The Northamptonshirebased firm, which makes computer systems for the d efence and aerospace
industry, said pretax profit for the year to March 31 fell to £5.6 million from £8.1 million a year ago.
Adjusted earnings per share slipped to 14.6 pence from 20.5p.
However, sales rose ten per cent, from £49.9 million to £54.9 million, and Radstone recommended a final dividend of 3.15 pence per share, raising the total dividend for the year by 17 per cent to 4.2 pence.
Radstone said its order book e n d e d t h e y e a r a t £94.1 million, up nine per cent on last time after recovering from earlier delayed and cancelled orders.
"We have ended the financial year with a strong order book and have spent significant time and resources on our product development," said chief executive Jeff Perrin.
"Our efforts ensure we remain at the forefront of the military embedded computing market and we are confident that this will continue to provide a solid base for Radstone's future growth and strategic development."
In the US, where Radstone makes more than half of its turnover, sales were flat.
However, Radstone said it expects US sales to accelerate.
Mr Perrin also said the four-year US defence review o n military spending announced last year places more emphasis on computer technology.
"The whole tone of the quadrennial defence review was about an increase in the use of technology," he said.
"For example, we supply computer boards that enable communications between unmanned aircraft and base stations.
"We would expect double digit sales growth from the US."
Radstone, whose technology is used in weaponry from tanks to torpedoes, has spent more money on developing new products over the last year.
"Radstone has a strong record of developing leading edge products and our highly focused product development programme differentiates us from the competition and makes us the preferred supplier to leading military and aerospace companies," Mr Perrin added.
"Our investment in development in the year amounted to £7.7 million.
"This year has been an exceptionally productive period with 21 new product introductions."
Mr Perrin said the new products, which include digital technology for military radars, had already helped Radstone win contracts.
New orders booked totalled £62.1 million, compared with £54.4 million in 2005.
Radstone also announced that chairman Rhys Williams will stand down at the company's AGM in September, to be replaced by non-executive director Malcolm Baggott.
Radstone is seeking a replacement for group finance director Kevin Boyd, who will leave the company in August. ..SUPL: