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(Alliance News) - SRT Marine Systems PLC on Tuesday received formal written notification confirming the status of certain Middle East contracts, but said the expected signing and commencement date will likely be delayed.
The maritime surveillance, monitoring and management systems provider said the Middle East system contracts - with an aggregate value of GBP65 million - were previously scheduled for signature and commencement during March.
The reason provided by the customers for the delays are related to their governments' response to coronavirus, which is requiring them to immediately and unexpectedly reprioritise their short-term operational focus, combined with expected restriction of movement of goods and people.
SRT said the initial contractual milestone deliverables relevant to the current financial year were the GeoVS data centre systems, which would be required to be delivered within the first few weeks of the contract signings and generate GBP14 million of revenue. However, because of the expected delay, the first milestones are now expected to be completed and their associated revenue recognised in the next financial year, which will start on April 1.
As a result, SRT said it now expects revenue for the year to March-end to be GBP17.5 million lower than previously anticipated, with an expected pretax loss of GBP3.8 million.
In its financial 2019, the company reported pretax profit of GBP3.2 million on a revenue of GBP20.6 million.
For its financial 2021, however, SRT expects to "substantially" increase its revenue.
"Of course, we understand and respect the decision of our customers to concentrate on the current exceptional circumstances. Nevertheless, the timing and nature of this delay is unexpected and very disappointing, and I apologise to my colleagues and shareholders for the angst this unexpected delay will no doubt cause," said Chief Executive Simon Tucker.
He added: "However, I hope it is of some re-assurance to note that after many years of diligent work we have reached the point of contract signature and that once we are past this short delay the contracts will proceed and the significant revenue lost in the current financial year added to the next."
AIM-listed SRT shares were trading 2.4% higher in London on Tuesday at 33.28 pence each.
By Evelina Grecenko; evelinagrecenko@alliancenews.com
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