SRT Marine Systems is a company I know well. Many people have described it as a jam tomorrow company and the patchy record does lend credibility to the allegation. However, there are good reasons to believe that image is about to change. I first bought shares around 2010. Up until then the company was primarily a supplier of radios. Its name in those days was Software Radio Technology. My interest coincided with a change of direction when the company entered the AIS market.
AIS stands for Automatic Identification System. It is used by ships and smaller vessels to broadcast their presence to other vessels. It was originally conceived as a means of saving lives and applied initially only to very large ships. The SOLAS convention came into effect in 1980 making the use of AIS mandatory for certain categories of vessel on a Global basis by the International Marine Organisation.
AIS uses VHF radio frequencies so SRT had appropriate expertise to enter the market as it began to broaden into non mandatory classes of vessel. At first the devices, called transponders, were bulky and the size of a brick. SRT developed a much smaller chipset the size of a credit card which revolutionised the form factor of these boxes and cut their cost.
Since then, SRT has developed an even wider range of devices which use AIS and is now a market leading supplier. They design them, but outsource manufacture. They sell directly via their in-house brand em-trak and over 1000 dealers world wide. They also supply most of the well known OEM maritime equipment brands with products made and packaged to show the brand name and cosmetic changes and em-trak takes care not to undercut the branded versions. Despite this the em-trak profit margin is higher. They operate from a small industrial estate in Midsomer Norton, Somerset. Throughout my time as shareholder, the company has always been cost conscious, eschewing fancy offices. They are a very shareholder friendly, keen to respond to enquiries and regularly provide web casts to update on developments. I have attended most of the AGM’s during the time I have known the company.
Selling transponders, even as a market leader has not made for serious profits, particularly when, despite mandating the use of AIS in their waters, many countries simply failed in the enforcement. SRT’s prospects changed in 2013 with the purchase of…
