Interim Results

RNS Number : 1102F
Software Radio Technology PLC
10 November 2015
 

SRT, the AIM-quoted developer and supplier of maritime identification and tracking technologies, announces its unaudited interim results for the six months ended 30 September 2015 (the "Period").

 

Financial Highlights

 

·      Revenue of £3.6 million

·      Loss before tax of £0.7 million

·      50.7% gross profit margin

·      Order book of £3.6 million at the Period end

·      Cash of £2.4 million at the Period end

 

Operational Summary

 

·      Signing and commencement of customer delivery for the first complete Maritime Domain Management (MDM) system, with a total contract value of US$5.3 million

·      Strong progress with further potential MDM system sales

·      ABSEA technology development completed and implemented for Identifier product

·      Multiple customer evaluation and validation of ABSEA service has commenced

·      New Apollo hardware platform completed which will enable new generation of Class A and Class B products

 

 

Contacts:


Software Radio Technology plc

www.softwarerad.com

+ 44 (0) 1761 409 500

Simon Tucker (CEO)

simon.tucker@softwarerad.com

Louise Coates (Marketing Manager)

louise.coates@softwarerad.com

media@softwarerad.com

WH Ireland Limited

Tim Feather / Liam Gribben

+44 (0) 113 394 6600

 

 

Chairman's Statement

 

For the six months ended 30 September 2015, revenues were £3.6 million generating a gross profit of £1.8 million (gross margin of 50.7%) and a loss before and after tax of £0.7 million and £0.5 million respectively.  As at 30 September 2015, the Group had cash of £2.4 million, including drawn down borrowings of £1.0 million, stock valued at cost of £5.2 million, a forward order book of £3.6 million and a validated sales opportunity pipeline worth approximately £200 million.   

 

During the Period, core business generated by our module, OEM and em-trak dealer base grew strongly.  In the second half we expect to see baseline business of a similar level, but with additional contributions driven by market demand created by the new USCG AIS rule which has a compliance deadline of 1 March 2016 and a potential new mandate in Asia.

 

By far the largest short and medium term opportunity is within the Projects business for the sale of our MDM system to authorities as a solution for tracking, monitoring and managing their national fishing, commercial and, in some cases, leisure boats.  The system comprises a bundled package of vessel transceivers, coast stations, supplementary satellite data and GeoVS database and viewing stations which is scaled and customised for individual customer requirements.  SRT is actively working on 34 such projects, of which 18 are considered sufficiently mature to qualify for our validated sales opportunity pipeline now valued at approximately £200 million.  The first half saw one of these opportunities convert into a contract with a Middle Eastern government worth US$5.3 million for the provision of an MDM system, the delivery of which commenced during the first half, although the majority of revenues will be during the second half.  In addition we saw good progress with other validated opportunities which we expect to yield additional revenues during the second half and the next financial year.

 

Typically the initial focus for each MDM customer is the implementation of their base monitoring system, including the installation of large numbers of transceivers on vessels.  However, once substantially installed, with extended and often problematic coastlines we expect most MDM customers to require supplementary satellite AIS data feeds into their MDM system to ensure full tracking coverage of all vessels operating within their EEZ.  

 

This provides SRT with the potential for significant recurring revenues due to our development and implementation of ABSEA technology with our partner, exactEarth, which endows our Class B and Identifier transceivers with the unique ability to track globally from space.    

 

Our ports, marine infrastructure and waterways business built around our AtoN and GeoVS display products continued to make steady progress.  This is a significant target market segment which is at the very early stages of implementing AIS systems for applications beyond simply tracking vessels and one where our investments in technology, products, customers and marketing is generating considerable interest and building a healthy pipeline of opportunities.  We therefore look forward to this segment considerably increasing its contribution in the future.

 

Overheads remained tightly controlled at approximately £2.5 million for the Period on a cash accounting basis consistent with the comparable period last year.  The Company continues to innovate and invest in core technology and new products.  During the Period we added a new product variant to our AtoN portfolio, continued the development of the Apollo SOTDMA Class A and B product platform, embarked on an upgrade of our existing Cobalt Class B module, and added significant functionality to our GeovS Viewer and GeoVS HUB products.

 

Reflecting the increased opportunities across multiple market segments and geographies, we have invested more in sales and marketing, primarily in relation to intensive direct engagement with customers to assist them with the planning of their intended projects and working with new customers who are beginning the planning of their projects.  In the second half we will be expanding our customer support function to ensure that we are in a position to continue to deliver the high level of service the market has come to expect from SRT.

 

Going forward, we will continue to invest aggressively in the development of new technologies and products, but with an increased bias away from hardware towards our display and data management products and the functionality of our transceiver platforms. In parallel we also anticipate a further shift in overhead from development to customer support and sales and marketing activities as the number of projects we are addressing continues to increase.

 

In the second half we will deliver our £3.6 million order book, plus additional orders that we expect to receive and ship derived from day to day core business including the USCG and Asia mandates, continuing growth in our ports, infrastructure and waterway business, and the conversion of additional projects from our validated sales opportunity pipeline.

 

SRT has evolved into an established international company.  As a result of many years of accumulated investment in technology, products, customers and markets, SRT has become the dominant player in the global market for all things AIS.  AIS has become globally adopted by authorities as an integral element of their maritime domain awareness strategies, plans and projects.  This position has taken considerable time, investment and strategic decision making to attain, but as can be seen from this report, with a £3.6 million order book, plus multiple additional validated future revenue opportunities, we can look forward positively and optimistically to the second half of this financial year and the years ahead.  

 

 

Simon Rogers

Chairman



CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2015

 

 



Six months ended

 

Six months ended


Year

ended



30 Sep 2015

 

30 Sep 2014


31 Mar

 2015



Unaudited

 

Unaudited


Audited



 

 



 


 

£

 

£


£

 







Revenue 


3,635,090


5,410,060


8,522,134

Cost of sales


(1,792,936)


(2,430,584)


(4,168,698)

 

Gross profit

 

 

1,842,154

 

 

2,979,476

 

 

4,353,436

Administrative expenses


 

(2,562,323)


 

(2,439,656)


     (4,687,282)

 

Operating (loss) / profit


 

(720,169)


 

539,820


 

(333,846)

Finance expenditure


(24,590)


(22,860)


(45,587)

Finance income


285


162


319

 

(Loss) / profit before income tax

 

 

(744,474)

 

 

517,122

 

 

(379,114)

Income tax credit

3

228,874


425,469


425,469

 

(Loss) / profit for the period


 

(515,600)

 

 

942,591

 

 

 46,355

 

Total comprehensive (loss) / income for the period


 

 

(515,600)

 

 

 

942,591

 

 

 

46,355

 

(Loss) / earnings per share:

Basic

Diluted

 

 

2

2

 

 

(0.40)p

(0.40)p

 

 

 

0.77p

0.75p


 

 

0.0p

0.0p

                                                                                      

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

AS AT 30 SEPTEMBER 2015

 

 



As at

 

As at

 

As at



30 Sep

 

30 Sep

 

31 Mar



2015

 

2014

 

2015



Unaudited

 

Unaudited

 

Audited



 

 

 

 

 


Notes

£

 

£

 

£

 







Assets







Non-current assets







Intangible assets


5,975,813


5,847,995


6,055,165

Property, plant and equipment


115,265


142,963


110,543

 

Total non-current assets

 

 

6,091,078

 

 

5,990,958

 

 

6,165,708








Current assets







Inventories


5,182,750


4,990,882


4,960,959

Trade and other receivables


1,140,981


2,824,440


1,604,422

Cash and cash equivalents


2,367,002


2,651,359


2,151,232

 

Total current assets

 

 

8,690,733

 

 

10,466,681

 

 

8,716,613








Liabilities







Current liabilities







Trade and other payables


(1,583,923)


(2,117,881)


(1,425,846)

Financial liabilities


(1,000,000)


(1,000,000)


(1,000,000)








Total current liabilities


(2,583,923)

 

(3,117,881)

 

(2,425,846)

 


 

 

 

 

 

Net current assets


6,106,810

 

7,348,800

 

6,290,767








Provision for liabilities

 

 

 

 

 

 

Deferred tax


(222,593)


-


-








 

Net assets

 

 

11,975,295

 

 

13,339,758

 

 

12,456,475








 







Shareholders' equity

 






Ordinary shares

4

127,513


127,453


127,453

Share premium


4,855,729


4,844,989


4,844,989

Other reserves

6

5,490,596


5,490,596


5,490,596

Retained earnings


1,501,457


2,876,720


1,993,437

 

Total shareholders' equity

 

 

11,975,295

 

 

13,339,758

 

 

12,456,475

 



CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2015

 

 



Six months ended

 

Six months ended


Year ended



30 Sep 2015

 

30 Sep

 2014


31 Mar 2015



Unaudited

 

Unaudited


Audited



 

 



 


Notes

£

 

£


£








 







Cash generated from operating activities

 

5

 

451,917


 

514,201


 

1,033,847

Corporation tax received


461,794


425,469


425,469

 

Net cash  generated from operating activities

 

 

 

 

913,711

 

 

 

939,670

 

 

 

1,459,316








Investing activities







Expenditure on product development


(639,601)


(999,892)


(1,932,321)

Purchase of patent


-


-


(54,160)

Purchase of property, plant and equipment


 

(44,835)


 

(9,161)


 

(19,775)

Interest paid


(24,590)


(22,860)


(45,587)

Interest received


285


162


319

 

Net cash used in investing activities

 

 

(708,741)

 

 

(1,031,751)

 

 

(2,051,524)

 

Cash inflow / (outflow) before financing

 

 

 

204,970

 

 

 

(92,081)

 

 

 

(592,208)

 







Financing activities







Net proceeds from issue of ordinary share capital


 

10,800


 

1,452,901


 

1,452,901

 

Net cash generated from financing activities

 

 

10,800

 

 

1,452,901

 

 

 

1,452,901

 

 

Net increase in cash and cash equivalents

 

 

 

215,770

 

 

 

1,360,820

 

 

 

860,693

 

Cash and cash equivalents at beginning of period


 

 

2,151,232


 

 

1,290,539


 

 

1,290,539

 

Cash and cash equivalents at end of period

 

 

 

2,367,002

 

 

 

2,651,359

 

 

 

2,151,232

 

 

 

 

 

 

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2015

 

 

 

 


Share

Capital

Share

Premium

Retained Earnings

Other Reserves

Total


 

 


 

 


£

£

£

£

£







 

 

 

 

 

 

Balance at 31 March 2014

119,003

3,400,538

1,919,143

5,490,596

10,929,280





 

 

Issue of equity share capital

8,450

1,512,550

-

-

1,521,000

Costs of issue of equity share capital

-

(68,099)

-

-

(68,099)

Comprehensive income for the period

 

-

 

-

 

942,591

 

-

 

942,591

Share based payment expense

-

-

14,986

-

14,986








 

 

 

 

 

Balance at 30 September 2014

127,453

4,844,989

2,876,720

5,490,596

13,339,758

 

 

 

 

 

 

Comprehensive loss for the period

-

-

(896,236)

-

(896,236)

Share based payment expense

-

-

12,953

-

12,953







 

Balance at 31 March 2015

127,453

4,844,989

1,993,437

5,490,596

12,456,475

                       

Comprehensive loss for the period

-

-

(515,600)

-

(515,600)

Share based payment expense

-

-

23,620

-

23,620

Issue of equity share capital

60

10,740

-

-

10,800







 

Balance at 30 September 2015

127,513

4,855,729

1,501,457

5,490,596

11,975,295



NOTES TO THE INTERIM FINANCIAL STATEMENTS

 

1.      Accounting Policies

           

Basis of preparation

 

The interim financial information in this report has been prepared using accounting policies consistent with International Financial Reporting Standards (IFRS) as adopted by the European Union.  IFRS is subject to amendment and interpretation by the International Accounting Standards Board (IASB) and the IFRS Interpretations Committee and there is an ongoing process of review and endorsement by the European Commission.  The financial information has been prepared on the basis of IFRS that the Directors expect to be adopted by the European Union and applicable as at 31 March 2016.

 

Non-statutory accounts

 

Financial information contained in this document does not constitute statutory accounts within the meaning of section 434 of the Companies Act 2006 ("the Act").  The statutory accounts for the year ended 31 March 2015 have been filed with the Registrar of Companies.  The report of the auditors on those statutory accounts was unqualified, did not draw attention to any matters by way of emphasis and did not contain a statement under section 498(2) or (3) of the Act.

 

The financial information for the six months ended 30 September 2015 and 30 September 2014 is unaudited. The interim financial statements will be available to download on the Company's website www.softwarerad.com from 10 November 2015.

 

Accounting policies

 

The accounting policies as applied by the Group are the same as those applied by the Group in the consolidated financial statements for the year ended 31 March 2015, which are the same policies expected to apply for the year ended 31 March 2016.

 

2.      Earnings per share

 

The basic (loss) / earnings per share have been calculated using the loss for the period of £515,600 (six months ended 30 September 2014 - profit of £942,591; year ended 31 March 2015 - profit of £46,355) divided by the weighted average number of ordinary shares in issue of 127,459,304 (six months ended 30 September 2014, 123,111,982 and year ended 31 March, 2015 125,253,104).

 

During the six months ended 30 September 2015 the Group has incurred losses for the period and therefore there is no impact of the share options granted on diluted earnings per share.  During the six months ended 30 September 2014, the diluted earnings per share have been calculated using weighted diluted shares of 125,919,549 and during the year ended 31 March 2015 the number of weighted diluted shares was 128,259,031.

 

3.      Income tax credit

 

         During the period, the Group received income tax credits of £461,794 (six months ended 30 September 2014 and year ended 31 March 2015 £425,469) in respect of its Research and Development activities.  A deferred tax liability of £222,593 in relation to timing differences on capitalised development costs and an historical tax charge for a subsidiary of £10,327 are offset against this income tax credit resulting in a net balance of £228,874.

 

Taxes on income in the interim periods are accrued using the tax rate that would be applicable to expected annual earnings.

 

4.      Called up share capital



30 Sep

 2015

 

30 Sep 2014


31 Mar 2015



Unaudited

 

Unaudited


Audited



£

 

£


£

 

Allotted: (Ordinary shares of 0.1p each):


 

127,513


 

127,453


 

127,453



 

 

 


 

Share capital reconciliation:


Number of shares

 

 


 

 

Shares outstanding at 31 March 2014                  119,002,419

 

Placing July 2014                                                        8,450,000

 

Shares outstanding at 30 September 2014           

and 31 March 2015                                                127,452,419

 

Exercise of employee share options                                  60,000

 

Shares outstanding at 30 September 2015            127,512,419

 

 

a)       The placing in July 2014 took place at 18p per share raising gross proceeds of £1,521,000 before costs of £68,099.

b)      The exercise of employee share options took place in September 2015 at an exercise price of 18p.

 

5.      Cash from operations



Six months ended

 

Six months ended


Year ended



30 Sep 2015

 

30 Sep 2014


31 Mar 2015



Unaudited

 

Unaudited


Audited



 

 



 



£

 

£


£



 

 

 


 

Operating (loss) / profit

 

(720,169)

 

539,820

 

(333,846)

Depreciation of property, plant and equipment


 

40,113


 

51,595


 

94,629

Amortisation of intangible fixed assets


718,953


837,198


1,616,618

Share-based payment charge


23,620


14,986


27,939

Increase in inventories


(221,791)


(820,156)


(790,233)

Decrease / (increase) in trade and other receivables


 

463,441


 

(203,615)


 

1,016,402

Increase / (decrease) in trade and other liabilities


 

147,750


 

94,373


 

(597,662)

 

 

Net cash generated from operations

 

 

 

451,917

 

 

 

514,201

 

 

 

1,033,847

 

 

 

 

6.      Statement of movement in shareholders' equity

 

Other reserves consist of: Capital Redemption Reserve £2,857 (31 March 2015: £2,857), Warrants Reserve £62,400 (31 March 2015: £62,400) and Merger Reserve £5,425,339 (31 March 2015: £5,425,339). There were no movements during the period.

 

 

 

 


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