Final Results for Year Ended 31 March 2012
SOFTWARE RADIO TECHNOLOGY PLC
FINAL RESULTS FOR THE YEAR ENDED 31 MARCH 2012
Software Radio Technology plc, the AIM-quoted developer and provider of
maritime identification and tracking technologies and products, announces its
results for the year ended 31 March 2012.
HIGHLIGHTS
* Gross profit of 51%
* Revenues of £6.2 million
* Debt free
* Multiple new products launched
* Steadily growing core business
* Significant new global market opportunities
* $3.7 million order for new Identifier product received in June 2012
Simon Tucker, CEO of SRT, commented, "SRT has continued to deliver on its
stated strategy of positioning itself in the growing global market with a broad
range of best in class products being sold through a worldwide network of
established customers. Whilst revenues remain lumpy, we are now starting to see
consistent growth in our core business and some of the many large projects
coming to fruition, such as our recently announced $3.7 million order for
Identifiers."
Enquiries:
Software Radio Technology plc +44 (0)1761 409500
Simon Tucker simon.tucker@softwarerad.com
Chief Executive Officer
Westhouse Securities Limited +44 (0)20 7601 6100
Richard Baty +44 (0)20 7397 8900
Petre Norton + 44 (0)20 3137 2501
Cenkos Securities Plc
Andy Roberts
Allerton Communications Limited
Peter Curtain
About SRT:
Software Radio Technology plc develops advanced radio communications
technologies which are used to create enabling modules and OEM products. SRT
Marine Technology Limited focuses on VHF and AIS technologies for use in
navigation and homeland security identification and tracking applications. SRT
Marine Technology provides its solutions in a variety of module and OEM product
formats.
CHAIRMAN'S STATEMENT
This year has been one of market and product consolidation to prepare and
enable SRT to address the full spectrum of market opportunities opening up to
us through our global network of established customers.
The past financial year saw revenue decrease from £9.2 million to £6.2 million
with a corresponding decrease in profits to £0.2 million. As reported to the
market in March 2012, this was primarily caused by a shifting in expected
demand derived from existing EU mandates from the last quarter of financial
year 2011/12 to the second half of 2012/13 and a slow down in sales from some
customers as they transition to our new range of technologies and products. As
such the Board view this as a timing issue and not a market or sales trend.
In 2009 we set ourselves the target of increasing our gross profit margin from
38% to 50% and I am pleased to report that this year we achieved this target
and more importantly we expect to be able to maintain this average margin in
the future. This has been delivered through our development of new core
technologies over the last 3 years which have enabled SRT to deliver
significantly improved and lower cost products to our customers this year
whilst simultaneously improving our margins.
As at the year end, we had cash of £0.6 million, no debt and inventories at a
cost of £3.5 million. A significant proportion of the stock was manufactured in
anticipation of the EU demand which has shifted towards the end of 2012, as
well as components to support production requirements of new products. We
anticipate these inventories will enable us to meet market demand and be
converted into cash over the coming months. This strategy will enable us to
quickly fulfil the first batch of the recently announced $3.7 million
Identifier order. In April 2012, we raised a net £2.5 million of new capital to
enable us to hold these inventories of finished goods and components to support
our customers in meeting growing demand whilst maintaining our product
development plans. Many of our products have relatively long production lead
times which when combined with lumpy market orders contribute to the
significant challenge of managing highly fluctuating cash and stock positions
throughout the year.
Most importantly for our long term strategic objective of maintaining our
majority global market share has been the acceleration of our product
development programs during financial year 2011/12. Whilst core overheads were
tightly controlled with the £0.5 million increase due to the full effects of
our 2011 restructure, I am delighted to report that we have accelerated our new
product development investments which is reflected in a more than doubling of
our cash investment to in excess of £2 million.
We have managed the business carefully to ensure that we remain debt free, able
to finance stock required for demand materialising from active mandates while
maintaining our accelerated product development program. Through our sales
activities we have grown our customer base and increased the number of products
our customers are promoting and selling.
Operational Review
During the last twelve months our operations team have delivered a new product
on average once every twelve weeks and run up to eight separate projects
simultaneously. These projects have varied from integrating the Russian
positioning system, GLONASS into our Class A product to meet demand from the
mandate in Russia, to the completion of our Identifier product and the ongoing
development of SART and AtoN product ranges which are expected to commence
production in the second half of the coming financial year. This has been made
possible by the heavy investments made during 2010/11 when we developed our new
core technology platforms.
As such by the end of the coming financial year, SRT will have a complete range
of new products addressing all segments of our global target market. We believe
that these products offer our customers the very best in terms of cost, size,
performance, ease of use and reliability, thus enabling them to easily address
the wide spectrum of opportunities now emerging.
As I mentioned in last year's report the exact pattern and timing of demand
from the end market for our products is unpredictable and often translates into
a lumpy order pattern. However, throughout the year and in particular in the
last few months we have seen a good number of mandate opportunities progress to
their implementation phase, such as the EU fisheries, Russia, and one specific
project in the Americas thus starting to generate sales for our customers and
therefore SRT. Others mandates and projects in regions such as South East Asia,
India, Middle East and South America have progressed significantly towards
entering their implementation phase, but the exact timing remains challenging
to forecast. These are large market opportunities which are expected to
generate significant orders in the future.
Employees
The quality and commitment of our employees is what ultimately defines our
international competitive advantage. Over the years we have built an
exceptional team of people covering all areas of our business from product
development to sales, marketing, finance and supply chain. We are constantly
reviewing our employee packages to ensure that our staff are well rewarded for
their hard work within the overall context of the company's financial
performance. I would like to take this opportunity to thank each and every one
of them for their continuing hard work and support in delivering our commercial
objectives.
Strategy and the Future
Our strategy continues, delivering a first class product and service to its
customers and real shareholder value. We believe that the decisions we have
taken and executed over the last few years have resulted in your company being
well placed to profit from the conversion of multiple market opportunities into
demand for our products.
Over the next year, SRT will continue to execute and complete our product
development programs. We expect this to be substantially complete by the end of
financial year 2012/13 with annual new product development then normalising. I
expect that in the coming twelve months our biggest challenge will be to
smoothly and efficiently accommodate the rapid growth that many of our
customers expect either in the non-mandated market or in the multiple mandates
which are now underway. I have every confidence that whilst this will certainly
be challenging, the structural changes and investments we have made will enable
our team to deliver.
Today we are addressing more and larger markets than ever before. Taking a five
year view, the non-mandated market which accounts primarily for the estimated
16 million leisure vessels in the EU and USA are expected to consider having an
AIS device as standard equipment. The mandated markets, whilst often slow to be
implemented, are now existing from Asia to Europe to the Americas and provide
SRT with a potential one million vessel opportunity over the next three years.
SRT therefore enters the new financial year with a global network of
established customers selling an expanded range of best in class products to a
wide range of geographic and vessel type markets. I therefore look forward to
2012/13 as the year when SRT truly capitalises on its investments.
Simon Rogers
Chairman
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME for the year ended 31 MARCH 2012
2012 2011
£ £
Revenue 6,171,697 9,154,708
Cost of sales (3,029,270) (4,724,980)
Gross profit 3,142,427 4,429,728
Administrative costs (2,989,779) (2,499,603)
Operating profit 152,648 1,930,125
Finance income 21,995 7,626
Profit before tax 174,643 1,937,751
Income tax credit - 232,029
Profit for the year after tax 174,643 2,169,780
Total comprehensive profit for the year 174,643 2,169,780
Earnings per share: 0.2p 2.2p
Basic
Diluted 0.2p 2.1p
CONSOLIDATED STATEMENT OF FINANCIAL POSITION as at 31 MARCH 2012
2012 2011
£ £
Assets
Non-current assets
Intangible assets 3,568,959 1,899,472
Property, plant and equipment 153,989 159,617
Total non-current assets 3,722,948 2,059,089
Current assets
Inventories 3,495,650 1,910,818
Trade and other receivables 1,536,701 1,738,826
Cash and cash equivalents 646,202 3,025,448
Total current assets 5,678,553 6,675,092
Liabilities (1,945,163) (1,542,984)
Current liabilities
Trade and other payables
Net current assets 3,733,390 5,132,108
Total assets less current liabilities 7,456,338 7,191,197
Net assets 7,456,338 7,191,197
Shareholders' equity
Share capital 106,190 105,864
Share premium account 8,484 17,819,772
Retained earnings 1,851,068 (16,225,035)
Other reserves 5,490,596 5,490,596
Total shareholders' equity 7,456,338 7,191,197
CONSOLIDATED STATEMENT OF CASH FLOWS for the year ended 31 MARCH 2012
2012 2011
£ £
Cash (used in) / generated from (268,945) 405,982
operating activities
Corporation tax received - 232,029
Net cash (used in) / generated from (268,945) 638,011
operating activities
Investing activities
Expenditure on product development (2,063,160) (906,745)
Purchase of property, plant and (81,486) (105,163)
equipment
21,995 7,626
Interest received
Net cash used in investing activities (2,122,651) (1,004,282)
Cash outflow before financing (2,391,596) (366,271)
Financing activities
Net proceeds on issue of shares 12,350 2,439,234
Net (decrease) / increase in cash and (2,379,246) 2,072,963
cash equivalents
Net cash and cash equivalents at 3,025,448 952,485
beginning of year
Net cash and cash equivalents at end 646,202 3,025,448
of year
Notes
1. Status of financial information
Software Radio Technology plc ("the company") is a public limited company
incorporated in England and Wales and whose ordinary shares of 0.1p each are
traded on the AIM Market of the London Stock Exchange. The Company's registered
office is Wireless House, Westfield Industrial Estate, Midsomer Norton, Bath,
BA3 4BS, England.
The Board of Directors approved this preliminary announcement on 8 June 2012.
Whilst the financial information included in this preliminary announcement has
been prepared in accordance with International Financial Reporting Standards
("IFRS") as endorsed by the European Union, this announcement does not itself
contain sufficient information to comply with all the disclosure requirements
of IFRS and does not constitute statutory accounts of the Group for the years
ended 31 March 2012 or 31 March 2011.
The financial information has been extracted from the statutory accounts of the
Company for the years ended 31 March 2012 and 31 March 2011. The auditors
reported on those accounts; their reports were unqualified and did not contain
a statement under either Section 498 (2) or Section 498 (3) of the Companies
Act 2006 and did not include references to any matters to which the auditor
drew attention by way of emphasis.
The statutory accounts for the year ended 31 March 2011 have been delivered to
the Registrar of Companies, whereas those for the year ended 31 March 2012 will
be delivered to the Registrar of Companies following the Company's Annual
General Meeting.
2. Basis of preparation
This financial information has been prepared in accordance with International
Financial Reporting Standards ("IFRS") as adopted by the European Union and
International Financial Reporting Interpretations Committee ("IFRIC")
recommendations and with those parts of the Companies Act 2006 applicable to
companies reporting under IFRS. For the purposes of the preparation of the
consolidated financial information, the Group has applied all standards and
interpretations that are effective for accounting periods beginning on or after
1 April 2011. There have been no changes in accounting policies during the
year. The financial statements have been prepared under the historical cost
convention unless otherwise stated.
3. Dividends
The Board is not recommending the payment of a final dividend.
4. Earnings / (loss) per Ordinary Share
The basic earnings / (loss) per share has been calculated on the profit on
ordinary activities after taxation of £174,643 (2011: profit £2,169,780)
divided by the weighted number of ordinary shares in issue of 105,950,771
(2011: 100,863,487).
The calculation of diluted earnings per share assumes conversion of all
potentially dilutive ordinary shares, all of which arise from share options. A
calculation is performed to determine the number of shares that could have been
acquired at fair value, based upon the monetary value of subscription rights to
outstanding share options. The number of dilutive shares under options was
4,598,170 (2011:5,559,926) and the weighted average number of ordinary shares
for the purposes of dilutive earnings per share was 109,733,497 (2011:
105,433,091).
5. Annual Report and AGM
The Annual Report will be available from the Company's website,
www.softwarerad.com from 11th June 2012. The Annual Report and Notice of AGM
will be posted to shareholders on 12th June 2012. The AGM will take place at
the offices of the Company, Wireless House, Westfield Industrial Estate,
Midsomer Norton, Bath, BA3 4BS on July 6th 2012 at 11 a.m.
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