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Cut loose from Software Radio

Delayed orders at marine identifier technology specialist Software Radio Technology mean that we no longer rate the shares a buy
March 13, 2012

Marine identifier technology specialist Software Radio Technology (SRT) has been hit by a slippage in the timing of a number of sales and a key contract – events that smaller companies fear the most and can do least to combat. This resulted is a savage profit warning – chief executive Simon Tucker said: "The expected outcome for the financial year is significantly below what we had hoped." As a result, the share price dropped by more than fifth to 23.5p. The price has recovered to 26p. Even so, we think the shares are no longer worth buying.

IC TIP: Hold at 23p

Management now says that for the year to end March the group will report revenues of £6m – down from £9.2m in 2010-11 – and pre-tax profits of just £100,000 after orders expected before the end of the fourth quarter slipped into the next financial year. The main issue was customers in the EU pushing their purchases out towards the end of the period in which they are mandated to fit identification equipment to their vessels. Slower-than-expected progress on a project in South America has also been a problem.