REG - SRT Marine Systems - Half-year Report
20/11/2023 07:00
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RNS Number : 8851T SRT Marine Systems PLC 20 November 2023
The information communicated in this announcement contains inside information
for the purposes of the UK Market Abuse Regulations and is disclosed in
accordance with the Company's obligations.
SRT MARINE SYSTEMS PLC ("SRT" or the "Group")
HALF YEARLY REPORT FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2023
SRT, the AIM-quoted developer and supplier of maritime surveillance, analytics
and management systems and products announces its unaudited interim results
for the six months ended 30 September 2023 (the "Period").
Financial Highlights
· Continued year on year growth of transceivers business.
· £2.5m new product and technology investment.
· £160m systems contract order book for System deliveries to
commence in H2.
· Gross cash balance at end of H1 £3.9m (H1 2022: £1.5m).
Operational Summary
· NEXUS transceiver product commences testing and launch planning.
· Final completion phase of Philippines - BFAR fisheries contract.
· £40m Middle East Border Agency maritime surveillance project -
Phase 1 completed, and planning and preparation for final Phase 2.
· Planning and procurement for commencement of £145m SE Asia coast
guard project signed in May.
Commenting on today's results, Simon Tucker, CEO of SRT said:
"The hard work and progress made across the business during the first half has
prepared us for a busy second half, with the scheduled delivery of a number of
system project milestones and continued growth of our transceivers business.
In line with this, we are on track to complete our financial year end as
expected."
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)
Cavendish
Jonny Franklin-Adams / Teddy Whiley (Corporate Finance) +44 (0) 20 7220 0500
Tim Redfern / Charlotte Sutcliffe (Corporate Broking)
Yellow Jersey PR
Charles Goodwin / Annabelle Wills +44 (0) 7747 788 221
About SRT:
SRT Marine Systems PLC ("SRT") is a global leader in maritime domain awareness
products and systems. Our solutions integrate multiple technologies, advanced
analytics, innovative digital display systems, logistics and command and
control to provide enhanced maritime surveillance, security, safety and
management for national authorities such as coast guards and fishery
authorities. Applications include coastal and territorial water surveillance
and security, fisheries monitoring, management and IUU detection, search and
rescue, waterway management and aquatic environment monitoring as well as
individual leisure and commercial boat owners.
About SRT:
SRT Marine Systems PLC ("SRT") is a global leader in maritime domain awareness
products and systems. Our solutions integrate multiple technologies, advanced
analytics, innovative digital display systems, logistics and command and
control to provide enhanced maritime surveillance, security, safety and
management for national authorities such as coast guards and fishery
authorities. Applications include coastal and territorial water surveillance
and security, fisheries monitoring, management and IUU detection, search and
rescue, waterway management and aquatic environment monitoring as well as
individual leisure and commercial boat owners.
Chairman's Statement
The first half of the financial year has been very busy with much progress
made across both our systems and transceivers businesses. With systems
contracts worth £160m to deliver, our project teams have been working closely
with the relevant customers and third-party suppliers on the substantial
preparatory and planning work required for their delivery, with multiple
milestones scheduled for H2, several of which are substantial revenue
generating milestones. Alongside this our transceivers business has made good
progress growing its sales and distribution as well as launching new products
which we expect to sell well during H2.
As already reported in our October 2023 trading statement, during the H1
period ending 30(th) September 2023, our systems business did not generate any
revenues having not completed any revenue milestones and as such the £5.5m of
Group revenues we are reporting derives entirely from our transceivers
business. Gross profit was 37%, resulting in a loss for the period of £4.6m,
and a period end cash position of £3.9m.
Systems
Our systems business, which provides maritime surveillance and monitoring
systems for government agencies such as coast guards and fisheries, has made
good progress on existing, new and prospective contracts. Our existing
contract with BFAR in the Philippines is in its final completion stage and is
expected to be completed during the second half. Having completed the first
phase of our £40m Middle East Border Agency project, we have been working
closely with the customer to aggregate and plan the next two phases into a
single phased implementation which we expect to commence during Q4 of this
financial year. This work has included significant project planning as well as
preparation and staging of equipment ready to make the first invoice and
payment generating deliveries upon instruction to proceed from the customer.
Much planning work has also been completed in respect of our $180m (£145m)
contract with a SE Asia National Coast Guard (as announced on 18 May 2023),
which is expected to commence in the next few months upon completion of a
government-to-government loan agreement, which is in its final formal stages.
This work has included the completion of the substantial procurement planning
which includes supplier selection, price and terms negotiation and detailed
project planning with the customer and our local civil works contractors. This
has included multiple in-country meetings as well as a recent multi-agency
final project planning and review meeting in the UK with the end customer and
the UK government present. We expect to commence first deliveries during Q4,
which will also include the first substantial revenue milestones.
We have also been working closely with an existing long-standing Middle East
Coast Guard who wishes to move on to the next stage of their maritime
surveillance system strategy and expand and enhance their existing system.
Following the usual period of consultations which has defined the scope of
this follow-on phase we have received official notification that they are now
ready to proceed and are awaiting issue of the contract, expected shortly,
whereupon we shall immediately commence implementation with some deliverables
potentially falling into H2 depending on the exact timing of contract and
equipment procurement lead times.
In tandem with this focused work on existing customers, our sales and support
teams have substantially progressed negotiations and project specification
discussions with several of our validated new contract opportunities and as
such we expect to see further new contracts in the near future. In general, we
continue to see growing interest and engagement from nation-state agencies who
desire to acquire independent maritime surveillance capabilities to transform
their understanding and monitoring of their marine domains and adopt a digital
intelligence lead approach to active management and law enforcement.
The SRT-MDA System has continued its development journey and has grown to be a
sophisticated national scale integrated surveillance and monitoring system
which can be configured for either coast guard and or fisheries users. Our
development teams continue to enhance its capabilities with particular focus
around its data fusion, analytics and command & control capabilities. This
is a long-term continuous improvement development roadmap which is the
foundation of our success and will support the long-term relationships we form
with customers.
Transceivers
Our transceivers business, which develops and sells maritime navigation safety
and communication transceivers, continues to grow, with revenues 5% ahead of
the comparative period last year. This growth reflects the established
long-term market trend of marine navigation digitisation and SRT's position as
the dominant provider of AIS and related transceiver systems. We see a blend
of growing regulation and market-ripple adoption driving demand, for example
the Port of Antwerp has recently extended existing regulation affecting
certain classes of commercial vessels to make it mandatory that all vessels
operating there are required to have an AIS.
We have continued to grow our global distribution network which now consists
of over 5,000 entities, from dealers and distributors for our own em-trak
brand to leading original equipment manufacturers ("OEM's") located across the
world from Australia, Japan to Europe and USA. Of note is our high margin
Digital ATON Systems ("DAS") sub-division which is focused on providing
specialist navigation devices for buoys and infrastructure. We see a
substantial global opportunity and have launched new kitted products which
make it easy for ports, waterways, and marine infrastructure owners to
implement these systems with full interoperability with their existing
systems. This is revealing new and unexpected opportunities, an example being
a new opportunity whereby many thousands of fish farms in the EU will require
tracking and monitoring using AtoN's from next year. We now have a dedicated
salesperson focused on this growing market, and this has started to bear fruit
with more sales and a growing pipeline of opportunities.
Our new NEXUS marine communication VHF/DSC radio system is now in its later
stages of development and commenced its testing phase along with a soft launch
to our dealers in the November METS exhibition. We have had a stronger market
reaction than was expected and received forward orders for over 100 units
within the first three days of the soft launch. We expect to complete all
final testing and pre-production by the summer of 2024 and start shipping
product in Autumn 2024. This is approximately 12 months later than we had
originally planned due to a conscious decision to be cautious and undertake a
much more extensive product testing and refinement period due to the
complexity of the product and to ensure our first voice communications product
is of a standard commensurate with what the market expects from an SRT device.
Outlook
I acknowledge and appreciate shareholders concerns regarding the financial
performance imbalance between the two halves of this financial year; however,
this is the nature of the timing of revenue related deliverables on our
current systems projects and was expected. With the revenue milestones
scheduled for the second half, we are confident of our full year performance.
Going forward, with multiple system contracts running in parallel, we expect a
smoother distribution of revenues across financial periods. However, I must
highlight that the exact timing of deliverables on a project are influenced by
multiple factors, some of which beyond our control and thus they can easily
slip either side of an accounting line. This does not detract from the
fundamentals of our business which are now built on robust, proven products
that deliver multiple revenue streams with defensible profit margins, being
delivered by an experienced team into a global market whose growth is driven
by strong fundamentals of security, safety and environment protection.
Kevin Finn
Chairman
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2023
Six months ended Six months ended Year
ended
30 Sep 2023 30 Sep 2022 31 Mar
2023
Unaudited Unaudited Audited
Notes £ £ £
Revenue 5,502,316 18,836,044 30,506,152
Cost of sales (3,441,404) (11,633,644) (19,467,188)
Gross profit 2,060,912 7,202,400 11,038,964
Administrative costs (6,268,250) (4,742,197) (10,903,940)
Operating (loss) / profit (4,207,338) 2,460,203 135,024
Finance expenditure (411,355) (337,628) (781,547)
Finance income 13 137 351
(Loss) / profit before income tax (4,618,680) 2,122,712 (647,172)
Income tax credit - - 715,692
(Loss) / profit for the period (4,618,680) 2,122,712 69,520
Total comprehensive (loss) / profit for the period (4,618,680) 2,122,712 69,520
(Loss) / earnings per share:
Basic 2 (2.47)p 1.17 0.04p
Diluted 2 (2.47)p 1.16 0.04p
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 SEPTEMBER 2023
As at As at As at
30 Sep 30 Sep 31 Mar
2023 2022 2023
Unaudited Unaudited Audited
Notes £ £ £
Assets
Non-current assets
Intangible assets 12,989,804 10,705,675 11,756,717
Property, plant and equipment 1,246,425 1,287,004 1,256,223
Total non-current assets 14,236,229 11,992,679 13,012,940
Current assets
Inventories 4,304,490 2,672,582 3,465,626
Trade and other receivables 4,268,348 13,434,163 5,828,652
Current tax recoverable 973,188 978,963 968,607
Cash 3,930,126 1,522,079 2,181,548
Restricted cash 949,115 906,245 949,115
Total current assets 14,425,267 19,514,032 13,393,548
Liabilities
Current liabilities
Trade and other payables (7,189,712) (11,592,880) (7,009,926)
Borrowings 3 (9,690,000) (3,962,500) (8,002,500)
Current tax liabilities - - (199,126)
Lease liabilities (250,840) (223,137) (237,371)
Total current liabilities (17,130,552) (15,778,517) (15,448,923)
Net current (liabilities) / assets (2,705,285) 3,735,515 (2,055,375)
Total assets less current liabilities 11,530,944 15,728,194 10,957,565
Long term liabilities
Borrowings 3 - (2,985,000) -
Lease liabilities (638,159) (704,026) (649,946)
Total long term liabilities (638,159) (3,689,026) (649,946)
Net assets 10,892,785 12,039,168 10,307,619
Shareholders' equity
Share capital 4 192,428 180,677 181,517
Share premium account 23,245,908 18,067,612 18,213,072
Other reserves 5,490,596 5,490,596 5,490,596
Retained loss (18,036,147) (11,699,717) (13,577,566)
Total shareholders' equity 10,892,785 12,039,168 10,307,619
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2023
Six months ended Six months ended Year ended
30 Sep 2023 30 Sep 31 Mar 2023
2022
Unaudited Unaudited Audited
Notes £ £ £
Cash (used in) / generated from operating activities
5 (1,683,914) (794,348) 778,840
Corporation tax (paid)/ received (203,707) - 925,174
Net cash (used in) / generated from operating activities
(1,887,621) (794,348) 1,704,014
Investing activities
Expenditure on product development (2,494,889) (2,483,961) (4,795,292)
Purchase of property, plant and equipment
(83,042) (57,955) (199,061)
Interest received 13 137 351
Net cash used in investing activities (2,577,918) (2,541,779) (4,994,002)
Financing activities
Gross proceeds on issue of shares 5,408,231 - 146,300
Costs of issue of shares (364,484) - -
New loans issued 2,000,000 15,000 1,695,000
Loan repayments (312,500) (625,000) (1,250,000)
Lease repayments (124,357) (139,323) (258,835)
Loan interest paid (392,773) (317,072) (742,660)
Net cash generated from / (used in) financing activities 6,214,117 (1,066,395)
(410,195)
Net increase / (decrease) in cash and cash equivalents
1,748,578 (4,402,522) (3,700,183)
Net cash and cash equivalents at beginning of period
3,130,663 6,830,846 6,830,846
Net cash and cash equivalents at end of period
4,879,241 2,428,324 3,130,663
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2023
Share Share Retained Earnings Other Reserves Total
Capital Premium
£ £ £ £ £
At 31 March 2022
180,677 18,067,612 (13,946,362) 5,490,596 9,792,523
Total comprehensive profit for the period - - 2,122,712 - 2,122,712
Share based payment charge - - 123,933 - 123,933
At 30 September 2022 180,677 18,067,612 (11,699,717) 5,490,596 12,039,168
- - (2,053,192) - (2,053,192)
Total comprehensive loss for the period
Share based payment charge - - 175,343 -
175,343
Issue of equity share capital 840 145,460 - 146,300
At 31 March 2023 181,517 18,213,072 (13,577,566) 5,490,596 10,307,619
- - (4,618,680) - (4,618,680)
Total comprehensive loss for the period
Share based payment charge - - 160,099 - 160,099
Issue of equity share capital 10,911 5,397,320 - - 5,408,231
Cost of issue of shares - (364,484) - - (364,484)
At 30 September 2023 192,428 23,245,908 (18,036,147) 5,490,596
10,892,785
NOTES TO THE INTERIM FINANCIAL STATEMENTS
1. Accounting Policies
Basis of preparation
The interim financial information in this report has been prepared using
accounting policies consistent with International Financial Reporting
Standards (IFRS) as adopted by the United Kingdom. IFRS is subject to
amendment and interpretation by the International Accounting Standards Board
(IASB) and the IFRS Interpretations Committee and there is an ongoing process
of review and endorsement by the UK Endorsement Board. The financial
information has been prepared on the basis of IFRS that the Directors expect
to be adopted by the UK Endorsement Board and applicable as at 31 March 2024.
Non-statutory accounts
Financial information contained in this document does not constitute statutory
accounts within the meaning of section 434 of the Companies Act 2006 ("the
Act"). The statutory accounts for the year ended 31 March 2023 have been filed
with the Registrar of Companies. 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 report drew attention by way of
emphasis to a material uncertainty relating to going concern and included an
emphasis of matter paragraph in relation to the uncertainties associated with
the forecasting of future revenues and profits.
The financial information for the six months ended 30 September 2023 and 30
September 2022 is unaudited. The interim financial statements will be
available to download on the Company's website www.srt-marine.com
(http://www.srt-marine.com) from 20 November 2023.
Accounting policies
The accounting policies as applied by the Group are the same as those applied
by the Group in the consolidated financial statements for the year ended 31
March 2023.
2. (Loss) / earnings per share
The basic (loss) / earnings per share has been calculated using the loss for
the period of £4,618,680 (six months ended 30 September 2022 - profit of
£2,122,712, year ended 31 March 2023 - profit of £69,520) divided by the
weighted average number of ordinary shares in issue of 187,174,103 (six months
ended 30 September 2022 - 180,676,939 and year ended 31 March 2023 -
180,961,021).
During the period ended 30 September 2023, the Group has incurred a loss for
the period and therefore there is no impact of the share options granted on
diluted earnings per share.
For the previous period ended 30 September 2022, the calculation of diluted
earnings per share has been calculated on profit for the period of £2,122,712
(year ended March 31 2023 profit of £69,520). It assumes conversion of all
potentially dilutive ordinary shares, all of which arise from share options. A
calculation is performed to determine the number of shares to be issued for no
consideration. The number of dilutive shares under option at 30 September 2022
was 1,787,866 (At March 31 2023 1,958,724) and the weighted average number of
ordinary shares for the purposes of dilutive earnings per share was
182,464,805 (year to 31 March 2023 182,919,745).
3. Borrowings
30 Sep 2023 30 Sep 2022 31 Mar 2023
Unaudited Unaudited Audited
£ £ £
Less than one year:
Bank loan 2,000,000 937,500 312,500
Other loan 7,690,000 3,025,000 7,690,000
Total 9,690,000 3,962,500 8,002,500
More than one year:
Bank loan - - -
Other loan - 2,985,000 -
Total - 2,985,000 -
The bank loan was drawn down in September 2023 as a
short-term loan provided under the UK Government Recovery Loan Scheme (RLS) at
an interest rate of 3.5% above base rate.
Other loans relate to drawdowns on a secured note programme
which has been arranged by LGB Capital Markets. The loan note liabilities are
secured by a floating charge over the Group's assets. The loans have terms of
up to 3 years and interest rates of 8-12%.
During the current period and previous year, a covenant in
relation to debt service cover was breached and a waiver from loan note
holders was obtained shortly after the period/year end. Due to the waiver not
being received prior to the period/year end, IAS 1 requires that the loans are
classified as being repayable in less than one year.
4. Share capital
30 Sep 30 Sep 2022 31 Mar 2023
2023
Unaudited Unaudited Audited
£ £ £
Allotted:
Ordinary shares of 0.1p each 192,428 180,677 181,517
Reconciliation of movement in share capital Number of shares
Shares issued at 31 March 2022
and September 2022
180,676,939
Exercise of share options
(a)
210,000
Exercise of share options (b)
530,000
Exercise of share options
(c)
100,000
Shares issued at 31 March 2023
181,516,939
Exercise of share options
(d)
8,000
Placing of shares (e)
10,720,000
Exercise of share options
(f)
15,000
Exercise of share options
(g)
48,000
Exercise of share options
(h)
120,000
Shares issued at 30 September 2023
192,427,939
Notes:
a) 150,000 share options were exercised at a price of 18p in
November 2022 and a further 60,000 at a price of 23p in the same month.
b) 500,000 share options were exercised at a price of 20p in
December 2022 and a further
30,000 at a price of 18p in the same month.
c) 100,000 share options were exercised at a price of 0.1p in
February 2023.
d) 8,000 share options were exercised at a price of 0.1p in April
2023.
e) The placing in June 2023 took place at 50p per share raising
gross proceeds of £5,360,000 before costs of £364,484.
f) 15,000 share options were exercise at a price of 0.1p in July
2023.
g) 40,000 share options were exercised at a price of 26p in August
2023 and a further 8,000 at an exercise price of 0.1p in the same month.
h) 120,000 share options were exercised at a price of 31.5p in
September 2023.
5. Cash (used in) / generated from operating activities
Six months ended Six months ended Year ended
30 Sep 2023 30 Sep 2022 31 Mar 2023
Unaudited Unaudited Audited
£ £ £
Operating (loss) / profit (4,207,338) 2,460,203 135,024
Depreciation of property, plant and equipment
200,296 241,005 474,226
Amortisation of intangible fixed assets 1,261,803 1,146,354 2,406,644
Share-based payment charge 160,099 123,933 299,276
Increase in inventories (838,864) (312,660) (1,105,704)
Increase in trade and other payables 179,786 5,133,245 550,291
Decrease / (increase) in trade and other receivables
1,560,304 (9,586,428) (1,980,917)
Net cash (used in) / generated from operating activities
(1,683,914) (794,348) 778,840
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