TIDMSRT
RNS Number : 9806T
SRT Marine Systems PLC
28 July 2022
SRT MARINE SYSTEMS PLC
(AIM: SRT)
("SRT" or the "Company")
FINAL RESULTS FOR THE YEARED 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 GBP8.2m, mostly generated by transceivers division.
-- GBP5.9m gross cash at year end following successful GBP4.9m equity placing.
-- GBP600m systems division validated sales pipeline.
-- GBP3.2m 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
+ 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 / 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.
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 GBP8.2m (2021: GBP8.3m)
resulting in a loss after tax of GBP5.8m (2021: GBP5.1m) with
gross cash as at the year-end of GBP5.9m (2021: GBP5.3m) following
a successful GBP4.9m equity placing in March. The systems
business did not complete any revenue milestones and thus
only generated GBP0.6m of revenues during the period from
the ongoing sale of data services to system customers. Cash
payments amounting to GBP6.1m were received during the year
from existing system customers. The transceivers business
thus accounted for GBP7.6m of our revenues (2021: GBP8.2m).
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 GBP40m 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 GBP3.2m 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 GBP600m 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 GBP40m 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 YEARED 31 MARCH 2022
Note 2022 2021
GBP GBP
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:
Basic 4 (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 GBP GBP
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
Current liabilities
Trade and other payables (6,459,635) (1,648,983)
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
GBP GBP
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 GBP5,838,005 (2021: loss GBP5,133,843) 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: GBP1,562,500) was
drawn down in April 2020 as a GBP2,500,000 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
GBP5,995,000. These all relate to drawdowns on a GBP20 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
GBP6,345,000 on the available GBP20 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 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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END
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