Final Results
SOFTWARE RADIO TECHNOLOGY PLC
FINAL RESULTS FOR THE YEAR ENDED 31 MARCH 2007
Software Radio Technology plc ("SRT" or "the Company"), the AIM-quoted
developer and licensor of sophisticated digital wireless technology, announces
its results for the year ended 31 March 2007.
Highlights:
* TETRA software issues resolved
* First TETRA customers actively planning production
* US Coast Guard approval for AIS Class B
* Turnover of £1.82 million (2006: £3.13 million)
* Loss before exceptional item of £2.59 million in line with market
expectations
* Loss per share of 3.83p (2006: 1.93p)
* Successful placing raised £4 million
SRT Chairman Richard Moon said: "Our first customers are now actively planning
the production of TETRA handsets and we expect our other customers to commit to
production progressively during the year. Demand in the TETRA market continues
to grow as networks in over 80 countries expand capacity providing a growing
market.
"In addition, we have made strong progress developing our marine business. We
have continued to build our international customer base of leading marine
electronics companies and now have agreements in place with over 20 companies.
"Having raised additional funds in April 2007, the Company is now well financed
to complete the development of existing products and to consider investment in
new products. We therefore look forward to the future with confidence."
Software Radio Technology plc 01761 409500
Simon Tucker simon.tucker@softwarerad.com
Hanson Westhouse Limited 0113 246 2610
Tim Feather / Matthew Johnson tim.feather@hansonwesthouse.com
CityRoad Communications 020 7248 8010
Paul Quade Paulquade@cityroad.uk.com
CHAIRMAN'S STATEMENT
Financial Review
Turnover for the year was £1.82 million (2006: £3.13 million), which resulted
in a loss for the year of £2.59 million (2006: £0.83 million) before an
exceptional item, in line with revised market expectations. The primary reason
for the reduction in turnover was a delay to the expected date of the
commencement of production by the Group's TETRA customers, which was announced
on 7 December 2006.
Costs were higher than the prior year due to an increased level of development
expenditure. However, since December 2006, action has been taken to reduce the
ongoing cost base significantly.
Operations
SRT PMR Technology
TETRA
In December 2006 we announced that there would be a delay in the ability of the
Group's customers to enter volume production of TETRA handsets due to certain
software-related issues which had arisen during extreme field testing by
customers. A plan to resolve the issues and to test and verify the resolution
was implemented and I am pleased to report that this has been successfully
completed.
Our first customers are now actively planning the production of handsets and we
expect our other customers to commit to production progressively during the
coming year. The current focus of our engineering teams therefore is the
provision of support to the customers to enable them to commence production and
deploy handsets into the field.
Our development teams have continued to improve our core TETRA technology in
terms of features and functions. We have also commenced the development of our
own range of TETRA products, which will include our own TETRA handset. We
expect that these will be sold to OEMs within the EU, where encryption issues
hinder non-EU handset manufacturers from entering the market.
Demand in the TETRA market continues to grow as networks in over 80 countries
expand capacity, providing a growing market for the anticipated launch of TETRA
products from our customers. Within the next 12 months, we expect that SRT will
be providing the core technology for eight TETRA handset manufacturers
worldwide.
Other Digital PMR standards
The migration from analogue to digital PMR systems has involved the development
of a number of other standards in addition to TETRA. We are working on the
evolution of our existing TETRA platform into a generic platform which can be
software-configured for other digital PMR standards, particularly those that
address the less stringent requirements of non-mission critical user groups.
Feasibility work has commenced on this next generation development.
SRT Marine Technology - AIS
During the year we made strong progress developing our marine business. We have
continued to build our international customer base of leading marine
electronics companies and now have agreements in place with over 20 companies.
In addition to the existing Class A AIS transceiver, we have successfully
launched our low cost Class B AIS transceiver, which is targeted at smaller
vessels and an AIS Aids to Navigation ("AtoN") product for use primarily on
buoys.
Our Class B transceiver received approval from the US Coast Guard. Having
received approval from the US Federal Communications Commission ("FCC") in
error, we have made an application under the FCC's waiver approval process.
Whilst we await final FCC approval, we understand this is proceeding.
In anticipation of the conclusion of this process, we are expanding our sales
and marketing support functions in order to take full advantage of the sales
opportunities generated by our customers.
As awareness and availability of competitively priced AIS products grows, we
have noted that the increasing levels of interest from Homeland Security
agencies, such as the US Coast Guard, which views AIS as a high priority.
Placing
On 29 March 2007 SRT announced a fundraising of £4 million (before expenses)
through a placing of 9,523,810 ordinary shares at 42p per share.
Board
In November 2006, the Board was pleased to welcome Nick Jolliffe as a
Non-Executive Director. This appointment increases the number of independent
directors and strengthens the corporate governance of the Company. We also
appointed Neil Peniket, the Managing Director of SRT Marine Technology Limited,
to the Board in June 2007.
In December 2006, Shamus Kelly, Managing Director, left the Company. Simon
Tucker was appointed interim Managing Director at that time. I am pleased to
report that this appointment has now been made permanent.
Outlook
Our first customers are actively planning production of TETRA PMR handsets
utilising SRT's technology. We expect our other customers to commit to
production progressively during the year.
As investment in homeland security continues around the world, we expect to see
substantial revenue growth during the coming years as our technology solutions
gain traction in our chosen markets.
Having raised additional funds in April 2007, the Group is now well financed to
complete the development of existing products and to consider investment in new
products. We therefore look forward to the future with confidence.
Richard Moon
Chairman
Notes for Editors
About Software Radio Technology
SRT has two divisions which are commercialising selected elements of its
portfolio of IPR: SRT PMR Technology Limited ("SRT PMR") and SRT Marine
Technology Limited ("SRT Marine").
SRT PMR focuses on professional digital communications and SRT Marine on
maritime identification and tracking. Our products are designed to meet
established international standards where the core technology must conform to
the same identical set of operating rules, thereby creating a common demand for
the core technology amongst different products.
SRT PMR has initially focused on the ETSI-defined digital PMR standard known as
TETRA. TETRA offers secure and reliable voice and data communications and is
the preferred system in over 80 countries where networks are being rolled out.
Typically TETRA systems are used by homeland security agencies and commercial
users such as police, fire and transport services.
SRT Marine has focused on Automatic Identification Systems (AIS) which was
first mandated by the International Maritime Organisation on all vessels
worldwide over 300GT. AIS's ability to identify and track vessels precisely has
resulted in many countries rolling out coastal networks in preparation for the
wider use of AIS on smaller vessels.
SRT generates income from the licensing of its technologies. Customers pay
initial support fees followed by ongoing per unit royalties which are secured
through the supply of a proprietary component around which the technology has
been designed
Today, SRT has a substantial customer base located around the world, each of
whom has well established sales and distribution channels. Each customer
supplies its own branded final form product containing the SRT core technology
solution, paying SRT a royalty on each unit.
CONSOLIDATED PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31 MARCH 2007
Notes Stated before Exceptional Total 2006
exceptional
items 2007 2007 2007
£ £ £ £
As restated
Turnover 1,817,588 - 1,817,588 3,125,270
Cost of sales (1,628,531) - (1,628,531) (1,569,125)
Gross profit 189,057 - 189,057 1,556,145
Administrative (2,861,464) (376,030) (3,237,494) (2,879,077)
expenses
Operating loss (2,672,407) (376,030) (3,048,437) (1,322,932)
Interest receivable 85,791 - 85,791 35,243
Interest payable - - - (18,616)
Loss on ordinary (2,586,616) (376,030) (2,962,646) (1,306,305)
activities before
taxation
Tax on loss on - - - 191,435
ordinary activities
Loss for the (2,586,616) (376,030) (2,962,646) (1,114,870)
financial year
Loss per share (3.83)p (1.93)p
(basic and diluted)
The profit and loss account has been prepared on the basis that all operations
are continuing operations.
There were no gains or losses in either year other than those included in the
above profit and loss account.
CONSOLIDATED BALANCE SHEET AS AT 31 MARCH 2007
2007 2006
£ £
Fixed assets
Intangible assets 4,883,768 2,860,875
Tangible assets 522,485 324,199
5,406,253 3,185,074
Current assets
Stocks 161,938 290,091
Debtors 2,971,612 1,903,977
Cash at bank and in hand 317,005 1,233,431
3,450,555 3,427,499
Creditors: amounts falling due within (1,589,170) (890,347)
one year
Net current assets 1,861,385 2,537,152
Total assets less current liabilities 7,267,638 5,722,226
Net assets 7,267,638 5,722,226
Shareholders' funds
Called up share capital 78,288 69,045
Share premium account 7,787,787 3,659,873
Profit and loss account (6,317,820) (3,731,204)
Other reserves 5,719,383 5,724,512
7,267,638 5,722,226
CASH FLOW STATEMENT FOR THE YEAR ENDED 31 MARCH 2007
2007 2006
£ £
Net cash outflow from operating (2,503,430) (1,878,024)
activities
Returns on investments and servicing
of finance
Interest received 85,791 35,243
Interest paid - (18,616)
Net cash outflow from returns on 85,791 16,627
investments and servicing of finance
(2,417,639) (1,861,397)
Taxation
Corporation tax received - 191,435
(2,417,639) (1,669,962)
Capital expenditure
Payments to acquire intangible fixed (2,218,164) (1,455,418)
assets
Payments to acquire tangible fixed (412,651) (293,850)
assets
(2,630,815) (1,749,268)
Net cash outflow for capital (5,048,454) (3,419,230)
expenditure and financial investment
Cash outflow before financing (5,048,454) (3,419,230)
Financing
Issue of ordinary share capital 4,330,000 4,093,497
Issue cost of ordinary shares issued (197,972) (518,486)
New long-term loans - 10,000
Net cash inflow from financing 4,132,028 3,585,011
(Decrease)/Increase in cash in the (916,426) 165,781
year
Reconciliation of operating loss to net cash 2007 2006
outflow from operating activities
£ £
As restated
Operating loss (3,048,437) (1,322,932)
Depreciation 214,365 132,154
Amortisation 195,271 146,286
Exceptional item - share option charge 376,030 489,171
Decrease/(Increase) in stocks 128,153 (155,354)
Increase in debtors (1,067,635) (1,268,113)
Increase in creditors 698,823 100,764
Net cash outflow from operating activities (2,503,430) (1,878,024)
Reconciliation of net cash flow to movement 2007 2006
in net debt
£ £
(Decrease)/Increase in cash in the year (916,426) 165,781
Change in net funds resulting from cash flows (916,426) 165,781
Movement in net funds in the year (916,426) 165,781
Net funds at 1 April 2006 1,233,431 1,067,650
Net funds at 31 March 2007 317,005 1,233,431
Notes
1. Status of financial information
The information set out in this announcement, which does not constitute the
statutory accounts of the Group as defined in section 240 of the Companies Act
1985, is extracted from the consolidated audited statutory accounts for the
year ended 31 March 2007, which were approved by the Board on 4 July 2007. The
auditors have reported on those accounts in accordance with section 235 of the
Companies Act 1985, their report was unqualified and did not contain a
statement under section 237(2) or 237(3) of the Companies Act 1985. The
statutory accounts for the period ended 31 March 2006 have been delivered to
the Registrar of Companies. Those for 2007 will be delivered to the Registrar
after the Annual General Meeting which is scheduled for 31 July 2007. The
preliminary announcement was approved by the Board on 4 July 2007.
2. Accounting policies
The results have been prepared on the basis of the accounting policies adopted
in the statutory accounts for the period ended 31 March 2006. Accounting
standards introduced since that date have no impact on the accounting treatment
adopted, except as detailed below.
On 19 October 2005, the Company acquired the entire issued share capital of
Software Radio Technology (UK) Limited by means of a share for share exchange.
This group reconstruction has been accounted for under merger accounting
principles. The substance of the transaction was not the acquisition of a
business, but a group reconstruction under which a new holding company has been
established with all the former shareholders having the same proportionate
interest in the new holding company. The adoption of merger accounting presents
Software Radio Technology plc as if it had always been the parent undertaking
of the group.
The results included in the profit and loss account for the period ended 31
March 2006 consolidate the results of the parent undertaking from the date of
incorporation to the 31 March 2006 and the results of its subsidiary
undertakings for the full year to 31 March 2006.
From 1 April 2006, the consolidated profit and loss account and balance sheet
include the accounts of the Company and its subsidiary undertakings made up to
31 March 2007. The results of the subsidiaries acquired or sold are included in
the profit and loss account up to, or from the date control passes. Intra-group
sales and profit are eliminated fully on consolidation.
Included in the profit and loss account is an exceptional charge of £376,030
(2006: £489,171), calculated in accordance with FRS 20, arising on the grant of
share options to executive and non-executive directors primarily on admission
to AIM. FRS 20 has been applied for the first time in 2007, the charge arising
in respect of share options having previously been accounted for in accordance
with UITF 17. In accordance with the transitional provisions of FRS 20, the
comparatives have been restated to reflect the charge of £489,171 that would
have been recorded in the accounts for the period ended 31 March 2006 had FRS
20 been adopted early. The UITF 17 charge of £675,820 previously recognised has
been reversed.
3. Dividends
The Board is not recommending the payment of a final dividend.
4. Loss per Ordinary Share
The calculation of basic loss per ordinary share is based on losses of £
2,962,646 (2006 - loss £1,114,870) and on 77,355,397 (2006 57,786,194) ordinary
shares, being the weighted average number of shares in issue during the year.
5. Annual report and AGM
The annual report and accounts for the year ended 31 March 2007 will be posted
to shareholders on or around 6 July 2007 and will be available from the
Company's website at www.softwarerad.com from the date of posting. The annual
report will include notice of the annual general meeting of the Company which
will be convened for 31 July 2007.