REG - SRT Marine Systems - Final Results
28/07/2022 07:00
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RNS Number : 9806T SRT Marine Systems PLC 28 July 2022
SRT MARINE SYSTEMS PLC
(AIM: SRT)
("SRT" or the "Company")
FINAL RESULTS FOR THE YEAR ENDED 31 MARCH 2022
SRT Marine Systems PLC, a provider of maritime surveillance, monitoring and
management systems, announces its results for the financial year ending 31
March 2022.
FINANCIAL SUMMARY
· Revenues of £8.2m, mostly generated by transceivers division.
· £5.9m gross cash at year end following successful £4.9m equity
placing.
· £600m systems division validated sales pipeline.
· £3.2m transceivers division forward order book.
OPERATIONAL HIGHLIGHTS
· Good progress with development of new dual application VHF/AIS
transceiver product (NEXUS) scheduled to commence shipping in 2023.
· Continued development of Digital AtoN System (DAS) product offer
for navigation safety and environment monitoring.
· Significant new functionalities implemented in the SRT-MDA
System.
· Systems delivery model evolved to enable more efficient
multi-project implementation.
Commenting on today's results, Simon Tucker, CEO of SRT said:
"Whilst these results are in line with market expectations, this has been a
challenging post-covid recovery year for SRT. I am happy that we have been
able to maintain our investments in product and customer development and have
started to see strong demand return for our products, both transceivers and
systems, which I expect to be reflected in next years financial results."
Contacts:
SRT Marine Systems plc www.srt-marine.com (http://www.srt-marine.com)
+ 44 (0) 1761 409500
Simon Tucker (CEO) simon.tucker@srt-marine.com (mailto:simon.tucker@srt-marine.com)
Louise Coates (Marketing Manager) louise.coates@srt-marine.com (mailto:louise.coates@srt-marine.com)
finnCap Ltd
Jonny Franklin-Adams / Teddy Whiley (Corporate Finance) +44 (0) 20 7220 0500
Tim Redfern / Charlotte Sutcliffe (Corporate Broking)
About SRT:
SRT Marine Systems PLC is a global company which develops and provides
integrated maritime surveillance, monitoring, management and safety systems
used by coast guards, fishery authorities, infrastructure and vessel owners
for the purposes of managing and controlling their maritime domain.
Applications include security, safety, search & rescue, law enforcement,
fisheries management, illegal fishing detection and environment monitoring.
The information contained within this announcement is deemed to constitute
inside information as stipulated under the Market Abuse Regulation (EU) No.
596/2014 which is part of UK law by virtue of the European Union (Withdrawal)
Act 2018. Upon the publication of this announcement, this inside information
is now considered to be in the public domain.
About SRT:
SRT Marine Systems PLC is a global company which develops and provides
integrated maritime surveillance, monitoring, management and safety systems
used by coast guards, fishery authorities, infrastructure and vessel owners
for the purposes of managing and controlling their maritime domain.
Applications include security, safety, search & rescue, law enforcement,
fisheries management, illegal fishing detection and environment monitoring.
The information contained within this announcement is deemed to constitute
inside information as stipulated under the Market Abuse Regulation (EU) No.
596/2014 which is part of UK law by virtue of the European Union (Withdrawal)
Act 2018. Upon the publication of this announcement, this inside information
is now considered to be in the public domain.
CHAIRMAN'S STATEMENT
This year's poor financial performance belies the material progress across
both our business divisions towards sustained profitability as the global
economy and SRT recover from Covid. Government agencies such as Coast Guards,
have returned to their long-term plans to build up sovereign maritime
surveillance capabilities and restarted their processes. Whilst our
transceivers business is experiencing strong demand as the macro
digital-marine trend continues in both commercial and leisure sectors. Both
are reflective of the strong fundamentals of our target markets coupled with
our long-term strategy and significant cumulative investments over many years
in the development of market leading products which we expect to be reflected
in future financial performance.
As reported in our post year end trading update (April 2022), year on year
group revenues were flat at £8.2m (2021: £8.3m) resulting in a loss after
tax of £5.8m (2021: £5.1m) with gross cash as at the year-end of £5.9m
(2021: £5.3m) following a successful £4.9m equity placing in March. The
systems business did not complete any revenue milestones and thus only
generated £0.6m of revenues during the period from the ongoing sale of data
services to system customers. Cash payments amounting to £6.1m were received
during the year from existing system customers. The transceivers business thus
accounted for £7.6m of our revenues (2021: £8.2m).
Our systems business continued to execute on our project with
BFAR-Philippines, with a number of operational milestones achieved, including
the full commissioning of the core fisheries monitoring and management centre
which is now in full daily operation. We expect this project to complete
within the next 12 months, and for further follow-on data sustainability and
system expansion contracts to follow. A contract for the first phase of a new
£40m three-phase project for an SRT-MDA System with a new national coast
guard agency customer was signed in January 2022. I am pleased to report that
following customer inspection and factory acceptance at SRT in March, first
equipment shipments were completed in April, and as of publication of this
report installation is well underway. This project is currently scheduled to
be implemented over 2 years, although the customer has now requested a faster
implementation timescale. We consider this new customer to be of considerable
long-term value to SRT and likely to generate further contracts as they build
up their maritime surveillance capabilities.
The SRT-MDA System is a complex combination of systems networking and
integrated functionality built around our core GeoVS technology. GeoVS has
been developed entirely inhouse over many years to realise our starting vision
of a being able to provide a national scale integrated system solution that
delivers a full range of sophisticated maritime surveillance, command, control
and management functionality. The development of the SRT-MDA System has
continued during the year, with new functionalities and capabilities
implemented. Notably we have innovated in the areas of marine activity
analytics, enabling much greater insight and detection of suspicious and
illegal events and vessels, and further enhanced our ability to integrate
multiple sensor systems located on different platform types such as coastal
installations, drones, patrol vessels and satellites. These are substantial
uplifts in system capability which we believe further extend the unique offer
of the SRT-MDA System and meet the maritime surveillance aspirations of our
customers. SRT has built up a formidable development systems capability of
which we are very proud and is in itself a very valuable asset and will enable
us to continue this process and thus ensure the SRT-MDA System remains a
market leader.
Our transceivers business has performed solidly, with demand exceeding our
current ability to supply, resulting in a growing order book backlog of £3.2m
as at year end. This reflects the ongoing issues in global electronics
component supply which has constrained our production. This continues to be
problematic with component order lead times being highly variable at best and
our product costs increasing substantially as we seek to fill supply chain
gaps through grey-market premium component buying to maximise production. Over
the years we have built a global reputation as the leading supplier of marine
transceivers with customers expecting both the best products and reliable
consistent supply. We have therefore actively engaged with our customers to
explain the issues and why supply is constrained and thus why we have had to
increase prices to cover these additional costs. I am pleased to report that
this approach has been well understood and we have not experienced a drop in
demand following the necessary price increases. Unfortunately, market
indicators suggest that this issue will remain until the end of 2023, but we
are increasingly confident of our capability to gradually increase production
capacity through strategic component purchasing.
Our new NEXUS transceiver product development has made substantial progress
during the year. NEXUS is a VHF voice and AIS data radio combined transceiver
with a range of very innovative functionalities that deliver a new level of
convenience for the mariner - commercial and leisure. This product will
significantly expand our target market from data only into marine voice
communications. We have developed NEXUS from scratch, enabling us to deploy
the full capabilities of our experienced transceiver team who are working
alongside selected external contractors to deliver this exceptional product.
This has enabled the development of an all-new optimal core technology
platform unconstrained from historical architectures. As of this report, we
have undertaken a soft teaser market awareness campaign, and the product is at
early prototype and type approval testing stage. As is typical for an SRT
product, NEXUS will undergo very extensive testing to ensure exceptional
performance of both the core radio transceiver and user functionality before
shipping commences. We have commenced the component purchasing process and
expect that the first units will start shipping towards the middle of 2023.
Our standard vessel transceivers continue to be recognised as the leading
quality product in the market, with customers seeking SRT based products from
our OEM partners and our own em-trak brand. We are working on further
enhancements to these products as part of continuous improvement. Our Digital
Aids to Navigation System (DAS) offer is being further developed to enable us
to offer ready to install kits directly to ports and waterway authorities who,
following a Covid induced lull, have re-engaged with their plans to digitise
navigation. The first DAS products have been launched with further to come.
Looking to the new financial year, we expect to see a material recovery in our
financial results driven by existing and new contracts in our systems division
and moderate, production constrained, growth, in our transceivers business.
In the first half we expect to show the first signs of that growth from the
completion of revenue milestones from existing contracts, and during the
second half from some substantial new system contracts that have been pending
for some time and form part of the £600m worth of new contract opportunities
on which our sales team are focused. We recognise and share the frustration at
the time these are taking to convert into signed contracts, however in the
last year, as reported we have seen vigorous re-engagement from these
customers who have in many cases had to restart their approval processes due
to internal time-out rules. We have close engagement with these customers, and
several are now in the late-sales stage administrative process that leads to
contract awards. Whilst these late-stage processes are defined by the
customer's respective legal procurement processes and thus entirely out of our
control, we do have good visibility of their status and this underpins our
confidence of new system contracts. An example of this is our January £40m
project award where we had a high degree of certainty of the contract award
well before the actual contract was signed and announced. I therefore expect a
succession of substantial new contracts during the second half of the new
financial year which will drive revenues in the new year and subsequent years.
And thereafter further contracts driven by the long-term trend of countries
wanting to build up sovereign maritime surveillance capability.
Our transceivers business will continue to benefit from increasing demand for
AIS in both commercial and leisure markets, underpinned by existing and new
legislation and general trend of digitising marine navigation. We also expect
to see good results from our ongoing DAS strategy, that targets environment
monitoring and navigation safety, where we have a market leading portfolio of
products. Whilst we expect the component supply issue to remain until the end
of 2023, we are confident that we can expand production to meet demand at the
higher pricing and will continue to work closely with our valued customer base
to that end. NEXUS will start to make a contribution in the next financial
year (2023/24) and based upon initial market feedback we expect this growth to
be substantial.
SRT's fundamental business model remains the same in that we focus on
developing advanced core technologies and that deliver products with
innovative functionalities for the marine market. These are delivered to
customers through a global network of over 1,000 established partners, that
range from marine electronic dealers, OEM marine electronic brands and system
integrators. This enables us to focus our investment and resources primarily
on product development and maintain low overheads whilst targeting a
significant global market and multiple substantial projects. This means that
we are structured to deliver substantial growth without commensurate growth in
our cost base. However, it also means that we must have and maintain the very
best core technology and product development capability as we have done in the
past financial year, something that our management team has carefully built
over many years and continues to evolve. Our transformation to a flexible
hybrid work location model is enabling us to harness global talent and this
process has accelerated during the past year and will continue going forward,
enabling SRT to extend its product lead. In that regard I want to thank our
team for their hard and intelligent work that enables us to have the products
that are the foundation of our business and future.
In final summary, the year was one of operational and market recovery and we
expect this to be reflected in our financial performance in the new financial
year and years ahead - as such we as a board look forward to the future with
confidence. I would like to thank both our staff and shareholders for their
continued support that has enabled SRT maintain its business through this
difficult period.
Kevin Finn, Chairman, Date: 27 July 2022
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR
THE YEAR ENDED 31 MARCH 2022
2022 2021
Note
£ £
Revenue 8,172,900 8,275,022
Cost of sales (5,500,942) (5,097,419)
Gross profit 2,671,958 3,177,603
Administrative costs (8,721,560) (8,048,640)
Foreign exchange losses (147,754) (486,675)
Total administrative costs and foreign exchange losses (8,869,314) (8,535,315)
Operating loss (6,197,356) (5,357,712)
Finance expenditure (615,648) (574,248)
Finance income 421 1,057
Loss before tax (6,812,583) (5,930,903)
Income tax credit 974,578 797,060
Loss for the year after tax (5,838,005) (5,133,843)
Total comprehensive expense for the year (5,838,005) (5,133,843)
Loss per share: 4
Basic (3.53)p (3.13)p
Diluted (3.53)p (3.13)p
CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 31 MARCH 2022
2022 2021
Note £ £
Assets
Non-current assets
Intangible assets 9,368,069 8,274,170
Property, plant and equipment 1,328,842 1,688,512
Tax asset - 793,602
Total non-current assets 10,696,911 10,756,284
Current assets
Inventories 2,359,922 2,368,283
Trade and other receivables 3,847,735 3,600,187
Current tax recoverable 978,963 -
Cash 5,924,601 5,286,432
Restricted cash 906,245 -
Total current assets 14,017,466 11,254,902
Liabilities (6,459,635) (1,648,983)
Current liabilities
Trade and other payables
Borrowings 5 (7,245,000) (8,515,000)
Lease liabilities (201,402) (262,011)
Total current liabilities (13,906,037) (10,425,994)
Net current assets 111,429 828,908
Total assets less current liabilities 10,808,340 11,585,192
Non-current liabilities
Borrowings (312,500) -
Lease liabilities (703,317) (861,409)
Total non-current liabilities (1,015,817) (861,409)
Net assets 9,792,523 10,723,783
Shareholders' equity
Share capital 180,677 164,252
Share premium account 18,067,612 13,431,735
Retained loss (13,946,362) (8,362,800)
Other reserves 5,490,596 5,490,596
Total shareholders' equity 9,792,523 10,723,783
CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31 MARCH 2022
2022 2021
£ £
Cash generated from operating activities 1,405,136 2,164,982
Corporation tax received 789,217 674,236
Net cash generated from operating activities 2,194,353 2,839,218
Investing activities
Expenditure on product development (3,327,011) (2,770,455)
Purchase of property, plant and equipment (183,802) (341,875)
Interest received 421 1,057
Net cash used in investing activities (3,510,392) (3,111,273)
Financing activities
Gross proceeds on issue of shares 4,919,130 2,000,005
Costs of issue of shares (266,828) (102,851)
New loans issued 1,000,000 3,525,000
Loan repayments (1,957,500) -
Lease repayments (267,458) (267,749)
Loan interest paid (566,891) (514,726)
Net cash generated from financing activities 2,860,453 4,639,679
Net increase in cash and cash equivalents 1,544,414 4,367,624
Net cash and cash equivalents at beginning of year 5,286,432 918,808
Net cash and cash equivalents at end of year 6,830,846 5,286,432
Notes
1. Status of financial information
SRT is a public limited company incorporated in England and Wales whose
ordinary shares of 0.1p each are traded on the AIM Market of the London Stock
Exchange. The Company's registered office is Wireless House, Westfield
Industrial Estate, Midsomer Norton, Bath BA3 4BS.
The Board of Directors approved this preliminary announcement on 27 July 2022.
This announcement does not itself contain sufficient information to comply
with all the disclosure requirements of IFRS and does not constitute statutory
accounts of the Company for the years ended 31 March 2022 or 31 March 2021.
The financial information has been extracted from the statutory accounts of
the Company for the years ended 31 March 2022 and 31 March 2021. The report of
the auditors on those statutory accounts was unqualified and did not contain a
statement under section 498(2) or (3) of the Companies Act 2006. The audit
reports for the years ended 31 March 2021 and 2022 drew attention by way of
emphasis to a material uncertainty relating to going concern and
recoverability of certain assets.
The statutory accounts for the year ended 31 March 2021 have been delivered to
the Registrar of Companies, whereas those for the year ended 31 March 2022
will be delivered to the Registrar of Companies following the Company's Annual
General Meeting.
2. Basis of preparation
The financial statements have been prepared in accordance with UK-adopted
international accounting standards. For the purposes of the preparation of
the consolidated financial information, the Group has applied all standards
and interpretations that are effective for accounting periods beginning on or
after 1 April 2021. The financial information has been prepared under the
historical cost convention unless otherwise stated.
3. Dividends
The Board is not recommending the payment of a final dividend.
4. Loss per ordinary Share
The basic loss per share has been calculated on the loss after taxation of
£5,838,005 (2021: loss £5,133,843) divided by the weighted number of
ordinary shares in issue of 165,167,407 (2021: 163,728,344).
During the current and previous years, the Group incurred a loss after
taxation and therefore there is no dilution of the impact of the share options
granted.
5. Borrowings
Bank loan
The bank loan (amount owed at 31 March 2022: £1,562,500) was drawn down in
April 2020 as a £2,500,000 one year loan provided under the UK government
Coronavirus Business Interruption Loan Scheme (CBILS) at an interest rate of
0%. During the year, the renewal of this facility has been agreed with
quarterly repayments commencing in July 2021 through to April 2023 at an
interest rate of 2.59% above base rate.
Other loans
As of 31 March 2022, the total of other loans outstanding is £5,995,000.
These all relate to drawdowns on a £20 million secured note programme which
has been arranged by LGB Capital Markets and which is secured by a floating
charge over the Group's assets. In total, the group has outstanding headroom
of £6,345,000 on the available £20 million. The loans have terms of up to 3
years and an interest rate of 8%-10%.
During the year ended 31 March 2022 the covenant in relation to debt service
cover was breached and a waiver from loan note holders was obtained subsequent
to the year end on May 4(th) 2022. Due to the waiver not being received prior
to the year end and the covenants being re-tested at 30 September 2022, IAS 1
requires that the loans are all classified as being repayable in less than one
year, despite their maturity dates of up to 3 years. The gearing covenant was
not breached as at 31 March 2022.
6. Annual Report and AGM
The Annual Report will be available from the Company's website,
www.srt-marine.com (http://www.srt-marine.com) once it is published. To
locate the report, click "Investors" and then scroll down the page to "Reports
and Presentations". The Annual Report and Notice of AGM will be posted to
shareholders on 19 August 2022.
The AGM will be held at the Centurion Hotel, Charlton Lane, Radstock BA3 4BD
at 11.00am on September 21, 2022. Prior to the commencement of the formal AGM
there will be an Open Morning at SRT's offices, commencing at 9.00am.
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