RNS Number:4628R
SatCom Group Holdings plc
20 September 2005
Press Release 20 September 2005
SatCom Group Holdings plc
("SatCom" or "the Group")
Preliminary Statement of Results for the Year Ended 30 June 2005
SatCom Group Holdings plc, the reseller of mobile satellite communications,
announces its maiden set of preliminary results for the year ended 30 June 2005.
Financial highlights
* Group turnover increased by 29.3% to US$47.9 million (2004: US$37.1 million)
* Operating profit increased by 24.9% to US$2.8 million (2004: US$2.3 million)
* Profit on ordinary activities before taxation increased by 16.6% to US$2.6
million (2004: US$2.2 million)
* Basic earnings per share increased by 16.6% to 3.45 cents per share (2004:
2.96 cents per share)
* EBITDA increased by 20.1% to US$3.0 million (2004: US$ 2.5 million)
* Successful flotation on AIM on 15 July 2005
Commenting on the results, Mark White, Chief Executive, said: "I am delighted to
announce this strong set of results following our flotation on AIM in July.
SatCom has always been a profitable company and our heightened profile since our
admission on AIM will assist future growth, in particular with further
acquisitions.
SatCom has long-standing relationships with customers and dealers on a worldwide
basis and has a broad customer base of over 7,500 active terminals. Our
diversified customer base not only gives good earnings visibility but also
places SatCom in a strong position to accelerate growth in the future."
For further information:
SatCom Group Holdings plc
Mark White, Chief Executive Officer Tel: +44 (0) 1722 439 206
mark.white@satcomgroup.com www.SatComgroup.com
----------------------
Martin Ward, Chief Financial Officer Tel: +44 (0) 1722 439 201
martin.ward@satcomgroup.com www.SatComgroup.com
----------------------
Ernst & Young LLP
John Stephan, Tel: +44 (0) 207 951 2000
jstephan@uk.ey.com
----------------------
Teather & Greenwood Limited
Stephen Austin, Corporate Finance Tel: +44 (0) 207 426 9000
stephen.austin@teathers.com www.teathers.com
----------------------
Media enquiries:
Abchurch
Heather Salmond / Dana Thomas Tel: +44 (0) 207 398 7700
heather.salmond@abchurch-group.com www.abchurch-group.com
----------------------
Chairman and Chief Executive's Statement
Financial Performance
This maiden set of preliminary results for SatCom Group Holdings plc ("SatCom"
or the "Group") for the 12 months ended 30 June 2005 represents an excellent
outcome for the year. Since SatCom's formation in 2001, the Group has increased
turnover and profitability every year and we are pleased to report that this
trend is continuing. The Group reports its financial statements in US dollars as
the majority of its sales and cost of sales are denominated in this currency.
Group turnover for the period rose by 29% to $48million, operating profit rose
by 25% to $2.8million, and earnings per share rose 17% to $0.0345 per share.
While a strong financial performance was anticipated in the recent AIM admission
document, we are pleased to confirm the actual outcome was ahead of
expectations.
As outlined in the AIM admission document the Group does not propose to pay a
final dividend in respect of the year to 30 June 2005. However, in the absence
of unforeseen circumstances, the Group expects to implement a progressive
dividend policy commencing with an interim payment in March 2006.
AIM Flotation
Earlier this year, the Board took the decision to obtain an AIM quotation for
the Group and this was successfully achieved in July 2005. The flotation was
designed to raise the Group's profile and to secure additional funding for
expansion. The funds raised will enable SatCom to accelerate its development
through expansion into additional geographical markets and to acquire
complementary businesses.
Strategy
SatCom operates in the expanding Mobile Satellite Services ("MSS") market place
and has announced its intention to expand its business by acquisition with a
very scaleable model. The MSS market profile was increased by the recent
successful IPO of Inmarsat and we expect a large amount of consolidation by
acquisition to take place in the market place over the next few years.
In addition to growth by acquisition, SatCom's growth will also be driven
organically by new products entering the marketplace, international political
developments, response to natural disasters and expansion into the maritime
market. Finally, the Group is in the process of diversifying away from its US
business through the expansion of its Asian operation, which is based in Hong
Kong.
Current Trading and Prospects
The market for mobile satellite services is expanding, and according to
estimates is expected to continue growing, influenced partly by the global
security situation and international response to humanitarian and natural
disasters. Against this background the Board believes that SatCom's established
relationships with satellite operators, land earth station operators (LESO's),
hardware manufacturers, dealers and customers will enable the Group to continue
to increase market share.
SatCom has identified several potential acquisition targets with strengths in
the commercial maritime sector, which has been identified by the Board as an
area of potential significant growth.
In the meantime, trading in the two months since the year end has been in line
with the Board's expectations and the Board remains confident of the outcome for
the year.
Finally, we would like to take this opportunity to thank all of SatCom's
employees for their continuing hard work and dedication.
David Hickey Mark White
Chairman Chief Executive
19 September 2005
SATCOM GROUP HOLDINGS PLC
GROUP PROFIT AND LOSS ACCOUNT
YEAR ENDED 30 JUNE 2005
30 June 2005 30June 2004
Note $ 000's $ 000's $ 000's
Turnover (including share of joint
venture)
Continuing operations 47,532 37,073
Acquisitions 473 -
----------
48,005 37,073
Less: share of joint
venture turnover (75) -
Group turnover 47,930 37,073
Cost of sales (40,684) (30,807)
---------- ---------
GROSS PROFIT 7,246 6,266
Net operating expenses 4,399 3,987
---------- ---------
OPERATING PROFIT
Continuing operations 2,928 2,279
Acquisitions (81) -
---------- ---------
GROUP OPERATING PROFIT 2,847 2,279
Share of joint venture
operating loss (79) -
Interest receivable 31 30
Interest payable and similar
charges
Group (194) (78)
Share of joint venture (3) -
----------
(197) -
---------- ---------
PROFIT ON ORDINARY
ACTIVITIES BEFORE TAXATION 2,602 2,231
Tax on profit on
ordinary activities 967 798
---------- ---------
PROFIT ON ORDINARY
ACTIVITIES AFTER TAXATION 1,635 1,433
Minority interests (35) -
---------- ---------
PROFIT ATTRIBUTABLE TO
MEMBERS OF THE PARENT COMPANY 1,670 1,433
Dividends 181 19
---------- ---------
RETAINED PROFIT FOR
THE FINANCIAL PERIOD 6 1,489 1,414
========== =========
Earnings per share
Basic earnings per
ordinary share 3 $0.0345 $0.0296
Diluted earnings per
ordinary share 3 $0.0344 $0.0296
GROUP BALANCE SHEET
30 JUNE 2005
30 June 2005 30 June 2004
Note $ 000's $ 000's $ 000's
FIXED ASSETS
Intangible assets 1,172 950
Tangible assets 399 285
--------- ---------
1,571 1,235
---------
CURRENT ASSETS
Stocks 1,694 918
Debtors 10,789 8,731
Cash at bank and in hand 5,161 1,661
--------- ---------
17,644 11,310
CREDITORS: Amounts falling
due within one year 19,355 15,548
--------- ---------
NET CURRENT LIABILITIES (1,711) (4,238)
--------- ---------
TOTAL ASSETS LESS CURRENT LIABILITIES (140) (3,003)
CREDITORS: Amounts falling due
after more than one year 1,538 66
--------- ---------
(1,678) (3,069)
PROVISIONS FOR LIABILITIES AND CHARGES
Deferred taxation 19 16
--------- ---------
(1,697) (3,085)
MINORITY INTERESTS 101 -
--------- ---------
(1,596) (3,085)
========= =========
CAPITAL AND RESERVES
Called up equity share
capital 5 4,935 4,845
Merger reserve 6 (10,884) (10,884)
Profit and loss account 6 4,353 2,954
--------- ---------
EQUITY SHAREHOLDERS'
FUNDS / (DEFICIT) (1,596) (3,085)
========= =========
GROUP CASH FLOW STATEMENT
YEAR ENDED 30 JUNE 2005
30 June 200 30 June 2004
Note $ 000's $ 000's $ 000's
NET CASH INFLOW FROM
OPERATING ACTIVITIES 6,019 2,367
RETURNS ON INVESTMENTS AND SERVICING OF
FINANCE
Interest received 31 30
Interest paid (186) (73)
Interest element of hire
purchase (8) (5)
--------- ---------
NET CASH OUTFLOW FROM
RETURNS ON INVESTMENTS
AND SERVICING OF FINANCE (163) (48)
TAXATION (629) (967)
CAPITAL EXPENDITURE
Payments to acquire
intangible fixed assets (18) (14)
Payments to acquire
tangible fixed assets (222) (74)
--------- ---------
NET CASH OUTFLOW FROM
CAPITAL EXPENDITURE (240) (88)
ACQUISITIONS AND DISPOSALS
Cash paid to acquire
subsidiaries (252) (1,807)
Net cash acquired with
subsidiary 104 -
--------- ---------
NET CASH OUTFLOW FROM
ACQUISITIONS AND
DISPOSALS (148) (1,807)
EQUITY DIVIDENDS PAID (181) (40)
--------- ---------
CASH INFLOW/(OUTFLOW) BEFORE
FINANCING 4,658 (583)
FINANCING
Decrease in short term
borrowing (1,107) (752)
Capital element of hire
purchase (51) (53)
--------- ---------
NET CASH OUTFLOW FROM
FINANCING (1,158) (805)
--------- ---------
INCREASE/(DECREASE) IN CASH 3,500 (1,388)
========= =========
NOTES TO THE FINANCIAL STATEMENTS
YEAR ENDED 30 JUNE 2005
1. ACCOUNTING POLICIES
Basis of Preparation
This preliminary statement does not represent the group's statutory accounts
within the meaning of section 240 of the Companies Act 1985. The accounts for
the year ended 30 June 2005, being the first statutory accounts for the company
since its incorporation, have not yet been delivered to the Register of
Companies but have been approved by the Board, on 16 September 2005, and have
been reported on by the auditors. The audit report was unqualified and did not
contain statements under section 237(2) or (3) of the Companies Act 1985.
Basis of accounting
The financial statements have been prepared under the historical cost
convention.
Basis of consolidation
The consolidated financial statements incorporate the financial statements of
the company and all subsidiary undertakings. These are adjusted, where
appropriate, to conform to group accounting policies. Acquisitions are accounted
for under the acquisition method and goodwill on consolidation is capitalised
and written off over twenty years from the year of acquisition. The results of
companies acquired or disposed of are included in the group profit and loss
account after or up to the date that control passes respectively. Group
reconstructions are accounted for under the merger method, with any merger
difference arising being shown as a movement on other reserves.
As a consolidated group profit and loss account is published, a separate profit
and loss account for the parent company is omitted from the group financial
statements by virtue of section 230 of the Companies Act 1985.
Entities in which the group holds an interest on a long term basis and are
jointly controlled by the group and one or more other venturers under a
contractual agreement are treated as joint ventures. In the group financial
statements, joint ventures are accounted for using the gross equity method.
Turnover
The turnover shown in the group profit and loss account represents amounts
invoiced during the period, exclusive of Value Added Tax.
Goodwill
Goodwill arising on acquisitions is classified as an asset on the balance sheet
and amortised on a straight line basis over its estimated useful economic life
of 20 years. It is reviewed for impairment when any events or changes in
circumstances indicate that the carrying value may not be recoverable.
Other intangible assets
Other intangible assets acquired are capitalised at cost.
Other intangible assets are amortised on a straight line basis over their
estimated useful lives up to a maximum of 20 years. The carrying value of
intangible assets is reviewed for impairment when any events or changes in
circumstances indicate the carrying value may not be recoverable.
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% per annum
Other intangible assets: 5% per annum
Fixed assets
All fixed assets are initially recorded at cost.
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 over remaining lease term straight line
Equipment 25-33% per annum straight line
Stocks
Stocks are valued at the lower of cost and net realisable value, after making
due allowance for obsolete and slow moving items.
Hire purchase agreements
Assets held under hire purchase agreements are capitalised and disclosed under
tangible fixed assets at their fair value. The capital element of future
payments is treated as a liability and the interest is charged to the group
profit and loss account on a straight line basis.
Operating lease agreements
Rentals applicable to operating leases where substantially all of the benefits
and risks of ownership remain with the lessor are charged against profits on a
straight line basis over the period of the lease.
Deferred taxation
Deferred tax is recognised in respect of all timing differences that have
originated but not reversed at the balance sheet date where transactions or
events have occurred at that date that will result in an obligation to pay more,
or a right to pay less or to receive more tax, with the following exceptions:
Provision is made for tax on gains arising from the revaluation (and similar
fair value adjustments) of fixed assets, and gains on disposal of fixed assets
that have been rolled over into replacement assets, only to the extent that, at
the balance sheet date, there is a binding agreement to dispose of the assets
concerned. However, no provision is made where, on the basis of all available
evidence at the balance sheet date, it is more likely than not that the taxable
gain will be rolled over into replacement assets and charged to tax only where
the replacement assets are sold;
Deferred tax assets are recognised only to the extent that the directors
consider that it is more likely than not that there will be suitable taxable
profits from which the future reversal of the underlying timing differences can
be deducted.
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 substantively enacted at the balance sheet date.
Foreign currencies
Assets and liabilities in other currencies are translated into U.S. Dollars at
the rates of exchange ruling at the balance sheet date. Transactions in other
currencies are translated into U.S. Dollars at the rate of exchange ruling at
the date of the transaction. Exchange differences are taken into account in
arriving at the operating profit.
2. Share optionS
On 29 April 2005, options over a total of 21,001 $1 shares in the Company were
awarded to staff who were employed at that date (none of whom were directors).
On 10 June 2005 the Ordinary Shares were subdivided into $0.10 shares, and
accordingly the number of options increased to 210,010 and the exercise price
reduced to #0.09625.
As at 30 June 2005, 177,930 options were outstanding under the Enterprise
Management Incentive Scheme and 32,080 options were outstanding under the
Unapproved Scheme.
3. EARNINGS PER SHARE
Basic earnings per share is based on the profit attributable to members of the
parent company of $1,670,000 (2004: $1,433,000) and on 48,450,000 (2004:
48,450,000) being the weighted average number of shares in issue during the
period.
Diluted earnings per share is based on the profit attributable to members of the
parent company $1,670,000 (2004: $1,433,000) and on 48,592,632 (2004:
48,450,000) being the diluted weighted average number of shares in issue during
the period.
4. INVESTMENTS
Details of the trading investments in which the group and the company (unless
indicated) holds 20% or more of the nominal value of any class of share capital
are as follows:
Name of subsidiary Holding Proportion of Nature of
shares held business
SatCom
Distribution
Limited Ordinary 100% Distribution of
Shares satellite
communication
equipment and
airtime
SatCom
Distribution
Inc+ Ordinary 100%* Distribution of
shares satellite
communication
equipment
O'Gara
Satellite
Systems Inc+ Ordinary 100%* Distribution of
shares satellite
communication
airtime
Northstar
Communications
Inc+ Ordinary 80%* Distribution of
shares HF Radio
equipment
SatCom
Distribution
(Asia)
Limited- Ordinary 60%* Distribution of
shares satellite
communication
equipment
+ Incorporated in the United States of America
- Incorporated in Hong Kong
* Held by a subsidiary undertaking
5. SHARE CAPITAL
Authorised share capital:
30 June 2005 30June
2004
$ 000's $ 000's
50,000,000 Ordinary shares of $1 each - 50,000
500,000,000 Ordinary shares of $0.10 each 50,000 -
50,000 Deferred shares of #1 each 90 -
--------- ---------
50,090 50,000
========== =========
Allotted and called up:
30 June 2005 30 June 2004
000's $ 000's 000's $ 000's
Ordinary shares of $1
each - - 4,845 4,845
Ordinary shares of
$0.10 each 48,450 4,845 - -
Deferredshares of #1
each 90 90 - -
-------- -------- -------- --------
48,540 4,935 4,845 4,845
======== ======== ======== ========
On 10 June 2005, the authorised share capital of the Company was increased to
$50,000,000 and #50,000 by the creation of 50,000 deferred shares of #1 each.
The 50,000 deferred shares were issued fully paid (equivalent to $90,000) on the
same day by way of a bonus issue, to existing shareholders pro rata to their
holdings of the ordinary shares, out of distributable reserves.
Also on 10 June 2005, the existing issued and unissued 50,000,000 ordinary
shares of $1 each were subdivided into 500,000,000 ordinary shares of $0.10
each.
6. RESERVES
Group Merger reserve Profit and loss
account
$ 000's $ 000's
Balance brought forward (10,884) 2,954
Retained profit for the period - 1,489
Bonus issue of shares - (90)
-------- --------
Balance carried
forward (10,884) 4,353
======== ========
Company Profit and loss
account
$ 000's
Retained profit for the period 2,816
Bonus issue of shares (90)
--------
Balance carried forward 2,726
========
As explained in note 1, the acquisition by the company of SatCom Distribution
Limited and its subsidiaries in May 2004 has been accounted for as a merger.
Accordingly, a debit merger reserve has been recognised in the consolidated
balance sheet representing the difference between the consideration paid to
acquire the group and its net assets at the date of the transaction.
7. POST BALANCE SHEET EVENTS
On 15 July 2005 the company was admitted to AIM. The float process raised #3.5
million before costs and was made up as follows:-
#3.0 million in 8% Convertible Loans. The loans can be converted to ordinary
shares within 4 years at 39p per share.
#0.5 million in 10 cents Ordinary Shares. The shares were issued at 30p per
share. Immediately following the float the company had 50,116,667 shares in
issue.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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