Software Radio on crest of a wave

21st Jun 2011 13:29

Software Radio Technology (SRT) moved close to a 52-week high after a good reception to full-year results.The developer of advanced radio communications technologies had a "year of financial transformation" which saw it navigate into calmer waters.Profit before tax in the year to 31 March was £1.94m on revenue of £9.15m, signalling a maiden voyage into the black for the company which the year before lost £0.39m on revenue of £3.56m.Profit after tax was £2.17m, and ahead of market expectations, according to the company.The company ended the financial year with cash of £3 and no debt.SRT has ramped up its product development programmes to cater for an expected increase in demand for automatic identification system (AIS) based products. "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," the company said.The order book ended the period valued at $3.0m, and this had risen to $3.2m at the beginning of June."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," said company chairman, Simon Rogers.Broker Merchant Securities described the results as "encouraging", and though it noted the "lumpy" nature of the group's order flow, it reckons the shares are a "buy" all the way up to 60p.At 3.46pm (21/6/11), the shares were trading at 39p, up 0.75p on the day.Northland Capital Partners noted the group's potential for exceptional project wins."Increasing regulation is expanding the market for SRT's AIS products. Last year, management reported that active mandates required 500k vessels to fit an AIS transponder by the end of 2015. This has now doubled and further mandates are expected. The poorly defined timelines associated with these mandates plus the 'exceptional project wins' creates some uncertainty on forecasting but the business now has a reasonably comfortable capital base,2 Northland analyst David Johnson said. "On the basis of consensus estimates, it's trading on a prospective PER [price/earnngs ratio] of 10.6x - in line with the sector," he added. --jh