CHAIRMAN'S STATEMENT

Whilst not as high as we had hoped, I am pleased to report that we were profitable on a 273% year on year increase in revenues to £30.5m as our target markets recovered and recommenced their expansion enabling us to benefit from our accumulated investments in technologies, products and customers over many years and enter the new financial year with a £160m forward order book and substantial new prospects pipeline.

As reported in our year-end trading update in March 2023, year on year group revenues grew to £30.5m (2022: £8.2m) of which transceivers generated £12.1m and systems £18.4m. Gross profit margin increased to 36% (2022: 33%), resulting in a profit after tax of £0.1m (2022: loss £5.8m).  As at year-end, gross cash was £2.2m (2022: £5.9m), and after the year-end we completed an equity raise of £5.4m and increased our loan note programme capacity by an additional £20m. 

During the period our systems business executed on three projects, two with coast guards and one with a national fisheries ministry, increased our forward contract order book to £160m and grew our new prospects pipeline to be worth an estimated £1.4bn. This growth is driven by the increasing desire of national agencies to have effective maritime surveillance and intelligence in line with what has become the norm in air traffic control.

The Philippine BFAR IMEMS system is now fully operational and in daily use, enabling BFAR to track, monitor and manage all their fisheries within a single optimised system. This project was originally scheduled to complete in December 2022, but is now expected to complete during 2023. This delay is a consequence of COVID where all installation work was suspended for well over a year due to mandatory travel and work suspensions. We also won and delivered a small but strategically important project to a national coast guard to enable the sharing of maritime information between multiple government agencies and completed the first phase of a £40m SRT-MDA System Vessel Tracking & Identification systems contract with a major Middle East Coast Guard, the formal sign-off of which was concluded shortly after our financial year end, along with preparations for the next and final two phases which are scheduled to be implemented by the end of 2024. 

The SRT-MDA System is a flexible and scalable integrated surveillance system solution that can be configured for either coast guard or fisheries use. After many years of continuous development, it offers an extensive range of innovative functionalities and capabilities that deliver enhanced maritime domain awareness. I am pleased to report that our development and product team have continued to enhance existing functionalities and introduce new capabilities. Of particular note is our focus on multi-sensor and multi-platform network integration, data fusion and management and intelligent analytics in the area of automated vessel detection and identification, along with specialist fisheries functionalities such as aquatic modelling and electronic catch reporting and auditing. This continuous development of the SRT-MDA System falls to our expanding development team which we have carefully built over many years and today combines a rare blend of scale, talent and experience. 

The transceivers division grew year on year by 60% to a turnover of £12.1m, generating a blended gross profit of 45%, with some product and application areas generating margins as high as 80% and some 20%.  We believe that growth has come from the compound effect of our reputation for having the best products, being a reliable supplier, expanding our distribution channels and the slow but steady rolling adoption and proliferation of AIS across commercial and leisure vessels. We remain in the early stages of AIS adoption with an estimated 500,000 vessels out of 26 million now having an AIS device, and most navigation aids at an even earlier stage. We therefore see very significant opportunity for steady long-term growth from our transceivers business driven by the same fundamentals of recent years.

The primary focus of our transceiver development team has been the development of our NEXUS VHF/AIS product. This product moves SRT into the voice communications segment of the leisure and commercial marine electronics market which has much greater volumes than data only AIS due to its greater maturity. NEXUS is a significant investment for SRT and the project is now in its third year, with the expectation that it will start commercial shipments in early 2024. In 2023 we decided to delay the commencement of shipping by approximately up to 9 months to allow for further testing. This decision was made in the context of our global reputation for excellence and wishing to enter this new segment with a truly innovative product that matches our history of reliable and trustworthy products. NEXUS will therefore not contribute material revenues during the coming financial year, but we do expect it to make an impact thereafter.

In the meantime, we have seen a significant growth in our distribution network and have added additional sales and marketing resource, particularly with our first in-territory presence in the USA, the effects of which we expect to see in the coming financial year. During the year we soft launched our DAS product offer and have received a good response with visibility of some substantial new projects. DAS targets the aids to navigation market which is integral to the digitisation of the marine domain and the realisation of safer and more efficient navigation. In the coming year we will invest more in this segment, including the hiring of a dedicated salesperson. 

Shortly after the year end, we signed a new systems contract worth £140m to deliver an integrated maritime surveillance and intelligence system to a National Coast Guard increasing our forward systems order book to £160m. This opportunity was previously in our new systems prospects pipeline, which continues to grow and now contains prospects at various stages of the sales cycle with an aggregate value of £1.4bn, and I expect to see some of these convert into contracts in the coming months  In the first half of the new financial year, we expect to commence the implementation of the next and final phases of our Middle East project, whilst the newly signed £140m National Coast Guard contract, with associated revenue milestone completion will commence first implementation milestones in the second half of the financial year. As usual, our transceivers business will be more balanced but with the traditional second half weighting.

In summary, the year has seen both our businesses grow strongly as a result of our long-term technology, product and market investments that have placed SRT at the centre of the global digitisation of maritime domain awareness and navigation. With over 3,000 transceiver distribution partners, established products, £160m of forward contracts and a pipeline of new prospects that has grown to £1.4bn, we feel very confident, although not complacent, about the future. This year really has been operationally tough, with a lot of product development and sales and contracts work to keep up with market demands, so I would like to take this opportunity to thank our staff, partners and shareholders for their hard and diligent work throughout the year. 

Kevin Finn, Chairman

26 July 2023

CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 MARCH 2023