Interim Results
September 02 2008 - 9:09AM
UK Regulatory
RNS Number : 5537C
Kenetics Group Limited
02 September 2008
For immediate Release
Kenetics Group Limited
2 September 2008
Kenetics Group Limited
Unaudited Interim Results for 30 June 2008
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 2008.
Key Points
* Consolidated turnover versus the comparable period fell by 17% to �235,000 (H1 2007: �283,000).
* Consolidated loss on ordinary activities after tax and expenses was �289,000 (H1 2006: �177,000). Material costs, employee
benefits and marketing expenses have increased, resulting in greater losses.
* The Company participated in 3 major RFID trade shows in Las Vegas (USA), Hanover (Germany) and Tokyo (Japan)
* The Company is continuing its efforts in expanding its sales and distribution network. A major step forward is the appointment of
a distribution partner in Japan. Sales enquiries have been received and we are expecting to turn some of these enquiries into sales orders
in the second half of the year.
* The Company is pleased to announce that in the last week of August it has secured a substantial contract with the Singapore Land
Transport Authority ("LTA"). The contract calls for the supply of a Contactless Smart Card ("CSC") Reader capable of reading both the
current public transport fare card and a new CSC. The tender requires the design, development and supply of an initial number of readers to
be used in the public transport systems.
* The contract allows the LTA the option to purchase additional card readers, reportedly requiring a number of 22,000 card readers
on buses and at train stations with the implementation of the new CSC.
* The directors believe that this contract will enable the Company to offset the earlier uncertainty of its project business which
affected its overall business performance in the first half of the year.
Commenting on the results Ken Wong, Chairman and CEO said:
"Although the first half year performance has been disappointing, the project contract that we gained in the last week of August is a
milestone for the Company and a successful outcome of this initial contract would leave Kenetics well-placed to compete for any related work
which this project may generate. Notwithstanding this contract, we will be continuing our push towards less dependence on our project
business and concurrently, working to improve our product sales. Our participation in 3 major RFID trade shows in USA, Europe and Japan has
enabled us to create greater visibility on our new Gen 2 products. We are beginning to establish distribution channels in new market
segments predominantly in the USA and Japan. Initial indications and interests in our products in these two markets are encouraging, as
sales enquiries have come in. Although there will be a lead-time before the sales orders are generated, we are optimistic that these
enquiries will lead to greater sales revenue in the second half of the year as we build up our market share in Europe, USA and Japan."
For more information, please contact:
Kenetics Group Limited
Ken Wong - Chairman, Tel: +65 6749 0083
Hin Yuen Yeong - Chief Operating Officer, Tel: +65 6749 0083
www.kenetics-group.com
Zimmerman Adams International Ltd.
Nominated Advisor/Broker
Graeme Thom/Dominique Doussot, Tel: +44 (0) 20 7060 1760
www.zimmint.com
Kenetics Group Limited - Interim financial information
Six months ended 30 June 2008
CONSOLIDATED INCOME STATEMENTS
6 months 6 months 12 months
Ended Ended Ended
30 June 30 June 31 December
2008 2007 2007
(Unaudited) (Unaudited) (Audited)
�*000 �*000 �*000
Continuing operations
Revenue 235 283 700
Other operating income - - 50
Changes in inventories of
finished
goods and work-in-progress (13) (74) 80
Raw materials and consumables (36) (408)
used (83)
Employee benefits expenses (245) (217) (492)
Depreciation of plant and (35) (24) (60)
equipment
Other operating expenses (145) (109) (301)
Finance costs (3) - (2)
Loss before tax (289) (177) (433)
Income tax expense - - 6
Loss for the period (289) (177) (427)
Attributable to:
Equity holders of the Company (282) (177) (427)
Minority interests (7) - -
(289) (177) (427)
Loss per share (pence) * (1.07) (0.67) (1.62)
Basicand diluted
Kenetics Group Limited - Interim financial information
Six months ended 30 June 2008
CONSOLIDATED BALANCE SHEETS
30 June 30 June 31 December
2008 2007 2007
(Unaudited) (Unaudited) (Audited)
�*000 �*000 �*000
Non-current assets
Plant and equipment 124 123 143
Available for sale financial 24 136 22
asset
Total non-current assets 148 259 165
Current assets
Stocks and work-in-progress 248 234 237
Trade receivables 55 125 139
Other receivables 41 41 32
Cash and cash equivalents 107 187 173
Total current assets 451 587 581
Total assets 599 846 746
Equity
Share capital 264 264 264
Share premium 280 280 280
Share option reserve 28 27 27
Merger reserve 370 370 370
Foreign currency translation (33) (24) (27)
reserve
Accumulated losses (914) (383) (632)
Total equity (5) 534 282
Non-current liabilities
Amount owing to director - 32 -
Obligations under finance - 3 -
leases
Total non-current liabilities - 35 -
Kenetics Group Limited - Interim financial information
Six months ended 30 June 2008
CONSOLIDATED BALANCE SHEETS (continued)
30 June 30 June 31 December
2008 2007 2007
(Unaudited) (Unaudited) (Audited)
�*000 �*000 �*000
Current liabilities
Excess of progress billings
over contract
work-in-progress - 31 -
Trade payables 76 116 147
Other payables 132 109 138
Amount owing to directors 223 16 51
Obligations under finance 4 5 6
leases
Bank overdraft - secured 169 - 122
Total current liabilities 604 277 464
Total liabilities 604 312 464
Total equity and liabilities 599 846 746
KENETICS GROUP LIMITED
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR 6 MONTHS ENDED 30 JUNE 2008
Attributable to Equity Holders of the Company
Group Sharecapital Sharepremium Shareoptionreserve Mergerreserve Foreigncurrencytrans
Accumulatedlosses Subtotal Minorityinterest Total
lation reserve
�*000 �*000 �*000 �*000 �*000
�*000 �*000 �*000 �*000
Balance as at 1/1/07 264 280 27 370 (18)
(206) 717 - 717
Currency translation - - - - (6)
- (6) - (6)
differences
Net loss for the period - - - - -
(177) (177) - (177)
Balance as at 30/6/07 264 280 27 370 (24)
(383) 534 - 534
Currency translation - - - - (3)
- (3) - (3)
differences
Net loss for the period - - - - -
(249) (249) - (249)
Balance as at 31/12/07 264 280 27 370 (27)
(632) 282 - 282
Currency translation - - - - (6)
- (6) - (6)
differences
Share option granted - - 1 - -
- 1 - 1
Net loss for the period - - - - -
(282) (282) (7) (289)
Acquisition of additional - - - - -
- - 7 7
interest in subsidiary
Balance as at 30/06/08 264 280 28 370 (33)
(914) (5) - (5)
Kenetics Group Limited - Interim financial information
Six months ended 30 June 2008
CONSOLIDATED CASH FLOW STATEMENTS
6 months 6 months 12 months
Ended Ended Ended
30 June 30 June 31 December
2008 2007 2007
(Unaudited) (Unaudited) (Audited)
�*000 �*000 �*000
Cash flows from operating
activities
Loss before taxation (289) (177) (433)
Adjustments for:
Depreciation 35 24 60
Interest paid 4 - 3
Interest received (1) (1) (2)
Impairment loss - - 122
Provision for inventory - - 10
obsolescence
Share options expenses 1 1 1
Unrealised translation loss - 2 -
Operating loss before working (250) (151) (239)
capital changes
Decrease/(increase) in - (29)
contract work-in-progress/ 4
excess of contract
work-in-progressover progress
billings
Decrease/(increase) in trade
and otherreceivables 85 (3) 3
Decrease/(increase) in 3 (83) (84)
inventories
(Decrease)/increase in trade
and otherpayables (116) 64 106
Cash used in operations (278) (169) (243)
Interest paid (4) - (4)
Income tax refunded - - 6
Net cash flows used in (282) (169) (241)
operating activities
Kenetics Group Limited - Interim financial information
Six months ended 30 June 2008
CONSOLIDATED STATEMENT OF CASH FLOWS (continued)
6 months 6 months 12 months
Ended Ended Ended
30 June 30 June 31 December
2008 2007 2007
(Unaudited) (Unaudited) (Audited)
�*000 �*000 �*000
Cash flows from investing
activities
Purchase of plant and (6) (5) (56)
equipment
Capital contribution from 8 - -
minority interest
Interest received 1 1 1
Net cash flows generated from/ (55)
(used) ininvesting activities 3 (4)
Cash flows from financing
activities
Receipt/ (Repayment) of loan 168 (8) (8)
from director
Repayment of hire purchase (3) (2) (5)
loan
Difference of fixed deposit (1) (2) (2)
balance dueto accumulation of
interest
Net cash flows generated from/ 164 (12) (15)
(used in)financing activities
Net decrease in cash in (115) (185) (311)
handand at bank
Effect of exchange rate (5) (4) (19)
changes
Cash in hand and at bank at (39) 291 291
beginning of period
Cash in hand and at bank at (159) 102 (39)
end of period
Fixed deposit 97 85 90
Bank overdraft 169 - 122
Cash and cash equivalents per 107 187 173
balance sheet
Kenetics Group Limited - Interim financial information
Six months ended 30 June 2008
Kenetics Group Limited * Interim financial information
Six months ended 30 June 2008
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 2008 comprise the Company and its subsidiaries, Kenetics Innovations Pte Ltd and Kenetics Innovations (Beijing) Co., Ltd.
The registered office of the Company is located at Walker House, 28-34 Hill Street, St Helier, Jersey JE4 8PN.
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 2008 has been prepared in accordance with the accounting policies set out
in the annual report and financial statements for the year ended 31 December 2007.
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
(30/06/07: 26,349,466, 31/12/07: 26,349,466), being the weighted average number of ordinary shares issued by the Company.
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 2008 0.3680 0.07318
Average rates 0.36472 0.07185
Kenetics Group Limited - Interim financial information
Six months ended 30 June 2008
5. Income tax
There was no income tax expense for the 6 months ended 30 June 2008 and the 6 months ended 30 June 2007 as the Group has been loss making
during these periods. The income tax credit for the year ended 31 December 2007 amounted to �6,000 and was an over-provision of tax
provision in prior year.
6. Nature of financial information
The interim financial information set out above is neither audited nor reviewed and does not represent the statutory financial statements
for Kenetics Group Limited or for any of the entities comprising the Kenetics Group for the period ended 30 June 2008. The figures for the
year ended 31 December 2007 were extracted from the consolidated financial statements which have been presented to the shareholders. The
auditors* report on those financial statements was unqualified.
The Board approved the interim financial information for the period ended 30 June 2008 on 2 September 2008.
These interim results are available on the Company's website www.kenetics-group.com.
7. Subsequent event
On 28 July 2008, the Company entered into a convertible loan agreement with Wong Kai Yun, sister of the Chairman of the Company, to
obtain a principal loan of S$1,000,000 (approximately �372,000). The loan may be converted on written notification at any time from 1 August
2008 in whole or in part. The principal loan will be due for repayment on 30 June 2009 if it is not converted to shares. Interest will be
payable at the rate of six per cent per annum if the Company fails to repay the loan on the due date.
The loan amount of S$1,000,000 has been received in cash by the Company.
For the terms of conversion of the above loan, please refer to the announcement made by the Company on 30 July 2008.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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