RNS Number:2079K
SatCom Group Holdings plc
10 October 2006
Press Release 10 October 2006
SatCom Group Holdings plc
("SatCom" or "the Group")
Preliminary Statement of Results for the Year Ended 30 June 2006
SatCom Group Holdings plc, the reseller of mobile satellite communications,
announces its preliminary results for the year ended 30 June 2006.
Highlights
* Group turnover increased by 8% to US$51.6 million (2005: US$47.9 million)
* Operating profit increased by 18% to US$3.37 million (2005: US$2.85 million)
* Profit on ordinary activities before taxation increased by 8% to
US$2.8 million (2005: US$2.6 million) after incurring additional annualised
running costs relating to public company status of $240,000
* Basic earnings per share increased by 12% to 3.87 cents per share (2005:
3.45 cents per share)
* EBITDA increased by 27% to US$3.8 million (2005: US$ 3.0 million)
* Maiden final dividend proposed of 0.25 cents per share
* Successful acquisition of Horizon Mobile Communications Group in September
2005
* Successful acquisition of Net Africa Arabia, an Inmarsat Distribution Partner
Commenting on the results, Mark White, Chief Executive, said: "I am delighted to
announce this improved set of results following our strong maiden set of results
last year. We stated at the AIM flotation that the Group needed to broaden its
customer base from land based services, which are always more prone to
fluctuations in demand. Accordingly, SatCom has moved to increase profitability
by diversification into the maritime sector through the acquisition of Horizon
Mobile Communications Group ("HMC").
"During the year the Group also acquired Net Africa Arabia Limited, an Inmarsat
Regional BGAN Distribution Partner. On 1 October 2006, this Distribution Partner
status was upgraded to cover the new high-speed data BGAN service. This is a
very exciting opportunity for the Group and developing the BGAN business will be
one of our main focuses this year.
"In July 2006, the Group announced the acquisition of World Communication
Center, Inc. ("WCC"), a satellite equipment and airtime reseller company, based
in Phoenix, Arizona, USA. In the 12 months to December 2005, WCC had sales of
$10 million and pre tax profits of $450,000.
"Following the two major acquisitions in HMC and WCC, the Group is now well
positioned globally to deliver a full range of maritime and land based services.
Additionally, the Group's improved buying power together with the recent upgrade
to BGAN Distribution Partner status provides significant growth prospects."
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
Jeff Keating, Corporate Finance Tel: +44 (0) 207 426 9000
Jeff.keating@teathers.com www.teathers.com
Media enquiries:
Abchurch
Heather Salmond / Georgina Bonham Tel: +44 (0) 20 7398 7700
heather.salmond@abchurch-group.com www.abchurch-group.com
Chief Executive's Statement
Highlights
The attached accounts of SatCom Group Holdings Plc ("SatCom" or the "Group"),
for the year ended 30 June 2006, represent the second set of audited accounts
since joining AIM in July 2005. The results show further growth in profits for
the Group. The Group reports its financial statements in US dollars as the
majority of its sales and cost of sales are denominated in this currency.
The Board stated at flotation that the Group needed to broaden its customer base
from land based services, which are always more prone to fluctuations in demand.
Accordingly the Group's first acquisition was the Horizon Mobile
Communications Group ("HMC"), a strong Maritime business based in the Asia
region. This acquisition has performed well under SatCom with good management
based in Bangkok providing the key to this success story.
In December 2005, SatCom acquired Net Africa Arabia Limited, an Inmarsat
Regional BGAN Distribution Partner. On 1 October 2006, this Distribution Partner
status was upgraded to cover the new high-speed data BGAN service. This is a
very exciting opportunity for the Group and developing the BGAN business will be
one of our main focuses this year.
In July 2006, the Group announced the acquisition of World Communication Center,
Inc. ("WCC"), a satellite equipment and airtime reseller company, based in
Phoenix, Arizona, USA. In the 12 months to December 2005, WCC had sales of $10
million and pre tax profits of $450,000. The Group anticipates being able to
rationalise its US operations and bring increased buying power with this
acquisition.
Financial Performance
The Group's results show an increase in turnover of 7.6% to $51.6 million,
including $9.6m arising from the acquisition of HMC. This takes account of a
reduction in the land based business, much of which was at a lower margin. The
Group had expected a reduction in the demand for land based services which
fluctuates significantly in line with conflicts and large scale disasters. The
year saw a lower level of conflict and disasters, and as such, the Group's
business relied more heavily on its maritime sector, which remains more
predictable.
The Board therefore focused on acquiring a major maritime business and was
pleased to acquire HMC in September 2005. HMC's results continue to show growth
and improved profits as the commercial shipping sector remains strong.
As a result of losing lower margin land based business and the gain of HMC's
higher margin maritime business, the Group's gross margin has increased to 20%
from 15% reported last year. As a result of the shift in our business to include
maritime, our staffing numbers have increased to cover additional support
requirements of that sector, and as a result our salary costs have increased by
89% to $3.4 million.
Profit before tax increased by 7.7%. This includes additional annualised running
costs relating to public company status of over $240,000. Comparing "like for
like" with 2005, the Group would have shown an increase of 18.6%.
As stated in the admission document and in the December 2005 Interim Statement,
SatCom has a progressive dividend policy and it is the Board's intention to
propose a final dividend of 0.25 cents per share. This dividend when added to
the interim dividend paid in April 2006 will provide a total income to
shareholders of 0.4 cents per share for the first year.
Strategy and Prospects
The Group has now made two large acquisitions in HMC and WCC, and given its new
status as an Inmarsat Distribution Partner, will concentrate mainly on growing
its business organically. The Board will of course continue to look at any
strategic acquisition opportunities that may arise.
The Group's forecasts include demand for the new technology in the high-speed
data capability of BGAN developed by Inmarsat. The roll out of this technology
has been slightly slower than forecast by the industry but is now increasing
considerably and our new status with Inmarsat, achieved as from 1 October 2006,
will enable us to take advantage of this opportunity.
Accordingly, the Board remains confident of the outcome for the year.
Chairmanship
David Hickey has tendered his resignation to take effect from the end of October
2006, due to pressures from other commercial interests. I am pleased to announce
that Richard Vos has agreed to step up to Chairman. Richard has considerable
experience of the satellite and international telecommunications world with over
35 years knowledge of working in the industry. He was previously Chairman of
Inmarsat Ventures plc and Inmedia Communications Limited and has been a
Non-Executive director of the Group since flotation.
The Group expects to appoint a replacement Non-Executive director in due course.
In the meantime, I would like to thank David for his significant contribution
during his tenure as Group Chairman, covering the period through flotation and
subsequent acquisitions.
Finally, I would like to take this opportunity to thank all SatCom Group
employees around the world for their continuing hard work and dedication during
the last year.
Mark White
Chief Executive
10 October 2006
SATCOM GROUP HOLDINGS PLC
GROUP PROFIT AND LOSS ACCOUNT
YEAR ENDED 30 JUNE 2006
30 June 2006 30 June 2005
Note $ 000's $ 000's $ 000's
Turnover
Continuing operations 41,426 47,532
Acquisitions 9,592 -
51,018 47,532
Discontinued operations 540 473
Less: share of joint venture turnover - (75)
Group turnover 51,558 47,930
Cost of sales (41,412) (40,684)
---------- ----------
GROSS PROFIT 10,146 7,246
Net operating expenses 6,775 4,399
---------- ----------
OPERATING PROFIT
Continuing operations 2,512 2,847
Acquisitions 979 -
Discontinued operations (120) -
---------- ----------
GROUP OPERATING PROFIT 3,371 2,847
- (79)
Share of joint venture operating loss
Loss on disposal of fixed asset investments (10) -
Interest receivable 303 31
Finance costs
Interest payable and similar charges (748) (197)
Amortisation of issue costs on convertible (114) -
---------- ----------
PROFIT ON ORDINARY ACTIVITIES BEFORE TAXATION 2,802 2,602
Tax on profit on ordinary activities 890 967
---------- ----------
PROFIT ON ORDINARY ACTIVITIES AFTER TAXATION 1,912 1,635
Minority interests (69) (35)
---------- ----------
RETAINED PROFIT FOR THE FINANCIAL PERIOD 7 1,981 1,670
========== ===========
Earnings per share
Basic earnings per ordinary share 3 $0.0387 $0.0345
Diluted earnings per ordinary share 3 $0.0385 $0.0344
SATCOM GROUP HOLDINGS PLC
GROUP BALANCE SHEET
30 JUNE 2006
30 June 2006 30 June 2005
Note $ 000's $ 000's $ 000's
FIXED ASSETS
Intangible assets 5,869 1,172
Tangible assets 746 399
---------- ----------
6,615 1,571
----------
CURRENT ASSETS
Stocks 3,216 1,694
Debtors 11,357 10,789
Cash at bank and in hand 1,901 5,161
---------- ----------
16,474 17,644
CREDITORS: Amounts falling due within one
year 15,907 19,355
---------- ----------
NET CURRENT ASSETS (LIABILITIES) 567 (1,711)
---------- ----------
TOTAL ASSETS LESS CURRENT LIABILITIES 7,182 (140)
CREDITORS: Amounts falling due after more than
one year 5 5,141 1,538
---------- ----------
2,041 (1,678)
PROVISIONS FOR LIABILITIES AND CHARGES
Deferred taxation - 19
---------- ----------
2,041 (1,697)
18 101
MINORITY INTERESTS
---------- ----------
2,059 (1,596)
========== ===========
CAPITAL AND RESERVES
Called up equity share capital 6 5,250 4,935
Share premium account 7 723 -
Merger reserve 7 (10,884) (10,884)
Contingent share capital 8 714 -
Profit and loss account 7 6,256 4,353
---------- ----------
EQUITY SHAREHOLDERS' FUNDS / (DEFICIT) 2,059 (1,596)
========== ==========
SATCOM GROUP HOLDINGS PLC
GROUP CASH FLOW STATEMENT
YEAR ENDED 30 JUNE 2006
30 June 2006 30 June 2005
Note $ 000's $ 000's $ 000's
NET CASH (OUTFLOW) INFLOW FROM OPERATING
ACTIVITIES (1,048) 6,019
RETURNS ON INVESTMENTS AND SERVICING OF FINANCE
Interest received 303 31
Interest paid (740) (186)
Interest element of hire purchase (8) (8)
---------- ----------
NET CASH OUTFLOW FROM RETURNS ON INVESTMENTS AND (445) (163)
SERVICING OF FINANCE
TAXATION (751) (629)
CAPITAL EXPENDITURE
Payments to acquire intangible fixed assets (657) (18)
Payments to acquire tangible fixed assets (154) (222)
---------- ----------
NET CASH OUTFLOW FROM CAPITAL EXPENDITURE (811) (240)
ACQUISITIONS AND DISPOSALS
Cash paid to acquire subsidiary undertakings (4,947) (252)
Net cash acquired with subsidiary undertakings 867 104
Sale of subsidiary undertakings 120 -
Net cash disposed of with subsidiary undertakings (55) -
---------- ----------
NET CASH OUTFLOW FROM ACQUISITIONS AND DISPOSALS (4,015) (148)
EQUITY DIVIDENDS PAID (78) (181)
---------- ----------
CASH (OUTFLOW) INFLOW BEFORE FINANCING (7,148) 4,658
FINANCING
Decrease in short term borrowing (2,243) (1,107)
Issue of ordinary share capital (net of costs) 1,038 -
Issue of Convertible Unsecured Loan Stock (net of 5,141 -
costs)
Capital element of hire purchase (48) (51)
---------- ----------
NET CASH INFLOW (OUTFLOW) FROM FINANCING 3,888 (1,158)
---------- ----------
(DECREASE) INCREASE IN CASH (3,260) 3,500
========== ==========
SATCOM GROUP HOLDINGS PLC
NOTES TO THE FINANCIAL STATEMENTS
YEAR ENDED 30 JUNE 2006
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 2006, have not yet been delivered to the Register of
Companies but were approved by the Board, on 9 October 2006, and have been
reported on by the auditors. The audit report was unqualified and did not
contain a statement under section 237(2) or (3) of the Companies Act 1985.
Basis of accounting
The financial statements have been prepared in US Dollars ($) under the
historical cost convention and in accordance with applicable accounting
standards.
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 ventures 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.
SATCOM GROUP HOLDINGS PLC
NOTES TO THE FINANCIAL STATEMENTS
YEAR ENDED 30 JUNE 2006 (Continued)
1. ACCOUNTING POLICIES (continued)
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.
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.
SATCOM GROUP HOLDINGS PLC
NOTES TO THE FINANCIAL STATEMENTS
YEAR ENDED 30 JUNE 2006 (Continued)
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.
Financial instruments
Financial instruments are classified and accounted for, according to the
substance of the contractual arrangement, as either financial assets, financial
liabilities or equity instruments. An equity instrument is any contract that
evidences a residual interest in the assets of the Company after deducting all
of its liabilities.
2. SHARE OPTIONS
The following share options were granted by the Company during the year to
employees of the Group (none of whom was a Director):
28 October 2005 173,588 Ordinary shares of 10 cents each
23 December 2005 19,188 Ordinary shares of 10 cents each
17 May 2006 8,760 Ordinary shares of 10 cents each
As at 30 June 2006, 180,120 options were outstanding under the Enterprise
Management Incentive Scheme and 221,075 options were outstanding under the
Unapproved Scheme.
3. EARNINGS PER SHARE
Basic earnings per share are based on the Group profit attributable to members
of the parent company of $1,981,000 (2005: $1,670,000) and on 51,132,380 (2005:
48,450,000) being the weighted average number of shares in issue during the
year.
Diluted earnings per share are based on the profit attributable to members of
the parent company plus the interest payable to the convertible bondholders less
the relevant tax relief thereon being $2,269,000 (2005: $1,670,000) and on
58,909,761 (2005: 48,592,632) being the diluted weighted average number of
shares in issue during the year.
SATCOM GROUP HOLDINGS PLC
NOTES TO THE FINANCIAL STATEMENTS
YEAR ENDED 30 JUNE 2006 (Continued)
4. INVESTMENTS
Details of the material trading investments in which the Group holds 20% or more
of the issued share capital of any class are as set out below. All companies
shown are in the business of distribution of satellite communication equipment
and airtime.
Proportion of Country of
Holding shares held incorporation
Name of subsidiary
SatCom Distribution Limited Ordinary 100% UK
shares
SatCom Distribution Inc. Ordinary 100% USA
shares
O'Gara Satellite Systems Inc. Ordinary 100% USA
shares
Horizon Mobile Communications Co. Ordinary 100% Thailand
Limited shares
Horizon Mobile Communications Pte Ordinary 100% Singapore
Limited shares
Horizon Mobile Communications (HK) Ordinary 100% BVI
Co. Limited shares
Horizon Mobile Communications (HK) Registered 100% Japan
Co. Limited branch
Horizon Mobile Communications Ordinary 100% Australia
(Australia) Pty shares
Net Africa Arabia Limited Ordinary 100% UK
shares
SATCOM GROUP HOLDINGS PLC
NOTES TO THE FINANCIAL STATEMENTS
YEAR ENDED 30 JUNE 2006 (Continued)
5. CREDITORS: Amounts falling due after more than one year
The amounts falling due after more than one year relate to the #3.0 million 8%
convertible unsecured loan stock ("CULS"), issued on 15 July 2005 (equivalent to
$5,532,000).
The CULS can be converted, at the option of the holder, into ordinary shares at
39p per share at any time during the conversion period, which is the period from
admission to three business days prior to the final maturity date of 30 June
2009.
The Company incurred costs of $505,000 in relation to the issue of the CULS and
is amortising these costs over the conversion period of 4 years. The unamortised
balance of $391,000 has been deducted from the CULS balance of $5,532,000
resulting in a net balance at 30 June 2006 of $5,141,000.
6. SHARE CAPITAL
Authorised share capital:
30 June 2006 30 June 2005
$ 000's $ 000's
500,000,000 Ordinary shares of $0.10 each 50,000 50,000
50,000 Deferred shares of #1 each 90 90
----------- -----------
50,090 50,090
=========== ===========
Allotted and called up:
30 June 2006 30 June 2005
000's $ 000's 000's $ 000's
Ordinary shares of $0.10 each 51,599 5,160 48,450 4,845
Deferred shares of #1 each 50 90 50 90
----------- ------------ ----------- -----------
51,649 5,250 48,500 4,935
=========== ============ =========== ===========
On 15 July 2005, 1,666,667 ordinary shares with an aggregate nominal value of
$166,667 were allotted, fully paid for cash at 30p per share.
On 6 October 2005, 1,482,155 ordinary shares with an aggregate nominal value of
$148,216 were allotted, fully paid as partial consideration for the acquisition
of Horizon Mobile Communications Group at 32.4425p per share.
SATCOM GROUP HOLDINGS PLC
NOTES TO THE FINANCIAL STATEMENTS
YEAR ENDED 30 JUNE 2006 (Continued)
7. RESERVES
Group
Share Merger Profit and loss
premium reserve account
$ 000's $ 000's $ 000's
- (10,884) 4,353
Balance brought forward
Retained profit for the year - - 1,981
Equity dividends paid - - (78)
Arising on share issue 1,468 - -
Issue costs (745) - -
---------- ---------- ----------
Balance carried forward 723 (10,884) 6,256
========== ========== ==========
The acquisition by the Company of SatCom Distribution Limited and its
subsidiaries in May 2004 was 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 and the net assets at
the date of the transaction.
8. CONTINGENT SHARE CAPITAL
Under the terms of the acquisition of Horizon Mobile Communications Group ("HMC
"), SatCom have deferred consideration to pay, based on the gross profit
achieved by HMC in the two years ended 31 December 2006. The deferred
consideration is payable 50% in cash and subject to SatCom's share price at the
time of issue, 50% by the issue of new ordinary shares in SatCom at a 5%
discount to the average closing mid-price over the previous month. Based on the
forecast results, SatCom expects to have an obligation in deferred consideration
of $1,428,000 of which 50% will be settled in new shares with a value of
$714,000.
On 26 September 2006, the Company paid $608,000 of this deferred consideration.
The balance is expected to be paid by 30 June 2007, based on HMC's current year
results.
SATCOM GROUP HOLDINGS PLC
NOTES TO THE FINANCIAL STATEMENTS
YEAR ENDED 30 JUNE 2006 (Continued)
9. POST BALANCE SHEET EVENTS
On 7 July 2006, SatCom acquired 100% of World Communication Center, Inc. ("WCC
"), a satellite equipment and airtime reseller company, based in Phoenix,
Arizona, USA.
In the 12 months to 31 December 2005, WCC had turnover of $10 Million and pre
tax profits of $0.45 million. The initial consideration of $4.1 million was paid
in cash, unsecured convertible bonds and SatCom ordinary shares. Additional
consideration is payable in the event that WCC earns pre tax profit in excess of
$0.75 million and $1.0 million in the years ended 30 June 2007 and 2008
respectively.
This information is provided by RNS
The company news service from the London Stock Exchange
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