SRT Marine Systems – £93m world-leading group has pipeline of £1.2bn sales potential, with £320m contracts booked

Do not worry about the delays Simon, just keep on winning and bringing in the new orders.

It must be an incredibly difficult and tortuous task negotiating with and contract preparing with overseas government bodies.

But that is what SRT Marine Systems (LON:SRT) has been patiently handling over the last few years, as it has been creating new international markets for its world-leading maritime surveillance, monitoring and management systems.

During the intervening times, from design to selling to implementing, the group has run down its cash reserves as it strained its way to success.

The Business

The Bath-based SRT 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 group’s transceivers business is the global leader in digital maritime navigation safety transceivers, which are used by boats, both commercial and leisure, and on marine infrastructure such as buoys, to enable automated communication and enhance navigation safety day and night and in all weathers.

The Latest Results

For the 15 months to end June the group reported revenues of just £14.81m (£30.51m yr to Mar 2023), while the loss before tax was £14.40m (£0.65m).

CEO Simon Tucker stated that:

"I had hoped for, and expected, a much better financial result for the financial period ending June 2024.

We under-estimated the time it would take for the final administrative processes to complete for contracts worth approximately £320m, resulting in significantly lower revenues and profit contribution during the period.

However, this time, and the investment received during the period, has given a critical advantage in that we have been enable us to prepare and build up our capacity to execute on multiple system contracts simultaneously.

SRT now enters the new financial year with a runway of £320m of system projects that we expect to implement over the next two years, a further pipeline worth up to £1.2bn of prospects and the launch of our new NEXUS marine communications transceiver through our global network of 5,000 distribution partners.

I am grateful for the significant investment support that has enabled SRT to reach this pivotal point and I, and the whole SRT team, are focused on delivering on these contracts and others in the coming years."    

The Equity

There are some 222m shares in issue.

The larger holders include Hargreaves Lansdown Asset Management (9.59%), David Brierwood (9.23%), David Newlands (2.39%), Barclays Bank Private (2.09%), Amati Global Investors (1.73%), Simon Tucker (1.38%), Toscafund Asset Management (0.81%), Investec Wealth & Investment (0.58%), and HSBC Global Asset Management (0.56%).

In My View

It takes time and patience as you break into a new field, which is exactly where SRT has been of late.

However, it has impressed two significantly wealthy Governments of the ability of its systems, enough to book multi-million orders – Indonesia $180m and Kuwait $213m.

It has been straining financially as it has built up to the current position but SRT has been very well backed up by a substantial player in the same sector – Ocean Infinity, which has taken share stakes and helped the recent funding issues.

Understandably brokers analysts are not making any recommendations until more is known, which could well come with the AGM Update in late January next year.

In the meantime, the group’s shares now 40p, which have endured a yo-yo swing over the last year or so, may well carry on swimming around the 30p/50p range.

If they drop below that, then gamblers could do very well by picking up some cheap stock.

I remain a big fan of the group, its products and its potential.