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magazineSRT finally ‘breaks cover’ with record first half sales and earnings
It has been a long time coming but maritime identification and tracking technologies kit supplier SRT Marine Services (SRT:AIM) is finally reaping the benefits of years of investment in its products and systems.
In a recent trading update, the firm revealed revenue for the six months to 30 September had jumped 300% to £18.8 million and pre-tax profit for the period would be more than £1.5 million.
The key to this remarkable growth was the systems business, which delivered ‘multiple operational and several revenue milestones’ during the half and delivered £13.6 million of revenue against £0.5 million the same time last year.
Not unreasonably, the shares cruised 18% higher to 31.75p on the day of the announcement but the good news is they haven’t sailed off into the sunset yet.
Chief executive Simon Tucker – who was flying to foreign shores to seal yet another deal as he spoke to Shares recently – describes SRT as providing ‘the equivalent of air traffic control for the seas’.
The firm introduced the first ‘black box’ for marine traffic 20 years ago and has an 85% market share of the installed base, which is growing at a 25%-plus compound annual growth rate.
As well as manufacturing the equipment itself at its facility near Bath, the company owns all the technology and IP (intellectual property) rights to its products.
It sells mainly to the Middle Eastern and Asian markets, with customers ranging from national defence agencies and coastguards to port owners and leading systems integrators.
One of the biggest markets for its products is among fishing fleets, which are heavily regulated in terms of where they can operate and what they can catch.
As well as tracking individual vessels the technology can be used to identify possible threats, monitor infrastructure such as buoys and underwater cables, manage traffic on busy waterways, help search and rescue teams and assist in accident investigation
Contracts can be worth up to tens of millions of pounds, and the firm has a sales pipeline of £600 million with Tucker promising to provide ‘further market updates with our continued progress’ suggesting the second half will also show a significant increase in revenues.
We should stress that as a small, AIM-quoted company, the market in SRT shares is not very liquid and as an investment it is only suited to those with a long-term horizon and an appetite for riskier stocks.
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