9th Feb 2010 07:00
9 February 2010
Sarantel Group PLC
Preliminary results for the year to 30 September 2009
Sarantel Group PLC, (AIM: SLG, "Sarantel"), a leading manufacturer of high-performance, miniature antennas for mobile and wireless devices, announces preliminary results for the year ended 30 September 2009.
Highlights:
·; Group revenues grew by more than 50% to £2.8m
·; High-value markets account for around 40% of revenues
·; Operating loss reduced for third successive year
·; £2.25m placing completed in December 2009
·; Visibility of an increasing number and range of design opportunities in all market sectors
·; Mobile Satellite Services and military markets continue to grow
Geoff Shingles, Chairman, said:
"Sarantel made solid progress in 2009. Revenues grew by over 50% and we reduced our losses for a third successive year. We are seeing an increasing number and range of design opportunities as GPS becomes ubiquitous and as we deepen our engagement in the higher-value markets, which accounted for 40% of our revenues.
"We remain confident that Sarantel's innovative technology will continue to increase market share as users demand ever-higher performance from navigation and other mobile devices."
Enquiries
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Sarantel Group PLC |
01933 670 560 |
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David Wither, Chief Executive Officer |
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Sitkow Yeung, Finance Director |
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Seymour Pierce |
020 7107 8000 |
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Nicola Marrin/John Cowie |
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College Hill |
020 7457 2020 |
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Carl Franklin/Adrian Duffield |
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About Sarantel
www.sarantel.com
Sarantel is a leader in the design of high-performance miniature antennas for portable wireless applications. Sarantel's revolutionary ceramic filtering antennas offer dramatically improved performance over existing antenna designs, resulting in a clearer signal, better range and a 90 per cent reduction in the amount of signal radiation absorbed by the body. Because of their smaller size and higher capabilities, Sarantel's antennas enable manufacturers to create innovative wireless products for the GPS, WiMax, Satellite Radio and Satellite phone markets.
Chairman's Statement
I am pleased to report that Sarantel successfully increased and diversified revenues in 2009, at the same time reducing losses for the third successive year. Group revenues grew by more than 50% with high-value markets generating around 40% of sales.
With improving gross margins and a focus on controlling operating costs, we reduced our operating loss before depreciation and amortisation by 32% to £1.9m (2008: £2.8m). Net cash outflow before financing fell to £2.2m (2008: £2.3m).
On 3 December 2009 Sarantel successfully closed a placing to raise £2.25m before expenses, to fund working capital needs as we see increasing design activity in our markets.
We believe that macrotrends in the GPS market are converging towards our antenna technology. As location-based services become enhanced with "Augmented Reality" applications on devices such as smartphones, it is becoming clearer that traditional GPS antennas cannot provide the degree of accuracy needed to make the best use of these applications. This fact is increasingly being recognised by technology commentators and the GPS industry itself. Along with this recognition, we believe that consumers will come to demand the higher performance that our GPS antenna solutions can deliver.
In the higher-value military and mobile satellite services (MSS) markets, we are seeing an increasing number and range of new design opportunities for which our antenna technology is being procured or evaluated.
For example, in May 2009, the US Navy signed a design and development contract with Sarantel to develop a dual-band GPS/Iridium antenna. Sarantel was recognised as the only supplier capable of producing an antenna to the Navy's demanding specifications - an impressive endorsement of the Group's technology and capabilities.
Against this backdrop of growing markets, driven by an increasing use of navigation in everyday life, we remain confident that Sarantel's innovative technology can continue to increase market share as users demand ever-higher performance from navigation and other mobile devices.
Chief Executive's Statement
Financial Review
Despite a challenging economy that badly affected the consumer GPS sector, revenues grew more than 50% to £2.8m (2008: £1.8m). Although we experienced lower demand from our largest GPS buyers, our client base grew significantly and we shipped antennas to more than 300 customers. This level of new customer activity has helped to diversify our revenue streams and establishes a portfolio of opportunities for future sales growth in a broad range of applications.
During the year, we began shipments of our antennas for Iridium and military applications, with sales to these markets accounting for approximately 40% of revenues, including £0.1m of non-recurring engineering revenues (2008: £0.2m).
Gross margins improved to 43% (2008: 4%) because of the favourable product mix and continued improvements in our production processes. Gross margins in 2008 were hit by one-off under-recoveries and write-offs.
Operating costs reduced by 14% due to a lower depreciation charge (included in Administration costs) and the one-off impairment loss on plant and machinery incurred in 2008. Research and development costs increased by 18% as we developed new antennas and invested to reduce our future production process costs. Selling and distribution costs increased by 49%, mainly because we recruited a new Director of Sales to focus on selling into new and significant markets.
The operating loss before impairment, depreciation and amortisation reduced to £1.9m (2008: £2.8m), benefitting from both higher revenues and improved gross margins.
The Group's loss per share reduced to 1.5p (2008: 3.5p).
Cash utilisation
Net cash outflow from operating activities reduced by 8% to £1.7m (2008: £1.9m). Although we substantially reduced our loss before tax, improvements in inventory management in the prior year left us little scope to achieve the degree of working capital reductions we managed in 2008.
Net cash outflow before financing reduced to £2.2m (2008: £2.3m). On 3 December 2009 we completed a placing to raise £2.25m (before expenses) in order to take advantage of the many opportunities ahead.
Sarantel sales are in US$ whilst most of our costs are in sterling. The dollar was highly volatile during the year, but because the strong first half revenues coincided with a period when the US$ was also strong, there was a net currency contribution of £0.1m to Group revenue.
Markets for Sarantel's products
Niche GPS
The GPS market is very dynamic with a large number of opportunities for Sarantel's technology across a wide variety of applications. Increasingly, electronic devices are evolving to incorporate GPS and devices already equipped with GPS are themselves evolving through applications ("apps") that add functionality, improve performance and enhance consumer experience. A good example of this can be found within the outdoor sporting segment where GPS is being incorporated in watches and performance tracking devices that can be used to provide feedback on user performance.
High-volume GPS
There are a number of encouraging developments in the high-volume consumer market that indicate a clear trend to GPS integration in an increasing number of small, handheld devices that Sarantel believes will require better performance as these markets mature.
Geotagging of photos and 'Augmented Reality' applications are among the most exciting developments in the handheld consumer market segments. Augmented Reality applications have already been developed for the iPhone, Google Android-based phones and other devices. Although exciting and useful for the consumer, the success of these applications requires an accurate and reliable GPS. Our view is that incumbent antenna technologies lack the required accuracy, thus providing an exciting opportunity for Sarantel's technology.
Military market
The Military market is a large and rapidly growing opportunity for Sarantel. The US government is aggressively investing in tactical communications systems to enhance the military's technological advantages. Recent contracts awarded to General Dynamics, Thales and Harris for improved tactical communications equipment demonstrate the priority the US military is placing on modernization. As a supplier to all three companies, we believe that Sarantel's antenna technology is very well placed to increase its market share.
Mobile Satellite Services ("MSS")
The mobile satellite services market is important for Sarantel and customers in this segment play a significant role in the Group's diversification strategy. In satellite telephony, antenna quality is a key determinant of call quality, and therefore of customer satisfaction with the system.
Established satellite phone operators such as Iridium, Inmarsat, Globalstar and Thuraya continue to experience growth and provide clear opportunities to further diversify our business and build revenues. Emerging MSS operators like SiriusXM, Skyterra, ICO, Solaris Mobile and TerreStar provide Sarantel with additional targets and the potential for significant future revenue growth. Sarantel's recently announced development contract with TerreStar is evidence that the Group continues to make progress in this important market segment.
Business Review
Niche Consumer GPS
Despite the difficult trading environment, design activity in the niche consumer GPS market remains healthy. We were able to maintain the level of our revenues in this market and continued to build our customer base, finishing the year with more than 300 different customers. Our LBS Pro antenna, launched in September 2008, shipped in growing volumes during the year and we announced a number of design wins including the Sonim XP3 Quest rugged mobile phone and the G-Core Mini Caddy Golf GPS device.
Military GPS
We continue to make inroads in the military GPS market. During the year, we won a design and development contract from the US Navy for a dual-band GPS/Iridium antenna, which the Group delivered on time. We began initial shipments of rugged Sarantel antennas for the AN/PRC 154 Rifleman tactical radio and the MR-1 Go Book rugged portable computer, designed by General Dynamics for the US military. We also began prototype deliveries of our new Iridium data antenna for Iridium's next-generation Shout device, which is a compact, handheld satellite communication platform. The device isprimarily designed for government and military communications but consumer applications are also under consideration. There are a large number of new opportunities that we are exploring in this market where we believe that our antenna's unique size and performance properties are superior to existing antenna solutions.
Mobile Satellite Services
During the year we began shipments of our antenna to Iridium for the new 9555 satellite phone, which was launched in November 2008. Initial production orders to fill channels ahead of the product launch generated more demand in the first half of 2009 than the second and since then, orders from Iridium have settled into a more stable pattern.
During the year we also introduced an Iridium data antenna aimed at the fast-growing data and M2M and Short-Burst Data segments of the Iridium network, which grew by 45 and 48% respectively in Iridium's third quarter. We received our first production orders for this antenna from Solara Data for its Field Tracker 2100, a real-time GPS tracking and user-messaging device that ensures two-way messaging and security for personnel working in remote locations. We also announced prototype shipments of this antenna to NAL Research for Iridium's next-generation "Shout" device.
In December 2009 Sarantel announced an agreement with TerreStar Networks Inc to develop a new antenna solution to deliver the high performance and small size requirements of TerreStar's next-generation reference design platform. The resulting platform will enable satellite connectivity to be embedded in a broad range of new conventionally-sized smartphones and machine-to-machine devices.
TerreStar is an MSS operator in the US that has teamed up with AT&T to launch the first fully integrated 3G/satellite smartphone. The service will allow users to access voice and data services in the United States, Puerto Rico, the U.S. Virgin Islands and offshore coastal waters over the AT&T cellular network or the TerreStar satellite network. The service is intended to work as a user's everyday cellular smartphone, with satellite access as a secondary option when needed.
In the US, where cellular coverage outside cities is generally poor, there is an expectation that these hybrid smartphones will be popular if priced at the right level. Sarantel's technology will play a critical role in the development of this market.
Research and development
We continue to develop and extend our antenna technology by investing in research and development. During the year we increased our spend by 18% and filed a number of new patent applications. We are also becoming more engaged with prospective customers in the high value markets with a view to developing customer specific antennas.
Manufacturing
Sarantel now sells from a portfolio of eight antennas with others in development. Our manufacturing operations have a flexible manufacturing strategy to minimise stock levels and meet customer requirements.
Summary and outlook
The Group has visibility of many opportunities developing in both the GPS and the high-value markets. The Board believes that the outlook for Sarantel remains very positive and is confident that further progress is achievable in 2010.
Consolidated Income Statement for the year ended 30 September 2009
|
|
Note |
2009 |
|
2008 |
|
|
|
£ |
|
£ |
|
|
|
|
|
|
|
Revenue |
4 |
2,811,437 |
|
1,858,463 |
|
|
|
|
|
|
|
Cost of sales |
|
1,616,228 |
|
1,791,069 |
|
|
|
|
|
|
|
Gross profit |
|
1,195,209 |
|
67,394 |
|
|
|
|
|
|
|
Research & development costs |
|
1,220,303 |
|
1,037,317 |
|
|
|
|
|
|
|
Selling & distribution costs |
|
599,575 |
|
401,696 |
|
|
|
|
|
|
|
Administration costs |
|
2,285,392 |
|
3,357,492 |
|
|
|
|
|
|
|
Total operating costs |
|
4,105,270 |
|
4,796,505 |
|
|
|
|
|
|
|
Operating loss |
3 |
(2,910,061) |
|
(4,729,111) |
|
|
|
|
|
|
|
Operating loss before impairment, depreciation and amortisation |
|
(1,907,832) |
|
(2,781,460) |
|
Impairment, depreciation and amortisation |
|
(1,002,229) |
|
(1,947,651) |
|
|
|
|
|
|
|
Finance and other income |
|
90,802 |
|
86,273 |
|
Finance and other costs |
|
160,759 |
|
23,438 |
|
|
|
|
|
|
|
Loss before tax |
|
(2,980,018) |
|
(4,666,276) |
|
|
|
|
|
|
|
Tax |
|
195,297 |
|
198,171 |
|
|
|
|
|
|
|
Loss for the year |
|
(2,784,721) |
|
(4,468,105) |
|
|
|
|
|
|
|
Basic and diluted loss per share |
5 |
(1.5)p |
|
(3.5)p |
All the activities of the Group are classed as continuing.
Consolidated Balance Sheet as at 30 September 2009
|
|
Note |
2009 |
|
2008 |
|
|
|
£ |
|
£ |
|
Assets |
|
|
|
|
|
Non-current |
|
|
|
|
|
Intangible assets |
|
1,476,654 |
|
1,270,515 |
|
Property, plant & equipment |
6 |
1,382,299 |
|
2,055,483 |
|
Total non-current assets |
|
2,858,953 |
|
3,325,998 |
|
|
|
|
|
|
|
Current |
|
|
|
|
|
Inventories |
7 |
224,525 |
|
344,862 |
|
Trade & other receivables |
|
455,451 |
|
446,386 |
|
Current tax |
|
195,667 |
|
206,887 |
|
Cash & cash equivalents |
8 |
876,474 |
|
2,957,626 |
|
Total current assets |
|
1,752,117 |
|
3,955,761 |
|
|
|
|
|
|
|
Total assets |
|
4,611,070 |
|
7,281,759 |
|
|
|
|
|
|
|
Current liabilities |
|
|
|
|
|
Trade and other payables |
|
722,950 |
|
995,999 |
|
Amounts due under finance leases and HP agreements |
|
185,294 |
|
242,534 |
|
Amounts due under invoice financing facility |
|
137,204 |
|
- |
|
Total current liabilities |
|
1,045,448 |
|
1,238,533 |
|
|
|
|
|
|
|
Non-current liabilities |
|
|
|
|
|
Amounts due under finance lease and HP agreements |
|
344,941 |
|
203,991 |
|
|
|
|
|
|
|
Total liabilities |
|
1,390,389 |
|
1,442,524 |
|
|
|
|
|
|
|
Equity |
|
|
|
|
|
Share capital |
|
8,788,562 |
|
8,788,562 |
|
Share premium |
|
16,165,487 |
|
16,165,487 |
|
Share scheme reserve |
|
500,248 |
|
334,081 |
|
Warrant reserve |
|
75,600 |
|
75,600 |
|
Merger reserve |
|
13,389,536 |
|
13,389,536 |
|
Retained loss |
|
(35,698,752) |
|
(32,914,031) |
|
Total equity |
|
3,220,681 |
|
5,839,235 |
|
|
|
|
|
|
|
Total liabilities & equity |
|
4,611,070 |
|
7,281,759 |
Consolidated Statement of Changes in Equity for the year ended 30 September 2009
|
|
Share capital |
Share premium |
Share scheme reserve |
Warrant reserve |
Merger reserve |
Retained loss |
Total equity |
|
|
£ |
£ |
£ |
£ |
£ |
£ |
£ |
|
At 1 October 2007 |
7,643,553 |
14,252,078 |
203,465 |
- |
13,389,536 |
(28,445,926) |
7,042,706 |
|
Loss after tax |
- |
- |
- |
- |
- |
(4,468,105) |
(4,468,105) |
|
Share based payments |
- |
- |
130,616 |
- |
- |
- |
130,616 |
|
Warrants issued |
- |
- |
- |
75,600 |
- |
- |
75,600 |
|
Shares issued |
1,145,008 |
1,913,409 |
- |
- |
- |
- |
3,058,417 |
|
At 30 September 2008 |
8,788,562 |
16,165,487 |
334,081 |
75,600 |
13,389,536 |
(32,914,031) |
5,839,235 |
|
At 1 October 2008 |
8,788,562 |
16,165,487 |
334,081 |
75,600 |
13,389,536 |
(32,914,031) |
5,839,235 |
|
Loss after tax |
- |
- |
- |
- |
- |
(2,784,721) |
(2,784,721) |
|
Share based payments |
- |
- |
166,167 |
- |
- |
- |
166,167 |
|
At 30 September 2009 |
8,788,562 |
16,165,487 |
500,248 |
75,600 |
13,389,536 |
(35,698,752) |
3,220,681 |
Consolidated Cash Flow Statement for the year ended 30 September 2009
|
|
Note |
2009 |
2008 |
|
|
|
£ |
£ |
|
|
|
|
|
|
Loss before tax |
|
(2,980,018) |
(4,666,276) |
|
Adjustments for non-cash items: |
|
|
|
|
Depreciation and amortisation |
|
932,397 |
1,345,418 |
|
Depreciation absorbed to cost of sales |
|
69,833 |
89,414 |
|
Impairment loss on property, plant and equipment |
|
- |
512,819 |
|
Loss on disposal of property, plant and equipment |
|
153 |
- |
|
Investment revenue |
|
(41,902) |
(126,973) |
|
Effect of foreign exchange rate changes |
|
(86,966) |
20,076 |
|
Finance costs |
|
160,759 |
23,438 |
|
Grants received |
|
(8,200) |
- |
|
Change in fair value of derivative financial instruments |
|
(40,700) |
40,700 |
|
Share based payment |
|
166,167 |
130,616 |
|
Decrease in inventories |
|
120,337 |
396,418 |
|
(Increase)/decrease in trade and other receivables |
|
(9,065) |
103,680 |
|
(Decrease)/increase in trade and other payables |
|
(232,349) |
105,597 |
|
Taxation paid |
|
(370) |
- |
|
Taxation received |
|
206,887 |
146,686 |
|
|
|
|
|
|
Net cash outflow from operating activities |
|
(1,743,037) |
(1,878,387) |
|
|
|
|
|
|
Investing activities |
|
|
|
|
Interest received and similar income |
|
41,902 |
126,973 |
|
Payments to acquire intangible assets |
|
(381,663) |
(311,868) |
|
Payments to acquire property, plant and equipment |
|
(153,675) |
(327,346) |
|
Disposal proceeds from sale of property, plant and equipment |
|
- |
- |
|
Decrease in short term deposits |
|
- |
47,814 |
|
Net cash used in investing activities |
|
(493,436) |
(464,427) |
|
|
|
|
|
|
Cash outflow before financing |
|
(2,236,473) |
(2,342,814) |
|
|
|
|
|
|
Financing activities |
|
|
|
|
Interest paid and similar expense |
|
- |
(52) |
|
Finance lease interest paid |
|
(73,793) |
(43,464) |
|
Grants received |
|
8,200 |
- |
|
Issue of shares |
|
- |
3,435,022 |
|
Expenses paid in connection with issue of shares |
|
- |
(301,005) |
|
Cash received for new finance leases |
|
314,058 |
500,000 |
|
Capital element of finance lease rentals |
|
(230,348) |
(672,319) |
|
Net cash inflow from financing activities |
|
18,117 |
2,918,182 |
|
|
|
|
|
|
Net (decrease)/increase in cash and cash equivalents |
|
(2,218,356) |
575,368 |
|
|
|
|
|
|
Cash and cash equivalents at start of period |
|
2,957,626 |
2,382,258 |
|
|
|
|
|
|
Cash and cash equivalents at end of period |
|
739,270 |
2,957,626 |
Notes to the Company Financial Statements
For The Year Ended 30 September 2009
1. Basis of information in this announcement
The financial information in this announcement does not constitute the Company's statutory accounts for the years ended 30 September 2009 or 30 September 2008 but is derived from those accounts.
Statutory Accounts for 2008 have been delivered to the Registrar of Companies and those for 2009 will be delivered following the Company's annual general meeting. The auditors have reported on those accounts; their reports were (i) unqualified, (ii) did not include a reference to any matters to which the auditors drew attention by way of emphasis without qualifying their report and (iii) did not contain a statement under section 498 (2) or (3) of the Companies Act 2006 or section 237 (2) or (3) of the Companies Act 1985.
This announcement has been prepared on the basis of the Group's accounting policies. These are set out in its Annual Report and Accounts for the year ended 30 September 2008 which is available on the Group's website (www.sarantel.com). As of 1 October 2008 various new standards and interpretations apply to financial statements prepared in accordance with IFRS. However, none apply to the Group.
2. Going concern
The directors have prepared a business plan which formed the basis on which they are satisfied that the Group has adequate financial resources to continue to operate at least for the next twelve months from the date of approval of these financial statements. This business plan assumes a certain level of sales, which the directors believe to be both achievable and the best estimate of the Group's future activities. Whilst the achievement of these sales is a key uncertainty, in the light of the successful fund raise referred to below, the directors have made cost reductions and will also consider other alternatives including further cost reductions, to ensure that the Group is able to continue to operate for at least the next twelve months. At 30 September 2009 the Group had gross cash balances of £0.9m, and in December 2009, announced a successful placing to raise £2.25m (before expenses). Consequently, the directors consider it appropriate that these financial statements should be prepared on a going concern basis.
3. Operating loss
Operating loss is stated after charging:
|
|
2009 |
2008 |
|
|
£ |
£ |
|
Amortisation of intangible assets |
175,524 |
136,017 |
|
Depreciation of property, plant and equipment |
826,705 |
1,298,814 |
|
- of which, depreciation included in cost of sales |
69,833 |
89,414 |
|
Impairment of plant and equipment |
- |
512,819 |
|
Loss on disposal of tangible assets |
153 |
- |
|
|
|
|
|
Auditors' remuneration |
|
|
|
Fees payable to the Company's auditor for the audit of these financial statements |
13,000 |
13,700 |
|
|
|
|
|
Fees payable to the Company's auditor and its associates for other services |
|
|
|
Audit of the financial statements of subsidiaries pursuant to legislation |
13,000 |
15,300 |
|
Other series relating to taxation |
4,920 |
3,950 |
|
All other services |
6,700 |
12,500 |
|
|
37,620 |
45,450 |
|
|
|
|
|
Operating lease rentals - land and buildings |
135,000 |
135,000 |
|
Inventory written off against prior year provision |
(32,915) |
(133,140) |
|
Write down of inventories |
12,000 |
38,260 |
|
Write down of receivables |
- |
2,000 |
4. Revenue
|
|
2009 |
2008 |
|
|
£ |
£ |
|
Sales of antennas |
2,708,338 |
1,621,436 |
|
Sale of Non-Recurring Engineering services (NRE) |
103,099 |
237,027 |
|
Total revenue |
2,811,437 |
1,858,463 |
5. Loss per Share
The calculation of basic loss per share is based on the loss attributable to ordinary shareholders divided by the weighted average number of shares in issue during the year.
|
|
2009 |
2008 |
|
|
£ |
£ |
|
Loss for the financial year |
2,784,721 |
4,468,105 |
|
Weighted average number of shares |
190,936,331 |
126,313,962 |
|
Basic loss per share |
(1.5)p |
(3.5)p |
|
Dilutive effect of weighted average options and warrants* |
10,468,522 |
6,269,822 |
* The effect of options and warrants are anti-dilutive.
6. Property, plant and equipment
The Group
|
|
Leasehold improvements |
Property, plant and equipment |
Total |
|
Cost |
£ |
£ |
£ |
|
At 1 October 2007 |
196,646 |
9,166,517 |
9,363,163 |
|
Additions |
- |
327,345 |
327,345 |
|
At 1 October 2008 |
196,646 |
9,493,862 |
9,690,508 |
|
Additions |
- |
153,675 |
153,675 |
|
Disposals |
- |
(7,576) |
(7,576) |
|
At 30 September 2009 |
196,646 |
9,639,961 |
9,836,607 |
|
|
|
|
|
|
|
|
|
|
|
Depreciation |
|
|
|
|
At 1 October 2007 |
107,720 |
5,715,672 |
5,823,392 |
|
Charge for the year |
19,437 |
1,279,377 |
1,298,814 |
|
Impairment |
- |
512,819 |
512,819 |
|
At 1 October 2008 |
127,157 |
7,507,868 |
7,635,025 |
|
Charge for the year |
19,437 |
807,268 |
826,705 |
|
Disposals |
- |
(7,422) |
(7,422) |
|
At 30 September 2009 |
146,594 |
8,307,714 |
8,454,308 |
|
|
|
|
|
|
|
|
|
|
|
Carrying amount |
|
|
|
|
At 30 September 2009 |
50,052 |
1,332,247 |
1,382,299 |
|
|
|
|
|
|
At 30 September 2008 |
69,489 |
1,985,994 |
2,055,483 |
The Group carried out an impairment review of property, plant and equipment as at the end of the year, as part of the annual review cycle and in view of the deteriorating economic conditions, it was determined that no impairment of property, plant and equipment was required (2008: £512,819).
During the year, the Group signed an agreement for the sale and leaseback of all of its unencumbered property, plant and equipment comprising all plant and machinery, test and computer equipment to Close Leasing Limited for a total value of £600,000. At the same time, the Group settled a previous sale and leaseback agreement, so that the net effect was the realising of an additional £311,000. The principal terms of the new agreement are a 36 months term at a monthly rent of approximately £20,000. In common with similar agreements, the lessor may adjust the amounts payable by the Group if assumptions (principally UK taxation laws) underpinning their eventual net return, as calculated at inception, are materially incorrect. At the end of the term and subject to meeting certain conditions, the Group is appointed as the agent of the lessor, to sell the goods to a third party for a minimal nominal sum.
In accordance with IAS17 - Leases, the sale and leaseback transaction has been classified as a finance lease. No adjustment has been made for the difference between the carrying value of the assets and the sale proceeds under the sale and leaseback agreement.
Capital Commitments
|
|
2009 |
|
2008 |
|
|
£ |
|
£ |
|
Amounts contracted for but not provided in the financial statements |
21,359 |
|
33,610 |
7. Inventories
|
|
Group |
||
|
|
2009 |
|
2008 |
|
|
£ |
|
£ |
|
Raw materials |
130,709 |
|
117,734 |
|
Work in progress |
10,523 |
|
59,522 |
|
Finished goods |
83,293 |
|
167,606 |
|
|
224,525 |
|
344,862 |
The cost of inventories recognised as an expense and included in 'cost of sales' amounted to £826,101 (2008: £998,180)
8. Cash and cash equivalents
|
|
Group |
|
Company |
||||
|
|
2009 |
|
2008 |
|
2009 |
|
2008 |
|
|
£ |
|
£ |
|
£ |
|
£ |
|
Cash and cash equivalents |
876,474 |
|
2,957,626 |
|
173,196 |
|
2,157,042 |
Cash and cash equivalents comprise cash and short-term bank deposits with an original maturity of three months or less. The Directors consider that the carrying amount of these assets approximates to their fair value. There is no collateral on the above amounts.
Cash, cash equivalents and bank overdrafts include the following for the purposes of the cash flow statement:
|
|
Group |
|
Company |
||||
|
|
2009 |
|
2008 |
|
2009 |
|
2008 |
|
|
£ |
|
£ |
|
£ |
|
£ |
|
Cash and cash equivalents |
876,474 |
|
2,957,626 |
|
173,196 |
|
2,157,042 |
|
Amounts due under invoice financing facility |
(137,204) |
|
- |
|
- |
|
- |
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
739,270 |
|
2,957,626 |
|
173,196 |
|
2,157,042 |
9. Post Balance Sheet Events
In December 2009, the Group announced a successful placing to raise £2.25m (before expenses).
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