Rock Solid Share Discussion Threads

[christianf12] 27/1/2012 12:25

It is my rns yes. I'll keep adding at these silly prices.

I think the "short positions" text is actually in the wrong place, not my 1.3% holdings : )

[the prophet] 27/1/2012 12:01

-ChristainF12
-got a feeling it won't last, as VIY could really be off to the races soon, imo, so gap could well increase.

-still holding here with RSI, but it needs some sort of spark to kick things off here, I feel, although RSI still offers good value. The amount owing to the ex parent company in unused services was a bit of a kick in the teeth, but still, there should be more value here than the current 2p mid.

[christianf12] 27/1/2012 08:09

Look at VIY motoring again lifting the gap in valuations between RSI & VIY.

VIY now capped at 10 x that of RSI, surely won't last?

[chrisis33] 26/1/2012 17:10

Can be frustrating holding a static share whilst others take off, but if I've learned one thing about investing, it's to do your research and be patient.
Today's buying was encouraging, and it looks as though we've seen a textbook consolidation after the rise from 1p to 2p+.

Another of mine, STY, also consolidating over the past few days whlist buys exceed sells. I'm hoping to see both start trekking in the right direction shortly.

[chrisis33] 26/1/2012 16:59

Looks like 300K more at mid price through after the close.

[chrisis33] 26/1/2012 15:57

2.1p to buy, 1.85p to sell.

[chrisis33] 26/1/2012 15:54

I missed the trades at 3:38. More buying than selling recently.

[chrisis33] 26/1/2012 15:48

Paying over mid price now ... signs of life?

[christianf12] 26/1/2012 14:00

VIY up 30% today. It is now capped at £25m.

RSI capped at £3m.

I think we have some catching up to do : )

[christianf12] 25/1/2012 23:05

I'm doing the same tomorrow! : )

[117mike] 25/1/2012 19:22

bought some more today at 2p

[christianf12] 24/1/2012 18:55

Fox Davies have told me they can't do any more notes as they are not allowed if RSI in takeover talks! So September last one. Obviously if RSI end the takeover period I expect another fd note to be published.

[euclid5] 24/1/2012 18:43

so may have to wait until end of 1Q 12 for a decision on what they plan to do

is the sept 2011 FD broker report the last one

restructure, sell part or sell all of the Company. This process will continue into the first quarter of calendar year 2012

[christianf12] 24/1/2012 13:26

This chart is courtesy of rosssiddle on the FXD chartists thread.

Let's hope it plays out and we see 3.5-4p soon : )

[christianf12] 24/1/2012 10:08

Best bit, are they basically saying the market cap should be around £14.5m? That would be 9pps!




Impairment of goodwill, tangible and intangible assets

The Group is required to test, on an annual basis, whether goodwill and other intangible assets and intangible assets with indefinite lives have suffered any impairment. At each reporting date where there are indicators of impairment tangible assets are also tested for impairment. In this test the net book value of the cash-generating unit is compared with the associated expected discounted future cash flows over a five year period. If the net book value is higher, then the difference is written off to the Consolidated Group Statement of Comprehensive Income as impairment. The recoverable amount is determined based on "value in use" calculations.



One indication of impairment is the Company's share price and the resulting total market capitalisation. At 31 August 2011 the Company's closing mid-market share price was 3.50 pence which gives the Company a market capitalisation of approximately £5.5 million, which is significantly lower than the total shareholders' equity at the same date of approximately £14.5 million.The directors, while disappointed with this low share price despite the significant progress made by the Company since November 2010, believe that it is disconnected from the current and future potential of the business. However, the Board of Directors recognise that the low share price means that a review for impairment should be undertaken.



The use of the "value in use" method requires the estimation of future cash flows and the choice of a discount rate in order to calculate the present value of the net cash flows. Discounted future net cash flows for IAS 36 purposes are calculated using a pre tax discount rate of 22% (2010: 22%). The Directors believe that this discount rate includes a suitable allowance for the risk and uncertainty inherent in forecasting cash flows. The Directors determine forecasted revenues and costs for each cash-generating unit over a five year period based on a combination of historical experience and projected growth rates for the WISE and WSS segments which are corroborated by external sources and sales pipeline, wherever possible.



The Directors have carefully reviewed the Group's latest order book and sales pipeline which gives them comfort that the revenues planned for the financial year ending on 31 August 2012 are achievable. Recent investment made in the business and its market positioning (as explained in both the Chairman's Statement and CEO Report) should lead to significant levels of growth into 2013, 2014, 2015 and 2016. However, as with any forecast, there is bound to be a degree of uncertainty which increases the further into the future forecasts are made. The markets may not grow as predicted and the Group's share of these markets may not follow the Directors' plans for any number of reasons. A further analysis of the principal risks and uncertainties facing the Group is set out on page 8.



The Directors have determined that the Group has two largely independent cash-generating units, the Well-driven Integration of Seismic and Electromagnetics business (WISE), and the Well and Surface Seismic interpretation business (WSS). These cash-generating units correspond to the Group's business segments and further information describing these is set out in note 4.



The WISE market is forecast to grow by between 25% and 30% pa. (2010: between 25% and 30% pa.) over the next five years with the Group's share of this market increasing from approximately 15% (2010:15%) to approximately 50% (2010: 50%). The Group's WISE revenues are forecast to increase by between 50% and 60% pa over this period (2010: between 50% and 60%). Assumptions relating to the high growth of the WISE market are based on projections made by the Directors and reflect the relatively small level of revenues and low market penetration in the financial year to 31 August 2011. High growth levels are also supported by the increasing rate of adoption of EM technology by oil companies, particularly national oil companies and the Company's position in the market as the only independent integrator of EM, seismic and well data.



The WSS market is forecast to grow by between 5% and 10% pa (2010: between 5% and 10% pa) over the next five years with the Group's share of this market increasing from approximately 5% (2010: 5%) to between 10% and 15% (2010: between 10% and 15%). The Group's WSS revenues are therefore forecast to increase by approximately 40% pa (2010: 40% pa) over this period reflecting the Group's new focus on the South American market and the fledgling market for geophysical services to oil companies investing in un-conventional reservoirs. The Company is developing a technical leadership position in the market for consulting on un-conventional reservoirs.



The calculation of the value in use for each cash-generating unit is most sensitive to assumptions for:

(a) the forecast rate of growth of the Group's revenues in the WISE and WSS markets over the next five years;

(b) The growth in the market for hydrocarbon potential of un-conventional reservoirs such as shales and tight gas sands; and

(c) the discount rate used.



The Directors consider the value attributable to net cash flows generated from the WISE and WSS businesses to be higher than the current carrying value of goodwill, tangible and intangible assets and consequently no impairment adjustment is required. However, attention is drawn to the risks and uncertainties in arriving at this conclusion.

[christianf12] 24/1/2012 10:04

Trading outlook

The 2012 financial year is looking promising with the award of several large projects for both our WSS and WISE product lines. Our revenue backlog is much healthier and visibility of the opportunity pipeline is significantly better than at this stage last year.



We are seeing growing interest in our new funded R&D project, designed to deliver a next generation EM processing and interpretation system, which is anticipated to commence early in 2012 subject to industry funding.



We forecast steady growth in our traditional offshore reservoir characterisation market (WSS), but more rapid growth in revenues from and our offering to the un-conventional reservoir market (also WSS) and, particularly, our WISE business line.

[christianf12] 24/1/2012 10:02

Missed this on first read:



In addition to this new broad business focus, we will be expanding our geographic reach by opening a branch office in Bogota, Colombia. We have identified Colombia as being an ideal base for the development of a South American market for RSI, with an initial focus on WSS products and services both in Colombia itself, but also in Peru. We have hired an experienced manager and are currently recruiting technical staff to be based in Bogota. In addition we will be using this office to help provide additional sales support throughout South America and in Mexico.

[christianf12] 24/1/2012 08:10

qwazi, not too long to wait:

Disappointingly, despite the significant progress made since November 2010, our share price appears to be completely disconnected from the current and future potential of the business. The difficult capital markets, has meant that raising equity funds to build on that progress and take the Company forward at speed did not appear to management to be palatable option. For these reasons, the Board decided to explore the strategic options available to RSI and accordingly on 9 November 2011 announced the appointment of Simmons & Co International Limited to assist us in that review. When completed, the strategic review may result in proposals to stay as we are, restructure, sell part or sell all of the Company. This process will continue into the first quarter of calendar year 2012 and I look forward to reporting on the results in due course. In the meantime, as can be seen from recent contract awards, the RSI team is very much engaged and pursuing commercial opportunities.

[qwazi] 24/1/2012 08:09

Quiet here for the moment. Hopefully won't have to wait too long before outcome of strategic review.

[christianf12] 24/1/2012 08:09

The startegic review was announced on the 9th November when the share price was at 2.25p because the company were not happy with the share price as it didn't reflect the value of the company. Since then all we have had is contract wins yet the share price hasn't budged.

I would say we are due for another run North v.soon. The sellers seem to have finished now.

[christianf12] 23/1/2012 20:28

Eu, if you look at fd targets compared to other brokers I think they have the highest hit target in terms of companies hitting their targets. Half of their target at 6.5p will do me for starters.