TIDMSRT
RNS Number : 3831W
SRT Marine Systems PLC
14 November 2017
The information communicated in this announcement contains
inside information for the purposes of Article 7 of the Market
Abuse Regulation (EU) No. 596/2014 and is disclosed in accordance
with the Company's obligations under Article 17 of those
Regulations.
SRT MARINE SYSTEMS PLC ("SRT" or the "Group")
HALF YEARLY REPORT FOR THE SIX MONTHSED 30 SEPTEMBER 2017
SRT, the AIM-quoted developer and supplier of maritime
identification and tracking technologies, announces its unaudited
interim results for the six months ended 30 September 2017 (the
"Period").
Financial Highlights
-- Revenue up 10% to GBP2.9 million (2016: GBP2.7 million)
-- Gross profit margin of 46% (2016: 45%)
-- Operating loss before exceptional items of GBP1.7million (2016: GBP1.2 million)
-- Gross cash of GBP2.1 million at the Period end (2016: GBP1.8 million)
Operational Summary
-- New long-term OEM & Module customer agreements formed
-- Growth of em-trak dealer network
-- Significant project opportunities progressed towards contract
-- OCEAN-SCAN satellite program commenced
Chairman's Statement
The first half of the year has seen steady financial progress
broadly in line with our expectations and significant operational
and project related activities.
Revenue for the first half grew by 10% to GBP2.9 million (2016:
GBP2.7 million), generating a 46% gross profit margin (2016: 45%)
and with overheads of GBP3.1 million (2016: GBP2.4 million) this
has produced a loss before tax and exceptionals of GBP1.8 million
(2016: loss of GBP1.2 million). Period end gross cash balances were
GBP2.1 million (2016: GBP1.8 million) with saleable stock with a
cost value of GBP3.3 million (2016: GBP4.4 million).
Cash overheads for the period increased year on year to GBP2.9
million from GBP2.5 million in the previous period. This is largely
as a result of increased investment in our product development
activities which increased to GBP1.0m compared to GBP0.6m in the
previous period.
Our statement today records a one-off exceptional cost item of
GBP1.5 million, as announced on 31 July 2017, which arose due to a
delay in a project. During the period, we were officially informed
by the government entity in question, that a maritime surveillance
project for a SE Asia national Coast Guard signed in March 2016,
had been delayed significantly due to budget planning constraints.
Although the letter we received from the Coast Guard contained
explicit re-assurances of the continuity of the project and
contract, given the significantly extended timelines and in line
with appropriate accounting practices, we considered it prudent and
appropriate to write down the full value of the project to date.
The status of the project has not changed since the announcement
released on 31 July 2017 and thus, as advised, we expect the
project to recommence sometime prior to March 2019.
In September, we announced that we had agreed terms on a loan
program which will give us access to up to GBP10 million of funds
and of which GBP2 million has been drawn-down as at the period end.
This was done to provide the Group with a flexible ad-hoc working
capital facility to enable us to take on the expected projects and
fill any short term working capital gaps caused by extended payment
terms that are typical of some government contracts, whilst
continuing with our product development programs. I believe this is
an excellent program for SRT and ensures SRT has a clear cash flow
runway going forward.
Our new range of high powered AIS Class B transceivers have been
well received by the market, particularly by the off-shore sailing
and small and medium sized commercial work-boat segments. During
the period, we continued with our core new product developments.
These currently include two new innovative transceiver products
which will come to market during 2018/19 and the ongoing
development of our GeoVS maritime tracking, management and data
analytics product which is key to our systems business. The
development of GeoVS is a continuing activity that now accounts for
approximately 40% of our R&D budget with new functionality
being introduced approximately every four months.
Recently we announced our new OCEAN-SCAN satellite system which
is a strategic addition to our systems business which will deliver
valuable long range vessel detection, tracking and identification
data to our project customers and a new recurring revenue stream
for SRT. The initial constellation configuration will comprise of
six satellites with coverage optimised on the areas of our project
opportunities. The system will combine AIS and detection technology
on each satellite for the first time and thus provide uniquely
valuable long range vessel tracking data. The architecture of the
system will also enable direct delivery of data to customers. We
expect the system to go live during 2019 which we are planning to
be in line with the requirement of the expected vessel transceiver
deployments being projected by many of our project customers.
Revenues from our em-trak business, which sells standard AIS
transceivers for leisure and commercial vessels through a global
network of dealers, grew 60% period on period to GBP0.9 million. It
now has a network of over 400 active dealers and an established
dealer merchandising support program which is increasing per dealer
sales. We will continue to grow this revenue segment through
increasing the number of active dealers, refining and improving our
dealer support program. New product launches, particularly
Buoy-Tracker which enables small buoys such as fishing buoys to be
electronically marked, have been received by the market with
considerable interest; one opportunity alone in the UK could be
worth over GBP1 million in revenue.
The OEM & Module business, which provides customised AIS
product and integrated core technology solutions to a range of
customer types including major marine electronic brands, achieved
revenue growth of 12% period on period to GBP1.8 million. AIS is
now a product segment of its own in most major marine electronics
companies as the amount of information available within AIS
increases - such as live weather, sea state, tide, depth - and its
general adoption in leisure and commercial markets increases.
During the period, we have renewed agreements with some existing
customers and significantly progressed negotiations with some new
customers which we expect to turn into contracts during the second
half. The established quality and performance of our products,
coupled with the breadth of our product offer and reliability as a
supplier are the key factors in us retaining and winning new
customers. Our OEM customers report that most new boats purchased
over 40ft in length are now specified by their owners to have AIS
as standard. Only a few years ago, AIS would not have been included
in their navigation and safety electronics selection. It is
expected that this threshold size will gradually lower and thus
quantities increase.
The revenue growth for both our em-trak and OEM & Module
businesses are directly coupled to the adoption of AIS by vessel
owners. The primary sales driver for our OEM customers are new boat
purchases and for em-trak retro-fits by existing owners. We
estimate that AIS transceivers are currently fitted to
approximately 1.5% of leisure and commercial vessels, compared to
radar which we estimate to be at around 25%. Over the next ten
years we expect this to equalise as AIS and radar are complimentary
to each other.
Our systems business provides turn-key maritime domain awareness
solutions to ports (VTS), coast guards (MDM) and fishery (VMS)
authorities. For example, the delivery of a multi-million dollar
project in Bahrain in 2016 and the contract for a second country in
the Middle East as announced in March 2017.
Each system is a combination of hardware and software and
delivered to customers over time in the form of a project
comprising multiple milestones. No project milestones were
completed during the first half resulting in no revenue being
recognised. As previously reported re-commencement of our large SE
Asia project has been delayed until sometime next year and so we do
not expect any revenues to be derived from this until the end of
our next financial year at the earliest. We expect to complete the
existing Middle East contract announced earlier this year during
the second half.
I am pleased to report that we have seen significant activity
across all our validated sales pipeline opportunities which have an
aggregate total value of over GBP200m. Each is a large and complex
project, where SRT is engaged directly with the end customer in
conjunction with our local partners. Each have their own local
planning challenges and therefore have required very involved and
protracted discussions which has involved a considerable investment
of sales and support resources by SRT over several years. Many are
now at an advanced stage with four, two in the Middle East and two
in Asia, with an aggregate value of GBP60 million, appearing to be
in the final stages prior to contracting. Once contracted, the
planned implementation period varies between 1 and 3 years,
depending on which contract.
In general, I can report that we have seen a significant
increase in sales activity driven by end customer demand;
particularly for our VMS and MDM systems. The demand driver for our
systems is the desire of authorities to monitoring their maritime
exclusive economic zone (EEZ). Most countries currently have
limited capability in this respect based upon systems installed in
the 1980s and 1990s. The relatively recent availability of new
technologies, such as AIS, new radar and display and management
systems such as GeoVS coupled with a new appreciation of the
economic value of their maritime domain and potential security
threats such as terrorism and smuggling are driving government
programs in this area. Over time through our strategic investment
in AIS and derivative products SRT has established itself as a
leading player in this market able to deliver turn-key system
solutions with completed projects providing new customers with
important references.
AIS is now an established global MDA technology with
applications across all market segments. Through careful
investments in core technologies and products over many years, SRT
has established itself as the market leader. The market for AIS in
general is still in its early stages with growth starting from a
very low base. We are seeing sustained and increasing growth in our
day to day em-trak and OEM & Module businesses which I expect
to continue into the second half and beyond. Our projects business,
where we have very significant opportunities has developed well and
I expect this to contribute in the second half and more regularly
thereafter as projects and their individual irregular milestones
overlap. With the growth of our em-trak and OEM/Module businesses
coupled with the expected contributions from our systems business I
look forward optimistically to the second half.
Kevin Finn
Chairman
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE SIX MONTHSED 30 SEPTEMBER 2017
Six months Six months Year
ended ended ended
30 Sep 30 Sep 31 Mar
2017 2016 2017
Unaudited Unaudited Audited
GBP GBP GBP
---------------------------- ---- -------------- --- -------------- ----------------
Revenue 2,928,576 2,658,748 11,025,730
Cost of sales (1,591,591) (1,454,393) (3,786,176)
---------------------------- ---- -------------- --- -------------- ----------------
Gross profit 1,336,985 1,204,355 7,239,554
Administrative expenses (3,082,711) (2,382,172) (5,961,393)
-------------- --- -------------- ----------------
Operating (loss) / profit
before exceptional item (1,745,726) (1,177,817) 1,278,161
Exceptional item 3 (1,490,318) - -
---------------------------- ---- -------------- --- -------------- ----------------
Operating (loss) / profit
after exceptional item (3,236,044) (1,177,817) 1,278,161
Finance expenditure (24,132) (23,298) (43,980)
Finance income 88 153 220
--- -------------- ----------------
(Loss)/profit before
income tax (3,260,088) (1,200,962) 1,234,401
Income tax credit 4 158,714 244,931 216,327
---------------------------- ---- -------------- --- -------------- ----------------
(Loss) / profit for
the period (3,101,374) (956,031) 1,450,728
---------------------------- ---- -------------- --- -------------- ----------------
Total comprehensive
(loss) / income for
the period (3,101,374) (956,031) 1,450,728
---------------------------- ---- -------------- --- -------------- ----------------
(Loss) / earnings per
share:
Basic
Diluted 2 (2.43)p (0.75)p 1.14p
2 (2.43)p (0.75)p 1.09p
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 SEPTEMBER 2017
As at As at As at
30 Sep 30 Sep 31 Mar
2017 2016 2017
Unaudited Unaudited Audited
Notes GBP GBP GBP
----------------------------- ------ --------------- -------------- --------------
Assets
Non-current assets
Intangible assets 6,053,887 6,057,548 5,810,954
Property, plant and
equipment 190,593 134,228 184,854
----------------------------- ------ --------------- -------------- --------------
Total non-current
assets 6,244,480 6,191,776 5,995,808
Current assets
Inventories 3,320,074 4,372,392 3,281,521
Trade and other receivables 4,129,170 4,109,957 7,926,686
Cash and cash equivalents 2,137,547 1,817,786 1,760,861
----------------------------- ------ --------------- -------------- --------------
Total current assets 9,586,791 10,300,135 12,969,068
Liabilities
Current liabilities
Trade and other payables (1,249,781) (3,160,835) (3,055,819)
Financial liabilities (2,500,000) (250,000) (500,000)
----------------------------- ------ --------------- -------------- --------------
Total current liabilities (3,749,781) (3,410,835) (3,555,819)
Net current assets 5,837,010 6,889,300 9,413,249
Long term liabilities
Financial liabilities (250,000) (750,000) (500,000)
Deferred tax (120,464) (250,573) (279,178)
----------------------------- ------ --------------- -------------- --------------
Total long term liabilities (370,464) (1,000,573) (779,178)
Net assets 11,711,026 12,080,503 14,629,879
----------------------------- ------ --------------- -------------- --------------
Shareholders' equity
Ordinary shares 5 127,703 127,593 127,613
Share premium 4,895,189 4,867,599 4,872,779
Other reserves 7 5,490,596 5,490,596 5,490,596
Retained earnings 1,197,538 1,594,715 4,138,891
Total shareholders'
equity 11,711,026 12,080,503 14,629,879
----------------------------- ------ --------------- -------------- --------------
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE SIX MONTHSED 30 SEPTEMBER 2017
Six months Six months Year
ended ended ended
30 Sep 30 Sep 31 Mar
2017 2016 2017
Unaudited Unaudited Audited
Notes GBP GBP GBP
----------------------------------- ------------- ------------ -------------
Cash (used in) /
generated from operating
activities 6 (353,825) 434,278 1,235,380
Corporation tax received - 202,342 202,342
------------------------------ ---- ------------- ------------ -------------
Net cash (used in)
/ generated from
operating activities (353,825) 636,620 1,437,722
------------------------------ ---- ------------- ------------ -------------
Investing activities
Expenditure on product
development (969,434) (636,389) (1,389,371)
Purchase of property,
plant and equipment (48,511) (33,298) (122,928)
Interest received 88 153 220
------------------------------ ---- ------------- ------------ -------------
Net cash used in
investing activities (1,017,857) (669,534) (1,512,079)
------------------------------ ---- ------------- ------------ -------------
Cash outflow before
financing (1,371,682) (32,914) (74,357)
------------------------------ ---- ------------- ------------ -------------
Financing activities
Net proceeds from
issue of ordinary
share capital 22,500 11,950 17,150
Net proceeds from 1,750,000 - -
debt financing
Interest paid (24,132) (23,298) (43,980)
------------------------------ ---- ------------- ------------ -------------
Net cash inflow /
(outflow) from financing
activities 1,748,368 (11,348) (26,830)
Net increase / (decrease)
in cash and cash
equivalents 376,686 (44,262) (101,187)
------------------------------ ---- ------------- ------------ -------------
Cash and cash equivalents
at beginning of period 1,760,861 1,862,048 1,862,048
------------------------------ ---- ------------- ------------ -------------
Cash and cash equivalents
at end of period 2,137,547 1,817,786 1,760,861
------------------------------ ---- ------------- ------------ -------------
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2017
Share Share Retained Other Total
Capital Premium Earnings Reserves
GBP GBP GBP GBP GBP
Balance at 31 March
2016 127,513 4,855,729 2,446,015 5,490,596 12,919,853
Comprehensive loss
for the period - - (956,031) - (956,031)
Share based payment
expense - - 104,731 - 104,731
Issue of equity
share capital 80 11,870 - - 11,950
Balance at 30 September
2016 127,593 4,867,599 1,594,715 5,490,596 12,080,503
Comprehensive profit
for the period - - 2,406,759 - 2,406,759
Share based payment
expense - - 137,417 - 137,417
Issue of equity
share capital 20 5,180 - - 5,200
Balance at 31 March
2017 127,613 4,872,779 4,138,891 5,490,596 14,629,879
Comprehensive loss
for the period - - (3,101,374) - (3,101,374)
Share based payment
expense - - 160,021 - 160,021
Issue of equity
share capital 90 22,410 - - 22,500
Balance at 30 September
2017 127,703 4,895,189 1,197,538 5,490,596 11,711,026
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 European
Union. 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 European Commission. The financial
information has been prepared on the basis of IFRS that the
Directors expect to be adopted by the European Union and applicable
as at 31 March 2018.
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 2017 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 the disclosure in the financial
statements surrounding the recoverability of debtors greater than
12 months old which had not been provided. These debts have
subsequently been provided following postponement of the contract
to which the revenue relates. This is detailed further in note
3.
The financial information for the six months ended 30 September
2017 and 30 September 2016 is unaudited. The interim financial
statements will be available to download on the Company's website
www.srt-marine.com from 14 November 2017.
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 2017, which are the same policies
expected to apply for the year ended 31 March 2018.
2. Earnings per share
The basic (loss) / earnings per share have been calculated using
the loss for the period of GBP3,101,374 (six months ended 30
September 2016 - loss of GBP956,031; year ended 31 March 2017 -
profit of GBP1,450,728) divided by the weighted average number of
ordinary shares in issue of 127,673,840 (six months ended 30
September 2016, 127,560,179 and year ended 31 March, 2017
127,583,214).
During the six months ended 30 September 2017 and 2016 the Group
has incurred losses for the periods and therefore there is no
impact of the share options granted on diluted earnings per share.
During the year ended 31 March 2017, the diluted earnings per share
have been calculated using weighted diluted shares of
133,358,885.
3. Exceptional item
During the period, the Group incurred an exceptional impairment
charge of GBP1,490,318 in respect of its contract to supply an MDM
system in South East Asia which has been postponed. This impairment
is presented net following the provision of the associated debtor
and the write back of associated project costs and Directors'
bonuses that were accrued but not paid.
4. Income tax credit
During the period, the Group credited GBP158,714 of income tax
to the profit and loss account in respect of a reduction in its
deferred tax liability (six months ended September 30 2016:
reduction of GBP42,590, year ended 31 March 2017: reduction of
GBP13,985). During the six months ended 30 September 2017 the Group
did not receive an income tax credit in respect of its Research and
Development activities (six months ended 30 September 2016
GBP202,341 and year ended 31 March 2017 GBP202,341).
Taxes on income in the interim periods are accrued using the tax
rate that would be applicable to expected annual earnings.
5. Called up share capital
30 Sep 30 Sep 31 Mar
2017 2016 2017
Unaudited Unaudited Audited
GBP GBP GBP
------------------------------- ----------- ---------- ----------
Allotted: (Ordinary
shares of 0.1p each): 127,703 127,593 127,613
-------------------------------- ----------- ---------- ----------
Share capital reconciliation: Number
of shares
Shares outstanding at 31 March 2016 127,512,419
a) Exercise of employee share options 80,000
Shares outstanding at 30 September 2016 127,592,419
b) Exercise of employee share options 20,000
Shares outstanding at 31 March 2017 127,612,419
c) Exercise of employee share options 90,000
Shares outstanding at 30 September 2017 127,702,419
a) The exercise of employee share options took place in April
2016 at an exercise price of 18p and July 2016 at exercise prices
of 2.5p and 29p
b) The exercise of share options took place in November 2016 at an exercise price of 26p
c) The exercise of share options took place in May 2017 at an
exercise price of 25p and June 2017 at exercise prices of 23p and
29p
6. Cash from operations
Six months Six months Year
ended ended ended
30 Sep 30 Sep 31 Mar
2017 2016 2017
Unaudited Unaudited Audited
GBP GBP GBP
------------------------------- ------------ ------------ --------------
Operating (loss) /
profit before exceptional
item (1,745,726) (1,177,817) 1,278,161
Depreciation of property,
plant and equipment 42,772 38,338 77,343
Amortisation of intangible
fixed assets 726,502 655,045 1,654,621
Share-based payment
charge 160,021 104,731 242,148
(Increase)/ decrease
in inventories (38,553) (113,836) 977,035
Decrease / (increase)
in trade and other
receivables 730,807 616,565 (3,200,164)
(Decrease) / increase
in trade and other
liabilities (229,648) 311,252 206,236
Net cash (used in)
/ generated from operations (353,825) 434,278 1,235,380
-------------------------------- ------------ ------------ --------------
7. Statement of movement in shareholders' equity
Other reserves consist of: Capital Redemption Reserve GBP2,857
(31 March 2017: GBP2,857), Warrants Reserve GBP62,400 (31 March
2017: GBP62,400) and Merger Reserve GBP5,425,339 (31 March 2017:
GBP5,425,339). There were no movements during the period.
This information is provided by RNS
The company news service from the London Stock Exchange
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