Shares in Software Radio Technology (SRT), the leading maker of automatic tracking devices for ships and sailing vessels, plunged 14 per cent on the morning these interim results were released. Declining revenues and a greater half-year loss are hardly cause for encouragement, but we can't help feeling the market over-reacted. The financial results were bang in line with guidance issued in a trading update in October and merely confirmed the fact that Software Radio will need a very strong second half to meet full-year targets.
That's nothing new. Last year, the weighting of sales in the first half versus the second half was 35:65; this year Software Radio will require a 21:79 split to hit broker WH Ireland's full-year revenue forecast. Simon Rogers, SRT's chairman, expects "several of the many project opportunities…to convert into material orders during the second half following an extended period of evaluations and trials", although he admits the company "remains dependent on the timing" of contract orders to achieve market estimates.
WH Ireland left its forecasts unchanged following the results, though they noted "current year forecast risk [is] higher than usual". They expect full-year revenues of £15m, generating pre-tax profits of £2.8m and EPS of 2p - up from £10m, £1.2m and 1.3p last year.
SOFTWARE RADIO TECHNOLOGY (SRT) | ||||
|---|---|---|---|---|
| ORD PRICE: | 29p | MARKET VALUE: | £33.9m | |
| TOUCH: | 28.5-29p | 12-MONTH HIGH: | 38p | LOW: 18p |
| DIVIDEND YIELD: | nil | PE RATIO: | 36 | |
| NET ASSET VALUE: | 9p* | NET CASH: | £2.18m | |
| Half-year to 30 Sep | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2012 | 3.48 | -0.17 | 0.13 | nil |
| 2013 | 3.16 | -0.43 | -0.37 | nil |
| % change | -9 | - | - | - |
*Includes intangible assets of £4.5m, or 4p a share | ||||
