SRT Marine Systems PLC SE Asia Contract Change (9565U)
July 18 2018 - 1:00AM
UK Regulatory
TIDMSRT
RNS Number : 9565U
SRT Marine Systems PLC
18 July 2018
SRT MARINE SYSTEMS PLC
("SRT" or the "Company")
SE Asia Project & Year End Update Revision
SRT advises that yesterday it was informed by its SE Asian
government customer of a decision to change the funding source and
therefore the contract structure for the fisheries monitoring
project announced in March 2018. This will adversely affect
revenues and profits for the year ending March 2018 and, if as
expected, SRT are awarded the contract again by the customer, will
positively affect revenues and profits for the financial year
ending 31 March 2019.
In March 2018, SRT was directly awarded a Euro 28.5m contract by
a SE Asian government to deliver the SRT VMS System for the purpose
of fisheries and maritime environment monitoring and management.
Whereupon SRT commenced the implementation of the project including
delivery and invoicing of product as per the contract
milestones.
The specified funding source for the project was to be provided
by way of an agreed overseas development assistance (ODA) loan from
a European government. Following some issues and delays in regards
to the activation of the loan and following confirmation of the
availability of internal funds for this project the customer has
formally decided to change the funding source for the project from
the original overseas ODA loan to their own internal funds. This
new funding has been approved and is now available for the
project.
In line with local government procurement regulations all
project contracts must specify the source of the funding. As such
the change in funding source requires a change to the existing
contract. The route to achieve this had originally been by way of a
contract novation process thereby maintaining the existing
contract. However, the customer has now determined that this is not
appropriate within their national procurement process and therefore
not advisable. Therefore, the customer has advised SRT that the
existing contract must now be cancelled on the basis that the ODA
loan funding source is not being used, and a new contract issued
via the standard procurement process which specifies the local
budget as the funding source.
As such SRT has been formally advised by the customer, and
accepted, the cancellation of the existing contract effective as
from 17(th) July 2018 and will now enter a new procurement process
which it expects to be completed over the next few months. The
project will then continue with payments being made directly from
the customer using their own funds.
In accordance with revenue recognition policies, the
deliverables made under the previous contract will be returned to
SRT, but remain in-country under SRT's local installation partner's
custody. The revenues arising from these deliverables made under
the now cancelled contract during the financial year ending March
2018 must therefore also be reversed, resulting in a reduction in
revenues of GBP8.2m for the year.
The accounting effect of this change is that management now
expect revenues for the year ending March 2018 to be reduced by
GBP8.2m to GBP5.3m resulting in a loss before tax and exceptional
items for the year of GBP4.3m. Management expectations for revenue
and profits will be materially increased for the current financial
year if the customer once again awards SRT the contract as
expected. This profit and loss account change is not expected to
change SRT's internal cash flow expectations.
Simon Tucker, SRT CEO commented: "Whilst this is very
unfortunate timing, we must respect and support the decision of our
customer with whom we are building a long-term relationship that we
expect will yield multiple significant contracts. Operationally we
are very happy about the customer's decision to use its own funds
rather than external loans, as we expect this will enable a much
smoother and more rapid implementation of this landmark project, as
well as accelerated payment flows with the assistance of UKTI
export credit guarantee programs."
The information communicated in this announcement contains
inside information for the purposes of Article 7 of the Market
Abuse Regulation (EU) No. 596/2014.
For further information, please contact:
SRT Marine Systems plc www.srt-marine.com
+ 44 (0) 1761 409500
Simon Tucker (CEO) simon.tucker@srt-marine.com
Louise Coates (Marketing Manager) louise.coates@srt-marine.com
finnCap Ltd
Jonny Franklin-Adams / Anthony Adams (Corporate
Finance) +44 (0) 20 7220 0500
Tim Redfern / Richard Chambers (Corporate
Broking)
About SRT Marine Systems plc:
SRT develops, manufactures and supplies maritime vessel tracking
technology and turn-key system solutions to marine stakeholders
across the globe with a particular expertise in AIS. The Company's
products and solutions are used by individual vessel owners, port
authorities, maritime infrastructure owners, coast guards and
national security agencies to enhance their maritime domain
awareness. Applications include the tracking of commercial and
leisure vessels; sustainable fishery; anti-collision; search and
rescue; waterway management, port and coast security; pollution
management; and environmental management.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
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