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Kenetics Group Ltd (KEN)


Tuesday 11 September, 2007

Kenetics Group Ltd

Interim Results

Kenetics Group Limited
11 September 2007

Kenetics Group Limited

Interim Results

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 2007.

Key Points

•  Consolidated turnover versus the comparable period increased by 36.7%
   to £283,000 (H1 2006: £207,000).

•  Consolidated loss on ordinary activities after tax and expenses was
   £177,000 (H1 2006: £103,000)

•  A range of newer generation products has been developed and is expected
   to be launched in the third quarter of the current year.

•  The Company is expanding its sales and distribution network in Europe
   to meet expected demand for its new generation products as well as to service
   the anticipated growing number of European customers.

•  As reported, the Company has secured the ODM project that had been
   delayed to the early part of 2007. This project is expected to complete by
   January 2008.

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

'We continue to remain optimistic about the outlook for the Group as we have
developed a range of new generation products that is expected to bring in a
source of revenue in addition to the revenue generated from the ODM projects.
With our expected expansion in the European market, we look forward to a
progressive improvement in our business in the second half of the year.'

For more information, please contact:

Ken Wong
Kenetics Group Limited
Tel: +65 6749 0083
Website :

Tim Thompson
Buchanan Communications
Tel: +44 20 7466 5000

Nandita Sahgal
Nominated Adviser/Broker
Insinger de Beaufort
Tel: +44 20 7190 7000


It is my pleasure to report our interim results for the 6 months period ended 
30 June 2007.

Business Review

The steps taken by the Company to get some of the delayed projects in 2006 back
on track have borne fruition. The Company has secured a tender in a key project
worth £250,000 that is contributing revenue on a monthly basis until January
2008. The Company is also expected to secure another project that will bring in
additional revenue for the year. In addition, the Company has widened its list
of potential major ODM customers and is expected to submit tenders due in the
second half of the year.

In line with the Company's change in emphasis from being a systems developer to
a product developer, the Company entered into technical collaborations with
major chip manufacturers to develop a generation of products to cater for their
new GEN2 chips. A collaboration with Intel has resulted in the Company
completing its first new generation UHF (Ultra High Frequency) products that
complements its existing HF (High Frequency) product range. These UHF Readers
are expected to open up a new segment of the market, both in Europe and
especially in the US. This range of products, to be marketed in the third
quarter of the year is expected to generate sales in 2008.

The Company's new HF mobile reader was launched in the CEBIT 2007 show in
Hanover, Germany. Initial orders have been received and volume production has
begun for deliveries in September 2007.

In Europe, the Company is evaluating various options to enlarge its sales and
distribution network to grow its business. Possible avenues include expansion
generically through the setting up of a sales office or through joint
partnerships or acquisitions.

With the marketing and sales of its new range of products in Europe and the US,
the Company is expected to lessen the timing uncertainty of ODM projects and to
provide a more stable and regular source of income for the future.

The China business support office established in Beijing is now fully
functional. Although the office will continue to explore ODM projects in China,
it has also taken the additional function of being a purchasing and outsourcing
arm of the Group. With this access to lower manufacturing costs, the Group's
operational expenses are expected to decrease.

Financial Summary

The turnover for the period was £283,000 (H1 2006: £207,000). With the
reorganisation efforts taken in the second half of 2006, the Company has
effectively got its business back on track with turnover increasing by 160% over
the previous six months (H2 2006: £109,000).

As a result of its investments in new product development, the recruitment of a
team of skilled engineers and various recurring professional and administrative
expenses arising from its AIM listing, post-tax loss of for the period was
£177,000 (H1 2006: £103,000). With the infrastructure in placed and the expected
increase in turnover for the second half of 2007, the Company expects the
post-tax loss to be further reduced for the year.


The board believes that with the transition from being a systems developer to
product developer and with greater ODM traction, the Company is well placed to
achieve a better performance than the previous year.

Ken Wong Kai En


11 September 2007

Kenetics Group Limited - Interim financial information
Six months ended 30 June 2007


                                                               6 months             6 months           12 months
                                                                  Ended                Ended               Ended
                                                                30 June              30 June         31 December
                                                                   2007                 2006                2006
                                                            (Unaudited)          (Unaudited)           (Audited)
                                                                  £'000                £'000               £'000

Continuing operations
Revenue                                                             283                  207                 316

Other operating income                                                -                    -                   -

Changes in inventories of finished

  goods and work-in-progress                                       (74)                   31                  29

Raw materials and consumables used                                 (36)                 (80)               (139)
Employee benefits expenses                                        (217)                (167)               (382)

Depreciation of plant and equipment                                (24)                 (21)                (49)

Other operating expenses                                          (109)                 (73)               (226)

Finance costs                                                         -                    -                   2

Loss before tax                                                   (177)                (103)               (449)

Income tax expense                                                    -                    -                   -

Loss for the period                                               (177)                (103)               (449)

Attributable to:
Equity holders of the Company                                     (177)                (103)               (446)
Minority interests                                                    -                    -                 (3)
                                                                  (177)                (103)               (449)

Loss per share (pence) - Basic                                   (0.67)               (0.43)              (1.93)
and diluted                                                                           

Kenetics Group Limited - Interim financial information
Six months ended 30 June 2007



                                                              30 June               30 June         31 December
                                                                 2007                  2006                2006
                                                          (Unaudited)           (Unaudited)           (Audited)
                                                                £'000                 £'000               £'000
Non-current assets

Plant and equipment                                               123                   136                 145

Available for sale financial asset                                136                   142                 139

Total non-current assets                                          259                   278                 284

Current assets

Contract work-in-progress                                           -                    35                   5

Stocks and work-in-progress                                       234                   134                 155

Trade receivables                                                 125                    60                 101

Other receivables                                                  41                   117                  66

Cash and cash equivalents                                         187                   206                 376

Total current assets                                              587                   552                 703

Total assets                                                      846                   830                 987


Share capital                                                     264                   606                 264

Share premium                                                     280                     3                 280

Share option reserve                                               27                     -                  27

Merger reserve                                                    370                     -                 370

Foreign currency translation reserve                             (24)                     -                (18)

(Accumulated losses)/Retained profits                           (383)                   138               (206)

Total equity                                                      534                   747                 717

Non-current liabilities

Amount owing to director                                           32                     -                  48

Obligations under finance leases                                    3                     5                   6

Total non-current liabilities                                      35                     5                  54

Current liabilities

Excess of progress billings over contract

 work-in-progress                                                  31                     -                  33

Trade payables                                                    116                    18                  32

Other payables                                                    109                    36                 136

Amount owing to directors                                          16                     -                  10

Obligations under finance leases                                    5                     9                   5

Provision for taxation                                              -                    15                   -

Total current liabilities                                         277                    78                 216

Total liabilities                                                 312                    83                 270

Total equity and liabilities                                      846                   830                 987

Kenetics Group Limited - Interim financial information
Six months ended 30 June 2007


                                                          6 months           6 months            12 months
                                                             Ended              Ended                Ended
                                                           30 June            30 June          31 December
                                                              2007               2006                 2006
                                                       (Unaudited)        (Unaudited)            (Audited)
                                                             £'000              £'000                £'000
Cash flows from operating activities
Loss before taxation                                         (177)              (103)                (449)

Adjustments for:
Depreciation                                                    24                 21                   49
Interest received                                              (1)                  -                  (3)
Share options expenses                                           1                  -                    -
Unrealised translation loss                                      2                (2)                    -
Operating loss before working capital changes                (151)               (84)                (403)

Decrease/(increase) in contract work-in-

progress/ excess of contract work-in-progress
over progress billings                                           4               (39)                   25
Decrease in trade and other receivables                        (3)                 93                   99
(Increase) in inventories                                     (83)               (95)                (118)
Increase/(decrease) in trade and other payables                 64              (115)                   38
Cash used in operations                                      (169)              (240)                (359)
Income tax paid                                                  -               (36)                 (53)
Net cash flows used in operating activities                  (169)              (276)                (412)

Cash flows from investing activities
Purchase of unquoted shares                                      -              (139)                (139)
Purchase of plant and equipment                                (5)               (24)                 (64)
Capital contribution from minority interests                     -                  -                    3
Interest received                                                1                  1                    3
Net cash flows used in investing activities                    (4)              (162)                (197)

Cash flows from financing activities
Repayment of loan from director                                  (8)               (52)               (27)
(Decrease) in share application                                    -                (2)                  -
Proceed from issue of ordinary shares of
holding company                                                    -                  -                827
Proceed from issue of ordinary shares of
subsidiary                                                         -                450                450
Repayment of hire purchase loan                                  (2)                (2)                (5)
Payment of AIM listing expenses                                    -                  -              (493)
Payment of dividend                                                -                  -                (1)
Difference of fixed deposit balance due
to accumulation of interest                                      (2)                (1)                (1)
Net cash flows (used in)/ generated from
financing activities                                            (12)                393                750

Net (decrease)/increase in cash in hand                        (185)               (45)                141
and at bank
Effect of exchange rate changes                                  (4)                (4)               (17)
Cash in hand and at bank at beginning of period                  291                167                167
Cash in hand and at bank at end of period                        102                118                291
Fixed deposit                                                     85                 88                 85
Cash and cash equivalents per balance sheet                      187                206                376

Kenetics Group Limited - Interim financial information
Six months ended 30 June 2007

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 2007
comprise the Company and its subsidiaries, namely Kenetics Innovations Pte Ltd
and Kenetics Innovations (Beijing) Co., Ltd.

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 2007 has been
prepared in accordance with the accounting policies set out in the annual report
and accounts for the year ended 31 December 2006.

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 (30/06/06: 23,592,880, 31/12/06:
23,125,500), being the weighted average number of ordinary shares issued by the

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 2007                     0.3259                       0.06563
Average rates                    0.3313                       0.06571

5.  Income tax

There was no income tax expense as the Group was making losses.


                                                            6 months            6 months           12 months
                                                               Ended               Ended               Ended
                                                             30 June             30 June         31 December
                                                                2007                2006                2006
                                                         (Unaudited)         (Unaudited)           (Audited)
                                                               £'000               £'000               £'000
Loss for the period                                            (177)               (103)               (449)
Movement arising from                                              -                   -                 448

restructuring exercise
Reduction in share applications                                    -                 (2)                   -
New shares issued                                                  -                 452                 827
AIM listing expenses                                               -                   -               (519)
Share options granted                                              -                   -                  27
Incorporation of a subsidiary                                      -                   -                   2
Opening shareholders funds                                       717                 409                 409
Currency translation differences                                 (6)                 (9)                (28)
Closing shareholders funds                                       534                 747                 717

7.  Nature of financial information

The interim financial information set out above is neither audited nor reviewed
and does not represent statutory financial statements for Kenetics Group Limited
or for any of the entities comprising the Kenetics Group for the period ended 30
June 2007. The figures for the year ended 31 December 2006 were extracted from
the consolidated financial statements which have been presented to the
shareholders. The auditors' report on those financial statements was

The figures for the six months ended 30 June 2006 represents the results and
financial position of one of the Company's subsidiary, Kenetics Innovations Pte
Ltd that was acquired by way of an exchange of shares on 24 July 2006. The
acquisition of Kenetics Innovations Pte Ltd reflects a group reconstruction and
has been treated as a merger for accounting purpose.

The Board approved the interim financial information for the period ended 30
June 2007 on 31 August 2007

These interim results are available on the Company's website

                      This information is provided by RNS
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