Annual Report 30 June 2007 - One Horizon Group

CHIEF EXECUTIVE’S STATEMENT
Highlights
The attached accounts of SatCom Group Holdings Plc
(“SatCom” or the “Group”), for the year ended 30 June 2007,
represent the third 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.
As reported in last year’s annual report, the Group gained
Distribution Partner status with Inmarsat for the high speed
data BGAN service on 1 October 2006. We are pleased to
report that this service has provided significant growth
although the delay in being able to supply this service was not
as originally anticipated. We expect this service to increase
further as worldwide demand continues to grow.
In July 2006, the Group acquired 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. I am pleased to say that WCC
performance in the first twelve months within the Group was
to increase turnover to $11.4 million and contribution before
management charges to Group Operating profits of $586,000.
These results reflect a 30% increase in profits over the year
ended December 2005. We have also commenced the
rationalisation of our North American business and made the
Phoenix location the main administration and inventory
holding location for the businesses located in North America.
During the year the Group has announced success in winning
new US Government business. Whilst the margin will be small
the size of the anticipated business and the quality of the
customer will enhance our global position in the Mobile
Satellite Services (“MSS”) sector.
In August the Group announced the signing of a Global Master
Distribution with Thrane & Thrane, a major manufacturer of
Satellite Equipment for the MSS market.
Financial Performance
The Group’s results show an increase in turnover of 12.6% to
$58 million, including $11.4 million arising from the acquisition
of WCC. This takes account of a reduction in the Middle East
land based business, due to the continued withdrawal of
military and security personnel. The Group had expected a
reduced demand for land based services, which fluctuates
significantly in line with conflicts and large scale disasters.
The maritime business continued to expand and our turnover
from this division reached $14.5 million (2006: $9.6 million).
Gross margin earned increased to 23% (2006: 20%) and
profit before tax increased by 31% to $3.6 million
(2006: $2.8 million). As our reporting currency and the
majority of our trading income is in US Dollars our operating
costs in the UK have been increased by the weakness of the
dollar as it affects our UK head office, Convertible Bond
Interest and our public company costs which are all Sterling
based by an average of 9%. The effect has been to increase
our overheads by $270,000 compared to the average rate
applicable in the previous year.
The basic earnings per share have risen by 36% to 5.26 cents
(2006: 3.87 cents) and as previously stated in line with our stated
progressive dividend policy it is the Board’s intention to propose
a final dividend of 0.33 cents per share (2006: 0.25 cents). This
dividend when added to the interim dividend paid in April 2007
will provide a total income to shareholders of 0.50 cents per
share for the year (2006: 0.40 cents).
The Group has invested in the new billing system and in
Inventory levels to take account of the new BGAN terminals
in the Group warehousing around the world.
Strategy and Prospects
The Group has developed an excellent wholesale customer
base for hardware equipment and airtime services using the
airtime portal website and billing systems which it has heavily
invested into in the last year. We will continue to look at
strategic acquisition opportunities as they arise.
Accordingly, the Board remains confident of the outcome
for the year.
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
8 October 2007
3