) (200,228) ======== ======== The taxation credit arises in respect of research and development expenditure and is subject to agreement with the Inland Revenue. The standard rate of tax for the year based on the UK standard rate of corporation tax is 19% (2004 - 19%). The actual tax credit for the year differs from the standard rate for the reasons set out in the following reconciliation: 2005 2004 £ £ Loss on ordinary activities before taxation (5,561,811) (3,955,709) -------- -------- Loss on ordinary activities multiplied by rate of tax (1,056,744) (751,585) Effect of: Expenses not deductible for tax purposes 222,870 198,427 Depreciation for the period in excess of capital allowances 144,572 130,738 Tax losses carried forward 689,302 422,420 R&D tax credit (150,000) (165,000) Prior year over provision (215) (35,228) -------- -------- Total current tax (150,215) (200,228) ======== ======== Tax losses available, subject to agreement with the Inland Revenue, to offset future taxable trading income amount to approximately £10 million. See note 19. 8 Result for the financial year The parent company has taken advantage of Section 230 of the Companies Act 1985 and has not included its own profit and loss account in these financial statements. The parent company's profit for the year was £343,705. 9 Loss per share The calculation of basic loss per share is based on the loss attributable to ordinary shareholders of £5,411,596 (2004: £3,755,481) divided by the weighted average number of shares in issue during the year which was 43,867,040 (2004: 22,024,352) The issue of additional shares on the exercise of options would decrease the basic loss per share and there is, therefore, no dilutive effect of share options. 10 Intangible fixed assets The Group Goodwill Patents Total £ £ £ Cost At 1 October 2004 760,632 563,833 1,324,465 Additions - 241,216 241,216 -------- -------- -------- At 30 September 2005 760,632 805,049 1,565,681 ======== ======== ======== Amortisation At 1 October 2004 608,504 172,047 780,551 Charge for the year 152,128 56,383 208,511 -------- --------- -------- At 30 September 2005 760,632 228,430 989,062 ======== ========= ======== Net book value At 30 September 2005 - 576,619 576,619 ======== ======== ======== At 30 September 2004 152,128 391,786 543,914 ======== ======== ======== 11 Tangible fixed assets The Group Leasehold Plant and Total improvements machinery, etc £ £ £ Cost At 1 October 2004 196,646 3,476,376 3,673,022 Additions - 2,957,151 2,957,151 -------- -------- -------- At 30 September 2005 196,646 6,433,527 6,630,173 ======== ======== ======== Depreciation At 1 October 2004 49,162 1,030,509 1,079,671 Charge for the year 19,664 859,807 879,471 -------- -------- -------- At 30 September 2005 68,826 1,890,316 1,959,142 ======== ======== ======== Net book value At 30 September 2005 127,820 4,543,211 4,671,031 ======== ======== ======== At 30 September 2004 147,484 2,445,867 2,593,351 ======== ======== ======== Fixtures and fittings and computer equipment are not significant and so are included in plant and machinery. Included within the net book value of £ 4,671,031 is £642,526 (2004 - £59,150) relating to assets held under finance leases and hire purchase agreements. The depreciation charged to the financial statements in the year in respect of such assets amounted to £67,480 (2004 - £492). 12 Investments The Group At 30 September 2005 the group held more than 20% of a class of the allotted share capital of the following: Country of Class of Proportion Nature of Incorporation share held held business Sarantel England and Ordinary 100% Design and Limited Wales shares manufacture of antennas * Sarantel USA USA Ordinary 100% Dormant Inc shares * Sarantel Asia Singapore Ordinary 100% Distributor of Pacific shares antennas Pte. Ltd * Owned by Sarantel Limited 12 Investments (continued) The Company Shares in subsidiary undertakings £ Cost and net book amount At 1 October 2004 Additions 3,080,348 -------- At 30 September 2005 3,080,348 ======== The company purchased 100% of the issued share capital of Sarantel Limited on 23 February 2005 in a share for share exchange in order to facilitate the subsequent flotation of Sarantel Group plc on the Alternative Investment Market. 13 Stocks The Group The company 2005 2004 2005 2004 £ £ £ £ Raw materials 107,941 253,157 - - Work in progress 15,457 36,109 - - Finished goods 2,883 74,550 - - ------- ------- ------- ------- 126,281 363,816 - - ======= ======= ======= ======= 14 Debtors The Group The company 2005 2004 2005 2004 £ £ £ £ Trade debtors 566,158 247,259 - - VAT recoverable 159,549 51,233 Amounts owed by group undertakings - - 6,153,706 - Corporation tax recoverable 150,000 165,000 - - Other debtors 66,195 90,508 688 - Prepayments and accrued income 104,753 59,352 - - ------- ------- -------- ------ 1,046,655 613,352 6,154,394 - ======= ======= ======== ====== 14 Debtors (continued) The debtors above include the following amounts falling due after more than one year: The Group The company 2005 2004 2005 2004 £ £ £ £ Other debtors 59,938 59,938 - - ======= ======= ======= ======= 15 Creditors: amounts falling due within one year The Group The company 2005 2004 2005 2004 £ £ £ £ Trade creditors 1,053,475 399,955 - - Other taxation and social security 193,531 46,344 107,769 - Amounts due under finance leases and hire purchase agreements 351,151 26,025 - - Other creditors 8,810 179,930 - - Accruals and deferred income 402,741 158,760 - - ------- ------- ------- ------- 2,009,708 811,014 107,769 - ======= ======= ======= ======= 16 Creditors: amounts falling due after more than one year The Group The company 2005 2004 2005 2004 £ £ £ £ Amounts due under finance leases and hire 460,257 27,127 - - purchase agreements ======= ======= ======= ======= 17 Borrowings Borrowings are repayable as follows: The Group The company 2005 2004 2005 2004 £ £ £ £ Within one year: Finance leases and hire purchase agreements 351,151 26,025 - - After one year and within two years: Finance leases and hire purchase agreements 233,008 27,127 - - After two years and within five years Finance leases and hire purchase agreements 227,249 - - - ------- ------- ------- ------- 811,408 53,152 - - ======= ======= ======= ======= 18 Financial instruments The Group uses financial instruments comprising borrowings, cash, liquid resources and various items such as trade debtors, trade creditors, etc. that arise directly from its operations. The Group uses derivatives which are limited to those described under currency exchange risk below. The main purpose of these financial instruments is to raise finance for the Group's operation. The main risks arising from the group financial instruments are interest rate risk, currency exchange risk and liquidity risk and the policies for managing these are regularly reviewed and agreed by the Board. Short-term debtors and creditors Short-term debtors and creditors have been excluded from the following disclosures, other than currency risk disclosures. Interest rate risk The Group finances its operations through share capital and leasing. The Group mixes the duration of its deposits to reduce the impact of interest rate fluctuations. Liquidity risk The Group seeks to manage financial risk by ensuring that sufficient financial liquidity is available to meet foreseeable needs and to invest cash assets safely and profitably. Currency exchange risk The Group operates in overseas markets and is subject to currency exposures on transactions undertaken during the year. The Group has options to sell currency at certain defined rates, and these option contracts are reviewed quarterly. There were no material option contracts in place at the year end. Borrowings The Group has purchased some fixed assets through finance leasing and hire purchase agreements at fixed interest rates. 18 Financial instruments (continued) Financial assets At 30 September 2005 £10.7m was on 3 month deposit at Anglo Irish Bank paying interest at 4.52%. The directors have given serious consideration and have reached the conclusion that there is no significant difference between the book and the fair value of assets and liabilities of the Group at the balance sheet date. 19 Deferred taxation A deferred tax asset amounting to approximately £3m (2004: £1.8m) arising from taxable trading losses has not been recognised due to continued losses being budgeted for the near future. 20 Leasing commitments At 30 September 2005 the company had aggregate annual commitments under non-cancellable operating leases as set out below. Land and buildings 2005 2004 £ £ Operating leases which expire: After more than 5 years 101,170 101,170 ======== ======== 21 Related party transactions Under an agreement dated 24 February 2005, between the Company and MTI Partners Limited ('MTI'), MTI provides an authorised representative to serve as a non-executive director of the company for a fee of £20,000 per annum payable quarterly. MTI controls 20.93% of the share capital of the company. At 30 September 2005, the amount outstanding to MTI was £965 (2004: £Nil) 22 Share capital Authorised share capital: 2005 2004 No £ No £ A ordinary shares of £0.10 each 63,000,000 6,300,000 63,000,000 6,300,000 B ordinary shares of £0.10 each 2,000,000 200,000 2,000,000 200,000 --------- -------- -------- 65,000,000 6,500,000 65,000,000 6,500,000 ========= ======== ========= ======== Allotted, called up and fully paid: 2005 2004 No £ No £ A ordinary shares of £0.10 each 52,522,562 5,252,257 30,644,770 3,064,477 B ordinary shares of £0.10 each 1,036,340 103,634 - - -------- -------- -------- -------- 53,558,902 5,355,891 30,644,770 3,064,477 ======== ======== ======== ======== Although the company was not incorporated until 30 November 2004, comparative balances have been prepared on a proforma basis as though it had existed throughout the period. This is to comply with the requirements of merger accounting. The shares issued at 30 September 2004 therefore reflect the share for share exchange explained below, less the shares issued by the subsidiary between 1 October 2004 and the date of the share for share exchange. Allotments during the year The company made the following allotments in the period: Share for share exchange On 23 February 2005, the company issued 30,803,473 A Ordinary share of £0.10 each to the existing shareholders of Sarantel Limited pro rata to their respective shareholdings in consideration for the transfer to the company of the entire issued share capital of Sarantel Limited. The investment was recorded at its nominal value of £3,080,348. Stock Exchange Flotation On admission to AIM, the company issued 21,951,220 shares as follows: (1) 20,854,880 A Ordinary £0.10 shares were issued at £0.82. The difference of £15,015,514 between the total consideration of £17,101,002 and the total nominal value of £2,085,488 has been credited to the share premium account. (ii) 1,096,340 B Ordinary £0.10 shares were issued at £0.82. The difference of £789,365 between the total consideration of £898,999 and the total nominal value of £109,634 has been credited to the share premium account. 22 Share capital (continued) During the year, 60,000 B Ordinary shares were transferred and in accordance with the Articles of Association of the Company, these shares were automatically converted into A Ordinary shares on transfer. The costs associated with the admission to AIM totalling £1,481,735 have been debited to the share premium account. A and B shares rank pari passu in all respects, save that the subscribers for B Ordinary Shares are only entitled to receive 10 clear days notice from the directors requiring payment of any moneys unpaid on their shares, whereas the holders of A Ordinary Shares are entitled to 14 clear days' notice. The B Ordinary Shares will automatically convert into A Ordinary Shares forthwith on the subscribers thereof transferring or disposing of the shares. Exercise of Options During the year employees of the group exercised share options and the Company issued 804,209 shares for a total consideration of £99,186. The difference of £18,765 between the total consideration and the nominal value of £80,421 has been credited to the share premium account. Share Options 2005 2004 Number of Share Options at the beginning of the year 8,882,781 2,041,398 Options granted during the year 1,284,851 6,841,383 Number of Options lapsed and eliminated (2,186,342) - Number of Options exercised during the year (804,209) - -------- -------- Balance at end of the year 7,177,081 8,882,781 ======== ======== Share options at 30 September 2005 are exercisable as follows: Number of share Exercise price Exercisable from Exercisable to options 1,174,851 27.5p 2/3/2005 16/2/2015 110,000 86.5p 19/9/2006 20/9/2015 Details of the share options granted to the directors will be shown in the Remuneration Committee Report. 23 Reserves The Group Share Other Profit and premium reserves loss account account £ £ £ At 1 October 2004 - 12,871,566 (10,590,705) Loss for the year Issue of shares in subsidiary prior to reconstruction - 517,970 (5,411,596) Premium arising on share issues 15,823,642 - - Expenses incurred re share issue (1,481,735) - - ---------- ---------- ---------- At 30 September 2005 14,341,907 13,389,536 (16,002,301) ========== ========== ========== The Company Share Profit and premium loss account account £ £ At 1 October 2004 Profit for the year 343,705 Premium arising on share issues 15,823,642 Expenses incurred re share issue (1,481,735) ---------- ---------- At 30 September 2005 14,341,907 343,705 ========== ========== 24 Reconciliation of movements in shareholders' funds Equity shareholders' funds 2005 2004 £ £ Loss for the financial year (5,411,596) (3,755,481) Issue of new shares (net of issue expenses) 16,617,450 4,077,424 Issue of shares in subsidiary prior to reconstruction 533,841 - -------- -------- Increase in shareholders' funds in the year 11,739,695 321,943 Opening shareholders' equity funds 5,345,338 5,023,395 -------- -------- Closing shareholders' equity funds 17,085,033 5,345,338 ======== ======== 25 Reconciliation of operating profit to net cash inflow from operating activities 2005 2004 £ £ Operating loss (5,890,258) (3,990,326) Depreciation and amortisation 1,087,982 920,411 Decrease/(increase) in stocks 237,534 (136,199) Increase in debtors (448,303) (156,701) Increase in creditors 947,210 298,779 Non cash item re exceptional item - see note 4 115,000 - -------- -------- Net cash inflow from operating activities (3,950,835) (3,064,036) ======== ======== 26 Reconciliation of net cash flow to movement in net funds 2005 2004 £ £ Increase in cash in the period 11,065,366 798,768 Cash outflow in respect of finance leases and hire purchase 191,586 - New finance leases and hire purchase agreements (949,842) (53,152) -------- -------- Change in net funds resulting from cash flows 10,370,110 745,616 Net funds at 30 September 2004 2,015,894 1,270,278 -------- -------- Net funds at 30 September 2005 12,323,004 2,015,894 ======== ======== 27 Analysis of changes in net funds At 1 Oct Cash Other At 30 Sept 2004 flows changes 2005 £ £ £ £ Net cash: Cash in hand and at bank 2,069,046 11,065,366 13,134,412 Debt: Finance leases and hire purchase agreements (53,152) 191,586 (949,842) (811,408) ---------- -------- -------- -------- Net funds 2,015,894 11,256,952 (949,842) 12,323,004 ========== ======== ======== ======== 28 Cash at bank Cash balances of £13,134,412 at the end of the year include an amount of £1,000,000 on an interest bearing deposit account with a financial institution which can only be repaid when the amounts owed to it under hire purchase agreements are settled in full. At the year end, the amount owed was £726,000 (2004: £ Nil). 29 Capital commitments Amounts contracted for but not provided in the financial statements at 30th September 2005 amounted to £827,409 (2004 - £302,000). 30 Pensions The group makes payments into a group personal pension scheme for certain employees and directors. The assets of the scheme are administered by trustees in a fund independent from those of the group. 31 Acquisition On 23 February 2005 the entire issued share capital of Sarantel Limited was acquired via a share for share exchange. The combination has been accounted for using the merger method of accounting. Further details of the transaction are included in note 1. 32 Statutory financial statements These financial statements are proforma financial statements which reflect the group as though it had existed in the prior year which was before the incorporation of the company. Statutory financial statements are however required to reflect the group's profit and loss account from the date of incorporation and are presented below. Notes to the statutory profit and loss account have not been given because in the opinion of the directors they would not provide useful information to the users of the accounts. Sarantel Group Plc Statutory consolidated profit and loss account 10 months to 30 September 2005 note 2005 £ Turnover 2,463,222 Operating costs: Raw materials and consumables 1,400,309 Other operating income 4 115,000 Other external charges 643,283 Staff costs 2,671,193 Other operating charges 1,745,456 Depreciation and other amounts 971,569 written off tangible and intangible ---------- assets ---------- 7,546,810 ---------- Operating loss (5,083,588) ----------------------------------------------------------------------------- Operating loss before depreciation, (3,807,053) amortisation and exceptional items Exceptional non-recurring costs (304,966) Depreciation and other amounts written off tangible and intangible assets (971,569) ----------------------------------------------------------------------------- Net interest 328,477 ---------- Loss on ordinary activities before (4,755,111) taxation Tax on loss on ordinary activities 150,215 ---------- Loss on ordinary activities after taxation (4,604,896) ---------- 33 Statutory financial statements The Preliminary Statement which has been agreed with the auditors and approved by the Board on 29th November 2005 is not the Group's Statutory Accounts. The Statutory Accounts for the period to 30th September 2005 received an audit report which was unqualified and did not contain statements under section 237 (2) or (3) of the Companies Act 1985. The 2005 Accounts have not yet been filed with the Registrar of Companies. This information is provided by RNS The company news service from the London Stock Exchange

Companies

UK Oil & Gas (UKOG)
UK 100
FTSE quotes by TradingView

Latest directors dealings

All directors dealings today