Interim Results

RNS Number : 7897X

Sarantel Group PLC

30 June 2008

SARANTEL GROUP PLC

('Sarantel' or the 'Company')

Half-yearly results

Sarantel Group PLC (AIM: SLG), the leading manufacturer of revolutionary filtering antennas for mobile and wireless devices, has published its unaudited half-yearly results for the six months period ended 31 March 2008.

Highlights

· Group revenues of £1.0 million (2007: £1.5 million), with GPS revenues increasing by 79 per cent. compared to the second half of 2007

· Gross margins on antenna sales improved to 11 per cent. (2007: -43 per cent.)

· Operating costs reduced by 14 per cent.

· Loss before tax reduced by 40 per cent. to £1.9 million (2007: £3.2 million)

· Significant progress in the Military and Satellite phones markets

· Continuing progress in the GPS market

· Launch of third generation GPS antenna

· Cash balances of £1 million at the end of March (before receipt of the proceeds of approximately £3.4 million raised by a placing in March and April 2008)

· Also announced separately today, initial order of $780,000 for satellite phone antennas received

David Wither, Chief Executive of Sarantel said:

'In the first half year Sarantel made significant progress in the military and satellite phone markets. Our presence in the consumer GPS market received a significant boost with a breakthrough design win with Garmin and the macro-market trends towards personal navigation are encouraging. During the last quarter we started to experience the impact of the downturn in the consumer electronics market as our lead customers have reduced their forecasts, but our earlier decision to diversify our business has helped to cushion the impact on the business. Additionally, we significantly improved our financial performance with a 40 per cent. reduction in losses. Finally, the new funds of £3.4 million raised in March and April give us the resources to continue to develop and exploit the promising opportunities for Sarantel's technology in our markets.'

Enquiries:

Sarantel
David Wither, Chief Executive Officer	01933 670 560
Sitkow Yeung, Finance Director
John East & Partners Limited	020 7628 2200
John East/Simon Clements
College Hill	020 7457 2020
Adrian Duffield/Kate Norton

Notes to Editors:

Sarantel (www.sarantel.com)

Sarantel is a leader in the design of high-performance miniature antennas for portable wireless applications including hand-held navigation, satellite radio and laptop computers.

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 high-volume consumer products incorporating technologies such as GPS, Wi-Fi, WiMax, 3G, GPRS, Satellite Radio and Bluetooth.

Chief Executive Officer's Statement

Results

This is the first set of financial results prepared in accordance with International Financial Reporting Standards ('IFRS'). In the statement accompanying the preliminary results for the financial year ended 30 September 2007, it was stated that the main area potentially affected by the transition to IFRS was the treatment of Research and Development expenditure. In the event, the application of IAS 38 Intangible Assets did not have a material impact on the financial results for the six months to 31 March 2008.

Group revenues were £1.0 million (H1 2007: £1.5 million). Revenues for the comparative period in 2007 included £0.5 million of satellite radio antenna sales (H1 2008: nil). The improvement in GPS revenues compared to the second-half of 2007 was 79 per cent. Non-Recurring Engineering revenue ('NRE') amounted to £0.2 million arising from the new contracts won in the military and satellite phones markets.

Margins improved to 11 per cent. on antenna sales. This improvement is due to the higher proportion of the second generation GPS antennas sold during the period and the continuing improvements made in manufacturing processes and cost of materials. The cost of sales of NRE is primarily engineering labour costs and is shown under Research and Development costs.

Admin expenses include depreciation of £0.8 million (H1 2007: £0.8 million), an amount of £0.4 million (H1 2007: £0.2 million) representing the estimated cost of excess capacity and £0.1 million (H1 2007: £0.1 million) of expense for share based payments. After excluding these items, Administration costs fell by 28 per cent.

As a result, losses before tax reduced by 40 per cent. to £1.9 million (H1 2007: £3.2 million). The Group reported a loss per share of 2.5p (H1 2007: 5.8p).

Before receipt of £3.4 million raised through the placings in March and April 2008, the Group had cash balances of £1 million at the half year, of which £0.5 million was held in a blocked account to secure leasing liabilities.

Placings

On 31 March 2008 and 7 April 2008, the Group completed two placings of a total of 114,500,800 shares at 3 pence each, raising approximately £3.4 million before expenses. These placings are excluded from these interim financial statements because they required ratification at a general meeting which took place on 24 April 2008. The new funds provide additional working capital to enable the Group to exploit the opportunities in its markets.

Market and strategic development

The Board's decision to diversify the business by entering new high-value markets has begun to bear fruit and there have been a number of significant strategic developments during the first half of the financial year.

In February 2008, Sarantel announced a contract with a major US supplier of military radios to develop a rugged version of the 2nd generation GPS antenna. The antenna will be connected to a tactical military radio and production shipments are expected to begin in 2009.

In March, the Group announced a design win for its antennas in a satellite phone. This is the first time that Sarantel's antenna technology will be used on a mobile phone to provide two-way communication. This design was won after a very rigorous selection process against well-established, much larger, competitors and incumbent suppliers. The satellite-phone market is growing and developing from a niche communication market for the maritime industry and Department of Defence to a broader mobile satellite services market. In these markets standard sized cellular-phones with satellite-phone functionality will be offered, appealing to users in poor cellular coverage areas, the transportation industry and government organizations which require reliable communications in emergency situations.

These two successes represent significant progress in the Group's strategy to generate maximum value from its market leading antenna technology.

The market for GPS in mobile handsets market is evolving rapidly. As this market develops and matures, we anticipate an increasing number of applications and services based around the user's location to be developed and launched. The Group expects that these new applications and services will highlight the need to improve the accuracy and reliability problems which are known to exist with today's handset GPS solutions. Sarantel's recently introduced its third generation GPS antenna, which directly addresses these known performance problems and the Group has demonstrated the dramatic improvements in accuracy and reliability in urban environments that the new Sarantel antenna provides. This new antenna is very small, requiring 60 per cent. less space than the previous generation, while maintaining comparable performance, making it ideal for embedding into a wide variety of small, highly integrated, lightweight hand portable mobile devices.

During the first half year, the Group secured a breakthrough design win with Garmin for its Colorado series of personal hand-held navigation devices. Sarantel's GPS antenna has also been selected by Sonim Technologies for a rugged mobile phone. Additionally, Sarantel has secured further designs in the personal tracker and golf range finder markets, where accurate positioning is a critical requirement.

The GPS markets that the Group currently addresses are in the consumer electronics space. The global economic slow down has impacted Sarantel's GPS business with the consequence that a few customers have delayed orders or requested postponement of confirmed orders. Additionally, the Group has experienced a few situations where new design projects incorporating its GPS antenna were cancelled due to the weakness in the consumer electronics market. However, demand so far is proving resilient due to the earlier diversification efforts and the wide customer portfolio of design wins and consequently, sales are so far, developing in line with the Board's plans.

Outlook

Trading to date is broadly in line with the Board's expectations and plans, but as the Group enters the key Christmas stocking period in mid to late summer, the exact impact of the global economic slowdown in consumer confidence is still uncertain. However, the new high-value markets continue to develop according to plan, although the Board does not expect to see results from this area until 2009.

David Wither

Chief Executive Officer

30 June 2008

cONDENSED Consolidated INTERIM income statement

March 2008

	Note	Six months to 31 March 2008	Six months to 31 March 2007	12 months to 30 September 2007
		Unaudited	Unaudited	Unaudited
		£	£	£

Revenue	3	1,013,607	1,541,154	2,016,462

Cost of sales		(757,017)	(2,210,987)	(2,823,473)

Gross profit/(loss)		256,590	(669,833)	(807,011)

Research and development costs		(417,769)	(584,978)	(1,070,300)

Selling and distribution costs		(153,140)	(383,402)	(565,699)

Administration costs		(1,667,204)	(1,628,887)	(3,469,400)

Total operating costs		(2,238,113)	(2,597,267)	(5,105,399)

Operating loss before depreciation and amortisation		(1,188,169)	(2,468,513)	(4,303,824)

Depreciation and other amounts written off property, plant and equipment and intangible assets		(793,354)	(798,587)	(1,608,586)

Operating loss		(1,981,523)	(3,267,100)	(5,912,410)


Finance income		25,556	28,233	97,340


Loss before tax		(1,955,967)	(3,238,867)	(5,815,070)

Tax	4	69,100	40,000	184,192

Loss after tax		(1,886,867)	(3,198,867)	(5,630,878)

Basic and diluted loss per share	5	(2.5)p	(5.8)p	(9.6)p

All of the activities of the Group are classed as continuing

cONDENSED Consolidated INTERIM balance sheet

March 2008

	Note	As at 31 March 2008	As at 31 March 2007	As at 30 September 2007
		Unaudited	Unaudited	Unaudited
		£	£	£
ASSETS

Non-current assets
Property, plant and equipment	6	2,950,159	4,271,745	3,539,771
Intangible assets	6	1,199,551	985,986	1,094,664

Total non-current assets		4,149,710	5,257,731	4,634,435

Current assets
Inventories		552,191	895,415	741,280
Trade and other receivables		832,121	1,480,057	705,466
Cash and cash equivalents		997,829	2,458,621	2,430,071

Total current assets		2,382,141	4,834,093	3,876,817

Total assets		6,531,851	10,091,824	8,511,252

EQUITY

Share capital		7,643,554	5,513,039	7,643,553
Share premium		14,252,078	14,424,857	14,252,078
Merger reserve		13,389,536	13,389,536	13,389,536
Share scheme reserve		264,753	168,015	203,465
Profit and loss account		(30,332,793)	(26,013,915)	(28,445,926)

Total equity		5,217,128	7,481,532	7,042,706

LIABILITIES

Non-current liabilities
Amounts due under hire purchase agreements		454	369,226	112,666

Current liabilities
Trade and other payables		1,314,269	2,241,066	1,355,880

Total liabilities		1,314,723	2,610,292	1,468,546

Total equity and liabilities		6,531,851	10,091,824	8,511,252

CONDENSED CONSOLIDATED INTERIM CASH FLOW STATEMENT

March 2008

	Six months to 31 March 2008	Six months to 31 March 2007	12 months to 30 September 2007
	Unaudited	Unaudited	Unaudited
	£	£	£
Cash flows from operating activities
Loss before tax	(1,955,967)	(3,238,867)	(5,815,070)
Depreciation	793,354	798,578	1,608,586
Loss on disposal of fixed assets	-	605	532
Finance costs	(25,556)	(28,233)	(97,340)
Share option expense	61,288	90,015	125,465

Decrease in inventories	189,090	814,268	968,403
(Increase)/decrease in receivables	(57,555)	(644,139)	76,851
Increase/(decrease) in payables	95,796	271,503	(627,566)
Taxation received	-	-	197,792
Net cash used in operating activities	(899,550)	(1,936,270)	(3,562,347)


Cash flows from investing activities
Purchases of property, plant and equipment	(172,896)	(276,905)	(303,807)
Proceeds from disposal of property, plant and equipment	-	369	525
Purchase of intangible assets	(135,733)	(175,964)	(335,857)
Interest receivable	44,124	60,672	147,226

Net cash used in investing activities	(264,505)	(391,828)	(491,913)

Cash flows from financing activities
Discharge of finance lease liability	(249,618)	(249,965)	(492,641)
Proceeds from share issue	-	19,000	1,976,735
Interest paid	(18,569)	(32,439)	(49,886)
Net cash (used in)/generated from investing activities	(268,187)	(263,404)	1,434,208

Net decrease in cash and cash equivalents	(1,432,242)	(2,591,502)	(2,620,052)

Cash and cash equivalents at beginning of period	2,430,071	5,050,123	5,050,123

Cash and cash equivalents at end of period	997,829	2,458,621	2,430,071

CONSOLIDATED INTERIM STATEMENT OF CHANGES IN EQUITY

March 2008

	Share capital	Share premium	Share scheme reserve	Merger reserve	Retained earnings	Total equity
	£	£	£	£	£	£
For the six months to 31 March 2008
Balance at 1 October 2007	7,643,553	14,252,078	203,465	13,389,536	(28,445,926)	7,042,706
Net result for the period					(1,886,867)	(1,886,867)
Share based payments			61,289			61,289
Shares issued net of expenses
Balance at 31 March 2008	7,643,554	14,252,078	264,754	13,389,536	(30,332,793)	5,217,128

For the six months to 31 March 2007
Balance at 1 October 2006	5,494,038	14,424,857	78,000	13,389,536	(22,815,048)	10,571,383
Net result for the period					(3,198,867)	(3,198,867)
Share based payments			90,015			90,015
Shares issued net of expenses	19,000					19,000
Balance at 31 March 2007	5,513,038	14,424,857	168,015	13,389,536	(26,013,915)	7,481,531

For the twelve months to 30 September 2007
Balance at 1 October 2006	5,494,038	14,424,857	78,000	13,389,536	(22,815,048)	10,571,383
Net result for the period					(5,630,878)	(5,630,878)
Share based payments			125,465			125,465
Shares issued net of expenses	2,149,515	(172,779)				1,976,736
Balance at 30 September 2007	7,643,553	14,252,078	203,465	13,389,536	(28,445,926)	7,042,706

notes to the interim FINANCIAL STATEMENTS

March 2008

1 GENERAL iNFORMATION

Sarantel Group PLC is a limited liability company incorporated in the United Kingdom under the Companies Act 1985. The address of the registered office is Unit 2, Wendel Point, Park Farm South, Wellingborough, Northamptonshire, NN8 6BA, England. The Company's shares are listed on AIM, a market operated by the London Stock Exchange.

The main activities of the Group are the design and manufacture of high-performance miniature antennas for portable wireless applications including hand-held navigation, GPS tracking, satellite radio, satellite phones and laptop computers.

These condensed interim consolidated financial statements do not constitute statutory accounts as defined in section 240 of the Companies Act 1985. Statutory accounts for the year ended 30th September 2007, as prepared under United Kingdom Generally Accepted Accounting Principles, were approved by the Board of Directors on 31 March 2008 and have been filed with the Registrar of Companies. The auditors' report on those financial statements was unqualified and did not contain a statement under Section 237(2/3) of the Companies Act 1985.

These condensed interim consolidated financial statements are presented in pounds sterling (£), which is the functional currency of the Company.

2 ACCOUNTING POLICIES and transition to ifrs

These consolidated interim financial statements for the six months ended 31 March 2008 have been prepared in accordance with IAS 34, 'Interim financial reporting' as adopted by the European Union ('EU'). The interim financial statements do not contain all the disclosures required for full accounts and should be read in conjunction with the financial statements for the year ended 30 September 2007 which have been prepared in accordance with UK Generally Accepted Accounting Principles ('UK GAAP').

The Group now prepares its financial statements in accordance with applicable International Financial Reporting Standards ('IFRS') as adopted by the EU and are effective at 30 September 2008 or are expected to be adopted and effective at 30 September 2008, our first annual reporting date at which we are required to use IFRS accounting standards adopted by the EU. The changes to accounting policies in respect to applying IFRS have no retrospective effect on the results and equity of the Group. Consequently, these interim financial statements do not include reconciliations of equity and the income statements from UK GAAP to IFRS as at the date of transition (1 October 2006), the end of the last interim period (31 March 2007) and the end of last financial year (30 September 2007) as there were no material items to report.

The Group has applied consistent accounting policies in preparing the consolidated interim financial statements for the six months ended 31 March 2008, the comparative information for the six months ended 31 March 2007, the financial statements for the year ended 30 September 2007 and the preparation of the opening IFRS balance sheet at 1 October 2006, the date of transition.

The Group has reviewed the presentation of its Income Statement in line with IAS 1 and has adopted a format that presents an analysis of expenses using a functional classification as in the opinion of the Directors, this provides more relevant information to users.

Estimates - Estimates at the date of transition to IFRS are consistent with estimates made under UK GAAP as there is no objective evidence that those estimates were inaccurate.

The interim financial information in this report has neither been audited nor reviewed by the Company's auditor.

IFRS 1 Exemptions

The Group has taken advantage of the following exemptions from full retrospective application of IFRS, as permitted by IFRS 1, 'First-time Adoption of International Financial Reporting Standards':

Business combinations - The Group has not restated business combinations which took place prior to the transition date.

Accordingly, the classification of the combination remains unchanged from that used under UK GAAP. The assets and liabilities are recognised at date of transition as they would be recognised under IFRS, and are measured at their UK GAAP carrying amount.

Share based payments granted after 7 November 2002 and not vested at 1 October 2006 have not been recognised in these financial statements.

Segmental Reporting

The Group's operations are located in the United Kingdom. The Group has only one type of business and therefore does not have separately identifiable business segments. However, the Group derives revenues from both the sale of antennas and the sale of services ahead of sale of antennas, such as feasibility studies and prototyping. These services are commonly referred to as Non-Recurring Engineering ('NRE'). An analysis of the revenues between sale of antennas and NRE is shown in Note 3. The costs associated with NRE revenues are included in Research and Development costs and have not been analysed separately.

The Group's revenues are denominated in US Dollars and are primarily derived from sales to customers located outside of the UK. All manufacturing is based in the UK and the Group supplies the same portfolio of product to customers irrespective of location, with no local adaptation required. As a result, the Directors do not consider that the Group operates in separately identifiable geographical segments.

Accounting policies

Basis of Consolidation

The consolidated financial statements incorporate the financial statements of the Company and all Group undertakings. All intra-Group transactions, balances, income and expenses are eliminated on consolidation.

Revenue

Revenue is measured by reference to the fair value of consideration received by the Group for goods supplied and services provided, excluding VAT and trade discounts. Revenue is recognised upon performance of services or transfer of risks to the customer.

Revenue from the sale of antennas is recognised when the Group has transferred to the buyer the significant risks and rewards of ownership of the goods, which is generally when the goods have been despatched and the collectability of the related receivables is reasonably assured.

Non Recurring Engineering revenue is recognised when both the completion stage agreed with the customer is achieved and the amount of revenue and associated costs can be reliably measured.

Intangible assets

Expenditure on research is recognised as an expense in the period in which it is incurred.

Development costs incurred on specific projects are capitalised when all the following conditions are satisfied:

Completion of the intangible asset is technically feasible so that it will be available for use or sale,
The Group intends to complete the intangible asset and use or sell it,
The Group has the ability to use or sell the intangible asset,
The intangible asset will generate probable future economic benefits. Among other things, this requires that there is a market for the product from the intangible asset or for the intangible asset itself, or, if it is to be used internally, the asset will be used in generating such benefits,
There are adequate technical, financial and other resources to complete the development and to use or sell the intangible asset, and
the expenditure attributable to the intangible asset during its development can be measured reliably.

Development costs not meeting the criteria for capitalisation are expensed as incurred.

The cost of an internally generated intangible asset comprises all directly attributable costs necessary to create, produce and prepare the asset to be capable of operating in the manner intended by management.

Patents are included at cost, representing third party costs of registering, net of amortisation.

Amortisation

Amortisation is calculated on a straight line basis 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:

Patents - ten years from year following acquisition.

Property, plant and equipment

Property, plant and equipment is stated at cost or valuation, net of depreciation and any provision for impairment.

Depreciation

Depreciation is calculated on a straight line basis 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 per cent.
Plant and machinery	20 per cent. – 33 per cent. from date asset is put into use

Material residual value estimates are reviewed annually.

Impairment testing of intangible assets and property, plant and equipment

For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units). As a result, some assets are tested individually for impairment and some are tested at cash-generating unit level. Intangible assets with an indefinite useful life are tested for impairment at least annually. All other individual assets or cash-generating units are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.

An impairment loss is recognised for the amount by which the asset's or cash-generating unit's carrying amount exceeds its recoverable amount. The recoverable amount is the higher of fair value, reflecting market conditions less costs to sell, and value in use based on an internal discounted cash flow evaluation. All assets are subsequently reassessed for indications that an impairment loss previously recognised may no longer exist.

Inventories

Inventories are valued on a FIFO basis at the lower of cost and net realisable value, after making due allowance for obsolete and slow moving items. Cost includes material, direct labour and an appropriate proportion of manufacturing overheads based on normal levels of activity. Net realisable value represents the estimated selling price less all estimated costs of completion, marketing, selling and distribution.

Leased assets

In accordance with IAS 17, the economic ownership of a leased asset is transferred to the lessee if the lessee bears substantially all the risks and rewards related to the ownership of the leased asset. The related asset is recognised at the time of inception of the lease at the fair value of the leased asset or, if lower, the present value of the minimum lease payments plus incidental payments, if any, to be borne by the lessee. A corresponding amount is recognised as a finance leasing liability. The interest element of leasing payments represents a constant proportion of the capital balance outstanding and is charged to the income statement over the period of the lease. All other leases are regarded as operating leases and the payments made under them are charged to the income statement on a straight line basis over the lease term. Lease incentives are spread over the term of the lease.

Taxation

Current tax is the tax currently payable based on taxable profit for the year. Deferred income taxes are calculated using the liability method on temporary differences. Deferred tax is generally provided on the difference between the carrying amounts of assets and liabilities and their tax bases. Tax losses available to be carried forward as well as other income tax credits to the Group are assessed for recognition as deferred tax assets. Deferred tax liabilities are provided in full, with no discounting. Deferred tax assets are recognised to the extent that it is probable that the underlying deductible temporary differences will be able to be offset against future taxable income. Current and deferred tax assets and liabilities are calculated at tax rates that are expected to apply to their respective period of realisation, provided they are enacted or substantively enacted at the balance sheet date. Changes in deferred tax assets or liabilities are recognised as a component of tax expense in the income statement, except where they relate to items that are charged or credited directly to equity in which case the related deferred tax is also charged or credited directly to equity.

Foreign Currencies

Monetary 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 arising on the settlement of transactions or retranslation at the balance sheet date are recognised in the income statement.

Employee benefits

Defined contribution pension scheme

The Group operates a Group personal pension plan (a money purchase arrangement) for the benefit of certain Directors and employees. Pension costs are charged to the income statement in the period to which they relate.

Share-based payments

The Group operates a Group share option scheme under which certain employees and Directors of the Company and its subsidiaries have been granted options to subscribe for shares in Sarantel Group PLC.

In accordance with the transitional provisions, IFRS 2 has been applied to all grants of equity instruments after 7 November 2002 that were unvested at 1 October 2006.

Where employees are rewarded using share based payments, the fair value of employees' services are determined indirectly by reference to the fair value of the instrument granted to the employee. Equity-settled share-based payments are measured at fair value (excluding the effect of non market-based vesting conditions) at the date of grant. The fair value determined at the grant date of the equity-settled share-based payments is expensed on a straight-line basis over the vesting period, based on the Group's estimate of shares that will eventually vest and adjusted for the effect of non market-based vesting conditions.

Fair value is measured by use of the Cox Rubenstein binomial model. The expected life used in the model has been adjusted, based on management's best estimate, for the effects of non-transferability, exercise restrictions and behavioural considerations.

All equity share based payments are ultimately recognised as an expense in the income statement with a corresponding credit to 'share scheme reserve'.

Upon exercise of share options the proceeds received net of attributable transaction costs are credited to share capital, and where appropriate share premium.

Financial assets

Financial assets are divided into the following categories: loans and receivables; financial assets at fair value through profit and loss; available-for-sale financial assets; and held-to-maturity investments. Financial assets are assigned to the different categories by management on initial recognition, depending on the purpose for which they were acquired. The designation of financial assets is re-evaluated at every reporting date at which a choice of classification of accounting treatment is available.

A financial asset is derecognised only where the contractual rights to the cash flows from the asset expire or the financial asset is transferred and that transfer qualifies for derecognition.

A financial asset is transferred if the contractual rights to receive the cash flows of the asset have been transferred or the Group retains the contractual rights to receive the cash flows of the asset but assumes a contractual obligation to pay the cash flows to one or more recipients. A financial asset that is transferred qualifies for derecognition if the Group transfers substantially all the risks and rewards of ownership of the asset, or if the Group neither retains nor transfers substantially all the risks and rewards of ownership but does transfer control of that asset.

Loans and receivables

Trade receivables are categorised as loans and receivables. Trade receivables are non-derivative

financial assets with fixed or determinable payments that are not quoted in an active market. Trade receivables are measured subsequent to initial recognition at amortised cost using the effective interest method, less provision for impairment. Any change in their value through impairment or reversal of impairment is recognised in the income statement. Provision against trade receivables is made when there is objective evidence that the Group will not be able to collect all amounts due to it in accordance with the original terms of those receivables. The amount of the write-down is determined as the difference between the asset's carrying amount and the present value of estimated future cash flows. An assessment for impairment is undertaken at least at each balance sheet date.

Financial liabilities

Financial liabilities are obligations to pay cash or other financial assets and are recognised when the Group becomes a party to the contractual provisions of the instrument. All financial liabilities are recorded initially at fair value, net of direct issue costs.

A financial liability is derecognised only when the obligation is extinguished, that is, when the obligation is discharged or cancelled or expires.

3 Revenue

	Six months to 31 March 2008	Six months to 31 March 2007	12 months to 30 September 2007
	Unaudited	Unaudited	Unaudited
	£	£	£

Sale of antennas	850,315	1,541,154	2,001,462
Sale of Non-Recurring Engineering services	163,292	-	15,000

Total Revenues	1,013,607	1,541,154	2,016,462

4 tax on Loss

	Six months to 31 March 2008	Six months to 31 March 2007	12 months to 30 September 2007
	Unaudited	Unaudited	Unaudited
	£	£	£

Current tax
UK corporation tax based on the results for 6 months to 31 March 2008	69,100	40,000	184,192

The taxation credit arises in respect of research and development expenditure and is subject to agreement with H M Revenue & Customs.

No deferred tax asset has been provided for during the period as it is unclear as to when future profit may be made. However, had the deferred tax asset been recognised, an asset of £5.2 million (2007: £4.5 million) would have arisen. This treatment is reviewed half-yearly.

5 loss per share

The calculation of the basic loss per share is based on the earnings attributable to the equity holders of the parent divided by the weighted average number of shares in issue during the year.

Reconciliations of the loss and weighted average number of shares used in the calculations are set out below.

FRS 22 requires presentation of diluted earnings per share ('EPS') when a company could be called upon to issue shares that would decrease net profit or increase net loss per share. For a loss making company with outstanding share options, net loss per share would only be increased by the exercise of out-of-the-money options. Since it seems inappropriate to assume that the option holders would act irrationally, no adjustment has been made to diluted EPS for out-of-the-money share options.

	Six Months to 31 March 2008	Six Months to 31 March 2007	12 Months to 30 Sept 2007
	Unaudited	Unaudited	Unaudited
	£	£	£

Losses	1,886,867	3,198,867	5,630,878
Weighted average number of shares	76,435,531	55,019,152	58,806,617
Per share amount pence (Basic and Diluted)	(2.5)p	(5.8)p	(9.6)p