Software Radio Technology (LON:SRT) has renegotiated a distribution deal in China after realising that the market offers much broader scope to sell its range of identification and tracking technologies used by maritime vessels. The company has freed itself from an exclusive one-party deal and has now signed a distributor agreement with a new customer in China whose sales channels access new segments of the market. Shares in the group surged by 16.8% to 24.25p during the morning.

The news comes as SRT reported that first quarter revenues had jumped by 147% to £1.82m on the same period last year, with gross profit margins in the three months to June 30 hitting 50% and net profit before tax had coming in at £448,000. The figures follow several significant developments in 2010 in which SRT added a Class A product to its established range of other devices that use AIS architecture for communications. The company is hoping to capitalise on a wave of new international regulations governing the standards of equipment used by vessels. It estimates that of the world’s 26 million vessels, approximately 200,000 have been fitted with an AIS device since 2002 and a further one million vessels are required to fit an AIS device during the next four years, with further mandates expected to add to this.

SRT has over 30 customers around the world, each with their own brands and sales channels providing a wide variety of AIS products to meet demand from all market segments. In the case of China, the company said it had become apparent that the market opportunity created by the national mandate programme was considerably larger than the 220,000 vessels originally estimated in September 2009 when SRT announced the receipt of a US$18m order from a strategic partner. Following a re-evaluation of the Chinese market, SRT said that its original single exclusive partner for the market did not provide optimal distribution. However, it is continuing to work closely with the original customer to maximise the potential of their sales channels into the Chinese market.

In mid-July, SRT reported a forward order book worth US$5.7m. Since then the company has announced additional orders worth US$750,000 and today announced a further conditional order for a customised version of its Class B product from a new customer which may be worth up to US$2.4m over the next…

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