Srt Marine Systems Share Discussion Threads

[dj trading] 09/4/2018 07:23

"LaValmy 9 Apr '18 - 06:51 - 6673 of 6673
DJ As you know the £250k 'commission' was an arrangement fee for the whole loan note programme of £10 million of up to three year loan notes."

LaValmy - I didn't know that nor can I see where it says that in either the Loan Note RNS or the 1H results. All I can see is the entry "Net proceeds from debt financing £1750k in 1H results and nothing in the notes or commentary to explain the £250k cost so I assumed the charge relates to the first issue of £2m only.
(Edit 21st April - Having revisited the accounts I think the £250k is actually a partial repayment of the bank loan that has been netted off the loan note issue of £2m so loan note interest £570k over 3 years. Any arrangement fees or other costs might be included in admin costs so not visible)

[lavalmy] 09/4/2018 06:51

DJ

As you know the £250k 'commission' was an arrangement fee for the whole loan note programme of £10 million of up to three year loan notes. When the programme is scheduled to end is unknown, but presumably a minimum of three years from December 2017. That was when the original £2 million was converted to 8% three year notes, which seems to have escaped your attention somehow.

The reason that they have issued three month money is presumably no more sinister than they need it for three months, but not necessarily longer. In June, I expect that they will have a much clearer view on the working capital requirements of all four contracts and the satellite programme, and, if required, issue more notes, change the second series into long-term notes or whatever they think best suits them.

As to Barclays, half was to have been repaid last FY, half this. The new loan note programme has covenants which presumably rule out or make impracticable a new overdraft facility.

[hjb1] 08/4/2018 23:02

but all is well, Mr Tucker said he was 'happy' where the company is on the last webcast, so must be true eh? lmao!
To think some here still reckon that rev will hit £15m, wow!!
DJ, must be the understatement of the year;

'Having watched Simon in action for the past few years I have learnt that it is always best to assume the worst case scenario'.

[dj trading] 08/4/2018 22:25

Re no profit warning RNS = no profit warning - that one or two have said above

It doesn't work like that - If SRT had a reasonable expectation of signing a contract before YE they could perhaps have hit the profit forecast by accruing/invoicing licence fees on day one of the contract as last year's 30/3/17 ME contract so no need to RNS before YE.

That hasn't happened this year but they then need time to prepare outline accounts before issuing a TS so I'm not surprised nothing issued yet but still believe Rev will be just £7m with a loss of around £3m or £4.5m loss inc exceptional

All imo and I note La Valmy and others assume they will meet forecasts of Rev £15m and profit of £1.15m. Having watched Simon in action for the past few years I have learnt that it is always best to assume the worst case scenario.

No Market reaction to the further loan note issue but presumably most won't know as not RNSd and only posted here.

The short term cash requirement doesn't suggest all is well to me!

[extrader] 08/4/2018 22:08

Hi DJTrading,

Sounds grim ! IIRC, you're the accountant : where would the SRT Board stand from a 'going concern' perspective, under the scenario you postulate ?

TIA

[dj trading] 08/4/2018 22:05

Re second Wonga loan - why does anyone issue loan notes for just 3 months?!
Presumably cash needed urgently (repay bank £0.5m?) and/or just run out of cash. (but why just a 3 month issue?!)

The commission on the first Wonga loan appears to have been £250k! (see 1H Cash statement). Plus a massive £190k/annum interest charge. (total bill £830k to borrow just £2m over 3 years!!!!)
(Edit 21st April - Having revisited the accounts I think the £250k is actually a partial repayment of the bank loan that has been netted off the loan note issue of £2m so loan note interest £570k over 3 years. Any arrangement fees or other costs might be included in admin costs so not visible)

How much commission on a 3 month Wonga loan? (we will find out in 3 months!)

It is interesting to note that Barclays are presumably unwilling to make further loans or extend the repayment date on the existing loan even with Wonga style commissions and interest rates on offer for just a 3 month term. (And Barclays have security over all assets so less/zero risk)

So what happens when £1.15m repayment due on 21 June 2018!? Will they have received cash from ME contract (high risk and how long will it last? - looks like about £2.5m still due see 1H Receivables) or will they have arranged alternative funding or a placing?

All imo but doesn't look good to me
Dave

[lavalmy] 06/4/2018 14:40

FWIW

I gather that the increased scope/cost threshold in the Philippines which would require a fresh NEDA board approval is 10%, or for the PHILO 2 some €2.8 mn. This would be a minimum. If, as they claim, the increase is to be spent on more transponders and satellite data ...

[crystball] 06/4/2018 10:45

Interesting!

[goodapple] 06/4/2018 10:28

Mr & Mrs Laing have had the wallet out again. Another 700,000 shares. Nice.

[alter ego] 06/4/2018 10:28

The Laings have added another chunk to their holding. Now over 6%. previously about 5.48%

[goodapple] 05/4/2018 18:15

"A new discovery off the coast of Bahrain is estimated to contain at least 80 billion barrels of tight oil, the kingdom’s biggest ever find, Bahrain’s oil minister said."

That should help to pay for the full upgrades!

[lavalmy] 05/4/2018 14:55

I had seen that new loan note issuance and it is consistent with what I think has been going on.

They had £2 million end H1. Margin from non project business less overheads equals a cash outflow of £1.5-2 million, leaving practically nothing. They have just borrowed £1,150k and like to have £1.5 million or so at the end of each reporting period.

So either they have done no significant project work, in which case they would have warned on the profits and need the £1,150k to keep the lights on

Or they have made up the shortfall of £7-8 million on projects, the make-up of which is yet to be disclosed. The goods shipped to make up that shortfall would have cost £3-4 million and little of that would have come from stock, which is comprised mainly of Class A devices. Hubs, screens etc that they ship at the beginning of MDM contracts would have to have been paid for. The large receivable due from Kuwait (of near £4 million) must have been in fact received, otherwise they couldn't have bought anything to ship. However, if they had received it and not shipped anything then they would not have needed to issue the loan note.

I note that the new note is until 21st June, so presumably they expect to get paid for what they have shipped by then. I would expect them to defer any decision on the satellite program until they have signed definitive contracts to supply satellite data and can figure out how much cash they have coming in versus the outflows for the satellites, working capital for the middle east etc.

[lavalmy] 05/4/2018 11:12

New picture on the site about an Indonesian port authority. At least they are still active there on other stuff and not just waiting for Bakamla.

[philburt] 04/4/2018 14:13

C5 - I certainly took the opportunity to top up (again), if only in a small way. Didn't expect to get the chance at this level again.... :)

[countryman5] 04/4/2018 13:26

We have passed year end and no profit warning / upgrade. The assumption must be that year end will be within plus or minus 10% of market forecast. An update should come next week and next stop for share price 35P?
will some posters be disappointed or have they bought in? Unfortunate for recent sellers.

[lavalmy] 03/4/2018 12:31

Countryman

I'm not too sure whether market expectations is with regard to sales or profits or both? Personally, I would find the revenue numbers generally more relevant.

As for CLS, they won the original Philo 1 contract and shortly thereafter the funding for the Philo 2 contract was agreed by the French, using the same amounts as was in the most recent bidding documents. I really don't know how they figure out these things that far ahead without knowing what exactly will be required and when etc. Lots of things have changed at SRT since then as well, all this bluetooth, smartphone stuff was only a twinkle in Peniket's eye. I suppose they just come up with a back of the envelope figure and work with that.

[yumyum] 03/4/2018 11:56

All rather bizarre.

[crystball] 03/4/2018 11:49

That's my understanding too Countryman5.

[countryman5] 03/4/2018 11:45

LAV.
I note your well researched comments, including satellite specialist CLS of France. I am sure that CLS was hoping to receive Philo 2 fishing contract, especially since the French Gov was providing the loan. Clearly SRT must be part , if not all of the contract because the specification requires SRT input. There has been no news of a CLS contract on their website. I am expecting, as usual, a trading update from SRT in the second week of April. It would appear that profits are within the 10% of market expectations because there has not been a RNS to the contrary.

[lavalmy] 03/4/2018 08:46

DJ

SRT have shipped goods previously before contracts have been signed - what I am suggesting is that they will have done something similar. Quite how they arrange the bookkeeping is anyone's guess and they would only (or at least have only until now) do so if the contracts were expected sufficiently soon as to make it plausible.

What Simon has always been clear about is that, if they were to miss their forecasts, they would have to inform the market immediately. They do not have to issue an RNS if they meet those.

EDIT A further point is that any contract with the Philippines will be between CLS and the Philippines and by the look of the terms will be confidential between the two parties. That leaves some wriggle room in the timing of relations between CLS and SRT.

[dj trading] 03/4/2018 08:37

LaValmy - Nobody (in their right mind) does work without a formal contract and that would require an RNS. Especially if that work amounts to a material revenue contribution as you are suggesting. I'll stick with my theory!

[lavalmy] 03/4/2018 08:11

I think that they are that paranoid about missing that they will have done whatever it takes to meet the numbers, even if that eats into future numbers. I can quite see them agreeing with CLS and the Philippines to start the project (based perhaps on the original scope/cost tender) whilst awaiting formal signing of the increased contract. Something similar with Ecuador perhaps?

[crystball] 03/4/2018 07:59

Time to top up?