Srt Marine Systems Share Discussion Threads

[countryman5] 12/10/2018 09:15

Goodapple.
I am sure that you are aware that J R-M is the MP for MSN. He could well extol the virtues of SRT in his constituency. He could highlight how the world is at the feet of UK exporters if only they try as hard as Mr T and his team.(Pity the UK banks don't see the potential of companies like SRT)

[goodapple] 12/10/2018 08:42

Presumably when the wider market becomes aware of SRT being awarded Philo2, there will an awakening of interest in this little company in Midsomer Norton.
No doubt the news will provide useful ammunition for Mr Rees Mogg et al with their views of Britain's post Brexit potential on the world stage.
And as you say C5, government support towards Philo3 would seem an attractive proposition.
I look forward to paying CGT on SRT after all this time.
My pot of jam is slowly working its way towards the front of the shelf.

[countryman5] 12/10/2018 08:17

Perhaps the UK gov should be offering to help fund Philo 3 on the basis that SRT gets the contract. It would probably get most of its money back via taxation. Ie SRT makes a profit and pays tax. SRT share price multiplies several times and shareholders pay CGT. Good relations, unlike the French, will lead to multiple UK trade deals with the Philippines, post Brexit.

[fredfishcake] 12/10/2018 07:48

Nice to read such a quality board, where people post when they actually have something to add. I'll shut up now!

[countryman5] 12/10/2018 02:56

Lav clearly knows much of the finer detail and his recent comments help complete the jigsaw picture about recent events in the Philippines. The picture, as I see it, is as follows (No doubt Lav will correct any miss info:-
CLS provided Philo 1, based on satellite and with expensive annual charges. The French offered to finance Philo 2 and assumed that CLS would get the contract, insisting that Philo 2 went to a french company. Mr T got to work on the Philippine people of influence and convinced them of the advantages of the SRT system. When the spec for Philo 2 came out it identified the need for a french company but it also required 3 D, which CLS could not comply with. SRT thought it had overcome the french bit by having a french partner or subsidiary. The contract was awarded to SRT and the french got nasty. They effectively said 'If you want the french Euros then the contract must go to CLS..Do as you are told'. The Philippines gov told the french where to stick their Euros, found the necessary budget by juggling internal funds and have reissued Philo 2 with a spec that appears to have SRT's name on it.
If SRT is awarded Philo 2 it puts them in prime position for the much bigger??? Philo 3 and possibly a coastguard project?
We believe that Bahrain, having bought into SRT, is acting as the best sales people for SRT in the M. East. Likewise if the Philippines are impressed with SRT they will be lauding Mr T to all and sundry and CLS will have a dirty name.

If this happens, how will the mighty CLS feel? Mr T better not go into a french embassy, or he might not come out again!!!

[lavalmy] 11/10/2018 18:09

hjb1

No offence but my wife sounds like that sometimes.

It is written for SRT alone but that is not surprising. These things have to be trialed at length, adjusted, re-tried, planned and all the rest of it. OTOH, procurement rules insist on tenders. All rivals and onlookers will know that it is a foregone conclusion - fancy putting in a functioning vessel monitoring system by end December, anyone?

SRT have been putting in the effort over the last couple of years on this and two or three years ago it might have been a bit speculative as to whether they could get it. Indeed, I asked Tucker when the initial Philippines order came in whether he thought it would lead to anything. He thought that a lot of other projects would be coming in before with this being no more than a twinkle in the Philippines eye. Predictions! We have all suffered when it comes to SRT.

[alter ego] 11/10/2018 14:48

That's interesting C5 as you well know since GeoVis can offer this feature. I'm afraid my time lately has been much constrained so I haven't been able to read as much of the detail as you and La V to name but two. It strikes me that no-one writing the functionality spec would have thought of that feature unless they had been shown it by SRT. Hopefully that precludes others form meeting the crtieria.

[countryman5] 11/10/2018 13:13

I have just been reading the vast amount of detail required in the Philo 2 contract bid. How many companies, apart from SRT (hopefully) can comply? Under 'Functionality requirement', one of the requirements is 'Ability for system operators to virtually place themselves on any identified vessel and share the vessel operator’s live
perspective with full 360° viewing'

[countryman5] 11/10/2018 08:49

Lav
Many thanks

[lavalmy] 11/10/2018 08:11

C5

They issue both sorts of guarantee, so for pre-shipment finance and for invoiced deliveries. The key issue is that UKEF do not provide the cash. It comes from participating banks who shoulder a small part of the risk, most of the admin and assessment and get most of the margin.

In SRT's case (or rather cases), I understand that they will be invoicing the Philippines for the stuff that is already out there and paid for, so pre-shipment doesn't come into it. They will then sell the invoice to an Asian bank at a discount to provide immediate cash and without recourse to SRT if the Philippines doesn't pay - so UKEF doesn't enter into it and the Asian bank shoulders all the risk. Whether they will need to do the same with further milestones/invoices is unclear but would depend on the overall cash position. They certainly do not see any credit risk so will not be getting cover for that. From the scheduling, it looks like they will be invoicing/receiving cash on a regular basis, as well as purchasing e.g. RADARS on the same timescale, so with little need for further large upfront purchases.

For others, particularly in the Middle East, there might be the dreaded combination of long payment terms and the need to purchase and pay for equipment from third parties - although Simon did say that part of the cash outflow in H1 was to buy goods for delivery soon, so some of that may already have been financed internally - so there is certainly the possibility that they may set up pre-shipment and post-shipment guarantees and there shouldn't be any problem with either. It's simply the cost versus the need for cash and by this time next year I would have thought that won't need any financing at all.

[yumyum] 11/10/2018 08:04

Thank you Countryman and LaValmy.

[countryman5] 10/10/2018 20:54

I am assuming that we will have to wait the best part of 3 months before the Company is in a position to update the market with a revised forecast for this financial year and to provide a conservative forecast for the following year.
There were very strong hints in recent communications that various contracts are nearing sign off and this will give the Company the confidence to update the market.
I use as my reference the 2017 AGM booklet and refer to the 'systems pipeline' chart.
VSP No. 1 and No2 are Middle East. Total $40 million. Probably Kuwait and Bahrain. (I think No 10-$40 million- is Saudi because of the 2,300 transceivers already supplied).
VSP No3, S America must be Ecuador.
NOs 4,5 and 6 are the interesting ones. This has got to be the Philippines in at $52 million, but I suspect that this might be a conservative figure.(See this year's booklet)
VSP Nos 8 and 9.-$51 million- Asia. I read this as Vietnam, but it could be Thailand or VSP No 11-$40 million- could be Thailand.

No doubt all will be revealed when the Company feels confident to update the market.

I am conscious that LAV does a lot of detailed research and I would like to hear his thoughts on whether the UK export guarantee allows the Company to receive cash at the beginning of each milestone on the contracts (assuming they come to SRT!!!)

[wynterwilde] 10/10/2018 17:08

Superb post LaValmy thanks.....do you work for Bellingcat..??ԅ12;

[lavalmy] 10/10/2018 16:36

I managed to get a slightly closer look at the proposed work schedule over the four years without hurting my eyes too much.

Firstly, 'one vessel monitoring system operated' will be installed in calendar Q4 this year. This is presumably the kit which is already out there. That point is important in that there will be little further cash costs to incur - they backed out £8.2 million of revenue and moved £5.6 million from profit to loss when this was delayed, which means that total costs for this part are £2.6 million most of which has already been paid. Hence, even if there is a retention of 10% as envisaged in the terms, SRT will have a bankable invoice of more than £7 million. It also means that the margins on the rest (£9.1 million on £21.2 million of revenue) drop to 43% and some clown in webcasts to come will be asking why margins have gone down.

Next up, the bigger ports. I can only see 12 of these on the schedules, one each in Q2&3 2019, 3 Q1 2020, 3 Q2 2020, 2 Q3 2020, 2 Q4 2020. Q1 2019 is missing and I assume that the other three are there. The smaller ports are 2019 Q2 5, Q3 15, Q4 3 and then 2020 Q1 20, Q2, 20, Q3 20, Q4 34 (total 117). The larger boats (those which require observers) will be equiped 1,000 in June 2019, 1,000 in December. The other three thousand equally in Q2-Q4 2020.

All that seems to suggest that the bigger boats will be accelerated (and tracked by satellite anyway) before there is much terrestrial coverage. The rest, contrary to my initial impressions, seems to be reasonably evenly spaced. So a much smoother revenue stream with a considerable amount of the £21.2 dropping into calendar 2020, pretty evenly in each quarter. Good for the project management and regular invoicing/payments.

[owenski] 10/10/2018 13:44

Isn't the key word - "within", a month counts for within.

[effortless cool] 10/10/2018 13:23

Thank goodness for SRT. Its share price chart this week is pretty much the exact inverse of everything else I own!

[lavalmy] 10/10/2018 11:50

FWIW, they are planning to install 2,000 of the transponders in 2019, 3,000 in 2020 - smallish fry in the scheme of things. It looks like the bulk of the actual work will be done in SRT's 19/20 FY, so something like £8-10 million this H2 (mainly installing what they previously booked) and regional centres/local ports next year for £15 million, probably back-end weighted to 3rd/4th quarter if payment is not going to be made until 2020.

A trivial point is that it seems to be PHP denominated and SRT will have to to lay off the FX risk.

[crystball] 10/10/2018 11:44

LaValmy, on page 3 under point 2., it says bidders 'should' have completed within the last 7 years.........

Then on page 39 the word 'must' rather than 'should' is used. Do we take it to mean 'should' which is not the same as 'must'?

If it really does mean 'must' then an explanation of how SRT qualifies and gets around this is needed.

I think we have to simply trust Simon that all bases are covered and everything is going to work out as planned.

We will not have too long to wait to find out!

[muckshifter] 10/10/2018 10:53

Thanks eagle eye, I went back after goodapple said it's working fine and - it was. No idea why it wouldn't earlier, but thanks anyway.

[eagle eye] 10/10/2018 10:36

muckshifter
Alternative link to SRT's webcasts:

[lavalmy] 10/10/2018 10:34

I am not sure about the timing - ST did say 35 days for the bidding period, if memory serves, and that seems to have been shortened considerably to 21 days, maybe because the BFAR faffed around. After that, there is the notice to proceed/contract paperwork to be signed etc, maybe two weeks? I can't make out the work load as described in the four annexes by year (all on the BFAR site) as they are too small, but the financial details seem to be payment of some

£700k 2018
£9.4 million 2019
£15.6 million 2020
£3.7 milion 2021

which all adds up to £29.4 million. How SRT can show that their largest contract to date is at least half of that will probably remain a mystery, unless they sign something pdq with Kuwait/Bahrain. I am sure they have that angle covered. The figures above are for BFAR's payments to SRT per calendar year and probably will not coincide with revenue recognition by SRT which would probably be earlier than that, as well as having a March year end. Finncap or SRT will no doubt be issuing guidance on that when the thing is signed.

All good stuff.