Last checked at 5 Nov 2007 07:00
SOFTWARE RADIO TECHNOLOGY PLC ("SRT" or the "Group") INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2007
Software Radio Technology plc ("SRT" or the "Group"), the AIM-quoted developer of digital wireless communications technology, announces its unaudited results for the six months ended 30 September 2007.
Highlights
Revenue up 127 per cent. at ‚£1.91 million (2006: ‚£0.84 million)
Loss reduced by more than 22 per cent. to ‚£0.99 million (2006: ‚£1.32 million)
SRT Marine traded profitably before depreciation
Asian partners commenced volume production delivery of TETRA handsets
Development of own brand TETRA handset for sale in EU
SRT Chairman Richard Moon said: "The first two licence customers in Asia have commenced volume production and customer deliveries of TETRA handsets. This is a significant milestone for the Company as it signifies the start of royalty income. Other licence customers in Asia are expected to commence production in the second half of the financial year.
"SRT Marine Technology continues to build its international network of partners. Orders for our AIS Class B solutions have continued to grow steadily throughout the first half as more of our partners enter the market with their products and commence active sales and marketing. Further national mandates are expected.
"The Board is pleased with the progress that SRT has made during the first half and is expecting further acceleration during the second half. SRT now has products being produced, marketed and sold by a global network of partners, creating the opportunity for significant and sustained revenue growth".
Enquiries: Software Radio Technology plc 01761 409500 Simon Tucker Group Managing Director Hanson Westhouse Limited 020 7601 6100 Tim Feather CityRoad Communications 020 7248 8010Paul Quade 07947 186694 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 base of customers located around the world, each of whom has well established sales and distribution channels.
CHAIRMAN'S STATEMENT
I am pleased to report that SRT continued to make strong progress during the first half of this financial year. In both our PMR-TETRA and Marine businesses, products containing our technologies are in the market. As a result revenues have increased by 127% and operating losses reduced by 22% over the same period last year.
SRT PMR Technology Limited - TETRA
The first two licence customers in Asia, TCB and Unimo, have commenced volume production and customer deliveries of their handsets, incorporating our technology. This is a significant milestone for the Company as it signifies the start of royalty income. Initial product runs have been relatively small as expected, however there is now increasing visibility of substantial orders in the future as these customers leverage their competitive advantages. Other licence customers in Asia are expected to commence production in the second half of the financial year.
In March 2007 the Company announced its intention to develop its own TETRA handset for sale as an OEM product within the European Union. The first stage of this project has been delivered on time, with first prototypes completed during October ready for formal type and network interoperability approval testing. Marketing of the handset to partners has commenced and initial reactions have been positive. We expect that first shipments will commence during the first half of the next financial year. If successful, with good margins and high per unit revenue, this could have a significant effect on the financial performance of the Group.
SRT has continued to build and evolve its specialist digital radio development team which is now focused on the development of next generation development core technology which will yield an improved platform. This is expected to be completed towards the end of 2008, providing a platform upon which our own OEM and licence customer product ranges can be expanded.
The Board is confident that SRT PMR Technology is now in a strong position to derive sustained and growing revenues from licence customers in Asia and OEM partners in the EU.
SRT Marine Technology Limited - AIS
SRT continues to build its international network of partners and to work with them as their long term AIS technology solution provider, offering a selection of technology licence, module and OEM solutions to fit their needs.
Orders for our AIS Class B solutions have continued to grow steadily throughout the first half as more of our partners enter the market with their products and commence active sales and marketing. Average order size per partner has increased as market demand from a variety of commercial and leisure users increases. The first formal national mandate, covering 15,000 vessels, to fit an AIS transceiver was announced by Turkey in July. Further national mandates are expected. We are still awaiting news on US FCC approval which would enable AIS Class B products to be sold into the world's largest marine market. This is expected during the second half of the current financial year.
In line with our corporate strategy the Company continues to evolve its AIS technologies and is now focused on the development of the next generation AIS platform.
Results and Trading
The results, which have been prepared in accordance with International Financial Reporting Standards for the first time, show revenues for the six months of ‚£1,910,852 (2006: ‚£842,579), an increase of 127% on the same period last year with a retained loss of ‚£992,184 (2006 ‚£1,322,685). SRT Marine Technology traded profitably (before depreciation) during the first half with gross margins of 40% and has increased visibility of forward orders for the second half. SRT PMR Technology traded at a loss due to expected royalty revenue, with an anticipated gross margin of 80%, falling into the second half of this year.
Overheads, excluding depreciation and non-recurring items, for the period were 22% higher than for the same period last year at ‚£1,491,667 primarily due to an increase in head count to support the Group's expanding activities.
Financing
In April 2007 SRT completed a placing of 9,523,810 shares at 42p, raising ‚£4 million (before costs) to support additional investment in both the TETRA and Marine businesses.
As at 30 September 2007 the Group had net cash balances of ‚£2.02 million (2006 ‚£2.68 million). In addition, since 30 September 2007 the Company has received applications to convert 8,722,882 warrants into ordinary shares at an exercise price of 40p per share, raising additional funding of ‚£3.49 million. The final date for the conversion of warrants was 2 November 2007 and unexercised warrants have now lapsed.
Management
The existing management team of the Group was further strengthened by the joining of Dr. George Kyprios to lead SRT's PMR business in September 2007. Dr. Kyprios, who has now been formally appointed as managing director of the PMR subsidiary, has a wealth of international business experience gained in "blue chip" multinationals such as Pirelli Cables & Systems and GEC/Marconi and has expertise of implementing change programmes to increase operational efficiency and competitive advantage.
Outlook
The Board is pleased with the progress that SRT has made during the first half and is expecting further acceleration during the second half. This has already become apparent through the announcement on 24 October of a TETRA order by Unimo which will generate US$3 million of royalties for SRT, of which approximately US$2 million is expected in revenue in the Group's current financial year.
In summary, SRT now has products being produced, marketed and sold by a global network of partners, creating the opportunity for significant and sustained revenue growth. In addition strategic initiatives such as the launch of our own TETRA handset targeting the European market also provide the basis for further growth during the next financial year and beyond.
Richard MoonChairman
SOFTWARE RADIO TECHNOLOGY PLC
CONSOLIDATED INCOME STATEMENT
FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2007
Six months ended Six months ended Year ended 30 Sep 2007 30 Sep 2006 31 Mar 2007 Unaudited Unaudited Unaudited ‚£ ‚£ ‚£ Revenue 1,910,852 842,579 1,817,588 Cost of sales (1,082,571) (601,855) (1,645,610) Gross profit 828,281 240,724 171,978 Administrative expenses (1,883,453) (1,610,349) (3,170,198) Operating loss (1,055,172) (1,369,625) (2,998,220) Finance income 62,988 46,940 85,791 Loss before income tax (992,184) (1,322,685) (2,912,429) Taxation - - - Loss for the period (992,184) (1,322,685) (2,912,429) Loss per share (basic and (1.15)p (1.80)p (3.76)pdiluted) CONSOLIDATED BALANCE SHEETAS AT 30 SEPTEMBER 2007 As at As at As at 30 Sep 30 Sep 31 Mar 2007 2006 2007 Unaudited Unaudited Unaudited ‚£ ‚£ ‚£ Assets Non-current assets Intangible assets 5,608,422 3,975,438 4,953,395 Tangible assets 431,320 510,854 520,154 Total non-current assets 6,039,742 4,486,292 5,473,549 Current assets Inventories 114,008 240,807 161,938 Trade and other receivables 3,330,388 2,284,865 2,971,612 Cash and cash equivalents 2,024,884 2,682,088 317,005 Total current assets 5,469,280 5,207,760 3,450,555 Total assets 11,509,022 9,694,052 8,924,104 Liabilities Current liabilities Trade and other liabilities (1,255,754) (1,080,884) (1,646,566) Total current liabilities (1,255,754) (1,080,884) (1,646,566) Total liabilities (1,255,754) (1,080,884) (1,646,566) Net assets 10,253,268 8,613,168 7,277,538 Shareholders' equity Ordinary shares 89,102 78,088 78,288 Share premium 11,645,291 7,702,858 7,787,787 Other reserves 5,719,384 5,724,512 5,719,383 Retained earnings (7,200,509) (4,892,290) (6,307,920) Total equity 10,253,268 8,613,168 7,277,538 CONSOLIDATED CASH FLOW STATEMENTFOR THE SIX MONTHS ENDED 30 SEPTEMBER 2007 Six months ended Six months ended Year ended 30 Sep 2007 30 Sep 2006 31 Mar 2007 Unaudited Unaudited Unaudited ‚£ ‚£ ‚£Cash flows used in operating activities Cash used in operations (1,364,253) (1,217,969) (2,503,430) Interest received 62,988 46,940 85,791 Net cash used in (1,301,265) (1,171,029) (2,417,639)operating activities Cash flows from investing activities Purchase of intangible (818,036) (1,154,059) (2,219,784)fixed assets Purchase of tangible (41,139) (278,281) (411,031)fixed assets Net cash used in (859,175) (1,432,340) (2,630,815)investing activities Cash flows from financing activities Net proceeds from the issue of ordinary share 3,868,319 4,052,026 4,132,028capital Net cash from financing 3,868,319 4,052,026 4,132,028activities Net increase/(reduction) in cash and cash 1,707,879 1,448,657 (916,426)equivalents Cash and cash equivalents 1,233,431at beginning of period 317,005 1,233,431 Cash and cash equivalents 2,024,884 2,682,088 317,005at end of period
NOTES TO THE INTERIM FINANCIAL STATEMENTS
1. Basis of preparation
These unaudited interim financial statements have been prepared under the historical cost convention and on a basis consistent with the UK Companies Act 1985 and International Financial Reporting Standards and IFRIC interpretations as endorsed by the European Union and interpretations expected to be in issue at 31 March 2008. The interim financial statements were approved by the Board of Directors and the Audit Committee on 2 November 2007 The interim financial statements do not constitute statutory financial statements within the meaning of the Companies Act 1985 and have not been audited. Comparative figures in the financial statements for the year ended 31 March 2007 have been taken from the Group's audited UK GAAP statutory financial statements on which the Company's auditors, Nexia Smith & Williamson, expressed an unqualified opinion and amended by adjustments required by IFRS. All periods presented are unaudited.
In anticipation of changes required under IFRS, the Group published an IFRS transition statement on 31 October 2007. This statement set out the effect of adopting IFRS for the Group, the basis of preparation, the accounting policies, and details of significant adjustments in respect of the opening balance sheet at 1 April 2006, the results for the year ended 31 March 2007 and the balance sheet at 31 March 2007. These interim financial statements have been prepared in accordance with the accounting policies outlined in the statement. This statement is available on the Company's website.
The interim financial statements will be sent to shareholders on or around 9 November 2007 and will be available from today on the Company's website and for a period of one month from the Company's registered office, Wireless House, Westfield Industrial Estate, Midsomer Norton, Bath BA3 4BS.
2. Share-based payment
In line with the requirements of IFRS 2, the Group has recognised the following profit and loss charges in respect of issued share options:
Six months ended Six months ended Year ended 30 Sep 2007 30 Sep 2006 31 Mar 2007 Unaudited Unaudited Unaudited ‚£ ‚£ ‚£ Share options - profit and 99,595 201,916 376,030loss charge 3. Earnings per share
The basis earnings per share has been calculated using the loss for the period of ‚£992,184 (2006 - loss of ‚£1,322,685) divided by the weighted average number of ordinary shares in issue of 86,653,590 (2006 - 73,565,805). The weighted average number of shares in issue has been adjusted to reflect the placing in April 2007.
As the Group is currently loss-making, the warrants and share options in issue are not considered dilutive.
4. STATEMENT OF MOVEMENT IN SHAREHOLDERS' EQUITY Six months ended Six months ended Year ended 30 Sep 2007 30 Sep 2006 31 Mar 2007 Unaudited Unaudited Unaudited ‚£ ‚£ ‚£ Loss for the period (992,184) (1,322,685) (2,912,429) Share issue proceeds 4,001,140 4,250,000 4,250,000 Share issue costs (192,821) (197,972) (197,972) Share warrant proceeds 60,000 - 80,000 Share-based payment 99,595 201,916 376,030credit Movement in shareholders' 2,975,730 2,931,259 1,595,629equity Opening shareholders' 7,277,538 5,681,909 5,681,909equity Closing shareholders' 10,253,268 8,613,168 7,277,538equity 5. CASH USED IN OPERATIONS Six months ended Six months ended Year ended 30 Sep 2007 30 Sep 2006 31 Mar 2007 Unaudited Unaudited Unaudited ‚£ ‚£ ‚£ Operating loss (1,055,172) (1,369,625) (2,998,220) Depreciation of tangible 132,304 91,626 214,365fixed assets Amortisation of 160,678 39,494 127,975intangible fixed assets Share-based payment 99,595 201,916 376,030charge Decrease in inventories 47,930 49,284 128,153 Increase in trade and (358,781) (380,884) (1,067,635)other receivables (Decrease)/increase in 715,902trade and other (390,807) 150,220 liabilities Cash used in operations (1,364,253) (1,217,969) (2,503,430) 6. RECONCILIATION OF OPERATING PROFIT UNDER UK GAAP TO IFRS EQUIVALENT Six months ended Six months ended Year ended 30 Sep 2007 30 Sep 2006 31 Mar 2007 Unaudited Unaudited Unaudited ‚£ ‚£ ‚£ Operating loss - UK GAAP (1,089,612) (1,395,304) (3,048,437) Reversal of goodwill 33,648 33,648 67,296amortisation Recognition of vacation 792 (7,969) (17,079)pay accrual Operating loss - IFRS (1,055,172) (1,369,625) (2,998,220)
The adjustments above reflect non-amortisation of goodwill and the recognition of a liability for employees' unused entitlement to annual leave as set out in the IFRS transition release.
7. RECONCILIATION OF SHAREHOLDERS' EQUITY AT 30 SEPTEMBER 2006 UNDER UKGAAP TO IFRS IAS 38 IFRS 3 IAS 19 Intangible Business Employee UK GAAP assets combinations benefits IFRS ‚£ ‚£ ‚£ ‚£ ‚£ Assets Non-current assets Intangible assets 3,941,790 33,648 3,975,438 Tangible assets 510,854 510,854 Total non-current assets 4,452,644 33,648 4,486,292 Current assets Inventories 240,807 240,807 Trade and other receivables 2,284,865 2,284,865 Cash and cash equivalents 2,682,088 2,682,088 Total current assets 5,207,760 5,207,760 Liabilities Current liabilities Trade and other liabilities (1,032,598) (48,286) (1,080,884) Total current liabilities (1,032,598) (48,286) (1,080,884) Net assets 8,627,806 33,648 (48,286) 8,613,168 Shareholders equity Ordinary shares 78,088 78,088 Share premium 7,702,858 7,702,858 Other reserves 5,724,512 5,724,512 Retained earnings (4,877,652) 33,648 (48,286) (4,892,290) Total equity 8,627,806 33,648 (48,286) 8,613,168 8. OTHER IFRS RECONCILIATIONS
As set out in Note 1 above, the Group published an IFRS transition statement on 31 October 2007. This statement included a reconciliation of shareholders' equity at 1 April 2006 and 31 March 2007.
The transition to IFRS has not significantly impacted the presentation of the consolidated cash flow statement.
SOFTWARE RADIO TECHNOLOGY PLC