After being submerged in red ink for the past few years, Mainboard-listed Stratech Systems (Stratech), which commands a market capitalisation of a mere $31m, finally has something to smile about.

For the full-year ended 31 March 2008, the information and advanced technology systems specialist raked in net earnings of $0.8m, reversing the annualised net loss of $8.5m for the previous corresponding period. Earlier, Stratech changed its financial year-end from 31 December to 31 March.

Founded in 1989, Stratech delivers large-scale, complex and real-time mission-critical systems in the areas of intelligent Vision, intelligent Transport Systems and e-Systems for governments and businesses. Throughout these years, the company has established an impressive track record serving industries including aerospace and defence, financial services, government, healthcare, homeland security and transportation.

According to the management, Stratech’s profitability in FY08 was attributable mainly to a 48% revenue surge, the right-sizing and cost-control efforts implemented as well as a significant improvement in gross profit margin, from prior period’s 60% to 71%. “With our commitment to the ‘powered by Stratech’ strategy, we are confident that the Group will see continued growth,” commented Dr David Chew, executive chairman of Stratech.

Major Developments

In April this year, Stratech was awarded a contract valued at approximately $3.7m for its next-generation Super BullsEye II Advanced Weapons Scoring System by a major air force in the Asia Pacific. The deal entails the design, development, supply, installation, testing and commissioning of an integrated bomb and gunnery scoring system for an air weapons range.

Determined to ensure that its recent turnaround isn’t just a flash in the pan, Stratech has also inked an agreement to appoint SITA as the global value-added reseller for its iFerret airfield/runway surveillance and foreign object and debris (FOD) detection system. Having chalked up consolidated revenues of US$1.42b in 2007, SITA is a specialist provider of integrated IT business solutions and communication services for the world’s air transport industry, comprising airports, airlines and ground handlers.

“FOD on runways is not only a major safety issue but it also costs around US$4b annually in direct costs to the aviation industry. This figure can be doubled or tripled when indirect costs such as flight delays are taken into account,” Bruno Frentzel, SITA’s senior vice president of application services, remarked.

With iFerret, air traffic and ground operations control staff are capable of reliably detecting foreign objects left on the runway surface down to 2cm in size under 16mm/hr of rainfall. The all-weather solution is also reliable under night conditions and with environmental factors such as aircraft movements, ambient lighting, rain, shadows or clouds.

Under the agreement, Geneva-based SITA will market, sell and deploy Stratech’s iFerret at the commercial airports operated by the former’s members or customers. Notably, four runways are targeted for the first year, with another twelve targeted for the subsequent year.

Already being deployed along Runways 1 and 2 at Singapore’s Changi Airport, the award-winning iFerret solution is currently being trialed by the US Federation Aviation Administration at Chicago’s O’Hare International Airport. Once successful, the product’s reputation and credibility would be further enhanced. In turn, Stratech’s top-line could receive a substantial and much-needed boost.

Based on the potentially huge market of more than 3,800 International Air Transport Association-listed airports, not forgetting the military airbases and aircraft carriers around the globe, Stratech appears poised to move away from its loss-making days for good.