No we don't unfortunately. Although they may be well connected, that doesn't seem to speed up the sales/contracting process.
For Indonesia once the UKEF insuranace is out of the way, the broker says 'the time to revenue recognition is expected to be short (ie not several weeks)' so call it two weeks after delivery. It is Santander that pays once the invoice is approved. So considering that, I reckon that they are being very prudent in the forecast for the position at the new year-end. All £55 million of the recognised revenue is assumed still to be receivable. I would think that they would get a fair chunk converted to cash by then. |
.."The in-country partner gets paid when SRT gets paid as usual..."
If the local partner is a serious business (one hopes SRT has chosen well!), it'll be motivated to lobby for prompt payment...and have the connections to help move things along.
As a matter of interest, do we know who SRT's partners are - in Bahrain, Indonesia and Philippines ?
TIA |
Thanks
The debt profile causes indigestion for auditors and going concern-mostly falling within 12 months so in short term liabilities in BS.Extending the year end kicks that conversation out and hopefully disappears |
For a better informed and less prejudiced view, I recommend the latest broker's note.
The in-country partner gets paid when SRT gets paid as usual. |
I wonder whether SRT has tapped in to the full range of facilities that UKEF offers?
They seem to have a number of facilities that are relevant to SRT's situation :
With its British ISA, HMG seems keen at the moment to encourage 'patriotic' investment, maybe it could do a bit more of its own?
'Asking for a friend'...
GLA |
Cash burn 1H excluding financing was £4.46m (ignoring the minor balance sheet movements)
So around £0.75m/month circa £9m/annum (ex systems income/costs)
Also worth noting that other than provision of software (already expensed), systems cash expenditure will usually be incurred well before the cash income (3-6 months+?)
Also given the state of the balance sheet and the amount of debt repayable in the next 12 months it is likely that the in country contractors will be seeking payment as work progresses or in advance which makes the cashflow situation even worse (excluding software) It's all uncertain and on a knife edge again!
Any systems contract announcement or UKEF positive news will obviously help the share price but the working capital requirements will increase significantly for in country work etc. It's going to be an interesting year again!
GL DJT
dyor all imo etc. etc. |
Loan note update dyor
Loan notes due for repayment in next 2 years
June 2024 - £0.415m 8%
November 2024 - £2.715m 12%! New issue 2023?
December 2024 £2.14m 9%
March 2025 - £2.125m 9%
March 2025 - £0.415m 9%
April 2025 - £0.445m 8%
March 2026 - £0.49m 10%
Total £8.745m mostly due in the next 12 months if not rolled
Latest issue at 12%/annum !
Bank loan from Sep 2023 £2.0m Less any repayments in 2H
Total loans £10.745*
*dyor this might be slightly out as not all loan notes quoted in the past and no detail on bank loan repayment timetable yet. Should be close enough though |
Some of us have been invested a lot longer than you Yump-and I wasn’t aware this was a shrine to the ever growing VSP |
I’d like to thank DJ trading for sparing the time, while clearly not invested, to dig around to find a potential risk that nobody has mentioned recently, although known already.
It was unfair of me to just highlight the first post RNS chasers. I hope DJT didn’t feel too left out. |
.."I wonder if he has been invited to meet President Marcos?.."
I believe that Simon acknowledged in a low key way at the last Open Day that they'd had a meeting. Not clear whether it was in a line-up or a tete-a -tete.
AIUI |
Lav has guided us to a very interesting article about the Philippines Coast Guard (PCG), which mentions substantial investments. There has been talk of a PCG contract for 1 billion US dollars, spread over ten years. Is this part of what Lav’s article refers to? Is this what the recent RNS refers to? Perhaps UKEF would underwrite the finances, perhaps with SRT delivering over a shorter period with payment spread over ten years. I suspect that ST spends a great deal of time in the Philippines. I wonder if he has been invited to meet President Marcos? |
Interesting how defence has overtaken fishing in these reports. |
Lav. We are grateful for your research. |
Thanks, La Valmy !
.."UK ventures
Earlier last week, Teodoro [Defence Minister] met with Richard Graham, the UK Prime Minister’s trade envoy, and their discussions included “the South China Sea, and potential avenues for collaboration in defense and investment,” under a memorandum of understanding on defense cooperation signed in January by Manila and London.
Teodoro and Graham “expressed interest in exploring joint ventures with British investors and other forms of cooperation to support” the revised AFP modernization program..." etc.
Let's hope, meanwhile, that the UKEF paperwork for Indonesia is indeed "all very close to being completed – hopefully this month or just the other side."
GLA and ATB |
"London Stock Exchange would have needed sight of detailed correspondence to authorise the change of year end".
NUTS. LSE has no authority in this matter what so ever. It is solely within the remit of the directors - possibly after a gentle sounding of major shareholders who would have to be brought inside and excluded from trading until made public - However whether they did is a moot point. |
Two trillion PHP is about £28 billion. |
As I say CM I admire your belief and I don’t disagree on ST-without him, there is no SRT
It’s difficult to make the claims about global player with a turnover around the same as a supermarket petrol station however-and we don’t know what it is for the last 12 months because the goalposts have been moved.
I had convinced myself that the 24 numbers were firm-the recent fundraise must have kicked the tyres in this front,so let’s hope it is a genuine delay
DJ is going to post more analysis this weekend-should be interesting |
 I readily recognise that SRT was a minnow on the world stage, dismissed by CLS and others. However, it has won through and now has global stature and cash in the bank.The first Country to commit to SRT was Bahrain, which must have required Simon's considerable skills. This became the reference point for various countries following on. The Philippines is well on board as is the major M E Country, where we are awaiting the follow on contracts. Finance has always been a problem but this is now under control. Read the recent brokers report, as outlined by LAV. SRT now has a signed contract with Indonesia where UKEF and Indonesia MOF are deciding the last wording on the contract.
Yes SRT was a minnow but now it is a company with a growing track record which is a reference point for all of those countries with an EEZ which need a system.
None of this would have happened without Simon Tucker and supportive management and shareholders.
I look forward to Simon receiving his share awards when the share price reaches the anticipated vesting price. |
A thing that struck me about the RNS was the detail about when they would be issuing statements in the future, particularly that the 15 months ending this June would be out in October as opposed to by December in years thereafter. I am certain that there is no legal requirement for this.
Whatever the financial ratios required to bid on these contracts are, they are based on the last published accounts and it seems to me that they want the June 2024 accounts out so as to be used for this. The contrast between March 2023 and the projected position June 2024 is stark, gross debt of £8mn supported by equity of £10.3mn compared to gross debt of £13.6mn with £31.6mn equity. Had they not shifted the accounting period, the 2024 ratios would be in the ballpark of 2023.
Most countries do have financial strength criteria for bidding, often including a haircut to equity for other projects being undertaked by the entity, but that has not hampered SRT to date despite the state of its balance sheet which might generously be described as parlous. So where is this 'one specific jurisdiction we must meet certain minimum financial ratio criteria related to the size of the target new project in order to bid and contract'? Indonesia dosn't seem to bother and any complaints by competitors about contract awards in the ME are likely to be counter-productive.
The one place where SRT is likely to come under scrutiny is the Philippines. The complaint to the Ombudsman about the BFAR contract does not seem to have reached any conclusion but a valid criticism of the award would have been the financial condition of the winning bidder. I assume that the adherence to the criteria is precisely to avoid any complaints by rivals which might gum up the smooth execution of these projects.
The broker's note is confusing about what is in the 2025 forecast, as they have not updated the narrative on the Fisheries 1 and CG3 contracts in the pipeline. Only £8mn is expected from the BFAR whereas £30mn is included from the PCG. Marcos has approved the revised AFP modernization programme called Re-Horizon 3 which is linked to the PCG modernization programme. I expect that these CG3 contracts are currently making their way through the budget process with publication of that in the summer and, assuming congressional approval in the autumn as usual, tendering can commence prior to the new financial year. That of course fits nicely with the publication of 2024 accounts. We should be able to see what is on the cards before the fourth Monday of July when the state of the nation address is due, as the draft budget has to be done by then, if not in press reports before then. |
Hi Countryman5
In your 0743 today you say, inter alia, .."A vast amount of kit is waiting at HQ to allow the speedy delivery of these first milestones...".
What is the basis for this statement, pls?
As Lenin is supposed to have said ' Trust is good, but checking is better' ;->
TIA |
Lav is spot on by highlighting the ability of SRT to generate cash and pay down debt. The systems business generates about 25% pbt. The transceivers currently covers about 60% of the £9 million overheads. if Nexus and DAS deliver the profit from systems will go straight to the bottom line.
The brokers note mentions again the £1.4 billion validated sales pipeline and most people dismiss this as fantasy. The NOMAD would not be allowed to print this without seeing evidence of discussions supporting this figure. There is no certainty that these discussions will lead to contracts and there is no certainty that SRT will win these contracts. There is one coastguard contract where $1billion is mentioned over 10 years.
if only £1 billion of contracts are won in the next few years this represents a lot of reward for the company.
RE DJT above, Simon is merely stating the obvious,nothing is signed until it is signed.Read the last sentence. |
You can’t value FOMO mate
Today marked the day when contracts aren’t announced just before the year end anymore.It doesn’t wash after the latest cash raise-something I pointed to months ago.
To be honest, I’m surprised the market reacted the way it has-moving the year end to disguise a huge profit warning should be a reason to punish but that’s FOMO
I said earlier-it’s time to put the company up for sale as the public arena clearly offers very little anymore |
Here's SRT's revenue and EPS progress since 2012. All figures are in millions of Pounds for 12 months to the 31st of March of the stated year. I defer to others for comment.
2012 6.2
2013 10 1.3p
2014 6.1 (1.3p)
2015 8.5 0.0p
2016 10.7 0.34p
2017 11 1.34p
2018 5.3 (4.09p)
2019 20.56 2.43p
2020 18.9 (3.93p)
2021 8.3 (3.13p)
2022 8.2 (3.53p)
2023 30.5 0.04p
Post edited to add EPS figures. |
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