REG - SRT Marine Systems - Half-year Report
02/12/2021 07:00
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RNS Number : 2724U SRT Marine Systems PLC 02 December 2021
The information communicated in this announcement contains inside information
for the purposes of Article 7 of the Market Abuse Regulation (EU) No. 596/2014
as it forms part of UK domestic law by virtue of the European Union
(Withdrawal) Act 2018 and is dlsclosed 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 2021
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 2021 (the "Period").
Financial Highlights
· 24% - year on year H1 period revenue increase to £4.7m
· 36% - gross profit margin
· £2.0m - gross cash balances as at end of H1
Operational Summary
· Significant increase in new system contract engagement.
· Major functionality and capability upgrade to GeoVS integrated
surveillance platform.
Positive reception from OEM's to initial NEXUS transceiver product launch.
Commenting on today's results, Simon Tucker, CEO of SRT said:
"Our transceivers business has performed very well and we expect this trend to
continue through the second half. Following a period of Covid induced
stagnation, system customers have substantially re-engaged during the first
half, some with a renewed sense of urgency to progress with their maritime
surveillance system plans. As we have previously mentioned, of particular note
are four in Asia and Middle East worth an aggregate of £71m which we are
confident will commence during the second half."
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 / Tim Harper (Corporate Broking)
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
Whilst our transceivers business continues to grow, we expect our systems
business to catch up from Covid delays during the second half with the
commencement of new projects which will result in a considerably improved year
end outcome along with greater clarity and surety on our longer-term financial
outlook.
Year on year revenues for the same period grew 24% from £3.8m to £4.7m,
generating a loss before tax of £3.1m. Our transceivers business grew 11%
year on year generating £4.2m revenues, with our systems business
contributing £0.5m from its first sales of our S-MDA system data product.
Cash balances were £2.0m as at 30(th) September 2021. During the second half
we will receive further substantial payments from existing systems customers
as well as the first payments from expected new contracts. I am pleased to
report we have also increased the capacity of our non-dilutive flexible
working capital loan note program by up to a further £10m.
Our business has transitioned to a hybrid home/office operating model which,
whilst not originally envisaged, has yielded significant productivity
improvements in both our systems and transceivers business and has enabled us
to continue to operate at maximum capacity even during full lock down periods.
Notably this has also forced us to refine our systems delivery model such that
we can more easily support the implementation of multiple system projects at
lower cost.
The transceivers business which develops AIS devices for leisure and
commercial vessels and marine environment monitoring has made significant
strides with NEXUS, our major new product development. NEXUS combines marine
voice and data communications by integrating AIS and VHF within a single
device. Whilst not a new concept in itself, NEXUS includes some major
innovations that we believe are market disruptive and deliver a new level of
end user functionality. NEXUS has been soft launched in the market and
introduced to selected target OEMs with very positive responses received. We
expect the first NEXUS units to start shipping in early 2023 and be a major
growth driver for the transceivers business. In parallel to this we have also
commenced plans to evolve our existing AIS transceivers in the coming years,
to improve functionality, performance and reduce production costs.
SRT has now manufactured over 350,000 AIS products, which accounts for the
majority of all AIS devices deployed globally. However, with approximately 26
million vessels worldwide, only a small percentage of boats have one installed
thus far. A clear trend is now established where AIS has moved from a product
categorised as an accessory, to one which is now its own product type category
and a standard fit on most large new build leisure and commercial boats and is
'the next' marine electronics purchase for existing boaters who expect to
travel in areas where they will encounter commercial vessels and/or are
undertaking longer trips. This is further augmented by a growing suite of
national mandates affecting various types of commercial vessels, each which
create an initial spike in demand followed by many years of replacement
cycles. We therefore see steadily increasing demand from this market across
all segments to continue to grow year on year into the future.
During the first half we saw sustained growth in all three transceiver
segments. This includes Em-trak, which sells vessel transceivers through a
global network of over 1,000 dealers, our digital AIS AtoN (DAS) which sells
specialist buoy and environment monitoring transceivers, and our OEM and
module business which provides AIS product solutions to existing marine
electronics brands. We believe that each of these businesses remain at the
beginning of their long-term growth and as such we have commensurately
increased sales resources to enable us to handle the growing sales
opportunities. The combination of our established market position built over
many years that includes multiple global sales channels, a complete and proven
product portfolio and an experienced development and logistics team means we
expect our business to continue to do very well, both in the second half and
further on.
Our systems business has been a long-term investment for SRT to target a large
global market and transform our business. We have made significant investments
to develop our SRT-MDA System product, which today is a highly sophisticated
national scale integrated surveillance system. In parallel we have built a
strong and respected market position and worked closely with customers around
the world over many years to help them develop ideas and aspirations into
solid system deployment plans. Whilst much progress has been made, the timing
of Covid delayed the expected conversion of multiple new system contracts as
customers' attention was temporarily deviated. We recognise and share the
frustration of shareholders that the systems business has not yet delivered
the returns expected. However, we are confident this situation will soon
change with long pending new contracts commencing.
To date we have undertaken $50m of important reference projects in S. America,
Middle East and Asia and invested heavily in developing a unique and robust
integrated maritime surveillance and management system. The SRT-MDA System is
designed to meet the next generation requirements of national agencies, such
as Coast Guards and Fisheries wanting to update their old unintegrated
maritime surveillance systems and interim web delivered services, to a fully
integrated in country and autonomous national marine surveillance system. This
combination of market presence and proven market-fit product has placed SRT at
the forefront of this global market opportunity, resulting in a significant
number of active inquiries, all of which are at different stages in their
process of developing strategies into real plans and implementation. Our
objective is to help interested parties develop their ideas into clear
internal plans built around the SRT-MDA System. The scale, complexity and
long-term nature of these projects necessarily means that this can be a
lengthy and variable process. As there are a considerable number of active
inquiries, we pro-actively manage the focus of our sales resources by
carefully validating prospects, prioritising those who have clear budgets,
political support and defined internal strategies to start building their
systems. As of 30(th) September 2021, our validated systems contract
opportunity pipeline stood at approximately £550m, representing the aggregate
value of all validated system contract opportunities that currently have an
expected start date horizon that varies from within the next few weeks or
months up to 3 years.
During the first half we continued to receive new inquiries as well as
assisting those not yet sufficiently developed with their planning to qualify
for our validated sales pipeline. I am very pleased to report that we saw most
of our system validated prospect customers re-emerge having been deviated by
Covid related events which had significantly slowed or temporarily suspended
project planning activities. As we have previously reported there are four
specific projects worth an aggregate of £71m which we know are at their final
stage before contracting and, based upon explicit information provide to us by
the customers in question, we are confident that these will be signed and
started during the second half. They have very aggressive delivery timescales
and we have therefore already purchased much of the standard SRT-MDA System
equipment necessary to deliver the initial phases within the required
timescales of the contract. Upon completion of these initial contracts, we
expect there to be a series of follow on projects from these customers as they
continue to build up their systems and these are already in discussion. In
addition to these specific four, there are two others in the Middle East and
one in Asia which have unexpectedly progressed and based upon customer
guidance could materialise during this financial year, however we prefer to
calibrate expectations for next financial year. Other opportunities in our
pipeline have also progressed, some quicker than others due to their differing
processes most of which are in Asia and will yield further contracts during
the course of next year and the year after.
Despite continued local challenges caused by Covid restrictions, we have
continued to progress the implementation of the SRT-MDA project in the
Philippines which is being delivered to the The Philippines Fishing Authority,
BFAR. More vessels have been equipped with transceivers, and monitoring
centres have been commissioned with training delivered. I am pleased to report
that we have developed an excellent working relationship with the customer
which is reflected in the progress of the project and continued timely
payments. This project is scheduled for completion at the end of next year,
and we are now in final discussions for the entering of a long-term S-MDA data
supply agreement and system maintenance contract, plus further contracts to
extend the system to cover more vessels. Everyone at SRT is rightly very proud
of this significant deployment of the SRT-MDA System which will be the largest
and most sophisticated fisheries management system worldwide.
In summary, transceivers continues to grow and we have a clear plan to
accelerate that growth. Our systems business has done well to progress
existing projects and £71m of new project contracts from our VSP pipeline are
expected to commence during the second half, with the potential of follow on
contracts thereafter. I would like to take this opportunity to thank our staff
and partners who have ensured our progress during this tricky period and our
shareholders who have patiently supported SRT.
Kevin Finn
Chairman
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2021
Six months ended Six months ended Year
ended
30 Sep 2021 30 Sep 2020 31 Mar
2021
Unaudited Unaudited Audited
Notes £ £ £
Revenue 4,703,107 3,790,852 8,275,022
Cost of sales (2,995,675) (2,308,881) (5,097,419)
Gross profit 1,707,432 1,481,971 3,177,603
Administrative costs (4,544,238) (3,919,662) (8,535,315)
Operating loss (2,836,806) (2,437,691) (5,357,712)
Finance expenditure (291,599) (282,925) (574,248)
Finance income 381 654 1,057
Loss before income tax (3,128,024) (2,719,962) (5,930,903)
Income tax credit - - 797,060
Loss for the period (3,128,024) (2,719,962) (5,133,843)
Total comprehensive loss for the period (3,128,024) (2,719,962) (5,133,843)
Loss per share:
Basic 2 (1.91)p (1.66)p (3.13)p
Diluted 2 (1.91)p (1.66)p (3.13)p
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 SEPTEMBER 2021
As at As at As at
30 Sep 30 Sep 31 Mar
2021 2020 2021
Unaudited Unaudited Audited
Notes £ £ £
Assets
Non-current assets
Intangible assets 8,542,558 8,252,007 8,274,170
Property, plant and equipment 1,553,099 1,643,557 1,688,512
Deferred Tax 793,602 670,778 793,602
Total non-current assets 10,889,259 10,566,342 10,756,284
Current assets
Inventories 2,352,351 2,878,417 2,368,283
Trade and other receivables 2,840,470 7,441,661 3,600,187
Cash and cash equivalents 1,998,747 4,996,949 5,286,432
Total current assets 7,191,568 15,317,027 11,254,902
Liabilities
Current liabilities
Trade and other payables (1,862,600) (3,208,505) (1,648,983)
Financial liabilities 3 (6,530,000) (8,490,000) (8,515,000)
Lease liabilities (239,067) (205,223) (262,011)
Total current liabilities (8,631,667) (11,903,728) (10,425,994)
Net current (liabilities) / assets (1,440,099) 3,413,299 828,908
Total assets less current liabilities 9,449,160 13,979,641 11,585,192
Long term liabilities
Financial liabilities 3 (937,500) - -
Lease liabilities (770,383) (978,422) (861,409)
Total long term liabilities (1,707,883) (978,422) (861,409)
Net assets 7,741,277 13,001,219 10,273,783
Shareholders' equity
Share capital 4 164,282 164,252 164,252
Share premium account 13,441,305 13,431,735 13,431,735
Other reserves 6 5,490,596 5,490,596 5,490,596
Retained (loss) / earnings (11,354,906) (6,085,364) (8,362,800)
Total shareholders' equity 7,741,277 13,001,219 10,723,783
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2021
Six months ended Six months ended Year ended
30 Sep 2021 30 Sep 31 Mar 2021
2020
Unaudited Unaudited Audited
Notes £ £ £
Cash (used in) / generated from operating activities 5 653,548
(202,248) 2,164,982
Corporation tax received - - 674,236
Net cash (used in) / generated from operating activities
(202,248) 653,548 2,839,218
Investing activities
Expenditure on product development (1,499,267) (1,506,194) (2,770,455)
Purchase of property, plant and equipment
(143,081) (83,303) (341,875)
Interest received 381 534 1,057
Net cash used in investing activities (1,641,967) (1,588,963) (3,111,273)
Financing activities
Gross proceeds on issue of shares 9,600 2,000,005 2,000,005
Costs of issue of shares - (102,851) (102,851)
New loans issued - 3,500,000 3,525,000
Loan repayments (1,047,500) - -
Lease repayments (139,691) (131,848) (267,749)
Loan interest paid (265,879) (251,750) (514,726)
Net cash (used in) / generated from financing activities (1,443,470) 5,013,556
4,639,679
Net (decrease) / increase in cash and cash equivalents
(3,287,685) 4,078,141 4,367,624
Net cash and cash equivalents at beginning of period
5,286,432 918,808 918,808
Net cash and cash equivalents at end of period
1,998,747 4,996,949 5,286,432
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2021
Share Share Retained Earnings Other Reserves Total
Capital Premium
£ £ £ £ £
At 31 March 2020 154,844 11,543,989 (3,458,289) 5,490,596 13,731,140
Total comprehensive loss for the period - - (2,719,962) - (2,719,962)
Share based payment charge - - 92,887 - 92,887
Issue of equity share capital 9,408 1,990,597 - - 2,000,005
Costs of issue of equity share capital - (102,851) - - (102,851)
At 30 September 2020 164,252 13,431,735 (6,085,364) 5,490,596 13,001,219
Total comprehensive loss for the period - - (2,413,881) - (2,413,881)
Share based payment charge - - 136,445 - 136,445
At 31 March 2021 164,252 13,431,735 (8,362,800) 5,490,596 10,723,783
- - (3,128,024) - (3,128,024)
Total comprehensive loss for the period
Share based payment charge - - 135,918 - 135,918
Issue of equity share capital 30 9,570 - - 9,600
At 30 September 2021 164,282 13,441,305 (11,354,906) 5,490,596 7,741,277
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 2022.
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 2021 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.
The financial information for the six months ended 30 September 2021 and 30
September 2020 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 2 December 2021.
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 2021.
2. Loss per share
The basic loss per share has been calculated using the loss for the period of
£3,128,024 (six months ended 30 September 2020 - loss of £2,719,962; year
ended 31 March 2021 - loss of £5,133,843) divided by the weighted average
number of ordinary shares in issue of 164,252,431 (six months ended 30
September 2020 - 163,435,470 and year ended 31 March 2021 - 163,728,344).
During the six months ended 30 September 2021 and 2020 and the year ended 31
March 2021, the Group has incurred losses for the periods and therefore there
is no impact of the share options granted on diluted earnings per share.
3. Financial liabilities
30 Sep 2021 30 Sep 2020 31 Mar 2021
Unaudited Unaudited Audited
£ £ £
Less than one year:
Bank loan 1,250,000 2,500,000 2,500,000
Other loan 5,280,000 5,990,000 6,015,000
Total 6,530,000 8,490,000 8,515,000
More than one year:
Bank loan 937,500 - -
Other loan - - -
Total 937,500 - -
The bank loan of £2,500,000 was provided under the UK
government Coronavirus Business Interruption Loan Scheme (CBILS) as part of
the Group's COVID-19 resilience financing and is repayable in quarterly
payments, commencing in July 2021 through to April 2023 at an interest rate of
2.59% above base rate.
Other loans all relate to drawdowns on a £20 million secured
loan note programme which has been arranged by LGB Corporate Finance and which
is secured by a floating charge over the Group's assets. The loans have terms
of up to 3 years and interest rates of 8-10%.
During the period, a covenant in relation to debt service
cover was breached and a waiver from loan note holders was obtained shortly
after the period end. Due to the waiver not being received prior to the period
end, IAS 1 requires that the loans are classified as being repayable in less
than one year, despite their maturity dates as set out below:
£
Maturity date:
March 2022 1,840,000
December 2022 2,025,000
March 2023 1,000,000
June 2024 415,000
Total 5,280,000
4. Share capital
30 Sep 30 Sep 2020 31 Mar 2021
2021
Unaudited Unaudited Audited
£ £ £
Allotted:
Ordinary shares of 0.1p each 164,282 164,252 164,252
Reconciliation of movement in share capital Number of shares
Shares outstanding at 31 March 2020
154,843,919
Share placing April 2020
(a)
7,208,020
Exercise of share options
(b)
2,200,000
Shares outstanding at 30 September 2020
& 31 March
2021
164,251,939
Exercise of share options
(c)
30,000
Shares outstanding at 30 September 2021 164,281,939
Notes:
a) The placing in April 2020 took place at 25p per share raising
gross proceeds of £1,802,005 before costs of £102,851.
b) 2,200,000 share options were exercised at a price of 9p in May
2020.
c) 30,000 share options were exercised at a price of 32p in
September 2021
5. Cash used in operating activities
Six months ended Six months ended Year ended
30 Sep 2021 30 Sep 2020 31 Mar 2021
Unaudited Unaudited Audited
£ £ £
Operating loss (2,836,806) (2,437,691) (5,357,712)
Depreciation of property, plant and equipment
278,494 236,046 496,872
Amortisation of intangible fixed assets 1,230,879 1,031,069 2,273,167
Share-based payment charge 135,918 92,887 229,332
Decrease / (increase) in inventories 15,933 (949,687) (439,553)
Decrease / (increase) in trade and other receivables
759,717 8,516,873 12,358,347
Increase / (decrease) in trade and other liabilities
213,617 (5,835,949) (7,395,471)
Net cash (used in) / generated from operating activities
(202,248) 653,548 2,164,982
6. Other reserves
Other reserves consist of a capital redemption reserve of £2,857 (six months
ended 30 September 2020 - £2,857 and year ended 31 March 2021 - £2,857), a
warrant reserve of £62,400 (six month ended 30 September 2020 - £62,400 and
year ended 31 March 2021 - £62,400) and a merger reserve of £5,425,339 (six
months ended 30 September 2020 - £5,425,339 and year ended 31 March 2021 -
£5,425,339). There were no movements in these reserves during the period.
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