SRT Marine : plc – Interims Sept 2018

The information communicated in this announcement contains inside information for the purposes of Article 7 of the Market Abuse Regulation (EU) No. 596/2014 and is disclosed in accordance with the Company's obligations under Article 17 of those Regulations.

SRT MARINE SYSTEMS PLC ("SRT" or the "Group")

HALF YEARLY REPORT FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2018

SRT, the AIM-quoted developer and supplier of maritime identification and tracking technologies, announces its unaudited interim results for the six months ended 30 September 2018 (the "Period").

Financial Highlights

•  Revenue increased by 10%

•  Gross profit margin of 41%

•  Gross cash of £1.4 million as at the period end

•  Equity raise of £3 million and Loan Note Refinancing

Operational Summary

•  Completion of transceiver production transfer

•  Expansion in transceiver distributor network

•  Significant increase of GeoVS system functionality

•  Progress with system contract negotiations

Chairman's Statement

The first half of the year has seen steady financial progress broadly in line with our expectations and significant operational and system related activities.

Revenue for the first half was primarily derived from our transceiver business and grew by 10% to £3.2 million (2017: £2.9 million), generating a 41% gross profit margin (2017: 46%). During the period no material system project delivery milestones were completed.

Administrative expenses were reduced to £2.5 million (2017: £3.1 million) largely due to some favourable foreign exchange movements on US dollar-based receivables. This resulted in a loss before tax £1.3 million (2017: loss before tax and exceptional item of £1.8 million).

We are pleased with the progress of our transceivers business which develops and manufactures AIS transceivers used in the marine industry for a variety of safety, security and monitoring purposes. Our investments of the past two years have resulted in a broader range of products with improved performance and functionality and are now in volume production. We will continue to work with existing distribution partners as well as selectively grow our network to maximise market penetration. In parallel we have commenced development activities to leverage the additional embedded capabilities within these new products to provide new added value user functionality on the transceivers to widen their appeal and utility within the leisure and commercial markets as well as innovative functionality that integrates with our various system offers. We expect to see demand for AIS across all application and geographic segments to continue to grow steadily in the future and believe that our investments will ensure that our position as the leading global supplier is further consolidated.

Our systems business is based around our GeoVS maritime domain awareness system application. GeoVS has evolved to be a sophisticated maritime surveillance, intelligence and analytics system that delivers customers such as coast guards, fisheries and port & waterway authorities enhanced control and understanding of their marine domain. We see that the global market has entered a phase of significant maritime surveillance and monitoring system upgrades due to the availability of a new generation of sensor technologies and analytics systems. We have completed a number of systems around the world and areactively and aggressively addressing the global maritime surveillance, security and monitoring market place. I am pleased to report that our pipeline of visible systems contract opportunities now stands at an aggregate value in excess of £400 million, with several of them in their final stages prior to contract and commencement of execution.

Our systems business involves the delivery of complete turn-key system solutions for the customer. These include the provision of various hardware, such as AIS devices that we produce, as well as third party items such as radar, communications, surveillance CCTV. In addition, we supply and integrate various forms of monitoring data from satellites for extended range monitoring which will provide a growing source of long-term recurring revenues in addition to ongoing system upgrades. All of this is integrated into a single operating platform by our GeoVS application. In 2017 we announced our intention to invest in our own satellite constellation. Following a period of intensive research and evaluation we have decided not to proceed with this investment. The satellite market is rapidly evolving with numerous competing systems being launched, thus providing SRT with a wide choice and a highly competitive market within which we can source the data our customers need.

In May the Company announced an equity fundraising of £3 million in order to provide the Company with growth capital and working capital to fund new and ongoing systems projects as well as to accelerate product development. In addition, the Company refinanced £1.15 million of short term loan notes by issuing new three year loan notes to the same value. The Company now has £3.15 million of Loan Notes drawn down of a £10 million available facility.

In summary, our transceivers business is well positioned to continue its long term growth path through the combination of better products and distribution, coupled with increasing adoption in the huge EU and USA commercial and leisure markets. SRT has established itself as a major player in the global maritime surveillance and security market, with proven projects completed, and a pipeline of major opportunities some of which are in their final stages of closure. I therefore expect the second half to see significant systems deliverables from multiple contracts and associated revenues as well as a solid contribution from our transceivers business.

Kevin Finn ChairmanCONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2018

Six months	Six months	Year
ended	ended	ended
30 Sep	30 Sep	31 Mar
2018	2017	2018
Unaudited	Unaudited	Audited
£	£	£
Revenue	3,223,804	2,928,576	5,331,559
Cost of sales	(1,915,550)	(1,591,591)	(3,026,374)
Gross profit	1,308,254	1,336,985	2,305,185
Administrative expenses	(2,472,004)	(3,082,711)	(6,469,102)
Operating loss before exceptional item	(1,163,750)	(1,745,726)	(4,163,917)
Exceptional item	3	-	(1,490,318)	(1,490,315)
Operating loss after exceptional item	(1,163,750)	(3,236,044)	(5,654,232)
Finance expenditure	(143,609)	(24,132)	(125,426)
Finance income	224	88	224
Loss before income tax	(1,307,135)	(3,260,088)	(5,779,434)
Income tax credit	4	113,829	158,714	551,866
Loss for the period	(1,193,306)	(3,101,374)	(5,227,568)
Total comprehensive loss for the period
	(1,193,306)	(3,101,374)	(5,227,568)
Loss per share:
Basic	2	(0.88)p	(2.43)p	(4.09)p
Diluted	2	(0.88)p	(2.43)p	(4.09)p

CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 30 SEPTEMBER 2018

As at 30 Sep 2018 UnauditedAs at 30 Sep 2017 UnauditedAs at 31 Mar 2018 Audited

Notes

£

£

£

Assets Non-current assets Intangible assets

Property, plant and equipment Deferred Tax

Total non-current assetsCurrent assets Inventories

Trade and other receivables Cash and cash equivalents

Total current assetsLiabilities Current liabilities

Trade and other payables Financial liabilities

Total current liabilities

Net current assets

Long term liabilities Financial liabilities Deferred tax

Total long term liabilitiesNet assetsShareholders' equity

(1,681,387)

7,758,393

(3,150,000)

(3,150,000)

Ordinary shares 5 Share premium

Other reserves 7 Retained earnings

Total shareholders' equity

6,275,385 175,431 386,517

3,353,330 4,660,048 1,426,402

(1,431,387)

(250,000)

-139,743 7,738,311 5,490,596

(1,922,924)

6,053,887

6,222,819

190,593 177,479

- 272,688

6,244,480 6,672,986

3,320,074 3,443,685

4,129,170 4,433,000

2,137,547 1,364,437

9,586,791

(1,249,781) (2,529,630) (2,500,000) (1,650,000)

(3,749,781)

5,837,010

(250,000) (120,464)

(370,464)

11,711,026

127,703

4,895,189 4,905,549

5,490,596 5,490,596

1,197,538

11,711,026

9,241,122

(4,179,630)

5,061,492

(2,000,000)

-

(2,000,000)

9,734,478

127,743

(789,410)

9,734,478

CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2018

Six months	Year
ended	ended	ended
30 Sep	30 Sep	31 Mar
2018	2017	2018
Unaudited	Unaudited	Audited
Notes	£	£	£
Cash used in operating activities	6	(1,635,351)	(353,825)	(993,536)
Corporation tax received	-	-	-
Net cash used in operating activities	(1,635,351)	(353,825)	(993,536)
Investing activities
Expenditure on product development	(711,324)	(969,434)	(1,876,920)
Purchase of property, plant and
equipment	(42,737)	(48,511)	(83,666)
Interest received	224	88	224
Net cash used in investing activities	(753,837)	(1,017,857)	(1,960,362)
Cash outflow before financing	(2,389,188)	(1,371,682)	(2,953,898)
Financing activities
Net proceeds from issue of ordinary
share capital	2,844,762	22,500	32,900
Net proceeds from debt financing	-	1,750,000	3,150,000
Repayments on loan	(250,000)	-	(500,000)
Interest paid	(143,609)	(24,132)	(125,426)
Net cash inflow from financing
	2,451,153	1,748,368	2,557,474
activities
Net increase / (decrease) in cash and
cash equivalents	61,965	376,686	(396,424)
Cash and cash equivalents at beginning
of period	1,364,437	1,760,861	1,760,861
Cash and cash equivalents at end of
period	1,426,402	2,137,547	1,364,437

Six months