DIGITISING THE MARINE DOMAIN
SECURITY I SAFETY I MANAGEMENT
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31ST MARCH 2021
SRT MARINE SYSTEMS PLC
CONTENTS
Directors and Advisors
About SRT Marine Systems plc
Annual Report Highlights
Chairman’s Statement
Strategic Report
Directors’ Report
Statement of Directors’ Responsibilities in respect of the Accounts
Corporate Governance Report
Independent Auditor’s Report
Consolidated Statement of Profit or Loss and other Comprehensive Income
Consolidated Statement of Financial Position
Company Statement of Financial Position
Consolidated Statement of Cash Flows
Company Statement of Cash Flows
Consolidated Statement of Changes in Equity
Company Statement of Changes in Equity
Notes to the Accounts
Notice of Annual General Meeting
2
3
4
5-6
7-8
9
10
11-13
14-20
21
22
23
24
25
26
27
28-55
56-60
1
SRT MARINE SYSTEMS PLC - ANNUAL REPORT AND FINANCIAL STATEMENTS, YEAR ENDED 31 MARCH 2021
DIGITISING THE MARINE DOMAIN
SECURITY I SAFETY I MANAGEMENT
DIRECTORS AND ADVISORS
Directors
Simon Tucker
Neil Peniket
Richard Hurd
Kevin Finn
Simon Rogers
Simon Barrell
Secretary
Richard Hurd
Registered Office
Wireless House
Westfield Industrial Estate
Midsomer Norton
Bath BA3 4BS
Bankers
Barclays Bank plc
4-5 Southgate Street
Bath BA1 1AQ
Auditors
Nexia Smith & Williamson
Audit Limited
Statutory Auditor &
Chartered Accountants
Portwall Place
Portwall Lane
Bristol BS1 6NA
Solicitors
CMS Cameron McKenna
Mitre House
160 Aldersgate Street
London EC1A 4DD
Nominated Advisor & Broker
finnCap
60 New Broad Street
London
EC2M 1JJ
Registrars
Computershare Investor Services PLC
PO Box 82
The Pavilions
Bridgewater Road
Bristol BS99 7NH
Company's registered number
05459678
Website
www.srt-marine.com
2
ABOUT SRT MARINE SYSTEMS PLC
SRT Marine Systems plc (SRT) is an established marine-tech business that specialises in providing solutions that
deliver enhanced maritime safety, security and management to vessel operators and national maritime authorities.
Our advanced technologies and products enable maritime activities to be continuously tracked, understood and
managed, resulting in less accidents, greater efficiency, detection and prevention of threats and illegal activities
such as smuggling and terrorism and the protection and conservation of the marine environment.
Our systems business division develops and delivers the SRT-MDA System solution. This sophisticated system is built
around our inhouse developed GeoVS™ platform and enables continuous and persistent surveillance of extended
ocean and coastal areas with integrated intelligent analytics that automatically identifies and alerts suspicious and
illegal activities. The SRT-MDA System is purchased and used to conserve, protect and secure coastal borders,
important infrastructure, territorial waters and extended oceanic areas of interest both within and beyond
national EEZ’s.
Our transceivers business division leads the world in the development and supply of maritime AIS transceivers. First
mandated on all commercial vessels over 300mt in 2002, today AIS is a globally adopted specialist maritime data
communications technology that is becoming widely used for a variety of applications. From collision avoidance
to vessel tracking, navigation safety and marine environment monitoring. Our customers range from leisure boat
owners to the largest ships, to authorities wishing to enhance navigation and monitor the environment.
3
ANNUAL REPORT HIGHLIGHTS
FINANCIAL:
• Revenues of £8.3m, mostly generated by transceivers division. No material revenue
contribution from systems business due to Covid-19 delays.
•
Improved gross profit margin of 38%.
• £550m systems division validated system sales opportunity pipeline, of which £71m
are very near term.
• £5.3m gross cash as at year end.
OPERATIONAL:
• Significant progress of development of new dual application AIS transceiver product
(NEXUS) scheduled to commence shipping early 2023.
• Specialist marine data analytics lab established within systems division.
• Systems delivery model evolved to enable efficient project delivery even when
international travel of SRT support engineers is restricted.
• Substantial new functionality implementation in SRT-MDA System GeoVS
software platform.
4
SRT MARINE SYSTEMS PLC - ANNUAL REPORT AND FINANCIAL STATEMENTS, YEAR ENDED 31 MARCH 2021
CHAIRMAN’S STATEMENT
Despite many positive developments and much progress across our business during the year that have
significantly strengthened our business, including significant engagement with new and existing system
customers and improved products, Covid-19 has caused significant delays to expected new system contracts.
Therefore, as we reported in our post year end trading update issued in April 2021, these delays have caused
a contraction of revenues and a loss for the financial year ending March 2021.
However, during the first quarter of the new financial year, we have seen unexpectedly strong trading in our
transceivers division and slow but steadily accelerating progress with new system contract opportunities. Of
particular note are four system contracts worth an aggregate of £71m which had been expected to commence
last year, where the customers are now actively pushing to complete their internal procurement processes as
quickly as possible, boding well for the new financial year.
As reported in our post year end trading update (April 2021), year on year group revenues decreased from
£18.9m to £8.3m, resulting in a loss after tax of £5.9m (2021: loss of £3.0m) with gross cash as at the year-
end of £5.3m. During the year, the vast majority of the revenues (£8.2m) were generated by our transceivers
division which grew 1%. Our systems business did not complete any revenue milestones, however £13.0m of
cash payments from existing customers were received in accordance with contracted payment schedules and
subsequent to year end a further £2.3m has been received, with further amounts due in the coming months.
Given the circumstances, our transceivers business performed better than expected during the year, delivering
1% growth. We saw steady demand across both leisure and commercial vessel transceiver segments, as well
as continuing increased demand for our Digital AIS Aids to Navigation (what we now call ‘DAS’ – Digital AtoN
System’). All driven by a fundamental long-term macro trend of digitising the monitoring and management
of the marine domain. Our product development focus has been the improvement in the mobile device
connectivity of existing products that will make it more convenient for users to wirelessly connect to their
navigation app enabled smart phones and tablets. And the creation and launch of more integrated DAS products
to meet growing demand from ports and waterway authorities wanting to enhance navigation safety and marine
environment monitoring. A new and very significant transceiver product (NEXUS) is also under development that
integrates AIS with other technologies and I am pleased to report excellent progress with our plan to complete
and start shipping this product from early 2023.
Looking forward, during the first quarter of the new year our transceivers business has exceeded our expected
10% annual growth target, with stronger demand for both DAS and vessel transceivers, which as of the date of
this report seems likely to continue into the future, along with stable profit margins with good cash generation.
We believe this is because of the combined effects of the well-known quality of our products, established and
growing sales channels that value good product and reliable supply, along with continued growing demand for
AIS. Our forthcoming NEXUS product will add a very significant new complementary product segment to our
transceivers business which we hope will result in a material increase in revenues from 2023.
Our systems business is ultimately underpinned by a long-term macro-trend of countries wanting to have the
autonomous ability to monitor, control and manage their marine territories. Having identified this strategic long-
term opportunity early, we have been able to develop a sophisticated turn-key system solution, the SRT-MDA
System, which is built around our GeoVS maritime enterprise application which delivers a fully integrated and
feature rich maritime surveillance and management system that is attractive to coast guards, fishery authorities
and owners of critical infrastructure. The SRT-MDA System is now in use around the world, for example in
Malaysia, Philippines, Bahrain and Panama, providing important proven references for new customers.
During the year we continued to invest in the development of our system to both enhance existing functionality
and performance, as well as implement new functionality. Of particular note is the growing sophistication of our
system’s backbone data networking and fusion capabilities, and intelligent analytics which is able to automatically
identify illegal and suspicious activities from hundreds of thousands of vessels and alert system operators who
can then instigate appropriate response actions. This is work that is accelerating and will continue into the future,
adding significant value to our core systems product.
These temporary delays, whilst extremely frustrating, have given us the time to make very significant operational
progress that I believe will make a material difference to the business both in the near term and years ahead.
5
SRT MARINE SYSTEMS PLC - ANNUAL REPORT AND FINANCIAL STATEMENTS, YEAR ENDED 31 MARCH 2021 CHAIRMAN’S STATEMENT – CONTINUED
These have included remodelling our systems delivery method such that our systems are more modular and
easier for our local partners to install, commission and support efficiently with much less in-country support from
our delivery support engineers. New and innovative system functionalities, such as dynamic analytics, multi-
source data fusion and alert response action management within the fully integrated operating environment of
the SRT-MDA System that set us apart from potential future competition and will deliver a material difference and
added value to our customers.
During the year, in conjunction with our local partners, we have continued to make good progress with the
implementation of the SRT-MDA System in The Philippines for BFAR. In December 2018, we entered a four
year PHP2.1 billion (£30m) value contract to build the first phase of the world’s largest and most sophisticated
national scale fisheries monitoring system. Much of the infrastructure has now been completed and the multiple
monitoring centres are systematically being commissioned, BFAR staff in training, with commercial fishing vessels
equipped with our VMS-100 now being tracked once every 15 minutes and electronically reporting fishing
catches. Following completion of the project we expect a long-term system sustainability contract which will
include a subscription to our S-MDA satellite data product, along with further system expansion contracts.
As we reported, new system contract discussions have been significantly affected by Covid-19 restrictions which
have caused customer project planning and procurement processing departments to regularly close or suffer
a significant capacity reduction, resulting in extended contract finalisation processing timelines. Whilst these
issues persist in many jurisdictions and the nature of government business means forecasting of precise sales
cycles is challenging, in recent months we have experienced renewed engagement from customers to progress
discussions coupled with a steady increase in meaningful activity from a subset of customers who appear eager to
complete their contracting processes as quickly as possible.
In our April 2021 post year end update we reported that the value of our pipeline of validated system
opportunities now stands at £550m, with contract opportunities that range from a few hundred thousand dollars
to tens of millions, spread across the world at different stages in the sales and contracting cycle. Of these, seven
worth an aggregate of £125m, located in countries in SE Asia and Middle East, we consider to be in their final
stage prior to contracting. Due to the complexities of government contracting processes and differences between
the processes of each customer, it is impossible for us to forecast with absolute surety the date upon which these
will be signed. However, based upon received information and activities we expect that four of these contracts
worth approximately £71m over an average two year delivery period, should be under contract and delivering
meaningful revenues within the new financial year. The other three, worth £54m, likely some months later, thus
being contracted during the latter half of the new financial year or early next year, and therefore depending on
exact timing may not contribute meaningful revenues until the next financial year. I am also pleased to report
that some other significant opportunities in our pipeline which are at an earlier stage in the sales development
cycle, have recently materially progressed with the customers indicating a likely contracting timescale towards the
end of 2022, although these timescales are likely to change.
Our quick action at the beginning of Covid-19 to develop and execute a Covid-19 resilience plan, coupled with
ongoing careful financial and operational management of the business has enabled us to successfully weather this
temporary storm and be in our current positive position with an array of significant opportunities ahead of us. In
our new financial year, we expect to see our transceiver business revert back to its long-term growth trajectory,
thus generating increasing revenues and profits, and our systems business to enter multiple new contracts, and
thus drive a substantial and sustained financial turnaround.
I would like to thank everyone at SRT, all of whom have continued to work fulltime throughout, even travelling
and enduring weeks of solitary isolation in hotel rooms around the world to deliver essential tasks when possible,
and our patient shareholders for their long term and exceptional support for the company.
Kevin Finn
Chairman, Date: 28 July 2021
6
SRT MARINE SYSTEMS PLC - ANNUAL REPORT AND FINANCIAL STATEMENTS, YEAR ENDED 31 MARCH 2021 STRATEGIC REPORT
FOR THE YEAR ENDED 31 MARCH 2021
The directors present their strategic report for the year ended 31 March 2021.
Business Review
The principal activity of the SRT Marine Systems plc Group is the development and supply of Automatic
Identification System (AIS) based maritime domain awareness (MDA) technologies, derivative product and system
solutions for use in a wide range of maritime applications from safety and security to fishery management and
environment protection.
The financial Key Performance Indicators (KPIs) used by the Board to monitor progress are revenue growth,
gross margin, profit before tax and cash flow. These are used because they best indicate performance against
the Group’s strategic objective of delivering profitable growth which in turn will drive shareholder value. Non-
financial KPIs used include status of customer and development projects against milestone targets. Performance
against these metrics has been discussed in the Chairman’s Statement on pages 5-6.
Principal Risks and Uncertainties
The key risks and uncertainties faced by the Group are:
Covid-19
At the present time, Covid-19 continues to present a key risk to the business in terms of economic disruption and
specifically the restriction of government budget and resource availability. This risk was mitigated by the Group
completing a Covid-19 resilience financing exercise in April 2021, providing the Group with additional working
capital in the event of delays to project commencement dates and payments.
A further risk, specifically as a result of Covid-19, is the restriction of the Group’s delivery team to travel in order
to implement and install project deliverables. During the year, the team has been able to travel on a limited basis
with trips often requiring extensive quarantine measures. However, going forward the Group will continue to
mitigate this risk as necessary with additional training of local partners, the use of technology to enable remote
working by the delivery team and the configuration of equipment in the UK before being delivered into the
various project territories.
Nature of systems customers
These customers tend to be governments and thus can be subject to significant risk, including but not limited to:
the forecasting of project commencement dates and project delivery schedules, political and financial change and
uncertainty, sudden cancellation and or changes to contracts without the possibility for redress, negotiation and
or compensation. Furthermore, payment terms are frequently extended and variable and in the event of non-
payment may not be collectable.
The Group seeks to manage this risk by obtaining a deep understanding of our markets, end customers and local
partners which is achieved through extensive and close co-operation.
System execution risk
The implementation of a system contract contains a wide range of execution risks. These risks are mitigated
through forming long term partnerships with local installation partners and investing in customer support and
system project delivery teams.
Attracting and retaining employees with appropriate skills
The group’s ability to execute its strategy is dependent on the skills and abilities of its staff. The group undertakes
ongoing initiatives to foster good staff engagement and ensure that remuneration packages are competitive in
the market.
7
SRT MARINE SYSTEMS PLC - ANNUAL REPORT AND FINANCIAL STATEMENTS, YEAR ENDED 31 MARCH 2021
STRATEGIC REPORT - CONTINUED
FOR THE YEAR ENDED 31 MARCH 2021
Section 172 (1) Statement
Each individual director must act in the way he considers, in good faith, would be the most likely to promote the
success of the Group for the benefit of its members as a whole, and in doing so have regard to:
•
•
•
•
•
long term consequences of any decisions
the interests of the Group’s employees
the need to foster business relationship with suppliers, customers and others
the impact of the Group’s operations on the community and the environment
the need to maintain a reputation for high standards of business conduct and act
fairly between members of the group.
Key issues
Key issues include the investment and delivery of key projects in the systems business in overseas territories. In all
evaluations the need to foster important business relationships with customers and local in country suppliers
are key considerations which are weighted heavily as are the need for high standards of business conduct and
health and safety and environmental compliance.
Furthermore, the interests of our employees amid the Covid-19 pandemic has and continues to be of paramount
importance with the business having transitioned to a largely homebased operating model to protect their health
and safety together with the implementation of the required government regulations in our offices. We expect
this home-based operating model to continue in the future.
The full impact of the Covid-19 pandemic on future cash flows is a key issue which is difficult to quantify but
the raising of finance during the year will have the long term consequence of providing working capital to allow
for a significant Covid-19 related delay in normal business and thus ensure the resilience of the Group during
this period.
Stakeholders
Key stakeholders include shareholders, employees, customers and suppliers.
Methods of engagement
The Group uses a range of methods of engagement with stakeholders, ranging from formal structures to personal
engagement. Shareholders are updated regularly on business activities via investor roadshows, quarterly on-line
web casts, one on one communication with the executive directors and AGM presentations.
The Group’s flat management structure allows personal interaction at all levels which facilitates communication
within the organisation as well as externally with customers and suppliers. An “open door” culture is operated
with all stakeholders. Employees have regular personal interaction with their line managers and the executive
directors and have annual targets set against which formal assessments of performance is reviewed. All key
suppliers and customers are personally met in order that business relationships can be fostered.
Investing for the Future
We acknowledge that our chosen market places are still in their early stages and as a result we need to continue
to invest in our organisation in order to meet the challenges that a growing market will bring. This will involve
adding to our existing product and system portfolio as well as evolving our current technology offerings which is
further discussed in the Chairman’s Statement.
Approved by the Board of Directors and signed on behalf of the Board on 28 July, 2021.
S Tucker
Director
8
SRT MARINE SYSTEMS PLC - ANNUAL REPORT AND FINANCIAL STATEMENTS, YEAR ENDED 31 MARCH 2021 DIRECTORS’ REPORT
FOR THE YEAR ENDED 31 MARCH 2021
General information
SRT Marine Systems plc is a public limited Company which is listed on the AIM market of the London Stock
Exchange and is incorporated and domiciled in the United Kingdom.
Results for the Year and Dividends
The Group incurred a loss after tax of £5,133,843 (2020: loss £6,079,022). The directors have not recommended
the payment of a dividend (2020: £nil).
Future developments and strategy
These are considered in the Chairman’s Statement on pages 5-6.
Financial instruments and risk management
Details of the Group’s financial instruments and its policies with regard to financial risk management are given in
note 24 to the financial statements.
Directors
The directors who served during the year were:
Non Executives
Chairman
Non Executive Director
Non Executive Director
Executives
Chief Executive Officer
Chief Operating Officer
Chief Financial Officer
Kevin Finn
Simon Rogers
Simon Barrell
Simon Tucker
Neil Peniket
Richard Hurd
Directors’ indemnities
The Company has made qualifying third party indemnity provisions for the benefit of its directors which were
made during the year and remain in force at the date of this report.
Going concern
The directors have prepared the financial statements on a going concern basis. They believe that the Group and
Company will have adequate resources to continue in operational existence for the foreseeable future. Further
details can be found in note 1, Accounting Policies.
Disclosure of information to the Auditors
In the case of each person who was a director at the time this report was approved:
•
•
so far as that director was aware there was no relevant available information of which the Company’s auditors
were unaware; and
that director had taken all steps that the director ought to have taken as a director to make himself or
herself aware of any relevant audit information and to establish that the Company’s auditors were aware of
that information.
This information is given and should be interpreted in accordance with the provisions of s418 of the Companies
Act 2006.
Auditors
A resolution to appoint the auditors, Nexia Smith & Williamson Audit Limited, will be proposed at the next
Annual General Meeting.
Approved by the Board of Directors and signed on behalf of the Board on 28 July, 2021.
S Tucker
Director
9
SRT MARINE SYSTEMS PLC - ANNUAL REPORT AND FINANCIAL STATEMENTS, YEAR ENDED 31 MARCH 2021
STATEMENT OF DIRECTORS’ RESPONSIBILITIES IN RESPECT OF THE ACCOUNTS
The directors are responsible for preparing the Strategic Report, Directors' Report and the financial statements in
accordance with applicable law and regulations.
Company law requires the directors to prepare financial statements for each financial year. Under that law the
directors have elected to prepare the Group and parent Company financial statements in accordance with
international accounting standards in conformity with the requirements of the Companies Act 2006. Under
Company law the directors must not approve the financial statements unless they are satisfied that they give a
true and fair view of the state of affairs of the Company and of the Group and of the profit or loss of the Group
for that period. In preparing these financial statements, the directors are required to:
select suitable accounting policies and then apply them consistently;
•
• make judgments and accounting estimates that are reasonable and prudent;
•
state whether international accounting standards in conformity with the requirements of the Companies Act
2006 have been followed subject to any material departures disclosed and explained in the financial
statements; and
• prepare the financial statements on the going concern basis unless it is inappropriate to presume that the
Company will continue in business.
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the
Company's transactions and disclose with reasonable accuracy at any time the financial position of the Company
and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also
responsible for safeguarding the assets of the Group and Company and hence for taking reasonable steps for the
prevention and detection of fraud and other irregularities.
The directors are also responsible for ensuring that they meet their responsibilities under the AIM Rules.
The directors are responsible for the maintenance and integrity of the corporate and financial information
included on the Company’s website. Legislation in the United Kingdom governing the preparation and
dissemination of financial statements may differ from legislation in other jurisdictions.
10
SRT MARINE SYSTEMS PLC - ANNUAL REPORT AND FINANCIAL STATEMENTS, YEAR ENDED 31 MARCH 2021
CORPORATE GOVERNANCE REPORT
FOR THE YEAR ENDED 31 MARCH 2021
The directors recognise the importance of, and are committed to, high standards of corporate governance. AIM
companies are required to apply a recognised corporate governance code. Of the three widely recognised formal codes,
the directors have decided to adhere to the Quoted Companies Alliance’s Corporate Governance code for small and
mid-size quoted companies. The Group’s compliance with this code is summarised below and can be found in full on
the Group’s website at: www.srt-marine.com/corporate-governance.
Business Model and Strategy
SRT is a global leader in the provision of maritime domain awareness (MDA). Our products are used by mariners,
infrastructure owners, coast guards and fishing authorities to enhance safety, security and management efficiency
of maritime regions.
SRT’s strategy and business model is to address MDA market segments using a small set of innovative core technologies
and products and systems which can be combined and customised into multiple product configurations and types each
of which address different MDA market segments.
The key risks and challenges faced by the Group are set out in the Strategic Report on page 7.
Risk Management
The Board is responsible for the systems of internal control and risk management and reviewing their effectiveness.
Furthermore, through the activities of the Audit Committee the effectiveness of these internal controls is considered
annually.
A comprehensive budgeting process is completed once a year and is reviewed and approved by the Board. Revised
forecasts are also produced on a monthly basis. The Group’s results, compared with the budget and forecast are
reported to the Board on a monthly basis.
Within the scope of the annual audit, specific financial risks are evaluated in detail, including those in relation to revenue
recognition, recoverability of receivables and stock and intangibles valuation.
SRT has published a share dealing policy on its intranet to seek the necessary approval from directors should they,
or their families, plan to trade in the group’s equities.
The Board of Directors
The members of the board have a collective responsibility and legal obligation to promote the interests of the group
and are collectively responsible for defining corporate governance arrangements. Ultimate responsibility for the
quality of, and approach to, corporate governance lies with the chair of the board.
The board consists of six directors of which three are executive and three are independent non-executives. The board
is satisfied that at present it has a suitable balance between independence on the one hand and knowledge of the
company on the other.
During the year ended 31 March 2021 there were seven board meetings and calls. All the directors attended all the
meetings and calls during the year.
11
SRT MARINE SYSTEMS PLC - ANNUAL REPORT AND FINANCIAL STATEMENTS, YEAR ENDED 31 MARCH 2021 CORPORATE GOVERNANCE REPORT - CONTINUED
FOR THE YEAR ENDED 31 MARCH 2021
The board has an agenda of items to consider at each meeting subdivided into the key activities of the business,
namely operations, project delivery, sales and marketing and financial matters. Prior to the board meeting a board
pack of information is compiled by the executive directors and circulated around the board together with the
minutes from the previous meeting for approval and the monthly management accounts. The board believes that
the composition and breadth of experience of the board are appropriate for the Company at present and that its
blend of relevant experience, skills and personal qualities and capabilities is sufficient to enable it to successfully
execute its strategy. All Directors receive regular and timely information on the Group’s operational, sales and
financial performance.
Biographies of the board are set out in the Corporate Governance section of the Group’s website.
The board is supported by three committees: audit, remuneration and nomination. No detailed reports have
been included as there was no significant activity during the year.
Audit Committee
The Audit Committee comprises of Simon Barrell (Chairman) and Kevin Finn. It meets at least twice per year. The
audit committee reviews the effectiveness of the internal controls of the business, as well as any key judgements
made in the preparation of the interim and annual accounts and the effectiveness of the internal financial
management. The audit planning meeting took place on 18 May 2021 and the meeting to review feedback from
the 2021 audit took place on 19 July 2021.
Remuneration Committee
The Remuneration Committee comprises Simon Rogers (Chairman), Kevin Finn and Simon Barrell; it meets at
least once a year. During the year, the Committee met to discuss the remuneration of the Executive directors.
The remuneration policy for Directors is set by the Board and is described below. It is determined by the
Remuneration Committee within the framework of this policy. The remuneration of the Executive Directors
is determined by the Remuneration Committee which consists entirely of Non-Executive Directors. The
Remuneration Committee consults with Simon Tucker, the Group Chief Executive Officer, as appropriate with
regard to its proposals relating to the remuneration of the Executive Directors.
The policy of the Remuneration Committee is to review the Executive Directors’ Remuneration based on market
practice within the Company’s market sector. The Group wishes to attract, motivate and retain key executives.
Accordingly, its policy is to design remuneration packages which, through an appropriate combination of basic
salary, performance related bonuses, share options, pension arrangements and certain benefits, reward executives
fairly and responsibly for their individual contributions, whilst linking their potential earnings to the performance
of the Group as a whole. The overall package, which is reviewed at least annually may contain the following
elements:-
a) Basic salaries
Basic salaries for Executive Directors are reviewed annually by the Remuneration Committee and are set at
levels which reflect their performance and degree of responsibility.
b) Enterprise Management Incentive Share Option Scheme
The Company has had in place, since November 2005, an enterprise management incentive share option
scheme under which awards are met at the discretion of the Remuneration Committee. The share options
held by the Directors are set out in note 4.
c) Performance related bonus
The Remuneration Committee can award discretionary bonuses, which are linked to the achievement of
demanding individual, business and corporate objectives.
12
SRT MARINE SYSTEMS PLC - ANNUAL REPORT AND FINANCIAL STATEMENTS, YEAR ENDED 31 MARCH 2021
CORPORATE GOVERNANCE REPORT - CONTINUED
FOR THE YEAR ENDED 31 MARCH 2021
d) Pension allowance
Simon Tucker elected not to join the Company’s Money Purchase Pension Scheme and in compensation for
this the Remuneration Committee agreed to pay him the amount that the Company would have paid to the
pension scheme on his behalf, for him to invest as he wishes.
e) Other benefits
Other benefits include private health insurance.
f) Non-Executive Directors
The Non-Executive Directors are independent of management and have no relationship which could
materially interfere with the exercise of their independent judgement. The remuneration of the Non-
Executive Directors is decided by the Executive Directors.
Nomination Committee
The Nomination Committee comprises Kevin Finn (Chairman) and Simon Rogers. The Nomination Committee
met during the year to discuss the appointment of new members of the senior management team.
Corporate Culture
The Board aims to lead by example and do what is in the best interests of the Company. It seeks to maintain the
highest level of integrity in the conduct of the Group’s operations. An open culture is encouraged within the
Group, with regular communication to staff regarding progress and staff feedback sought on a regular basis.
Given the nature of the customers and markets within our systems business, a strict anti-bribery and corruption
policy is operated to ensure that business dealings are carried out to the highest ethical standards.
13
SRT MARINE SYSTEMS PLC - ANNUAL REPORT AND FINANCIAL STATEMENTS, YEAR ENDED 31 MARCH 2021
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF SRT MARINE SYSTEMS PLC
Opinion
We have audited the financial statements of SRT Marine Systems plc (the ‘parent company’) and its subsidiaries
(the ‘group’) for the year ended 31 March 2021 which comprise the Consolidated Statement of Profit or Loss
and Other Comprehensive Income, the Consolidated and Company Statements of Financial Position, the
Consolidated and Company Statements of Cash flow, the Consolidated and Company Statements of Changes in
Equity, and the notes to the financial statements, including significant accounting policies. The financial reporting
framework that has been applied in their preparation is applicable law and international accounting standards in
conformity with the requirements of the Companies Act 2006.
In our opinion, the financial statements:
•
give a true and fair view of the state of the group’s and of the parent company’s affairs as at 31 March 2021
and of the group’s loss for the year then ended;
have been properly prepared in accordance with international accounting standards in conformity with the
requirements of the Companies Act 2006; and
have been prepared in accordance with the requirements of the Companies Act 2006.
•
•
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable
law. Our responsibilities under those standards are further described in the Auditor’s responsibilities for the
audit of the financial statements section of our report. We are independent of the group and parent company
in accordance with the ethical requirements that are relevant to our audit of the financial statements in the
UK, including the FRC’s Ethical Standard as applied to listed entities, and we have fulfilled our other ethical
responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is
sufficient and appropriate to provide a basis for our opinion.
Material uncertainty related to going concern
We draw attention to note 1 in the financial statements. The timing of the awarding of contracts and subsequent
cash receipts from the Group’s systems business is uncertain. In addition, the impact of the continuing Covid-19
pandemic makes predicting the timing of cash flows even more difficult. The directors have prepared cash flow
projections.
Our evaluation of the directors’ assessment of the group and parent company’s ability to continue to adopt the
going concern basis of accounting included:
• Challenging the assumptions used in the forecasts prepared by management for the financial years ending
2022, 2023 and 2024;
• Assessing the appropriateness of the assumptions concerning growth rates and inputs to the discount rate
against latest market expectations and macro-economic assumptions;
• Comparing the forecast results to those actually achieved in the 2022 financial period so far;
• Considering the group’s funding position and requirements; and
• Considering the sensitivity of the assumptions and re-assessing headroom after sensitivity.
The events or conditions along with the other matters as set forth in note 1, indicate that a material uncertainty
exists that may cast significant doubt on the company’s ability to continue as a going concern. Our opinion is not
modified in respect of this matter.
Notwithstanding the above, in auditing the financial statements we have concluded that the directors’ use of the
going concern basis of accounting in the preparation of the financial statements is appropriate.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the
relevant sections of this report.
14
SRT MARINE SYSTEMS PLC - ANNUAL REPORT AND FINANCIAL STATEMENTS, YEAR ENDED 31 MARCH 2021
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF SRT MARINE SYSTEMS PLC - CONTINUED
Emphasis of Matter – recoverability of intangible assets, inventories, investment value, intercompany
debtor and goodwill
We draw attention to note 1 in the financial statements concerning key sources of estimation uncertainty, and
specifically the recoverability of £4.2m of intangible assets, £725k of inventories and £633k of goodwill on the
Group balance sheet relating to the Group’s systems business; and £933k of investment value and intercompany
debtor of £13.3m on the balance sheet of the Company.
As described in Note 1 - Critical accounting judgements and key sources of estimation uncertainty - the
recoverability of these assets is dependent on significant contracts being signed, delivered and cash collected
within the projects arm of the Group, the timing of which is not certain. The financial statements do not reflect
any impairment that may be required if the above Group assets totalling £5.6m or the above Company assets
totalling £14.2m is not recoverable. Our opinion is not modified in respect of this matter.
Key audit matters
In addition to the matter described in the material uncertainty related to going concern section, we have
determined the matters described below to be the key audit matters to be communicated in our report. We
identified the key audit matters described below as those that were of most significance in the audit of the
financial statements of the current period. Key audit matters include the most significant assessed risks of material
misstatement, including those risks that had the greatest effect on our overall audit strategy, the allocation of
resources in the audit and the direction of the efforts of the audit team.
In addressing these matters, we have performed the procedures below which were designed to address the
matters in the context of the financial statements as a whole and in forming our opinion thereon. Consequently,
we do not provide a separate opinion on these individual matters.
15
SRT MARINE SYSTEMS PLC - ANNUAL REPORT AND FINANCIAL STATEMENTS, YEAR ENDED 31 MARCH 2021 INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF SRT MARINE SYSTEMS PLC - CONTINUED
KEY AUDIT MATTER DESCRIPTION OF RISK
HOW THE MATTER WAS ADDRESSED IN THE AUDIT
Intangible assets –
for Group only
The Group capitalises qualifying
development costs as intangible
assets, which are material to the
Group’s financial statements.
The audit risk is considered
significant, given the stringent
requirements that must be
met to capitalise these costs in
accordance with IAS 38.
In addition, the value of
these costs to the Group,
once capitalised, presents an
area of audit risk, given the
uncertainty and value of future
sales, and the projected future
life of the intangible asset and
amortisation period assigned.
For these reasons, we have
considered this an area of key
audit focus.
The main procedures performed on the recognition
and valuation assessments, including areas where we
challenged management were as follows:
• Obtaining and agreeing the breakdown of intangible
assets by ongoing/finalised projects to note 10 in the
financial statements.
•
•
•
•
•
•
Assessing the most significant costs capitalised
per each project at year end against the stringent
recognition criteria of IAS 38 and corroborating
the explanations received from management
with information obtained elsewhere, such as
corroborating sales levels and margins obtained on
the projects for which amortisation is being charged
to work performed on the respective sales area.
Substantive testing a sample of costs capitalised
during the year by agreeing to supporting
documents and assessing them against the
recognition criteria of IAS 38.
Reviewing the amortisation charged during the year,
to ensure it has been calculated in accordance with
the Group’s amortisation policy, and consideration
of whether the amortisation period is appropriate for
the specific costs capitalised.
Reviewing management’s assessment of the value
of the intangible assets against the impairment
indicators of IAS 36.
Reviewing and challenging the impairment review
conducted to ensure the value of intangible assets
not yet in use were more than covered by the
recoverable amount.
Considering the appropriateness of the disclosures
made in the financial statements in respect of these
assets.
Inventories –
for Group only
As shown in note 13, group
inventories consist of raw
materials and finished goods.
The main procedures performed on the valuation
assessments, including areas where we challenged
management were as follows:
The audit risk is considered
to be significant given the
high levels of old inventories
included within the accounts.
All inventory should be held
at the lower of cost and net
realisable value. If stock is
held for long periods of time
then the net realisable value is
called into question. Given the
uncertainty over this estimate
we have considered this to be a
key area of audit focus.
• Obtaining and agreeing the detailed inventory listing
to the note in the accounts.
•
•
•
•
•
Substantively testing a sample of inventory costs
back to latest purchase invoices.
Considering the net realisable value of a sample of
inventory lines by testing the latest sale of the lines.
Reviewing the appropriateness and effectiveness of
management’s stock provision.
Recalculation of appropriate provision and
comparing to client’s calculation of provision.
Considering the appropriateness of the disclosures
made in the financial statements in respect of
inventory.
16
SRT MARINE SYSTEMS PLC - ANNUAL REPORT AND FINANCIAL STATEMENTS, YEAR ENDED 31 MARCH 2021 INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF SRT MARINE SYSTEMS PLC - CONTINUED
Our application of materiality
The materiality for the group financial statements as a whole (“group FS materiality”) was set at £437k. This
has been determined with reference to the benchmarks of the group’s total assets and net assets as well as
considering revenue. As part of our consideration of materiality, we considered using alternative approaches
based on profit and loss metrics but considered these to be inappropriate in a year that has been affected by the
Covid-19 pandemic. Materiality represents 4.1% of the group’s net assets.
The materiality for the parent company financial statements as a whole (“parent FS materiality”) was set at £284k.
This has been determined with reference to the benchmark of the parent company’s net assets as it exists only as
a holding company for the group, capped at the level of performance materiality applied to the group financial
statements. Parent FS materiality represents 2.5% of the parent company’s net assets as presented on the face of
the parent company statement of financial position.
Performance materiality for the group financial statements was set at £284k, being 65% of group FS materiality,
for purposes of assessing the risks of material misstatement and determining the nature, timing and extent of
further audit procedures. We have set it at this amount to reduce to an appropriately low level the probability
that the aggregate of uncorrected and undetected misstatements exceeds FS materiality. We judged this level
to be appropriate based on our understanding of the group and its financial statements, as updated by our
risk assessment procedures and our expectation regarding current period misstatements including considering
experience from previous audits.
Performance materiality for the parent company financial statements was set at £185k, being 65% of parent
FS materiality, for purposes of assessing the risks of material misstatement and determining the nature, timing
and extent of further audit procedures. We have set it at this amount to reduce to an appropriately low level the
probability that the aggregate of uncorrected and undetected misstatements exceeds FS materiality. We judged
this level to be appropriate based on our understanding of the company and its financial statements, as updated
by our risk assessment procedures and our expectation regarding current period misstatements including
considering experience from previous audits.
An overview of the scope of the audit
The Group performs all transaction processing and financial statement preparation centrally in the UK. Of the
Group’s seven reporting components, we audited individually three of them, with the remaining components
being dormant entities.
The components within the scope of our work covered all of the Group’s revenue, all of the Group’s profit before
of the Group’s net assets.
Other information
The other information comprises the information included in Annual Report and Financial Statements, other than
the financial statements and our auditor’s report thereon. The directors are responsible for the other information.
Our opinion on the financial statements does not cover the other information and, except to the extent otherwise
explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is
to read the other information and, in doing so, consider whether the other information is materially inconsistent
with the financial statements or our knowledge obtained in the course of the audit or otherwise appears to be
materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are
required to determine whether this gives rise to a material misstatement in the financial statements themselves.
17
SRT MARINE SYSTEMS PLC - ANNUAL REPORT AND FINANCIAL STATEMENTS, YEAR ENDED 31 MARCH 2021 INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF SRT MARINE SYSTEMS PLC - CONTINUED
If, based on the work we have performed, we conclude that there is a material misstatement of this other
information, we are required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of the audit:
•
•
the information given in the strategic report and the directors’ report for the financial year for which
the financial statements are prepared is consistent with the financial statements; and
the strategic report and the directors’ report have been prepared in accordance with
applicable legal requirements.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the group and the parent company and their environment
obtained in the course of the audit, we have not identified material misstatements in the strategic report or the
directors’ report.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006
requires us to report to you if, in our opinion:
•
adequate accounting records have not been kept by the parent company, or returns adequate for our audit
have not been received from branches not visited by us; or
the parent company financial statements are not in agreement with the accounting records and returns; or
•
•
certain disclosures of directors’ remuneration specified by law are not made; or
• we have not received all the information and explanations we require for our audit.
Responsibilities of directors
As explained more fully in the directors’ responsibilities statement set out on page 10, the directors are
responsible for the preparation of the financial statements and for being satisfied that they give a true and fair
view, and for such internal control as the directors determine is necessary to enable the preparation of financial
statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the group’s and the parent
company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern
and using the going concern basis of accounting unless the directors either intend to liquidate the group or the
parent company or to cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our
opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in
accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from
fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected
to influence the economic decisions of users taken on the basis of these financial statements.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures
in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities,
including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud, is
detailed below:
18
SRT MARINE SYSTEMS PLC - ANNUAL REPORT AND FINANCIAL STATEMENTS, YEAR ENDED 31 MARCH 2021
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF SRT MARINE SYSTEMS PLC - CONTINUED
We obtain a general understanding of the group’s legal and regulatory framework through enquiry of
management in respect of their understanding of the relevant laws and regulations. We also drew on our
existing understanding of the group’s industry and regulation.
We understand that the group complies with requirements of the framework through:
• The establishment of a testing department to ensure all AIS product approval requirements are met
•
Engaging external experts to ensure the group remains in line with regulatory expectations and is aware of
any updates to legislation
• Given the management structure and reporting lines, any litigation or claims would come to the Directors’
attention and are considered at board meetings.
In the context of the audit, we considered those laws and regulations which determine the form and context
of the financial statements, which are central to the group’s ability to conduct its business and where failure
to comply could result in material penalties. We have identified the following laws and regulations as being of
significance in the context of the group:
• The Companies Act 2006 and IFRS in respect of the financial statements
• AIM rules and the UK Market Abuse Regulation
• Bribery Act 2010
• AIS product approval requirements
• Health and safety regulations.
We performed the following specific procedures to gain evidence about compliance with the specific laws and
regulations defined above:
Inspected the monthly board meeting minutes to ensure there are no reports of non-compliance
•
• Reviewed legal expense accounts to ensure spend is in line with expectations
•
• Reviewed the bribery policy to ensure adequacy against preventing instances of bribery occurring
Inspected health and safety records kept in the year
within the group.
The senior statutory auditor led a discussion with senior members of the engagement team regarding the
susceptibility of the group’s financial statements to material misstatement, including how fraud might occur.
The key areas identified as part of this discussion were:
• Manipulation of the financial statements through the posting of manual journals
• Valuation of stock and intangible assets where estimates are made by management.
The procedures we carried out to gain evidence in the above areas included:
• Testing a sample of manual journals back to supporting documentation
• Testing a sample of capitalised development costs back to supporting documentation and confirming that
they are capital in nature (see Key Audit Matter regarding Intangible Assets for further detail)
• Reviewing the NRV of a sample of stock lines to ensure that they are valued correctly.
Overall, the senior statutory auditor was satisfied that the engagement team collectively had the appropriate
competence and capabilities to identify or recognise irregularities. In particular, both the senior statutory auditor
and the audit manager have a number of years’ experience in dealing with companies in the technology
development sector and those with cross-border activities, and also with companies listed on the AIM
market of the London Stock Exchange.
19
SRT MARINE SYSTEMS PLC - ANNUAL REPORT AND FINANCIAL STATEMENTS, YEAR ENDED 31 MARCH 2021
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF SRT MARINE SYSTEMS PLC - CONTINUED
A further description of our responsibilities is available on the Financial Reporting Council’s website at:
www.frc.org.uk/auditors responsibilities. This description forms part of our auditor’s report.
Use of our report
This report is made solely to the parent company’s members, as a body, in accordance with Chapter 3 of Part 16
of the Companies Act 2006. Our audit work has been undertaken so that we might state to the parent company’s
members those matters we are required to state to them in an auditor’s report and for no other purpose. To
the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the parent
company and the parent company’s members as a body, for our audit work, for this report, or for the opinions
we have formed.
Carl Deane
Senior Statutory Auditor, for and on behalf of
Nexia Smith & Williamson
Statutory Auditor
Chartered Accountants
Portwall Place
Portwall Lane
Bristol
BS1 6NA
Date: 28 July, 2021
20
SRT MARINE SYSTEMS PLC - ANNUAL REPORT AND FINANCIAL STATEMENTS, YEAR ENDED 31 MARCH 2021
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 MARCH 2021
Revenue
Cost of sales
Gross profit
Administrative costs
Foreign exchange (losses) / gains
Notes
2021
£
2020
£
2
8,275,022
18,908,062
(5,097,419)
(14,537,092)
3,177,603
4,370,970
(8,048,640)
(486,675)
(7,717,677)
834,416
Total administrative costs and foreign exchange (losses) / gains
(8,535,315)
(6,883,261)
Operating loss before exceptional item
Impairment charge
Operating loss after exceptional item
Finance expenditure
Finance income
Loss before tax
Income tax credit
7
3
6
6
8
(5,357,712)
(2,512,291)
-
(3,922,029)
(5,357,712)
(6,434,320)
(574,248)
1,057
(464,539)
1,430
(5,930,903)
(6,897,429)
797,060
818,407
Loss for the year after tax
(5,133,843)
(6,079,022)
Total comprehensive expense for the year
(5,133,843)
(6,079,022)
Loss per share:
Basic
Diluted
23
23
(3.13)p
(3.13)p
(3.93)p
(3.93)p
The notes on pages 28-55 form part of these financial statements.
21
SRT MARINE SYSTEMS PLC - ANNUAL REPORT AND FINANCIAL STATEMENTS, YEAR ENDED 31 MARCH 2021
CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 31 MARCH 2021
Assets
Non-current assets
Intangible assets
Property, plant and equipment
Deferred tax
Total non-current assets
Current assets
Inventories
Trade and other receivables
Cash and cash equivalents
Total current assets
Liabilities
Current liabilities
Trade and other payables
Financial liabilities
Lease liabilities
Total current liabilities
Net current assets
Notes
2021
£
2020
£
10
11
8
13
14
8,274,170
1,688,512
793,602
7,776,882
1,782,048
670,778
10,756,284
10,229,708
2,368,283
3,600,187
5,286,432
1,928,730
15,958,534
918,808
11,254,902
18,806,072
15
16
17
(1,648,983)
(8,515,000)
(262,011)
(9,044,454)
(4,990,000)
(202,445)
(10,425,994)
(14,236,899)
828,908
4,569,173
Total assets less current liabilities
11,585,192
14,798,881
Non current liabilities
Lease liabilities
17
(861,409)
(1,067,741)
Total non current liabilities
(861,409)
(1,067,741)
Net assets
10,723,783
13,731,140
Shareholders’ equity
Share capital
Share premium account
Retained loss
Other reserves
18
20
20
20
164,252
13,431,735
(8,362,800)
5,490,596
154,844
11,543,989
(3,458,289)
5,490,596
Total shareholders’ equity
10,723,783
13,731,140
The financial statements were approved by the Board of Directors on July 28, 2021 and were signed on its behalf by:
S Tucker
Director
The notes on pages 28-55 form part of these financial statements.
22
SRT MARINE SYSTEMS PLC - ANNUAL REPORT AND FINANCIAL STATEMENTS, YEAR ENDED 31 MARCH 2021
COMPANY STATEMENT OF FINANCIAL POSITION AS AT 31 MARCH 2021
Assets
Non-current assets
Investments in subsidiaries
Property, plant and equipment
Other receivables
Total non-current assets
Current assets
Other receivables
Cash and cash equivalents
Total current assets
Liabilities
Current liabilities
Trade and other payables
Financial liabilities
Lease liabilities
Notes
2021
£
2020
£
12
11
14
14
15
16
17
932,593
608,787
17,431,831
932,593
727,572
-
18,973,211
1,660,165
143,237
1,700,504
14,986,225
105,237
1,843,741
15,091,462
(311,228)
(8,515,000)
(158,881)
(512,272)
(4,990,000)
(131,506)
Total current liabilities
(8,985,109)
(5,633,778)
Net current (liabilities) / assets
(7,141,368)
9,457,684
Total assets less current liabilities
11,831,843
11,117,849
Non current liabilities
Lease liabilities
17
(370,476)
(473,679)
Total non current liabilities
(370,476)
(473,679)
Net assets
11,461,367
10,644,170
Shareholders’ equity
Share capital
Share premium account
Retained loss
Other reserves
18
20
20
20
164,252
13,431,735
(2,197,020)
62,400
154,844
11,543,989
(1,117,063)
62,400
Total shareholders’ equity
11,461,367
10,644,170
The loss for the year ended 31 March 2021 was £1,309,289 (2020: loss £892,912).
The financial statements were approved by the Board of Directors on July 28, 2021 and were signed on its behalf by:
S Tucker
Director
Company’s registered number: 05459678
The notes on pages 28-55 form part of these financial statements.
23
SRT MARINE SYSTEMS PLC - ANNUAL REPORT AND FINANCIAL STATEMENTS, YEAR ENDED 31 MARCH 2021
CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31 MARCH 2021
Cash generated from operating activities
Corporation tax received
Notes
22
2021
£
2020
£
2,164,982
674,236
857,765
201,926
Net cash generated from operating activities
2,839,218
1,059,691
Investing activities
Expenditure on product development
Purchase of property, plant and equipment
Interest received
(2,770,455)
(341,875)
1,057
(2,970,033)
(523,530)
1,430
Net cash used in investing activities
(3,111,273)
(3,492,133)
Financing activities
Gross proceeds on issue of shares
Costs of issue of shares
New loans issued
Lease repayments
Loan interest paid
2,000,005
(102,851)
3,525,000
(267,749)
(514,726)
34,837
-
-
(225,149)
(400,605)
Net cash generated from / (used in) financing activities
4,639,679
(590,917)
Net increase / (decrease) in cash and cash equivalents
4,367,624
(3,023,359)
Net cash and cash equivalents at beginning of year
918,808
3,942,167
Net cash and cash equivalents at end of year
5,286,432
918,808
Reconciliation of financing activities for the year ended 31 March 2021 and 31 March 2020
2021
Interest
£
£
New
leases
£
IFRS 16
adoption
£
Cash flow
2020
£
£
Bank loan
Other loan
Lease liabilities
2,500,000
6,015,000
1,123,420
-
514,726
59,522
-
-
61,461
-
-
-
2,500,000
-
510,274 4,990,000
1,270,186
(267,749)
Financial liabilities
9,638,420
574,248
61,461
-
2,742,525
6,260,186
2020
Interest
£
£
New
leases
£
IFRS 16
adoption
£
Cash flow
2019
£
£
Other loan
Lease liabilities
4,990,000
1,270,186
400,605
63,934
-
222,473
-
1,163,892
(400,605)
(225,149)
4,990,000
45,036
Financial liabilities 6,260,186
464,539
222,473
1,163,892
(625,754)
5,035,036
The notes on pages 28-55 form part of these financial statements.
24
SRT MARINE SYSTEMS PLC - ANNUAL REPORT AND FINANCIAL STATEMENTS, YEAR ENDED 31 MARCH 2021
COMPANY STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31 MARCH 2021
Cash used in operating activities
Investing activities
Purchase of property, plant and equipment
Interest received
Notes
22
2021
£
(3,100,015)
2020
£
(1,993,806)
(57,286)
276
(176,642)
702
Net cash used in investing activities
(57,010)
(175,940)
Financing activities
Gross proceeds on issue of shares
Costs of issue of shares
New loans issued
Lease repayments
Loan interest paid
2,000,005
(102,851)
3,525,000
(164,619)
(505,243)
34,837
-
-
(128,801)
(400,593)
Net cash generated from / (used in) financing activities
4,752,292
(494,557)
Net increase / (decrease) in cash and cash equivalents
1,595,267
(2,664,303)
Net cash and cash equivalents at beginning of year
105,237
2,769,540
Net cash and cash equivalents at end of year
1,700,504
105,237
Reconciliation of financing activities for the year ended 31 March 2021 and 31 March 2020
2021
Interest
£
£
New
leases
£
IFRS 16
adoption
£
Cash flow
2020
£
£
Bank loan
Other loan
Lease liabilities
2,500,000
6,015,000
529,357
-
505,243
27,330
-
-
61,461
-
-
-
2,500,000
519,757
(164,619)
-
4,990,000
605,185
Financial liabilities
9,044,357
532,573
61,461
-
2,855,138
5,595,185
2020
Interest
£
£
New
Leases
£
IFRS 16
adoption
£
Cash flow
2019
£
£
Other loan
Lease liabilities
4,990,000
605,185
400,593
28,178
-
222,472
-
438,300
(400,593)
(128,801)
4,990,000
45,036
Financial liabilities
5,595,185
428,771
222,472
438,300
(529,394)
5,035,036
The notes on pages 28-55 form part of these financial statements.
25
SRT MARINE SYSTEMS PLC - ANNUAL REPORT AND FINANCIAL STATEMENTS, YEAR ENDED 31 MARCH 2021
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 MARCH 2021
Share
capital
£
Share
premium
£
Retained
earnings
£
Other
reserves
£
Total
£
At 1 April 2019
153,223 11,510,773
2,621,858 5,490,596 19,776,450
Total comprehensive expense for the year
-
- (6,079,022)
- (6,079,022)
Transactions with owners:
Issue of equity share capital
1,621
33,216
-
Share based payment credit
-
-
(1,125)
-
-
34,837
(1,125)
At 31 March 2020
154,844 11,543,989
(3,458,289)
5,490,596
13,731,140
Total comprehensive expense for the year
-
- (5,133,843)
- (5,133,843)
Transactions with owners:
Issue of equity share capital
9,408
1,990,597
Cost of issue of equity share capital
Share based payment charge
-
-
(102,851)
-
229,332
-
-
-
-
-
2,000,005
(102,851)
229,332
At 31 March 2021
164,252 13,431,735 (8,362,800) 5,490,596 10,723,783
The notes on pages 28-55 form part of these financial statements.
26
SRT MARINE SYSTEMS PLC - ANNUAL REPORT AND FINANCIAL STATEMENTS, YEAR ENDED 31 MARCH 2021
COMPANY STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 MARCH 2021
Share
capital
£
Share
premium
£
Retained
earnings
£
Other
reserves
£
Total
£
At 1 April 2019
153,223 11,510,773
(223,026)
62,400 11,571,948
Total comprehensive expense for the year
-
-
(892,912)
-
(892,912)
Transactions with owners:
Issue of equity share capital
1,621
33,216
-
Share based payment credit
-
-
(1,125)
-
-
-
34,837
(1,125)
At 31 March 2020
154,844 11,543,989 (1,117,063)
62,400 10,712,748
Total comprehensive expense for the year
-
- (1,309,289)
- (1,309,289)
Transactions with owners:
Issue of equity share capital
9,408
1,990,597
Cost of issue of equity share capital
Share based payment charge
-
-
(102,851)
-
229,332
-
-
-
-
-
2,000,005
(102,851)
229,332
At 31 March 2021
164,252 13,431,735 (2,197,020)
62,400 11,461,367
The notes on pages 28-55 form part of these financial statements.
27
SRT MARINE SYSTEMS PLC - ANNUAL REPORT AND FINANCIAL STATEMENTS, YEAR ENDED 31 MARCH 2021
NOTES TO THE ACCOUNTS FOR THE YEAR ENDED 31 MARCH 2021
1 ACCOUNTING POLICIES
SRT Marine Systems plc is a public limited Company, limited by shares, incorporated in England and Wales.
It is listed on the AIM. The address of the registered office is Wireless House, Westfield Industrial Estate,
Midsomer Norton, Bath BA3 4BS. The nature of the Group’s operations and its principal activities are noted
in the Chairman’s Statement and Strategic Report. The principal accounting policies are summarised below.
They have all been applied consistently throughout the period covered by these financial statements.
Basis of preparation
The financial statements have been prepared in accordance with international accounting standards in conformity
with the requirements of the Companies Act 2006. The financial statements have been prepared under the
historical cost convention.
Basis of consolidation
The Group financial statements incorporate the financial statements of the Company and entities controlled
by the Company prepared to 31 March each year. An investor controls an investee if the investee has all of the
following: power over the investee; exposure or rights, to variable returns from its involvement with the
investee; and the ability to use its power over the investee to affect the amount of the investor’s returns.
All intra-Group transactions and balances and any unrealised gains and losses arising from intra-Group
transactions are eliminated in preparing the consolidated financial statements.
Going concern and material uncertainties
The Group’s business activities, together with the key factors likely to affect its future development,
profitability, cash flows, liquidity position, borrowing facilities and financial position are outlined within the
chairman’s statement, strategic report and the financial statements. The directors have prepared the financial
statements on the going concern basis, which assumes that the systems business will generate sufficient future
recoverable income.
The level of future income to be generated is uncertain and is highly dependent on the timing of the awarding
of contracts and cash receipts from the Group’s systems business. A number of significant systems opportunities
in the Middle East and South East Asia are expected to generate material cash receipts in the next 12 months
although the Directors recognise that it is very difficult to quantify the full impact of the Covid-19 pandemic
upon the timing of these cash receipts and in order to mitigate the potential impact on cash flows, the Group
completed a Covid-19 resilience financing exercise during the year. Furthermore, the Group’s projections have
allowed for delays relating to the possible impact of the pandemic in performance and specifically cash receipts
and its projections have allowed for a range of possible outcomes on trading performance. That said, and whilst
the directors consider that they have used a reasonable basis to forecast the timing of these types of cash receipts,
they do recognise that the nature of these systems’ customers does mean that the awarding of future contracts
can be unpredictable, difficult to forecast and subject to change, particularly in the context of the current
Covid-19 pandemic. These circumstances represent a material uncertainty that may cast significant doubt upon
the group’s and the company’s ability to continue as a going concern.
Notwithstanding this matter, after making due enquiries and considering the uncertainty described above, the
Directors believe they have a reasonable basis to conclude that the Group and Company have adequate resources
to continue in operational existence for the foreseeable future and for this reason, the directors continue to
adopt the going concern basis in preparing the financial statements. The financial statements do not include any
adjustments that would result if the company was unable to continue as a going concern.
28
SRT MARINE SYSTEMS PLC - ANNUAL REPORT AND FINANCIAL STATEMENTS, YEAR ENDED 31 MARCH 2021 NOTES TO THE ACCOUNTS FOR THE YEAR ENDED 31 MARCH 2021
1 ACCOUNTING POLICIES – CONTINUED
Business combinations and goodwill
Business combinations are accounted for using the acquisition method as at the acquisition date, which is the
date on which control is transferred to the Group.
The consideration transferred for the acquisition of a subsidiary is the fair values of the assets transferred, the
liabilities incurred and the equity interests issued by the Group. The consideration transferred includes the fair
value of any asset or liability resulting from a contingent consideration arrangement. Identifiable assets acquired
and liabilities and contingent liabilities assumed in the business combination are measured initially at their fair
values at the acquisition date.
Critical accounting judgements and key sources of estimation uncertainty
The preparation of financial statements in conformity with generally accepted accounting practice requires
management to make estimates and judgements that affect the reported amounts of assets and liabilities as well
as the disclosure of contingent assets and liabilities at the year end date and the reported amounts of revenues
and expenses during the year. Estimates and judgements are continually evaluated and are based on historical
experience and other factors, including expectations of future events that are believed to be reasonable under the
circumstances.
Judgements
• Development costs capitalised as intangible assets
Management exercises judgement in determining whether the costs can be capitalised, and this is done
by reference to a number of criteria as set out in these accounting policies. During the year, the Group has
capitalised intangible assets development costs of £2,770,455 (2020: £2,970,031).
• Determination of performance obligations and satisfaction thereof
For the purposes of recognising revenue, management has exercised judgement in considering the bundle
of products and services provided under long term contracts as one performance obligation in building a
monitoring system.
•
Allocation of transaction price
The allocation of the total price to performance obligations is done, where possible, on the basis of relative
stand-alone selling prices, which may need to be estimated as some performance obligations are never, in
practice, sold on their own. Management exercises judgement to determine the best approach for allocating
the transaction price to performance obligations where relative stand-alone prices are not readily available as
some of the contracts are highly bespoke. The residual method of allocation of the transaction price is used
when stand-alone prices are not available.
•
Revenue recognition method for performance obligations where satisfaction is over time
The Group uses either output methods or input methods to measure the progress towards completion of
a performance obligation satisfied over time, depending on which method is considered to depict the
entity’s performance. Output methods recognise revenue on the basis of direct measurement of the value
to the customer of the goods or services transferred to date relative to the remaining goods or services
promised under the contract. The output method used by the Group is based on milestones reached. Input
methods recognise revenue on the basis of the entity’s efforts or inputs to the satisfaction of a performance
obligation relative to the total expected inputs to the satisfaction of that performance obligation. The input
method used by the Group is based on costs incurred to date relative to total expected costs, which requires
significant judgement. Contracts can be highly bespoke and hence historical cost information is not always
useful in estimating future costs. The Group’s policies for the recognition of revenue and profit are set out in
the revenue recognition policy below.
29
SRT MARINE SYSTEMS PLC - ANNUAL REPORT AND FINANCIAL STATEMENTS, YEAR ENDED 31 MARCH 2021
NOTES TO THE ACCOUNTS FOR THE YEAR ENDED 31 MARCH 2021
1 ACCOUNTING POLICIES – CONTINUED
Critical accounting judgements and key sources of estimation uncertainty - continued
• Determination of the lease term
Rental contracts are typically made for fixed periods but may have extension options. In these cases,
significant judgement is required to ascertain the correct lease term. When assessing whether the Group
is reasonably certain to exercise the option to extend the lease, the directors consider all relevant facts and
circumstances (both monetary and non- monetary) that create an economic incentive for them to
exercise or not exercise that options. They also include any expected changes in facts and circumstances
from the commencement date until the exercise date of that option.
Key sources of estimation uncertainty
•
Bad debt provision
A full review of trade receivables is carried out at the end of each month in order to estimate the likely
lifetime credit losses. Whilst every attempt is made to ensure that the bad debt provisions are as accurate as
possible, there remains a risk that the provisions do not match the level of debts which ultimately prove to be
uncollectible. At 31 March 2021, the Group’s bad debt provision was £9,802 (2020: £3,922,029).
Impairment of property, plant and equipment
•
Management tests property, plant and equipment for impairment if and when indicators of impairment
arise. Where such an indication exists management estimates the fair value less costs to sell of the assets
based on the net present value of future cash flows. The directors have considered whether there are any
indicators of impairment to the carrying amount of property, plant and equipment of £1,688,512 (2020:
£1,782,048). The unpredictability of cash flows in the Group’s system business has resulted in the existence
of an impairment indicator which has been considered by the directors. Whilst recognising the challenges
in forecasting these cash flows, particularly in the context of the Covid-19 pandemic the directors
consider that they have used a reasonable basis to forecast the timing of these cash receipts.
Impairment of intangible assets
•
Management tests intangible assets for impairment if and when indicators of impairment arise. Where such
an indication exists management estimates the fair value less costs to sell of the assets based on the net
present value of future cash flows. The directors have considered whether there are any indicators of
impairment to the carrying amount of intangible assets of £8,274,170 (2020: £7,776,882). £4,195,755
(2020: £3,265,803) of intangible assets relate to the group’s systems business. The challenging trading
conditions in the Group’s system business has resulted in the existence of an impairment indicator which
has been considered by the directors. The recoverability of these assets is dependent on significant contracts
being signed, delivered and cash collected within the projects arm of the Group, the timing of which is
not certain. Whilst recognising the challenges in forecasting these cash flows, particularly in the context of
the Covid-19 pandemic the directors consider that they have used a reasonable basis to forecast the
timing of these cash receipts.
•
Valuation of inventory
Inventory is held at the lower of cost and net realisable value and is held for the Group’s transceiver business
(£1,642,640) and its systems business (£725,643). If transceiver inventory is held for a long period of time
or relates a product line that is superseded, then the net realisable value is brought into question.
Management perform a review of any such inventory and provides accordingly thereby seeking to ensure
that the value at which inventories are held is appropriate. Systems inventory is reviewed for provision based
on the assessment of sales patterns which can be unpredictable in their timing and hence difficult to forecast.
30
SRT MARINE SYSTEMS PLC - ANNUAL REPORT AND FINANCIAL STATEMENTS, YEAR ENDED 31 MARCH 2021
NOTES TO THE ACCOUNTS FOR THE YEAR ENDED 31 MARCH 2021
1 ACCOUNTING POLICIES – CONTINUED
Critical accounting judgements and key sources of estimation uncertainty – continued
•
Investments and amounts owed by group undertakings
The company accounts include an investment in subsidiaries balance of £932,593 together with amounts
owed by group undertakings of £17,431,831. The amounts owed by group undertakings have been classified
as being due in more than one year as at 31 March 2021 (note 14). Management tests intangible assets for
impairment if and when indicators of impairment arise. The unpredictability of cash flows in the Group’s
system business has resulted in the existence of an impairment indicator which has been considered by the
directors. Whilst recognising the challenges in forecasting these cash flows, particularly in the context of the
Covid-19 pandemic the directors consider that they have used a reasonable basis to forecast the timing of
these cash receipts.
Research and development
Research expenditure is written off to profit or loss in the year in which it is incurred. Development expenditure is
capitalised and amortised over the period during which the Company is expected to benefit, currently considered
to be five years. This cost is included as part of administrative expenses within profit or loss.
Development expenditure capitalised represents time spent by Company employees, sub-contractor costs, and
any other directly attributable costs incurred in creating the asset for the purposes intended by management,
valued at cost. In recognising such development costs as assets consideration is given to each of the following:-
• The technological feasibility of completing the asset so that it may be used or sold
• The intention and ability to use or sell the asset
• How the asset will generate future probable economic benefits, for example by
demonstrating that there is a market for the asset’s output
• Availability of adequate technical, financial and other resources to complete the
development and to use the asset
• The ability to measure reliably the expenditure on the asset during its development.
Once management is satisfied that the above criteria are met the development costs are carried as assets. The
amortisation periods of each of the assets is five years, as this is considered to be the revenue generating life of
each asset. This period is subject to annual review by management. The AIS technology assets have between
7 and 60 months of amortisation remaining.
Revenue recognition
Revenue is recognised in accordance with the transfer of promised goods or services to customers (i.e. when
the customer gains control of the good/service) and is measured as the consideration which the Group expects
to be entitled to in exchange for those goods or services. Consideration is typically fixed on the agreement of a
contract. Payment terms are agreed on a contract by contract basis.
Contracts include promises to transfer goods and/or services to a customer (i.e. “performance obligations”)
which are typically indistinct and hence are accounted for together in a single performance obligation. Where
multiple performance obligations exist within one contract, the transaction price is allocated between each
performance obligation on the basis of past experience, with reference to stand-alone selling prices of each
component, and where appropriate by using the residual method approach.
31
SRT MARINE SYSTEMS PLC - ANNUAL REPORT AND FINANCIAL STATEMENTS, YEAR ENDED 31 MARCH 2021
NOTES TO THE ACCOUNTS FOR THE YEAR ENDED 31 MARCH 2021
1 ACCOUNTING POLICIES – CONTINUED
Revenue recognition – continued
A good or service is distinct if the customer can benefit from the good or service on its own or together with
other resources that are readily available to the customer and the entity's promise to transfer the good or service
to the customer is separately identifiable from other promises in the contract.
The group recognises revenue when (or as) it satisfies a performance obligation by transferring a promised
good or service to a customer. A performance obligation is satisfied over time when the vendor’s performance
creates an asset under the control of the customer and the customer has an obligation to pay the vendor
for performance to date, or when the customer simultaneously receives and consumes the benefits from the
performance obligation.
The group recognises revenue from the sale of support services, maintenance and training over the time period
to which the services provided relate, as this is considered the best indicator of when the customer receives and
consumes the benefit of the service.
The group recognises revenue from the sale of maritime system solutions over the time as the monitoring system
is installed on the customer’s territory and therefore the asset is deemed under the customer’s control.
The Group uses either output methods or input methods to measure the progress towards completion of a
performance obligation satisfied over time, depending on which method is considered to faithfully depict the
entity’s performance.
Output methods recognise revenue on the basis of direct measurement of the value to the customer of the goods
or services transferred to date relative to the remaining goods or services promised under the contract. The
output method used by the Group companies is based on milestones reached.
Input methods recognise revenue on the basis of the entity’s efforts or inputs to the satisfaction of a performance
obligation relative to the total expected inputs to the satisfaction of that performance obligation. The input
method used by the Group is based on costs incurred to date.
If revenue is recognised over a period of time, the Group presents as a contract asset the gross amount due
from customers for contract work for all contracts in progress for which costs incurred plus recognised profits
(less recognised losses) exceeds progress billings. Progress billings not yet paid by customers and retentions are
included within ‘trade and other receivables’. The Group presents as a liability the gross amount due to customers
for contract work for all contracts in progress for which progress billings exceed costs incurred plus recognised
profits (less recognised losses). Contract asset and liability balances fluctuate due to the timing and mix of
contracts held across the Group.
The group recognises revenue from the sale of goods and licenses at the point in time that goods are transferred
to a customer, which is the point in time that the customer gains control of the goods. This is due to the nature
of goods being fairly standardised and hence specific contract accounting does not apply.
Contracts are deemed to be complete, and hence performance obligations fully satisfied, post customer
acceptance of the goods. Amounts disclosed as current deferred income reflect revenue that will be recognised
on performance obligations that will be satisfied within a year. The aggregate amount of the transaction price
allocated to the performance obligations that are unsatisfied, or partially unsatisfied, as of the end of the
reporting period is £7,106,353 (2020: £7,567,456). This amount will be recognised over the remaining life
of the contract.
32
SRT MARINE SYSTEMS PLC - ANNUAL REPORT AND FINANCIAL STATEMENTS, YEAR ENDED 31 MARCH 2021
NOTES TO THE ACCOUNTS FOR THE YEAR ENDED 31 MARCH 2021
1 ACCOUNTING POLICIES – CONTINUED
Property, plant and equipment
Property, plant and equipment are valued at net book value, being the cost less accumulated depreciation and
any impairment losses where there is an impairment recognised. Depreciation is provided on cost in equal annual
instalments over the estimated useful lives of the assets concerned. Annual lives of 3-4 years are used for plant
and equipment.
Taxation
Where an income tax credit arises, this represents the sum of the tax currently receivable and deferred
tax. Current tax is based on taxable profits for the year using tax rates and laws that have been enacted or
substantively enacted by the statement of financial position date.
Deferred tax is provided for on a full provision basis on all temporary differences, which have arisen but not
reversed at the statement of financial position date. Temporary differences represent the accumulated differences
between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases
used in the computation of taxable profit. Deferred tax is calculated at the tax rates that are expected to apply
when the related deferred tax balance is settled. Deferred tax is charged or credited to profit or loss, except when
it relates to items charged or credited directly to equity in which case the deferred tax is also dealt with in equity.
Deferred tax assets are recognised to the extent that it is probable that there will be suitable taxable profits from
which the future reversal of the underlying temporary differences can be deducted.
Pension costs
Contributions to defined contribution schemes are recognised on an accrual basis in accordance with the rules of
the scheme.
Foreign currencies
Transactions denominated in a foreign currency are translated into sterling at the rate of exchange ruling at the
date of the transaction. At the statement of financial position date, monetary assets and liabilities denominated
in foreign currency are translated at the rate ruling at that date. All exchange differences are dealt with in profit
or loss.
Inventories
Inventories and work in progress are stated at the lower of cost and net realisable value. Cost comprises direct
materials and other subcontracted manufacturing costs. The costs of finished products are expensed to profit
or loss to match against the corresponding revenues from those products. Net realisable value represents the
estimated selling price less all estimated costs of completion and costs to be incurred in marketing, selling
and distribution. Provision is made against slow moving and obsolete inventories to ensure the value at which
inventories are held in the statement of financial position is reflective of anticipated future sales patterns.
Share based payments
The Group operates an equity settled share-based compensation plan whereby the Company grants share options
to employees of all Group companies. The fair values of the options granted under this plan are calculated using
an appropriate valuation model which takes into account assumptions about future events and market conditions.
Further details are provided in note 19.
33
SRT MARINE SYSTEMS PLC - ANNUAL REPORT AND FINANCIAL STATEMENTS, YEAR ENDED 31 MARCH 2021
NOTES TO THE ACCOUNTS FOR THE YEAR ENDED 31 MARCH 2021
1 ACCOUNTING POLICIES – CONTINUED
Share based payments – continued
The cost of equity-settled transactions is recognised, together with a corresponding increase in equity, over the
period in which the performance and/or service condition are fulfilled, ending on the date on which the relevant
employees become fully entitled to the award. The cumulative expense recognised for equity-settled transactions
at each reporting date, until the vesting date, reflects the extent to which the vesting period has expired and the
Directors’ best estimate of the number of equity instruments that will ultimately vest.
In making this judgement consideration must be made as to the likely number of shares that will vest, and the fair
value of each award granted. The fair value is determined using a valuation model, which is dependent on further
estimates, including the Group’s future dividend policy, employee turnover, the timing with which options will
be exercised and the future volatility in the price of the Group’s shares. Such assumptions are based on publicly
available information and reflect market expectations.
Financial instruments
Trade receivables and contract assets
Trade receivables are held in order to collect the contractual cash flows and are initially measured at the
transaction price as defined in IFRS 15, as the contracts of the Group do not contain significant financing
components. Impairment losses are recognised based on lifetime expected credit losses in profit or loss.
Other receivables are held in order to collect the contractual cash flows and accordingly are measured at initial
recognition at fair value, which ordinarily equates to cost and are subsequently measured at cost less impairment
due to their short-term nature. A provision for impairment is established based on 12 month expected credit
losses unless there has been a significant increase in credit risk when lifetime expected credit losses are
recognised. The amount of any provision is recognised in profit or loss.
Borrowings
Interest-bearing loans and overdrafts are recorded initially when the proceeds are received. Finance charges are
accounted for at amortised cost using the effective interest rate method.
Trade payables
Trade payables are non-interest bearing and are initially measured at their fair value and subsequently at their
amortised cost.
Leases
A right of use asset and lease liability has been recognised for all leases. The right of use asset has been measured
at cost, which is made up of the initial measurement of the lease liability, any initial direct costs incurred by
the Group, an estimate of the costs to dismantle and remove the asset at the end of the lease, and any lease
payments made in advance of the lease commencement date.
The Group will depreciate the right of use assets on a straight line basis from the lease commencement date to
the earlier of the end of the useful life of the right of use asset or the end of the lease term. Where impairment
indicators exist, the right of use asset will be assessed for impairment.
The lease liabilities are measured at the present value of the lease payments due to the lessor over the lease term,
discounted using the interest rate implicit in the lease if that rate is readily available or the Group’s cost of capital.
34
SRT MARINE SYSTEMS PLC - ANNUAL REPORT AND FINANCIAL STATEMENTS, YEAR ENDED 31 MARCH 2021
NOTES TO THE ACCOUNTS FOR THE YEAR ENDED 31 MARCH 2021
1 ACCOUNTING POLICIES – CONTINUED
Financial instruments – continued
After initial measurement, any payments made will reduce the liability and the interest accrued will increase it.
Any reassessment or modification will lead to a remeasurement of the liability. In such cases, the corresponding
adjustment will be reflected in the right of use asset, or profit or loss if the right of use asset is already reduced to
zero.
On the statement of financial position, right of use assets have been included in property, plant and equipment.
Changes in accounting policies and disclosures
New and amended Standards and Interpretations adopted by the Group and Company
Amendments have been made to IAS 1 Presentation of Financial Statements and IAS 8 Accounting Policies,
Changes in Accounting Estimates and Errors in relation to the definition of material. The amendments clarify the
definition of what is material to the financial statements and how to apply the definition.
New and amended Standards and Interpretations mandatory for the first time for the financial year
beginning 1 April 2020 but not currently relevant to the Group or Company
The following new and amended Standards and Interpretations are not currently relevant to the Group or
Company; however, they may have a significant impact in future years: Interest rate benchmark reform:
amending hedge accounting requirements of IFRS 9, IAS 39 and IFRS 7.
New and amended Standards and Interpretations issued but not effective for the financial year
beginning 1 April 2020
Amendment to IAS 1: “Classification of Liabilities as Current or Non-current”. This is not expected to have a
material impact.
35
SRT MARINE SYSTEMS PLC - ANNUAL REPORT AND FINANCIAL STATEMENTS, YEAR ENDED 31 MARCH 2021
NOTES TO THE ACCOUNTS FOR THE YEAR ENDED 31 MARCH 2021
2 REVENUE AND SEGMENT INFORMATION
Business and Geographical Segments
The directors have given due consideration to the requirements of IFRS 8 and the components of the Group
which management use to make decisions about operating matters and internal reports that are regularly
reviewed by the chief operating decision maker, which is considered to be the board of directors.
As in previous years, it has been concluded by management and the board that the organisation is structured
as a single business segment, the Marine technology business. The Marine technology business is the segment
which provides solutions to solve the problem of maritime domain awareness, both products and systems and
which reflects the results presented in the primary statements. Individual contracts are specifically considered by
management and the board if their magnitude is considered significantly large to warrant such consideration.
From a geographical perspective, the Group earns revenue from a number of countries as set out below:
Revenue by geographical destination:
Europe
Middle East
North America
UK
South East Asia
Other
2021
£
2020
£
5,512,039
5,592,199
133,385
626,807
601,989
522,676
878,126
25,752
679,322
1,029,501
11,275,045
306,243
8,275,022
18,908,062
Included within revenue is one customer (2020: two) with an amount exceeding 10% of the Group’s total
revenue. In both years, these customers were within the Marine technology business segment. Sales to the
Group’s largest customer from Belgium amounted to £2,839,198 (2020: largest customer from the Philippines
amounted to £10,782,128 and second largest customer from Belgium amounted to £3,091,427).
Revenue from the Group’s customer in the Philippines is recognised over time whilst all other revenue is
recognised at a point in time.
3
IMPAIRMENT CHARGE
During the previous year, the Group has incurred an exceptional impairment charge of £3,922,029 in respect
of a contract signed in 2017 to supply a national vessel tracking system for a Middle East Coast Guard.
36
SRT MARINE SYSTEMS PLC - ANNUAL REPORT AND FINANCIAL STATEMENTS, YEAR ENDED 31 MARCH 2021
NOTES TO THE ACCOUNTS FOR THE YEAR ENDED 31 MARCH 2021
4 DIRECTORS’ EMOLUMENTS
The remuneration of the individual Directors was as follows:
Year ended 31 March 2021
Executive Directors
S Tucker
N Peniket
R Hurd
Non Executive Directors
K Finn
S Barrell
S Rogers
Total
Year ended 31 March 2020
Executive Directors
S Tucker
N Peniket
R Hurd
Non Executive Directors
K Finn
S Barrell (joined July 2019)
S Rogers
Total
Salary
£
225,000
150,000
110,000
50,000
36,000
20,000
591,000
Salary
£
225,000
150,000
110,000
50,000
27,000
20,000
582,000
Bonus
£
-
-
-
-
-
-
-
Bonus
£
-
-
-
-
-
-
-
Pension
£
-
7,500
5,500
-
-
-
Total
£
225,000
157,500
115,500
50,000
36,000
20,000
13,000
604,000
Pension
£
-
7,063
5,500
-
-
-
Total
£
225,000
157,063
115,500
50,000
27,000
20,000
12,563
594,563
37
SRT MARINE SYSTEMS PLC - ANNUAL REPORT AND FINANCIAL STATEMENTS, YEAR ENDED 31 MARCH 2021
NOTES TO THE ACCOUNTS FOR THE YEAR ENDED 31 MARCH 2021
4 DIRECTORS’ EMOLUMENTS - CONTINUED
Share options at 31 March 2021
Executive Directors
S Tucker
N Peniket
N Peniket
R Hurd
R Hurd
R Hurd
Non Executive Directors
K Finn
S Barrell
Total
options
1,500,000
1,200,000
750,000
600,000
450,000
500,000
Exercise
price
0.1p
0.1p
0.1p
0.1p
0.1p
20p
Expiry date
8 August 2026
22 May 2030
8 August 2026
22 May 2030
8 August 2026
18 December 2022
1,000,000
300,000
0.325p
0.325p
27 May 2030
27 May 2030
Share options at 31 March 2020
Executive Directors
S Tucker
S Tucker
N Peniket
R Hurd
R Hurd
Total
options
1,500,000
2,200,000
750,000
450,000
500,000
Exercise
price
0.1p
9p
0.1p
0.1p
20p
Expiry date
8 August 2026
18 February 2020
8 August 2026
8 August 2026
18 December 2022
Those options granted to S Tucker, N Peniket and R Hurd at an exercise price of 0.1p and an expiry date of
August 2026 vest in three equal tranches dependent on the Company’s share price. The first tranche vests when
the share price has exceeded 50p. This occurred during the year ended 31 March 2017 and so the first tranche
has vested and is exercisable. The second and third tranches vest on the same basis but with thresholds of 75p
and £1.25.
During the year, options were granted to N Peniket and R Hurd. These options have an exercise price of 0.1p
and an expiry date of May 2030 and vest based on four equal tranches dependant on the Company’s share price
exceeding 75p, £1.25, £1.50 and £2.00. Irrespective of these share price targets, 10% vest after 2 years and a
further 25% after 5 years from the date of grant. Furthermore, options were granted to K Finn and S Barrell with
the same vesting criteria but with an exercise price of 32.5p. The vesting criteria has not been met and as such
those options have not yet vested and are not exercisable.
The criteria for the options granted to R Hurd with an expiry date of December 2022 have been met and
therefore are exercisable immediately.
During the year, S Tucker exercised 2,200,000 share options at an exercise price of 9p. There were no other
movements from the previous year. An insurance premium of £5,160 (2020: £4,495) was paid in respect of
directors’ and officers’ liability. Retirement benefits are accruing to two directors (2020: two) under the money
purchase pension scheme.
38
SRT MARINE SYSTEMS PLC - ANNUAL REPORT AND FINANCIAL STATEMENTS, YEAR ENDED 31 MARCH 2021
NOTES TO THE ACCOUNTS FOR THE YEAR ENDED 31 MARCH 2021
5 EMPLOYEE INFORMATION
The average number of persons, including directors, employed by the Group during the year was:
Technical
Administration and sales
Staff costs for the above persons were:
Wages and salaries
Social security costs
Pension costs - defined contributions
2021
No.
49
21
70
2021
£
2020
No.
49
21
70
2020
£
2,935,814
281,415
106,287
2,436,547
297,268
97,084
3,323,516
2,830,899
Total amounts payable for wages and salaries exclude costs capitalised as development expenditure within
intangible assets, amounting to £1,642,426 (2020: £1,425,420). Total amounts payable for wages and salaries
include an amount of £229,332 (2020: credit of £1,125) in respect of share-based payment charges.
The Company employed an average of 7 persons within administration, sales and other (2020: 7) with total
wages and salaries of £822,009, (2020: £645,601), including social security costs of £31,381 (2020: £46,667)
and pension costs of £9,584 (2020: £9,589). The wages and salaries of the Company also include an amount of
£229,332 (2020: credit of £1,125) in respect of share-based payment charges.
6
FINANCE INCOME AND EXPENDITURE
Group
Bank interest payable
Interest on lease liabilities
Other interest payable
Total interest payable
Bank interest receivable
2021
£
1,682
59,522
513,044
2020
£
824
63,816
399,899
574,248
464,539
(1,057)
(1,430)
39
SRT MARINE SYSTEMS PLC - ANNUAL REPORT AND FINANCIAL STATEMENTS, YEAR ENDED 31 MARCH 2021
NOTES TO THE ACCOUNTS FOR THE YEAR ENDED 31 MARCH 2021
7 OPERATING LOSS
Operating loss for the year is stated after charging/(crediting):
2021
£
2020
£
Inventories recognised as an expense
4,985,600
14,335,666
Amortisation of intangible assets
2,273,167
1,818,352
Depreciation
496,872
389,997
Auditors' remuneration:
Fees payable to the company's auditor for the
audit of the parent company's accounts
Fees payable to the company's auditor for other services:
- audit of the company's subsidiaries
- audit-related assurance services
- tax compliance services
- tax advisory services
Exchange loss / (gain)
Research costs not capitalised
25,500
24,000
64,000
4,000
20,400
3,730
55,500
4,000
16,250
4,000
486,675
(834,416)
108,495
153,403
40
SRT MARINE SYSTEMS PLC - ANNUAL REPORT AND FINANCIAL STATEMENTS, YEAR ENDED 31 MARCH 2021
NOTES TO THE ACCOUNTS FOR THE YEAR ENDED 31 MARCH 2021
8 TAXATION
Income tax credit
UK corporation tax at 19% (2020: 19%):
Adjustments in respect of prior periods
Deferred tax credit
2021
£
674,236
122,824
2020
£
201,926
616,481
Total tax credit for the year
797,060
818,407
Factors affecting tax charge for the year
Loss on ordinary activities before tax
(5,930,903)
(6,897,429)
Loss on ordinary activities multiplied by standard rate
of corporation tax in the UK 19% (2020: 19%)
Effects of:
Expenses not deductible for tax purposes
Other differences
Additional deduction for R&D expenditure
Adjustment to tax charge in previous periods
Adjustment to tax charge in previous periods - deferred tax
Temporary differences in relation to share options
Deferred tax not recognised
Tax credit for the year
Losses carried forward
Movement in deferred tax asset:
At 1 April, 2020
Deferred tax credit
At 31 March, 2021
Deferred tax asset:
1,126,872
1,310,512
(62,671)
96,140
587,765
674,196
(670,778)
(272,574)
(681,890)
(1,900)
(96,138)
496,798
201,926
(240,746)
(64,264)
(787,781)
797,060
818,407
21,393,56 2
16,334,550
(670,778)
(122,824)
(54,297)
(616,481)
(793,602)
(670,778)
Fixed asset temporary differences
Losses and other deductions
1,585,141
(2,378,743)
1,477,684
(2,148,462)
Deferred tax asset
(793,602)
(670,778)
Unprovided deferred tax:
Fixed asset temporary differences
Short term temporary differences
Losses and other deductions
1,585,141
(438,208)
(3,271,175)
1,477,684
(165,634)
(2,432,787)
Unprovided deferred tax asset
(2,124,242)
(1,120,737)
41
SRT MARINE SYSTEMS PLC - ANNUAL REPORT AND FINANCIAL STATEMENTS, YEAR ENDED 31 MARCH 2021
NOTES TO THE ACCOUNTS FOR THE YEAR ENDED 31 MARCH 2021
8 TAXATION - CONTINUED
The deferred tax asset has been provided for to the extent that it relates to recoveries from the R&D tax credit.
No other deferred tax asset has been provided for due to uncertainties surrounding the recoverability of a
significant element of the losses. The planned reduction in tax rate to 17% from 1 April 2020 has been repealed
by Finance Act 2020. Deferred tax has been calculated at 19%.
9 COMPANY LOSS FOR THE FINANCIAL YEAR
The Company has taken advantage of the exemption under Section 408 of the Companies Act 2006 not to
publish its individual income statement. The loss for the year ended 31 March 2021, dealt with in the financial
statements of the Company, was £1,309,289 (2020: loss £892,912). The Company made no gains or losses
which would be reported in other comprehensive income in the years ended 31 March 2021 and 2020 and
therefore the Company has not published its individual Statement of Comprehensive Income.
10 INTANGIBLE ASSETS
Cost
At 1 April 2019
Additions
At 31 March 2020
Additions
Patent
£
Development
costs
£
Goodwill
£
Total
£
54,160
-
54,160
-
18,061,602
2,970,031
21,031,633
2,770,455
633,645
-
18,749,407
2,970,031
633,645
-
21,719,438
2,770,455
At 31 March 2021
54,160
23,802,088
633,645
24,489,893
Amortisation
At 1 April 2019
Charge for the year
At 31 March 2020
Charge for the year
54,160
-
54,160
-
12,070,044
1,818,352
13,888,396
2,273,167
At 31 March 2021
54,160
16,161,563
-
-
-
-
-
12,124,204
1,818,352
13,942,556
2,273,167
16,215,723
Net book value
At 31 March 2021
At 31 March 2020
At 1 April 2019
-
-
-
7,640,525
7,143,237
5,991,558
633,645
633,645
633,645
8,274,170
7,776,882
6,625,203
Goodwill acquired in a business combination is allocated, at acquisition, to the cash generating units (CGUs) that
are expected to benefit from that business combination identified according to operating segments. The carrying
amount of goodwill has been allocated to the Marine CGU.
The recoverable amount of the goodwill has been determined based on a value in use calculation. That
calculation uses cash flow projections covering a three-year period, and a discount rate of 6.5%. Management
estimated the discount rate using pre-tax rates that reflect current market assessments of the time value of money
and the risks specific to the market in which the Marine CGU operates.
42
SRT MARINE SYSTEMS PLC - ANNUAL REPORT AND FINANCIAL STATEMENTS, YEAR ENDED 31 MARCH 2021
NOTES TO THE ACCOUNTS FOR THE YEAR ENDED 31 MARCH 2021
10 INTANGIBLE ASSETS - CONTINUED
The main assumption in the cash flow projections is the budgeted sales which have been determined using in-
house estimates based upon detailed discussions with the Group’s customers and risk discounts applied where
necessary.
Management have concluded, based on its forecasts and the net present value of its forecast future cash flows,
that there is no recognised impairment. None of the goodwill is expected to be tax deductible.
Development costs in respect of assets not in use are subject to an impairment review.
The patent is the only intangible asset owned by the Company.
11 PROPERTY, PLANT AND EQUIPMENT
Group
Cost
Plant & Equipment
Land & Buildings
Owned
assets
£
Right of Use
assets
£
Right of Use
assets
£
Total
£
At 1 April 2019
Adjustment on adoption of IFRS 16
Additions
At 31 March 2020
Additions
1,238,053
-
529,021
1,767,074
341,875
-
31,945
216,983
248,928
61,461
-
1,308,373
-
1,238,053
1,340,318
746,004
1,308,373
-
3,324,375
403,336
At 31 March 2021
2,108,949
310,389
1,308,373
3,727,711
Depreciation
At 1 April 2019
Adjustment on adoption of IFRS 16
Charge for the year
882,544
-
200,342
-
7,098
74,092
-
262,688
115,563
882,544
269,786
389,997
At 31 March 2020
Charge for the year
1,082,886
273,595
81,190
107,712
378,251
115,565
1,542,327
496,872
At 31 March 2021
1,356,481
188,902
493,816
2,039,199
Net book value
At 31 March 2021
At 31 March 2020
At 1 April 2019
752,468
684,188
355,509
121,487
167,738
-
814,557
930,122
-
1,688,512
1,782,048
355,509
43
SRT MARINE SYSTEMS PLC - ANNUAL REPORT AND FINANCIAL STATEMENTS, YEAR ENDED 31 MARCH 2021
NOTES TO THE ACCOUNTS FOR THE YEAR ENDED 31 MARCH 2021
11 PROPERTY, PLANT AND EQUIPMENT - CONTINUED
Company
Plant & Equipment
Land & Buildings
Cost
At 1 April 2019
Adjustment on adoption of IFRS 16
Additions
At 31 March 2020
Additions
Owned
assets
£
Right of Use
assets
£
Right of Use
assets
£
Total
£
353,434
-
182,134
535,568
57,286
-
31,945
216,983
248,928
61,461
-
495,206
-
353,434
527,151
399,117
495,206
-
1,279,702
118,747
At 31 March 2021
592,854
310,389
495,206
1,398,449
Depreciation
At 1 April 2019
Adjustment on adoption of IFRS 16
Charge for the year
At 31 March 2020
Charge for the year
238,332
-
46,906
285,238
94,448
-
7,099
74,091
-
150,330
35,372
238,332
157,429
156,369
81,190
107,712
185,702
35,372
552,130
237,532
At 31 March 2021
379,686
188,902
221,074
789,662
Net book value
At 31 March 2021
At 31 March 2020
At 1 April 2019
213,168
250,330
115,102
121,487
167,738
-
274,132
309,504
-
608,787
727,572
115,102
The corresponding leases in respect of the above right of use assets are disclosed in note 17.
44
SRT MARINE SYSTEMS PLC - ANNUAL REPORT AND FINANCIAL STATEMENTS, YEAR ENDED 31 MARCH 2021
NOTES TO THE ACCOUNTS FOR THE YEAR ENDED 31 MARCH 2021
12 INVESTMENT IN SUBSIDIARIES – COMPANY
Cost - Shares in group undertakings
At 31 March 2021 and 2020
Holdings of more than 20%
£
932,593
The Company holds more than 20% of the share capital of the following companies:
Subsidiary
SRT Marine Technology Limited
Em-trak Marine Electronics Limited*
SRT Software Development (India) Private Limited*
SRT Marine Systems SAS*
Software Radio Technology Limited*
SRT Marine System Solutions Limited
* not consolidated as non-trading
Country of
Incorporation
UK
UK
India
France
UK
UK
Shares held
Class
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
%
100
100
100
100
100
100
The address of the above entities is the same as the Registered Office of the parent Company, SRT Marine
Systems plc as given on page 2 except for SRT Marine Systems SAS whose address is SNCF Station, 14 rue de
Dunkerque, 75010 Paris, France. The principal activities of these undertakings for the last relevant financial year
were as follows:
Subsidiary
Principal activity
SRT Marine Technology Limited
Sale, development and licensing of maritime
communication products
Em-trak Marine Electronics Limited
Non-trading
Software Radio Technology Limited
Non-trading
SRT Marine System Solutions Limited
Development & supply of real time maritime domain
tracking systems
SRT Marine Systems SAS
Non-trading
SRT Software Development (India) Private Limited
Non-trading
45
SRT MARINE SYSTEMS PLC - ANNUAL REPORT AND FINANCIAL STATEMENTS, YEAR ENDED 31 MARCH 2021
NOTES TO THE ACCOUNTS FOR THE YEAR ENDED 31 MARCH 2021
13 INVENTORIES
Group
Raw materials and consumables
Finished goods
14 TRADE AND OTHER RECEIVABLES
Group
Trade receivables
Other receivables
Prepayments and accrued income
2021
£
1,101,382
1,266,901
2020
£
982,238
946,492
2,368,283
1,928,730
2021
£
2020
£
2,167,805
174,436
1,257,946
15,474,537
220,184
263,813
3,600,187
15,958,534
As at 31 March 2021 and 31 March 2020 the following movements in the provision account for credit losses
were recognised during the year:-
Group
Balance at 1 April
Impairment during the year (note 3)
Amounts written off during the year
Provision made during the year
2021
£
2020
£
3,922,029
-
(3,922,029)
9,802
3,004,900
3,922,029
(3,004,900)
-
9,802
3,922,029
As at 31 March 2021 trade receivables and contract asset balances of £1,720,382 (2020: £300,745) were past
due but not impaired. The provision for bad and doubtful debts includes estimated potential credit losses. The
ageing analysis of these trade receivables is set out below. It includes a balance of £1,548,412 from a customer
which has been collected subsequent to the year end.
Group
Up to 3 months past due
3 to 6 months past due
Over 6 months past due
46
2021
£
164,693
1,555,689
-
2020
£
281,394
1,145
18,206
1,720,382
300,745
SRT MARINE SYSTEMS PLC - ANNUAL REPORT AND FINANCIAL STATEMENTS, YEAR ENDED 31 MARCH 2021
NOTES TO THE ACCOUNTS FOR THE YEAR ENDED 31 MARCH 2021
14 TRADE AND OTHER RECEIVABLES - CONTINUED
Company
Current
Amounts owed by group undertakings
Prepayments and accrued income
Other receivables
Non current
Amounts owed by group undertakings
2021
£
2020
£
-
105,745
37,492
14,821,436
119,270
45,519
143,237
14,986,225
17,431,831
17,431,831
-
-
The amounts owed by group undertakings have been reclassified as a non-current receivable based on the
expectation of when it is expected to be received. In previous years, this was a short-term, fluctuating trading
balance. However, following the impact of Covid-19, this amount has become more akin to long-term funding.
Post year end this was formalised by an agreement which changes the terms of the balance as not being
repayable for a period of three years.
Prepayments and accrued income and other receivables do not contain impaired assets.
15 TRADE AND OTHER PAYABLES
Group
Trade payables
Other tax and social security payable
Other payables
Accruals and deferred income
Company
Trade payables
Other tax and social security payable
Accruals and deferred income
2021
£
1,002,306
120,832
28,879
496,966
2020
£
2,267,228
246,390
15,878
6,514,958
1,648,983
9,044,454
2021
£
210,871
8,062
92,295
2020
£
334,284
36,096
141,892
311,228
512,272
47
SRT MARINE SYSTEMS PLC - ANNUAL REPORT AND FINANCIAL STATEMENTS, YEAR ENDED 31 MARCH 2021
NOTES TO THE ACCOUNTS FOR THE YEAR ENDED 31 MARCH 2021
16 FINANCIAL LIABILITIES
Group & Company
Less than one year:
Bank loan
Other loans
2021
£
2020
£
2,500,000
6,015,000
-
4,990,000
8,515,000
4,990,000
The bank loan was drawn down in April 2020 as a one year loan provided under the UK government Coronavirus
Business Interruption Loan Scheme (CBILS) at an interest rate of 0%. Subsequent to the year end, the renewal
of this facility has been agreed with quarterly repayments commencing in July 2021 through to April 2023 at an
interest rate of 2.59% above base rate. As the loan renewal documentation, whilst agreed prior to the year end,
was signed subsequent to the year end, IAS1 requires that the loan be classified in full as repayable in less than
one year despite the loan renewal and the revised maturity date.
Other loans all relate to draw-downs on a £10 million secured note programme which has been arranged by LGB
Capital Markets and which is secured by a floating charge over the Group’s assets. In total the group has drawn
down £9,215,000 of the available £10 million, and repaid £3,200,000, leaving the current outstanding balance of
£6,015,000 which is due for repayment on various dates over the next 3 years. (A note may only be issued once,
and then once repaid is cancelled). As the group has existing head room of £785,000 on the existing program,
for further draw downs the process has commenced to increase the head room by a further £10 million. The
loans have terms of up to 3 years and an interest rate of 8%.
The loans have maturity dates as follows:
June 2021
October 2021
March 2022
December 2022
£
1,150,000
1,000,000
1,840,000
2,025,000
6,015,000
The loans are subject to covenants relating to gearing and debt service cover.
During the year ended 31 March 2021 the covenant in relation to debt service cover was breached and a waiver
from loan note holders was obtained subsequent to the year end on April 28, 2021. Due to the waiver not being
received prior to the year end and the covenants being re-tested at 30 September 2021, IAS 1 requires that the
loans are all classified as being repayable in less than one year, despite their maturity dates.
The gearing covenant was not breached as at 31 March 2021.
There are no material differences between the fair value of all borrowings and their actual book value.
48
SRT MARINE SYSTEMS PLC - ANNUAL REPORT AND FINANCIAL STATEMENTS, YEAR ENDED 31 MARCH 2021
NOTES TO THE ACCOUNTS FOR THE YEAR ENDED 31 MARCH 2021
17 LEASE LIABILITIES
Group
Lease liabilities:
Current
Non current
Company
Lease liabilities:
Current
Non current
2021
£
2020
£
262,011
861,409
202,445
1,067,741
1,123,420
1,270,186
2021
£
158,881
370,476
2020
£
131,506
473,679
529,357
605,185
The group has long term property leases with a total value of £953,550 and with maturity dates varying between
3 and 8 years. Furthermore, it has leases on office equipment with a value of £169,870 with maturity dates
varying between less than one year and 2 years.
The company has a long term property lease with a total value of £359,847 and with a maturity date of 8 years.
Furthermore, it has leases on office equipment with a value of £169,870 with maturity dates varying between less
than one year and 2 years.
18 CALLED UP SHARE CAPITAL
Allotted: Ordinary shares of 0.1p each
2021
No.
2020
No.
Number of shares allotted
164,251,939
154,843,919
Value of shares allotted
Reconciliation of movements in share capital:
Shares outstanding as at 31 March 2019
Exercise of share options (a)
Shares outstanding as at 31 March 2020
Share placing April 2020 (b)
Exercise of share options (c)
Shares outstanding as at 31 March 2021
£
£
164,252
154,844
No.
153,222,419
1,621,500
154,843,919
7,208,020
2,200,000
164,251,939
49
SRT MARINE SYSTEMS PLC - ANNUAL REPORT AND FINANCIAL STATEMENTS, YEAR ENDED 31 MARCH 2021
NOTES TO THE ACCOUNTS FOR THE YEAR ENDED 31 MARCH 2021
18 CALLED UP SHARE CAPITAL - CONTINUED
Notes:
a) 35,000 share options were exercised at a price of 0.1p in April 2019 and a further 1,375,000 at a price of
2.5p in the same month. 152,500 options were exercised at a price of 0.1p in June 2019. 9,000 options were
exercised at a price of 2.5p in July 2019. 30,000 options were exercised at a price of 0.1p in October 2019
and a further 20,000 at the same price in December 2019.
b) The placing in April 2020 took place at 25p per share raising gross proceeds of £1,802,005 before costs of
£102,851.
c) 2,200,000 share options were exercised at a price of 9p in May 2020.
19 SHARE BASED PAYMENT
The Company operates an Enterprise Management Incentive share option scheme and a Non-Enterprise
Management Incentive scheme for directors and employees. The general terms of the schemes are that awards
are made once an employee has completed a minimum of six months’ service with the Company. The awards
made to employees are at the discretion of the Management Team and those to the directors at the discretion of
the Remuneration Committee.
The options are expected to vest over a period of up to four years and the maximum exercise period for the
options is ten years from the date of grant. Upon vesting the options are equity settled. Details of the share
options outstanding during the year and previous year are as follows:-
No. of options
Weighted
average
exercise price
8,143,000
40,000
(1,621,500)
(62,500)
6,499,000
5,090,000
(2,200,000)
(300,000)
9,089,000
2,405,000
4,532,000
6.3p
31.5p
2.1p
0.1p
7.5p
8.4p
9.0p
0.1p
7.7p
10.7p
10.0p
Balance at 1 April 2019
Granted during the year
Exercised during the year
Lapsed during the year
Balance at 31 March 2020
Granted during the year
Exercised during the year
Lapsed during the year
Balance at 31 March 2021
Balance exercisable at 31 March 2021
Balance exercisable at 31 March 2020
50
SRT MARINE SYSTEMS PLC - ANNUAL REPORT AND FINANCIAL STATEMENTS, YEAR ENDED 31 MARCH 2021
NOTES TO THE ACCOUNTS FOR THE YEAR ENDED 31 MARCH 2021
19 SHARE BASED PAYMENT - CONTINUED
The value of the options granted during the year has been measured by using the Black Scholes pricing model
as adjusted where applicable for market-based performance criteria. The inputs into the Black Scholes model
included expected lives of up to 4 years as well as the relevant share price, exercise price, volatility and risk-free
rate at the date of grant. The options granted during the year had an exercise price of 0.1p and 32.5p and a
share prices on the date of issue ranging from 32.5p to 44p.
Expected volatility was determined by referencing volatility data received and using historical data for similar
sized companies over the previous five years and amounted to approximately 84% for the grants made during
the year. Risk free rates were determined using government bonds and amounted to up to 0.35%. The expected
dividend yield was 0%.
For share options outstanding at the year end, vesting criteria and dates and expiry dates are as set out below.
Vesting date/criteria
Number
issued
Exercise
price
Expiry
date
Vested and exercisable immediately
Vested and exercisable immediately
Vested and exercisable immediately
Vested and exercisable immediately
Vested and exercisable immediately
Vested and exercisable immediately
Vested and exercisable immediately
Vested and exercisable immediately
Vested and exercisable immediately
Vested and exercisable immediately
Vested and exercisable immediately
Vested and exercisable immediately
Share price criteria not met
Share price criteria not met
Share price criteria not met
Share price criteria not met
Share price criteria not met
Not exercisable before:
May 2021
Dec 2021
Dec 2022
Dec 2024
30,000
500,000
180,000
60,000
174,000
50,000
160,000
900,000
225,000
20,000
66,000
40,000
30,000
30,000
1,800,000
3,300,000
1,300,000
34,000
40,000
75,000
75,000
32p
20p
18p
23p
25p
29p
26p
0.1p
0.1p
0.1p
0.1p
31.5p
37p
23p
0.1p
0.1p
32.5p
0.1p
31.5p
0.1p
0.1p
Oct 2021
Dec 2022
Dec 2022
Jan 2023
Dec 2023
Feb 2025
Dec 2025
Aug 2026
Dec 2026
Feb 2027
May 2028
Dec 2029
May 2021
May 2021
Aug 2026
May 2030
May 2030
May 2028
Dec 2030
Dec 2030
Dec 2030
Total outstanding options
9,089,000
51
SRT MARINE SYSTEMS PLC - ANNUAL REPORT AND FINANCIAL STATEMENTS, YEAR ENDED 31 MARCH 2021
NOTES TO THE ACCOUNTS FOR THE YEAR ENDED 31 MARCH 2021
20 RESERVES
Reserves for the Group and Company are set out in the Statement of Changes in Equity on pages 26 and 27
respectively. Other reserves consist of a capital redemption reserve, warrant reserve and a merger reserve as set
out below:
Capital
redemption
reserve
£
Warrant
reserve
Merger
reserve
Total
£
£
£
At 31 March 2019, 2020, 2021
2,857
62,400
5,425,339
5,490,596
The capital redemption reserve arose on 8 March 2005 when 285,714 deferred 1p shares with an aggregate
nominal value of £2,857 were repurchased by Software Radio Technology (UK) Limited for the aggregate
consideration of 1p. The merger reserve arose on 19 October 2005 when SRT Marine Systems plc acquired the
entire share capital of Software Radio Technology (UK) Limited by means of a share for share exchange.
The warrant reserve arose on Software Radio Technology plc listing on the London Alternative Investment Market
in November 2005 when for every one share issued one warrant was also issued. This reserve represents the other
reserve within the Company.
Retained earnings represent the profits that the Group and Company has earned to date less dividends paid to
shareholders. Share premium represents the difference between the subscription and issue price of shares and
their nominal value less any associated costs.
21 RELATED PARTY TRANSACTIONS
Key management are those persons having authority and responsibility for planning, controlling and directing the
activities of the Group. In the opinion of the Board, the Group’s key management are the directors of SRT Marine
Systems plc. The compensation of the directors of SRT Marine Systems plc is disclosed in note 4. In addition,
a total share-based payment expenses of £137,656 (2020: £nil) was recognised during the year in respect of
share options granted to directors, together with an aggregate charge relating to directors’ employer’s national
insurance contributions of £34,931(2020: £84,688).
During the year, there were expenses charged from the Company to its subsidiaries which are related parties
for services provided. These transactions amounted to £997,150 (2020: £1,042,470). As at 31 March 2021,
the Company had an outstanding receivables balance from SRT Marine Technology Ltd of £4,140,904
(2020: £5,140,221) and an outstanding receivables balance with SRT Marine System Solutions Ltd of
£13,270,927 (2020: £9,681,215).
52
SRT MARINE SYSTEMS PLC - ANNUAL REPORT AND FINANCIAL STATEMENTS, YEAR ENDED 31 MARCH 2021
NOTES TO THE ACCOUNTS FOR THE YEAR ENDED 31 MARCH 2021
22 CASH GENERATED FROM OPERATIONS
Group
Operating loss before exceptional item
Depreciation of property, plant and equipment
Amortisation of intangible fixed assets
Share based payment charge / (credit)
(Increase) / decrease in inventories
Decrease / (increase) in trade and other receivables
(Decrease) / increase in trade and other payables
Company
Operating loss
Depreciation of property, plant and equipment
Share based payment charge / (credit)
Decrease / (increase) in trade and other receivables
(Increase) in amounts owed by/to group undertakings
(Decrease) / increase in trade and other payables
2021
£
2020
£
(5,357,712)
496,872
2,273,167
229,332
(439,553)
12,358,347
(7,395,471)
(2,512,291)
389,997
1,818,352
(1,125)
305,648
(1,868,283)
2,725,467
2,164,982
857,765
2021
£
2020
£
(796,993)
237,532
229,332
21,552
(2,590,394)
(201,044)
(464,846)
156,369
(1,125)
(37,589)
(1,657,536)
10,921
(3,100,015)
(1,993,806)
23 BASIC AND DILUTED LOSS PER SHARE
The basic loss per share has been calculated on the loss on ordinary activities after taxation of £5,133,843
(2020: loss £6,079,022) divided by the weighted number of ordinary shares in issue of 163,728,344
(2020: 154,742,293).
During the current and previous years, the Group incurred a loss on ordinary activities after taxation and
therefore there is no dilution of the impact of the share options granted.
53
SRT MARINE SYSTEMS PLC - ANNUAL REPORT AND FINANCIAL STATEMENTS, YEAR ENDED 31 MARCH 2021
NOTES TO THE ACCOUNTS FOR THE YEAR ENDED 31 MARCH 2021
24 FINANCIAL INSTRUMENTS
The Group and Company’s financial instruments comprise cash and cash equivalents, borrowings, lease liabilities
and items such as trade payables and trade receivables which arise directly from its operations. The main purpose
of these financial instruments is to provide finance for the Group and Company’s operations.
The Group and Company’s operations expose it to a variety of financial risks including credit risk, interest rate
risk and foreign currency exchange rate risk. Given the size of the Group and Company, the directors have not
delegated the responsibility of monitoring financial risk management to a sub-committee of the board. The
policies set by the board of directors are implemented by the Company’s finance department.
Credit risk
The Group’s credit risk is primarily attributable to its trade receivables. The Company had no trade receivables
at 31 March 2021 (2020: £nil). The Group has implemented policies that require appropriate credit checks on
potential customers before sales are made. The amount of exposure to any individual counterparty is subject to
a limit, which is reassessed annually by each subsidiary’s management team. The carrying amount of financial
assets represents the maximum credit exposure.
The maximum credit exposure to credit risk has reduced significantly during the year due primarily to a reduction
in balances outstanding from the group’s largest customer in prior year. This largest customer now represents
71% (2020: 96%) of trade receivables. Other than that, the Group has no material credit risk concentration as it
maintains a diverse customer base. The overdue receivable and contract asset balances are shown in note 14 and
the maximum credit exposure as at the reporting date was:-
Trade receivables
Cash and cash equivalents
2021
£
2020
£
2,167,805
5,286,432
15,474,537
918,808
17,454,237
16,393,345
The Company has cash and cash equivalents of £1,700,504 (2020: £105,237) and no trade receivables.
Interest rate risk
The Group and Company have interest bearing assets and liabilities which comprise of cash and cash equivalents
and short and medium term loans (see note 16) and lease liabilities (note 17) which earn or incur interest at a
fixed rate.
The Group and Company have not entered into any derivative transactions during the period under review.
The Group and Company’s cash and cash equivalents earned interest at a variable rate totalling £1,682
(2020: £1,430) during the year. Interest payable on the short and medium term loans at a variable rate
amounted to £514,726 (2020: £400,273) for the Group and Company together with interest on lease
liabilities of £59,522 (2020: £63,816).
54
SRT MARINE SYSTEMS PLC - ANNUAL REPORT AND FINANCIAL STATEMENTS, YEAR ENDED 31 MARCH 2021
NOTES TO THE ACCOUNTS FOR THE YEAR ENDED 31 MARCH 2021
24 FINANCIAL INSTRUMENTS - CONTINUED
Foreign currency exchange rate risk
The Group is exposed to foreign currency exchange rate risk as a result of trade payables and trade receivables
which will be settled in US Dollars, Euros and Philippine Peso. The Company had no material exposure to foreign
exchange risk. During the year the Group did not enter into any arrangements to hedge this risk, as the directors
did not consider the exposure to be significant. The Group will review this policy as appropriate in the future.
The Group’s currency exposure comprises monetary assets and liabilities that are denoted in currencies other than
sterling, principally those denominated in US Dollars, Euros and Philippine Peso. Such transactions give rise to net
currency gains and losses recognised in profit or loss.
At the year end this exposure comprised £1,649,632 (2020: £695,539) of assets denominated in US Dollars,
£829,334 (2020: £290,338) of assets denominated in Euros and £2,544,427 (2020: £14,915,726) of assets
denominated in Philippine Peso. Furthermore, the Group at year end had £580,596 (2020: £579,838) of liabilities
denominated in US Dollars, £20,896 (2020: £60,798) of liabilities denominated in Euros and £29,918
(2020: £ 7,757,552) of liabilities denominated in Philippine Peso.
The table below illustrates the hypothetical sensitivity of the Group’s reported profits and equity to a 10%
increase and decrease in the US dollar/Sterling, Euro/Sterling and Philippine Peso/Sterling exchange rates at the
year-end date assuming all other variables remain unchanged. The sensitivity rate of 10% represents the Directors
assessment of a reasonable possible change.
Positive figures represent an increase in profit and equity.
Year-end exchange rates applied in the analysis below are US Dollar 1.37 (2020: 1.24), Euro 1.17 (2020: 1.12)
and Philippine Peso 66.75 (2020: 62.60).
Sterling strengthens by 10%
US Dollar
Euro
Philippine Peso
Sterling weakens by 10%
US Dollar
Euro
Philippine Peso
25 CAPITAL RISK MANAGEMENT
2021
£
(97,185)
(73,494)
(228,575)
2020
£
(10,518)
(20,867)
(650,743)
106,904
80,844
251,433
11,570
22,954
715,817
The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going
concern in order to provide returns to shareholders. The Group defines capital as being share capital plus
reserves. The Group is not subject to any externally imposed capital requirements, except as disclosed in note 16.
26 FINANCIAL COMMITMENTS
As at 31 March 2021, the Group had financial purchase order commitments with its contract manufacturer
amounting to £501,954 (2020: £921,074).
55
SRT MARINE SYSTEMS PLC - ANNUAL REPORT AND FINANCIAL STATEMENTS, YEAR ENDED 31 MARCH 2021
THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION.
If you are in any doubt about the action you should take, you should immediately consult your stockbroker,
bank manager, solicitor, accountant or other independent financial adviser duly authorised under the
Financial Services and Markets Act 2000.
If you have sold or otherwise transferred all your ordinary shares in the Company, please forward this
document to the purchaser or transferee or to the stockbroker, bank or other person through whom the
sale or transfer was effected for transmission to the purchaser or transferee.
NOTICE OF ANNUAL GENERAL MEETING
NOTICE is hereby given that the Annual General Meeting of SRT Marine Systems plc (the “Company”) will
be held at the Centurion Hotel, Charlton Lane, Radstock, England BA3 4BD at 11.00 a.m. on September
22nd 2021 for the purpose of considering and, if thought fit, passing the following ordinary resolutions
(in the case of resolutions 1 to 6 inclusive) and special resolution (in the case of resolution 7):
ORDINARY RESOLUTIONS
1. To receive the audited annual accounts and reports of the Company for the financial year ended 31 March
2021.
2. To re-appoint Nexia Smith & Williamson Audit Limited as the auditors of the Company, to hold office until
the conclusion of the next Annual General Meeting of the Company.
3. To authorise the directors to determine Nexia Smith & Williamson Audit Limited’s remuneration as the
auditors of the Company.
4. To re-appoint Simon Rogers as a director of the Company.
5. To re-appoint Neil Peniket as a director of the Company.
6. THAT the directors be generally and unconditionally authorised to exercise all the powers of the Company
to allot shares, and to grant rights to subscribe for or to convert any security into shares up to an aggregate
nominal amount of £54,751 provided that this authority shall expire (unless previously varied as to duration,
revoked or renewed by the Company in general meeting) on the date falling 15 months after the passing of
this resolution, or, if earlier, at the conclusion of the Annual General Meeting in 2022, except that the
Company may before such expiry make any offer or agreement which would or might require shares to be
allotted or such rights to be granted after such expiry and the directors may allot shares or grant such rights
in pursuance of such offer or agreement as if the authority conferred by this resolution had not expired, and
this authority shall be in substitution of any such previous authorities.
56
SRT MARINE SYSTEMS PLC - ANNUAL REPORT AND FINANCIAL STATEMENTS, YEAR ENDED 31 MARCH 2021
NOTICE OF ANNUAL GENERAL MEETING - CONTINUED
SPECIAL RESOLUTION
7. THAT subject to the passing of resolution 6, the directors be authorised pursuant to section 570 of the
Companies Act 2006 to allot equity securities (as defined in section 560 of that Act) for cash pursuant to
the general authority conferred on them by resolution 6 above and/or to sell equity securities held as treasury
shares for cash pursuant to section 727 of the Companies Act 2006, in each case as if section 561 of that Act
did not apply to any such allotment or sale, provided that this power shall be limited to:
(a) any such allotment and/or sale of equity securities in connection with an offer or issue by way of rights
or other pre-emptive offer or issue, open for acceptance for a period fixed by the directors, to holders
of ordinary shares (other than the Company) on the register on any record date fixed by the directors
in proportion (as nearly as may be) to the respective number of ordinary shares deemed to be held by
them, subject to such exclusions or other arrangements as the directors may deem necessary or expedient
in relation to fractional entitlements, legal or practical problems arising in any overseas territory, the
requirements of any regulatory body or stock exchange or any other matter whatsoever; and
(b) any such allotment and/or sale, otherwise than pursuant to sub-paragraph (a) above, of equity securities
having, in the case of ordinary shares, an aggregate nominal value or, in the case of other equity securities,
giving the right to subscribe for or convert into ordinary shares having an aggregate nominal value, not
exceeding the sum of £16,425.
This authority shall expire, unless previously revoked or renewed by the Company in general meeting, at such
time as the general authority conferred on the directors by resolution 7 above expires, except that the Company
may before such expiry make any offer or agreement which would or might require equity securities to be
allotted or equity securities held as treasury shares to be sold after such expiry and the directors may allot equity
securities and/or sell equity securities held as treasury shares in pursuance of such an offer or agreement as if the
power conferred by this resolution had not expired.
The directors believe that the proposed resolutions to be put to the meeting are in the best interests of
shareholders as a whole and recommend that shareholders vote in favour of all the resolutions, as they
intend to do in respect of their own beneficial shareholdings in the Company.
On behalf of the Board
Richard Hurd
Company Secretary
July 28, 2021
Registered Office:
Wireless House, Westfield Industrial Estate,
Midsomer Norton, Bath BA3 4BS
Registered in England and Wales No. 05459678
57
SRT MARINE SYSTEMS PLC - ANNUAL REPORT AND FINANCIAL STATEMENTS, YEAR ENDED 31 MARCH 2021
NOTICE OF ANNUAL GENERAL MEETING - CONTINUED
Notes:
1. A shareholder is entitled to appoint another person as that shareholder’s proxy to exercise all or any of
that shareholder’s rights to attend and to speak and vote at the Annual General Meeting. A shareholder
may appoint more than one proxy in relation to the Annual General Meeting, provided that each proxy is
appointed to exercise the rights attached to a different share or shares held by that shareholder. A proxy does
not need to be a shareholder of the Company. If you are appointing more than one proxy you will need to
state clearly on each form of proxy the number of shares in relation to which the proxy is appointed, and
ensure that, taken together, the numbers of shares stated on the forms of proxy do not exceed your holding.
2. A form of proxy for use in connection with the Annual General Meeting is enclosed with the document of
which this notice forms part. Completion and return of a form of proxy will not prevent a shareholder from
attending and voting at the Annual General Meeting. Addresses (including electronic addresses) in this
document are included strictly for the purposes specified and not for any other purpose.
3. To appoint a valid proxy or proxies shareholders must complete: (a) a form of proxy, sign it and return it,
together with the power of attorney or any other authority under which it is signed, or a notarially certified
copy of such authority, to the Company Secretary at the Company’s offices, or (b) a CREST Proxy Instruction
(see note 4 below) in each case no later than 48 hours before the time fixed for holding the meeting or any
adjournment thereof.
4. CREST members who wish to appoint a proxy or proxies through the CREST electronic proxy appointment
service may do so for the Annual General Meeting and any adjournment(s) of the meeting by using the
procedures described in the CREST Manual. CREST Personal Members or other CREST sponsored members
and those CREST members who have appointed any voting service provider(s) should refer to their CREST
sponsor or voting service provider(s), who will be able to take the appropriate action on their behalf.
In order for a proxy appointment or instruction made using the CREST service to be valid, the appropriate CREST
message (a “CREST Proxy Instruction”) must be properly authenticated in accordance with Euroclear UK & Ireland
Limited’s specifications and must contain the information required for such instructions, as described in the CREST
Manual. The message, regardless of whether it constitutes the appointment of a proxy or an amendment to the
instruction given to a previously appointed proxy must, in order to be valid, be transmitted so as to be received
by the Company’s agent by the latest time for receipt of proxy appointments set out in paragraph 3 above.
For this purpose, the time of receipt will be taken to be the time (as determined by the timestamp applied to
the message by the CREST Applications Host) from which the Company’s agent is able to retrieve the message
by enquiry to CREST in the manner prescribed by CREST. After this time any change of instructions to proxies
appointed through CREST should be communicated to the appointee through other means. CREST members
and, where applicable, their CREST sponsors or voting service providers should note that Euroclear UK & Ireland
Limited does not make available special procedures in CREST for any particular messages. Normal system timings
and limitations will therefore apply in relation to the input of CREST Proxy Instructions. It is the responsibility
of the CREST member concerned to take (or, if the CREST member is a CREST personal member or sponsored
member or has appointed any voting service provider(s), to procure that his CREST sponsor or voting service
provider(s) take(s)) such action as is necessary to ensure that a message is transmitted by means of the CREST
system by any particular time. In this connection, CREST members and, where applicable, their CREST sponsors
or voting service providers are referred, in particular, to those sections of the CREST Manual concerning
practicallimitations of the CREST system and timings.
The Company may treat as invalid a CREST Proxy Instruction in the circumstances set out in Regulation 35(5)(a)
of the Uncertificated Securities Regulations 2001.
58
SRT MARINE SYSTEMS PLC - ANNUAL REPORT AND FINANCIAL STATEMENTS, YEAR ENDED 31 MARCH 2021
NOTICE OF ANNUAL GENERAL MEETING - CONTINUED
5. Pursuant to regulation 41 of the Uncertificated Securities Regulations 2001 (as amended), only those
shareholders included in the register of members of the Company at 6.00 p.m. on September 20th, 2021
being the time not less than 48 hours before the time fixed for the meeting or, if the meeting is adjourned, in
the register of members at 6.00 p.m. on the day which is two days before the day of any adjourned meeting,
will be entitled to attend and to vote at the Annual General Meeting in respect of the number of shares
registered in their names at that time. Changes to entries on the share register after 6.00 p.m. on September
20th, 2021 or, if the meeting is adjourned, in the register of members after 6.00 p.m. on the day which
is two days before the day of any adjourned meeting, will be disregarded in determining the rights of any
person to attend or vote at the Annual General Meeting.
6.
In order to facilitate voting by corporate representatives at the meeting, arrangements will be put in place at
the meeting so that: (i) if a corporate shareholder has appointed the chairman of the meeting as its corporate
representative with instructions to vote on a poll in accordance with the directions of all of the other
corporate representatives for that shareholder at the meeting, then on a poll those corporate representatives
will give voting directions to the chairman and the chairman will vote (or withhold a vote) as corporate
representative in accordance with those directions; and (ii) if more than one corporate representative for
the same corporate shareholder attends the meeting but the corporate shareholder has not appointed
the chairman of the meeting as its corporate representative, a designated corporate representative will
be nominated, from those corporate representatives who attend, who will vote on a poll and the other
corporate representatives will give voting directions to that designated corporate representative. Corporate
shareholders are referred to the guidance issued by the Institute of Chartered Secretaries and Administrators
on proxies and corporate representatives – www.icsa.org.uk – for further details of this procedure. The
guidance includes a sample form of representation letter if the chairman is being appointed as described in
(i) above.
7. As at July 28, 2021, being the latest practicable date prior to the publication of this document, the
Company’s issued share capital consists of 164,251,939 ordinary shares of 0.1 pence each with each share
carrying the right to one vote.
EXPLANATORY NOTES FOR SHAREHOLDERS
The notice of the Annual General Meeting of the Company to be held at 11.00 a.m. on September
22nd, 2021 is set out on pages 56-59 of the annual report and accounts. The following notes provide an
explanation as to why the resolutions set out in the notice are to be put to shareholders. Resolutions 1 to 6
are ordinary resolutions. These resolutions will be passed if more than 50% of the votes cast for or against
are in favour.
Resolution 1 – Directors’ report and audited accounts for year ended 31 March 2021
The directors are required by the Companies Act 2006 to present to the shareholders of the Company at a
general meeting the audited accounts and the reports of the directors and auditors for the year ended 31 March
2021. The report of the directors and the audited accounts have been approved by the directors, and the report
of the auditors has been approved by the auditors, and both reports are contained in the Company’s Annual
Report and Accounts.
Resolution 2 – Re-appointment of auditors
The Companies Act 2006 requires that auditors be appointed at each general meeting at which accounts are
laid, to hold office until the next such meeting. This resolution seeks shareholder approval for the reappointment
of Nexia Smith & Williamson Audit Limited. The Audit Committee keeps under review the independence and
objectivity of the external auditors. After considering relevant information the Audit Committee recommended to
the board of directors that Nexia Smith & Williamson Audit Limited be reappointed.
This resolution proposes the re-appointment of Nexia Smith & Williamson Audit Limited as auditors of the
Company.
59
SRT MARINE SYSTEMS PLC - ANNUAL REPORT AND FINANCIAL STATEMENTS, YEAR ENDED 31 MARCH 2021
SRT MARINE SYSTEMS PLC - ANNUAL REPORT AND FINANCIAL STATEMENTS, YEAR ENDED 31 MARCH 2021
EXPLANATORY NOTES FOR SHAREHOLDERS - CONTINUED
Resolution 3 – Auditors’ remuneration
This resolution gives authority to the directors to determine the remuneration of Nexia Smith & Williamson Audit
Limited as auditors of the Company.
Resolutions 4 and 5 – Directors’ re-appointment
Simon Rogers and Neil Peniket will retire at this year’s Annual General Meeting and offer themselves for
re-appointment.
Resolution 6 – Authority to allot shares
The Companies Act 2006 provides that the directors may only allot shares or grant rights to subscribe for or to
convert any security into shares if authorised by shareholders to do so. Resolution 6 will, if passed, authorise the
directors to allot shares up to a maximum nominal amount of £54,751.
It is accordingly proposed that the directors be granted general authority at any time prior to the date falling
15 months after the passing of the resolution, or, if earlier, at the conclusion of the Annual General Meeting in
2022, to allot shares up to an aggregate nominal amount of £54,751, which represents an amount which is
approximately equal to one-third of the issued ordinary share capital of the Company as at the date of the notice
of Annual General Meeting. Passing this resolution will give the directors flexibility to act in the best interests of
shareholders, when opportunities arise, by issuing new shares. The directors have no current plans to make use of
this authority.
Resolution 7 is a special resolution. This resolution will be passed if not less than 75% of the votes cast for
and against are in favour.
Resolution 7 – Disapplication of statutory pre-emption rights
The Companies Act 2006 requires that, if the Company issues new shares, or grants rights to subscribe for
or to convert any security into shares, for cash or sells any treasury shares, it must first offer them to existing
shareholders in proportion to their current holdings. If passed, resolution 8 will authorise the directors to issue
shares for cash and/or sell shares from treasury (if any are so held) up to an aggregate nominal amount of
£16,425 (representing approximately 10% of the Company’s issued share capital as at the date of the notice of
Annual General Meeting) without offering them to shareholders first, and will also modify statutory pre-emption
rights to deal with legal, regulatory or practical problems that may arise on a rights or other pre-emptive offer
or issue. If passed, this authority will expire at the same time as the authority to allot shares given pursuant to
resolution 7. The Company does not at present hold any shares in treasury.
60
SRT MARINE SYSTEMS PLC
T +44 (0) 1761 409 500
WIRELESS HOUSE
WESTFIELD INDUSTRIAL ESTATE
MIDSOMER NORTON
BATH BA3 4BS
F +44 (0) 1761 410 093
E INFO@SRT-MARINE.COM
W SRT-MARINE.COM
SRT MARINE SYSTEMS PLC