Srt Marine Systems Share Discussion Threads

[yumyum] 09/4/2021 10:32

This clearer explanation of forthcoming contracts ties in with the latest SRT webcast where CEO Simon Tucker really does sound confident.

''How do I see cashflow for the next couple of years?...depends exactly on the timing of the contracts....I would hazard a guess....well it's not a guess....I am pretty...well I know what the cash flow is really...er...um...very positive, enabling us to repay all our debts...build up our reserves and start delivering dividends''

£1 a share by the end of September this year ?

[alter ego] 09/4/2021 10:27

How long? If I knew the answer I could be rich but I do know the need for these systems hasn't gone away and the contracts haven't been awarded to another party. Covid has badly disrupted normality and changed many government priorities so it should be no surprise that SRT has suffered delays. Vaccinations are helping restore more normality but every country is different so you can't make blanket assumptions. ST is the only one with enough knowledge who is in a position to give an opinion. You either trust him or you don't. Anyone who doesn't is probably better off taking their money off the table unless they are a gambler.

[pinkfoot2] 09/4/2021 10:12

Alter-how long mate?How long?These contracts have been around a long time.I’m not denying it’s difficult

I’m with FFT on revenue recognition-needs to be consistent and backed up with cash

SP clearly sees the potential however!

[pinkfoot2] 09/4/2021 10:12

Alter-how long mate?How long?These contracts have been around a long time.I’m not denying it’s difficult

I’m with FFT on revenue recognition-needs to be consistent and backed up with cash

SP clearly sees the potential however!

[alter ego] 09/4/2021 09:10

pinkfoot2 says
....but it cant sign contracts because of Covid.Is it that difficult?

Well, clearly you seem to think it's just a case of putting pen to paper, even remotely. If that was all that was involved then it would be simple.

But it's not that simple. As Simon has said on numerous occasions, you are dealing with governments and their administrative processes and people. In some cases multiple agencies are each required to review and approve proposed contracts. So in addition to the painstaking process of negotiating the details of a contract, someone, maybe many someones will want to read and check it all before giving approval. Our own civil service can be tediously slow to make something happen so why expect foreign governments to be swift?

Then we have the question of budget. No point signing the contract if there's no budget. Another bunch of people will need to understand what will be required to pay for the contract. Laws will need to be designed approved and passed to enforce new rules. No doubt there's a good deal of arguing about who wields the power and a few turf wars.
All of this before you even start to think about who needs to be trained, who will handle the physical implementation, construction and oversee the project.

SRT will have done everything they can to provide a contract that offers what the client needs to achieve what the client wants but it doesn't have any power to make people speed up their processes if they are inclined to take their time. Covid just adds to the difficulties locally.

[techno20] 09/4/2021 08:57

Great post Countryman. Very positive report out from Finncap this morning. Keeping the faith for another year!

[fft] 09/4/2021 08:55

It looks to me that when the contract was signed, most of the revenue was recognised then. Look at the full year accounts issued Mid 2019. Trade receivables is at 18m. i.e. the revenue has been reported in the P and L, but the cash hasnt been received. The accounts issued mid 2020 only show a small decrease in trade receivables.

All that has happened this year is that the revenue that was in the P and L back in 2018/19 has finally been paid. Thats why there is no 'revenue' from the all the cash that has arrived. C5 method, would, if i fully understood it (!) be double counting as the 13m has already been recognised.

SRT revenue recognition policy is fairly useless and over the last 10 years there have a number of occasions where all the revenue from a contract signed less than a week before the end of year has been fully recognised - even though only a very small amount has been delivered. It really should be recognised as delivered.

[lfc4ever] 09/4/2021 08:46

sensible post countryman.

if you look at the figures for y/e 3/2021 themselves, you roll your eyes, see same old, same old and probably sell and chalk it up to experience.

if you look at the projections, you might roll your eyes even more, see same old, same old and sell.

but- qualitatively, this feels different to me. this is not unsubstantiated guff about market size and validated pipelines. this is saying, we have 4 contracts, worth £71million, whcih we expect to commence in the next 6 months, and a further contrcat, worth £14 in the 6 months after that.

it would be outrageous if they were to publish that without strong grounds for really believing it to be true.

nothing is certain of course, but it feels to me that the 0830 this morning could be the last time we ever venture under 30p

[2vdm] 09/4/2021 08:44

Thanks Countryman, that makes sense.

[pinkfoot2] 09/4/2021 08:35

’You could argue the company broke even’It didn’t mate.

It seems the company can design things, make things, and forecast things during Covid-but it cant sign contracts because of Covid.Is it that difficult?

As for cash, we have been here several times with the historic mismatch between revenue recognised but no cash received.

Always depends on whether you are half full or half empty of course but these figures are not great

[fredfishcake] 09/4/2021 08:30

I'm always foxed by accounting standards as to when cash is recognised. Are they saying that the accounts recognised nothing from the Philippines for the past year, but they've physically paid £13 million into SRT's account, but it's not reflected in the figures???

"Five worth £85 million are of primary short-term focus for us given customer guidance regarding their contracting processing status." I'd read that as saying that the contracts haven't been signed yet. As usual, Simon is supremely confident that they're coming, it's just a question of whether you have faith in his confidence. If you do, the upcoming year could be very good. I'm still invested and hopeful, but the constant delays are starting to get worrying....

[countryman5] 09/4/2021 08:21

The headline figures look terrible, but what is the real story? There is £13 million from systems business received in cash but nothing declared as revenue. This anomaly is based on the initial BFAR contract which was to be funded by the French Government but was stopped when the contract was awarded to a UK company, instead of French CLS. The money the had to come from Philippine budgets. The contract was underpinned by two sets of milestones. Delivery and payment, The payment milestones were done on time periods, to match with budget availability. The delivery milestones were based on actual completed stages. When the contract was signed it was anticipated that the payment milestones would lag delivery. However, because of Covid the payment milestones have been ahead of delivery.
The Company used to need about £10 million of turnover, at about 45% margin , to cover overheads. Because the overheads have grown in recent years to underpin the systems business, it now requires about £20 million of turnover. This last year there was £8 million from transceivers and £13 million of cash from systems. You could argue that the company broke even last year.
Despite Covid, the systems business managed the same T/O of last year. I am expecting (Hoping for) 20 to 25% growth. ATON sales should be motoring (think Suez canal), a lot of the initial Class A's need replacing and increasingly countries are mandating boats over a certain size to have AIS. I believe Canada might be in that category.
Turnover this year?
I am assuming £10 million from transceivers.
The BFAR contract will be completed this year, which will allow the £13 million of undeclared cash to be recognised plus the further £5.7 as identified in this statement. That is £28 million, without anything from the £125 million which is identified in the statement.
Can we believe the figures in the statement?
At the time of writing those figures must be true, because they will have been scrutinised by the Nomad, the bank and also the Company solicitor.
It is interesting to note that the Bank has taken on the CBILS loan. The company has no assets and banks don't like lending to companies, without fixed assets that can be sold. The bank must have seen the contract documents before agreeing to the loan extension.
If we accept the figures in the statement as being true, we are talking about £125 million of extra revenue over the next 24 months.
If we assume £50 million of this in the current year, this would make T/O of £78 million this year. After servicing overheads, this could provide for a profit of £25 million!!!!!!!!!
My concern was that the company might run out of cash. This is not an issue.
A cynical soul might suggest that the bad headline figures today allow for Directors and shareholders in the know, to have a buying opportunity, assuming Directors are allowed to buy. Don't be surprised to see Director buying today.
Simon Thompson of the Investors Chronicle likes this one. I will be interested to see what he has to say next Tuesday or Friday.

[pinkfoot2] 09/4/2021 07:57

Whichever we you present it’s a whopping loss with lots of jam on top.Disappointing and I’m surprised they can’t get contracts signed remotely

[amt] 09/4/2021 07:56

Yes if the stuff is due for delivery why can't they just state contracts have been signed. It looks great but we have been here before.

[ppmm] 09/4/2021 07:40

They are working on the design and specification with the clients, No formally signed contracts it seems but as good as such in my books.

[pugugly] 09/4/2021 07:34

Can anyone put this into plain Englsih - For instance how much of the quote below is FIRM and how much still shbject to finalisation and therefore possibly not proceed- I am CONFUSED.



"Covid lockdowns have prevented system customers from moving forward with new contracts during the year, resulting in a lost year for SRT financially. We now have seven new system contracts worth a total of £125 million which are pending commencement as the respective countries relax restrictions and contracting processes catchup and normalise. Five worth £85 million are of primary short-term focus for us given customer guidance regarding their contracting processing status. These systems are vitally important to our customers and we maintain very close liaison with them whilst we both wait for the relevant government contracting agencies to normalise operations.

[piedro] 03/4/2021 11:08

Philippines - what can they do?

"Illegal Structures" Spotted at Contested S. China Sea Reefs

[pinkfoot2] 31/3/2021 22:15

Well it looks like the Middle East contract that was spanning the last year end, and triggered the disappointing numbers, has now spanned this one too-I’m sure we would have heard by now.

So we must be relying on the Philippines to deliver revenue and cash.

[alter ego] 30/3/2021 22:56

Not to overlook an old pot of jam. Mine’s still awaiting opening. Simon says shelf life is good. Better be.

[goodapple] 30/3/2021 21:23

In the last podcast Mr T alluded a couple of times to the contents of his briefcase, and that they would answer all our questions about progress and number of contracts etc.
In darker moments I sometimes wonder about the contents of that briefcase, and picture an old copy of Viz and a half eaten Greggs pasty.
But then optimism returns and I look forward to the promised land again.
Hey Ho ..... another H2 ends tomorrow.

[hjb1] 30/3/2021 21:16

There is always an IF and BUT!! Never happens. Never mind there is always that £500 zillion VSP to keep us happy. Must be short of cash now too.

[countryman5] 30/3/2021 20:56

Philippines accuses China of incursion. 200 militia boats were spotted near a disputed reef in the South China Sea. The coastguard detected the boats. The Defense Secretary, Delfin Lorenza said. 'We call on the Chinese to stop this incursion and immediately recall these boats violating our maritime rights and encroaching into our sovereign territory. This is clear provocative action of militarising the area'.
It appears that China is now prepared to take on all Countries and her neighbours are being bullied.
My understanding is that the PCG has been looking to buy a SRT system, when funds permit. Covid is putting pressure on numerous budgets but how important is the security threat? Another unknown is whether UK foreign aid is being directed at schemes that give the Uk some payback. Indonesia, Vietnam, Thailand and Cambodia are all in the same proverbial boat. They are being bullied by China which is happy to steal other countries' fish. There is an enormous market for SRT if the money can be found.

[homeboy] 30/3/2021 09:04

end of year about now isn't it, is the imminent still imminent or does it mean keep the shareholders on a hook cause it could be another year or five even,
their cost base must be going through the roof, i don't think this years numbers will look anything except dire,

didn't they used to eek out a profit on closer to 10m revenue at one time, i notice it's now closer to 20m just to get to breakeven,
that debt pile must be creeping up too,

this philippine contract revenue has almost come and gone, consumed by the wage bill and nought to show for shareholders, so in effect, they're starting from scratch all over and shareholders are still waiting,
lumpy contacts don't make for good cash flow do they, lumpy contracts that are not very imminent do not make for a good business model,

this company raises money more regularly than it does in signing contracts, tells you something don't it, fair bit of shareholder dilution here as well over the years,

will this year be 'the year'? wasn't last year supposed to be 'the year', or was it the year before that, all very imminent or maybe just a business that never really gets anywhere

[pinkfoot2] 29/3/2021 22:57

How about a contract signing operative?