Last checked at 11 Jun 2012 07:00
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 itsstated strategy of positioning itself in the growing global market with a broadrange of best in class products being sold through a worldwide network ofestablished customers. Whilst revenues remain lumpy, we are now starting to seeconsistent growth in our core business and some of the many large projectscoming to fruition, such as our recently announced $3.7 million order forIdentifiers."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.
XLON