Final Results
SOFTWARE RADIO TECHNOLOGY PLC
FINAL RESULTS FOR THE YEAR ENDED 31 MARCH 2011
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 2011.
HIGHLIGHTS
* 157% increase in revenue to £9.15 million
* Profit after tax, ahead of market expectation, at £2.17 million (2010: loss
of £0.2 million)
* Gross margin of 48%
* Cash balance of £3 million and debt free
* $3.2 million forward order book as at 1 June 2011
* Acceleration of new product and application development
* Significant growing global markets
Simon Tucker, CEO of SRT, commented, "I am delighted to report that the year
under review saw a transformation in the financial results of SRT. In
particular, we saw strong demand for our Class A product as a result of the EU
Inland Waterway mandate. During the year we significantly accelerated our
product development programmes to position ourselves and our customers to take
advantage of new market segment opportunities which we have previously
identified.
"We entered the new financial year with a significant and growing addressable
market, an active and established global network of customers and a wide and
increasing portfolio of market leading products. We therefore look forward to
continuing strong growth in the years ahead with the potential for some
exceptional project wins which would significantly increase the scale of our
operations."
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
Tim Feather / Matthew Johnson
Cenkos Securities Plc +44 (0)20 7397 8900
Andy Roberts
Leander PR +44 (0)7795 168 157
Christian Taylor-Wilkinson
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
Last year I reported that 2009/10 had been a transformational year for SRT from
a market evolution perspective and that we had started to see the expected
demand reflected in our financial performance. For the year just ended, 2010/
11, I am delighted to report it has been a year of financial transformation.
The past financial year saw us significantly increase our rate of growth, with
a 157% year on year increase in revenue to £9.15 million (2010: £3.56 million);
increase our gross margin to 48% from 39% last year; report a maiden post-tax
profit of £2.17 million (2010 loss of £0.22 million) and end the year with cash
of £3 million and no debt.
The acceleration in growth this year has been generated by several factors
including a broadening of SRT's product portfolio, aggressive implementation of
a number of specific mandates and a general global increase in demand for AIS.
We believe that market demand for AIS based products will continue to expand
considerably over the next few years. We have therefore significantly
accelerated our product development programmes to position ourselves and our
customers to take advantage of these market opportunities. This investment in
our core technology will continue during 2011/12 and a range of new and
innovative products will be launched over the next eighteen months which we
expect to start making significant revenue contributions from 2012.
Operational Review
SRT's core focus remains to be the global leader in AIS and a reliable supplier
of innovative products and technology solutions to our customers. Commensurate
with the growth and broadening of AIS opportunities, we are now evolving our
strategy to include applications and services. Whilst this is not expected to
realise immediate new revenue streams, we see significant long term
opportunities for SRT and our customers to generate recurring revenues.
During the year we completed a substantial investment in the development of a
new core technology platform architecture which will form the basis of the next
generation of significantly smaller, more powerful and lower cost products.
Having completed this core technology development we have now commenced the
development of the specific modules and derivative OEM products based on this
architecture, the first of which, our new Class B, will start shipping in July
2011.
In the second half of the financial year we completed a re-organisation of the
business to provide the internal structure and systems to support a substantial
increase in product development, manufacturing and customer support. This
resulted in a head count increase from 26 to 33 today which, together with an
increase in marketing expenditure, has led to a core overhead increase of
approximately £500,000 per annum. This investment, along with that in our core
technology, is enabling us to support the rapid increase in product launches
over the next 18 months which we expect to open new markets and drive future
revenue streams.
Part of our operational investment has been in customer support and sales. Our
global customer network has continued to evolve and today we have over forty
active customers with SRT based products being sold and used on every
continent. We believe that our customer support, in terms of both sales and
product support, needs to match the high quality of our products in order to
maximise sales for the benefit of SRT and our customers.
The market for all of our products has been strong through the year primarily
driven by a few of the mandates now in progress, such as the EU Inland Waterway
mandate for AIS Class A. In our markets, demand is unpredictable which often
translates into lumpy order patterns from our customers with either unexpected
demand accelerations or delays often occurring. This makes the forecasting of
sales and associated production exceptionally challenging beyond a six month
time horizon. We expect this to remain the case for the next couple of years as
the global AIS market establishes a more normalised pattern and more mandates
gain momentum. We have reacted to this by developing a supply chain strategy
which will involve us carrying a mixture of long lead time components, modules
and final OEM products of a value of between £1m and £2.5m to ensure that we
have the ability to react to demand spikes and delays. As of 31 March 2011 our
total inventories had increased from £0.8m in the prior year to £1.9m in line
with this strategy.
Employees
SRT's defining advantage in the competitive world of complex radio
communications stems from its people, without whom we would be unable to
develop the technology our customers rely upon and now expect from SRT. As a
business seeking to dominate a fast moving global market, we place large
demands and expectations on our staff. We are fortunate in having an expert and
dedicated team at SRT who, at all levels in the organisation, take their
responsibilities seriously and have continued to deliver against challenging
specifications and deadlines. We recognise the importance of attracting,
motivating and retaining key staff and accordingly, during the year, granted
share options to key employees. I would like to thank them personally on behalf
of the Board and shareholders for their continuing hard work and support.
Strategy and the Future
SRT is following a strategy to maximise shareholder value over the long term.
We see exceptional opportunities in the global maritime security and safety
market and believe that we have established firm foundations through AIS which
can be leveraged.
Over the next two years, SRT will significantly broaden its product range to
cover all elements of the AIS system. This will include SART (Search and Rescue
Transponders), Identifier (small vessel tracker), AtoN (Aids to Navigation
device for buoys), MOB (Man over board system) as well as a range of
complementary services and applications. Some of these products will also
integrate new satellite based technologies with AIS to expand their utility.
These products will be fed to the market through our established global network
of customers and in turn their extensive distributor and dealer networks.
As well as investing in new technologies and products, we will continue to
invest in our internal systems to ensure we have the ability to deliver and
support an increasing product portfolio to larger and more diverse markets and
deepen our customer relationships.
Last year we reported that active mandates required 500,000 vessels to fit an
AIS transceiver by the end of 2015. Over the year this figure has increased by
a further 500,000 to 1 million vessels, of which we estimate that approximately
15% to 20% have fitted a device, leaving a remaining addressable mandated
market of up to 800,000 vessels in the coming years. With further mandates
known to be in discussion and expected, the addressable AIS market continues to
grow.
Increasingly we are also being approached by customers with specific project
opportunities which could lead to substantial orders. The value of these
opportunities ranges from tens of thousands to tens of millions of dollars. The
challenge for SRT and our customers is forecasting the exact timing of project
rollouts as it is not unusual for there to be a one to two year window. In
addition, we expect new market segments and revenue streams to be opened
through the introduction of new products such as our MOB, Identifier and dual
mode satellite/AIS devices and a range of maritime applications and services.
The non-mandated leisure market segment remains quiet due to the general state
of the economy and we do not expect this to start to recover until 2012.
However, SRT has customers with strong brands and sales channels into this
segment and is working with them to update and broaden their product range such
that when this segment does start to grow we are well positioned to enjoy the
benefits.
Our fundamental development and production challenge over the next two years is
to anticipate the timing of demand from the market. Most mandates have poorly
defined timescales and rollout programmes are not linear creating a challenge
for SRT and our customers to forecast sales and manufacturing requirements. We
will continue to work closely with our customers and the authorities in control
of mandates to try to better understand the evolving characteristics of
specific markets and opportunities. Over time we expect this timing challenge
to diminish as more mandates come into effect and SRT has a broader range of
products.
We enter the new financial year with a significant and growing addressable
market, an active and established global network of customers and a wide and
increasing portfolio of market leading products. We therefore look forward to
continuing strong growth in the years ahead with the potential for some
exceptional project wins which could again be transformational for SRT.
Simon Rogers
Chairman
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME for the year ended 31 MARCH 2011
2011 2010
£ £
Revenue 9,154,708 3,558,124
Cost of sales (4,724,980) (2,180,119)
Gross profit 4,429,728 1,378,005
Administrative costs (2,397,082) (1,876,383)
Other operating income - 132,129
Operating profit / (loss) before share 2,032,646 (366,249)
based payments
Share based payments charge (102,521) (22,004)
Operating profit / (loss) after share 1,930,125 (388,253)
based payments
Investment revenues 7,626 2,067
Profit / (loss) before tax 1,937,751 (386,186)
Income tax credit 232,029 165,662
Profit / (loss) for the year after tax 2,169,780 (220,524)
Total comprehensive profit / (loss) for 2,169,780 (220,524)
the year
Earnings / (loss) per share:
Basic 2.2p (0.2)p
Diluted 2.1p (0.2)p
CONSOLIDATED STATEMENT OF FINANCIAL POSITION as at 31 MARCH 2011
2011 2010
£ £
Assets
Non-current assets
Intangible assets 1,899,472 1,570,429
Property, plant and equipment 159,617 123,759
Total non-current assets 2,059,089 1,694,188
Current assets
Inventories 1,910,818 894,392
Trade and other receivables 1,738,826 318,762
Cash and cash equivalents 3,025,448 952,485
Total current assets 6,675,092 2,165,639
Liabilities
Current liabilities
Trade and other payables (1,542,984) (1,381,665)
Net current assets 5,132,108 783,974
Total assets less current liabilities 7,191,197 2,478,162
Net assets 7,191,197 2,478,162
Shareholders' equity
Share capital 105,864 97,818
Share premium account 17,819,772 15,387,084
Retained earnings (16,225,035) (18,497,336)
Other reserves 5,490,596 5,490,596
Total shareholders' equity 7,191,197 2,478,162
CONSOLIDATED STATEMENT OF CASH FLOWS for the year ended 31 MARCH 2011
2011 2010
£ £
Cash generated from operating 405,982 1,391,790
activities
Corporation tax received 232,029 165,662
Net cash generated from operating 638,011 1,557,452
activities
Investing activities
Expenditure on product development (906,745) (1,073,269)
Purchase of property, plant and (105,163) (101,087)
equipment
Proceeds from the sale of property, - 31,630
plant and equipment
Interest received 7,626 2,067
Net cash used in investing activities (1,004,282) (1,140,659)
Cash inflow / (outflow) before (366,271) 416,793
financing
Financing activities
Net proceeds on issue of shares 2,439,234 -
Net increase in cash and cash 2,072,963 416,793
equivalents
Net cash and cash equivalents at 952,485 535,692
beginning of year
Net cash and cash equivalents at end 3,025,448 952,485
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 Alternative Investment 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 20 June 2011.
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 2011 or 31 March 2010.
The financial information has been extracted from the statutory accounts of the
Company for the years ended 31 March 2011 and 31 March 2010. 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 2010 have been delivered to
the Registrar of Companies, whereas those for the year ended 31 March 2011 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 2010. 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 £2,169,780 (2010: loss £220,524) divided
by the weighted number of ordinary shares in issue of 100,863,487 (2010:
97,817,107). 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 5,559,926 and the weighted average number of ordinary shares for
the purposes of dilutive earnings per share was 105,433,091. In 2010 the share
options were anti-dilutive.
5. Income Tax Credit
The income tax credit received was in respect of research and development tax
credit which is accounted for on a cash basis.
6. Annual Report
The Annual Report will be available from the Company's website,
www.softwarerad.com from 21 June 2011.
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