SRT Marine Systems (LON: SRT) reported pre-tax profit of £10.7m for the year to the 30th of June, up from £1.4m, on revenue 46% higher at £114.1m, against £78.0m a year earlier. The AIM-listed group supplies maritime surveillance systems to sovereign governments, plus navigation safety products. The audited results came by RNS at 7am today, before the market opened.
SRT shares were up 4.93% at 71.88p in delayed trading at 8am, against a previous close of 68.5p.
Systems revenue, the government surveillance contracts, rose to £104.3m from £68.5m, while navigation safety edged up to £9.8m from £9.5m. Gross profit reached £36.2m (£23.9m), a 32% margin, which the company said held up on the timing of higher-margin SRT-Tech deliverables. That came despite unexpected extra costs on a Middle East contract, from supply-chain disruption and a decision to expand the system’s scope. Operating profit was £11.9m, against £6.4m.
Cash flow improved sharply. Net operating cash was £37.7m, against £1.0m, and year-end cash was £57.1m (£9.9m a year earlier), although £27.4m of that is restricted as security for performance bonds. SRT converted £218.4m of its £1.8bn pipeline into contracts, lifting the contracted order book to £539.5m. It raised £17.5m gross in an April equity placing.
Chief executive Simon Tucker pointed to the pipeline, which has grown despite that conversion to £2.4bn:
Despite converting 12% of our previously reported £1.8bn pipeline during the year we have grown the pipeline itself to £2.4bn and I expect to see conversion to continue at pace.
Simon Tucker, SRT Marine Systems
Chairman Kevin Finn expects a similar pattern in the current year: a loss-making first half, weighed down by low-margin infrastructure completions, offset by higher-margin technology modules in the second. A new five-year strategy extends into land and low-altitude air border surveillance.
The auditors’ report is unqualified but carries an emphasis of matter on going concern. Rapid growth and a possible mismatch between customer receipts and supplier payments could need bridging finance, and loan note repayments fall due within 12 months, with no guarantee of financing. The loan notes stand at £14.41m at 10%. SRT says its secured loan note programme has sufficient capacity. No final dividend is recommended.