SRT Marine Systems LON:SRT, the AIM-listed engineering firm that builds maritime surveillance, security, management and safety products, and integrated systems, has published an important update on its ongoing business last week.
We wrote about the Somerset-based company a few weeks ago, when the engineering firm published its half-year results to end-December and it reported a 350% increase in year-on-year revenues.
SRT Marine Systems had a tough 2023 and early 2024, especially as some of its key clients in the Middle East were tardy in ratifying agreed contracts. This forced SRT to change its end-period accountancy date in order to push revenues from 2024 to 2025, because a significant contract that SRT was bidding for required a minimum financial ratio in relation to size of contract, and without the revenues from the delayed, but agreed contract, SRT would not have achieved the required ratio.
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SRT Marine Systems project worth $15m
The company said at the start of January that it had received formal notice from a potential client, to proceed with the second stage of a project to help the sovereign state client build-up its own national integrated maritime domain awareness (MDA) system for the country’s coastguard. This part of the project is worth USD15m (GBP12.2m) and implementation will be expected to complete within one-year.
The formal phase two agreement was signed last week and Simon Tucker, SRT Marine Systems’s chief executive said: “This is an important long-term customer for SRT and we are pleased to be starting this next phase in their transition to a fully digitised and integrated intelligence based maritime domain awareness capability. We look forward to many years of future work and co-operation with this customer.”
The longer-term ramifications of the project are also beneficial for SRT and its shareholders, given the once the implementation phase is completed, a five-year service and support agreement comes into action – which although smaller than the contract implementation phase, will give SRT secured annuity-like income for the following five-years. The client is expected to start phase three of the project in 2026, which SRT must feel it has a good change of securing, given that it is the incumbent technology and systems provider.
Tucker said: “Common to all our customers is a long-term strategy to transform themselves into a digitised, intelligence-led operation. This requires the buildup of a new generation of integrated maritime surveillance, intelligence and command and control system and capabilities. Such system implementation programs are characterised by a long-term succession of individual implementation and expansion projects or phases of various sizes and types. Each expansion project builds on and integrates with the previous, creating a single integrated system that is enabled by a common GeoVS (Geo-visualisation) operating platform.”
Strong pipeline of contracts
SRT Marine Systems now has several sovereign-nation maritime surveillance clients in its roster, notably in the MDA field, has a forward-contract order book of GBP320m to implement, and a validated sales pipeline of GBP1.2bn new contract prospects.
The company’s shares opened the week at 59.8p rising to just shy of 60p within the first hour of trading, a few pence behind its record high of 63p. Over one-year SRT’s shares are up 60% but the share price was as low as 17p last June. The company has a market cap of GBP152.4m.
With a strong pipeline of contracts, increasing revenue, and an expanding client base of sovereign nations, SRT Marine Systems is well-positioned for long-term growth. The formal signing of the second phase of its latest project underscores the company’s strategic progress in maritime surveillance. As SRT continues to deliver on its commitments and secure new deals, investors will be watching closely to see how the company capitalises on its momentum in the evolving maritime security sector.
