Software Radio Technology (LON:SRT) (SRT), the AIM listed company behind a range of identification and tracking technologies used by maritime vessels, has received formal EU, US and Canadian certifications for its new AIS Class A transceiver. Shares in the group jumped by 12% to 21p on the news because it means SRT can begin shipping units to customers and fulfilling an order book that runs to around US$2.4m. SRT said that production and deliveries of the units would ramp up over the coming months in a controlled manner to ensure quality.
AIS is a system which transmits and receives data via VHF. Following a 2002 IMO (International Maritime Organisation) mandate, Class A transceivers were required to be fitted to most vessels worldwide over 300 tonnes. The Class A incorporates a number of sophisticated features and functions not specified in the simpler, lower cost Class B devices and as a result is sold at a higher price. However, the Class A transceiver is considerably more complex than a Class B transceiver and requires much more rigorous formal testing and approvals, reflected in the fact that SRT began the process back in 2008.
Market demand for Class A transceivers is driven by commercial factors such as operational efficiency and safety, as well as specific mandate requirements around the world. For example, over the next 18 months the EU Inland Waterway Mandate requires certain commercial vessels operating along the Rhine to install an approved Class A transceiver by the end of 2011, thereby creating a single market worth approximately US$30m over the next 18 months.
Simon Tucker, the chief executive of SRT, said: “The Class A development has been a long-term undertaking for SRT and I am delighted that we have delivered such an excellent product. The timing of these certifications and the commencement of deliveries to our waiting customers comes at a time when there are various market opportunities for this product around the world. For example, an EU mandate requires approximately 15,000 vessels operating along Europe's inland waterways to fit an approved Class A device over the next 18 months, with a €2,100 per unit subsidy being provided to Dutch and German vessel owners by their respective governments. We therefore look forward to this product generating strong revenue growth for SRT in the coming financial year and beyond.”
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Bought on the back of a tip at about 14p. The story is entirely the AIS potential and the fact that the company has been well supported despite the failure of an earlier project. Accounts don't tell us much as it is all about the potential of this marine identification unit. Results on 7 June 10. Risky but could have a lot further to go.
