Antenna group Sarantel saw losses narrow in the year to September 30 as the company offset the effects of big customers cutting on costs by widening its client base.

Sarantel, which supplies high-performance miniature antennas for military and consumer GPS devices, posted a pre-tax loss of £2.98m, down from £4.7m the previous year as revenues jumped to £2.8m from £1.8m.

Chief financial officer Sitkow Yeung told ShareCast that the company expects to break even at the EBITDA level some time this financial year.

Sarantel said the higher revenues were in spite of challenging conditions in the consumer GPS sector. It said it experienced lower demand from its largest GPS buyers but that its client base grew significantly.

Chief executive David Wither told ShareCast that, while the company had seen reduced revenues from larger customers, it was benefiting from GPS technology being applied to a range of different products.

Revenues this year comprised £2.71m from sales of antennas, a 67% rise from £1.62m the previous year, and £103,000 from non-recurring engineering services, down from £237,000 the previous year.

Sarantel, whose sales are broadly divided among 'niche GPS' applications such as the SkyCaddie, used by golfers to tell them where they are positioned in relation to the hole, high-volume GPS applications and military markets, said high-value markets accounted for about 40% of sales.

The favourable product mix helped lift gross margins to 43% from 4% in 2008.

While Sarantel's move towards profitability is laudable, what investors in the company would really like to see is a big contract with one of the major smartphones such as the Apple iPhone to supply technology for a funky new 'app' that requires a high performance antenna.

'We believe that macrotrends in the GPS market are converging towards our antenna technology,' says chairman Geoff Shingles.

'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.'

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