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This marine tech company is set for a re-rating - Investors' Chronicle
https://www.investorschronicle.co.uk/ideas/2023/03/23/this-marine-tech-company-is-set-for-a-re-rating/
The usual jam tomorrow from Tucker. Been the same for 10 years. He will get there one day.
Today's RNS is Good News - OK it starts off saying this year's turnover & profits will be below expectations because of project milestone delays (so the money will come in just a bit later) But the Letter of intent for a £145m 2 year project is excellent. Bear in mind an annual turnover of 20m+ is very rare for them. Also it will mean for the first time for a long time, if ever, they will have 2 large projects on the go at the same time.
And when there is a realistic pipeline in the billions, and the transceivers business is almost large enough to support the business without any contract income, things are looking good!
I wonder if it's time to open my jar of jam!
Well as I recall the broker's target for FY was +£6.8M, and FY has three weeks to go.
We need Management to poke their head out. They seem very good. This is a Company working on Govt contracts and the process is slow. Once you are in though the revenue streams recur.
We are still at a very nascent stage and our valuation as we come down becomes even more compelling as long as we hit targets.
From SRT's website:
"SRT’s S-MDA product, fuses and filters data from multiple satellite sources to provide a single optimal data stream to supplement terrestrial sensor coverage"
Hi Sam - yes very slow! I went to the September '21 AGM and there were 2 close contracts. One was the Saudi one that is currently being expedited and the other is still to come!
Hi goodapple, We do monitoring of course but usually in coastal waters that are quite small in relation to the high seas and usually with quite a bit of kit such as radar towers that have limited usage. My guess is that to monitor international waters would need satellites as a primary method and possibly a bespoke array. The bigger defense companies might be better placed?
The new deals seem to be VERY slow in coming. Share price steadily falling back as a result From a previous life I know how difficult it can be to bring deals that are close 'over the line' in the Middle and Far East. I hope the CEO has not hyped the opportunities too much with resultant expectations.
This raises the general profile of the High Seas issues. Amongst other measures there will be a large number of 'protected areas' established. These will need to be monitored. All a long way down the road as these agreements will need to be ratified by individual nations. But as ST often says, the seas need to be monitored for many reasons. SRT do monitoring.
Hi goodapple, not to sure how SRT gain from this?
https://www.reuters.com/world/philippines-grants-us-greater-access-bases-amid-china-concerns-2023-02-02/
Can't hurt the mood music....and I imagine will give the various US defense contractors a chance to look at what SRT's platform can do.....
GLA
I'm with you Hardboy. Simon is 100% as open as he can be. The French connection probably dates back to a contract some 6/7 years ago when we were awarded a contract (around £70 Mill) from a French contractor to the Philippines. When the French government, who were the fund providers, realised it was an English company who got the contract they cancelled the funding!
We then negotiated directly with the Philippines. This is our business model. We always negotiate directly with the Government concerned. Not to sure what the problem actually is?
Didn't bother reading the article - too many things I had to tick before I had access to it - got very bor3ed and angered.
You may not trust AIM companies as a whole, but this one is superb at shareholder involvement. I've had cause to write to the company with queries on a number of occasion, and ALWAYS Simon replies personally within an hour addressing every point and often adding far more detail. I have never held shares in a company where I feel more informed.
Go to an AGM (assuming you are a shareholder) and see how they treat you and what they tell you.
I came across this which is a bit unnerving, though the article is a couple of weeks old. I don't trust AIM companies to keep us well informed. https://newsinfo.inquirer.net/1714214/vessel-monitoring-key-to-fight-vs-plunder-of-ph-seas-faces-new-problem
Hi stick. The short answer is none! We have already sold 3 complete Domain systems. There is obviously various tweaks to both software and hardware but these are just ongoing costs as would be expected. We've been selling the Transponder kit for many many years and so there are tweaks there also. The new Nexus project development cost (some 3 Mill I think) were spread out over the last 2/3 years and it is now readyish to rock. Now we have hit profits there will be no problems. Which brings me back to two new domain systems to underpin the next financial year - oh yes we do need those!
Hi Truro, interested in your comments. But in a way they do raise more questions about how much cash is required in developing this business. To be honest I am buying ideas that i think hold water and in my mind there is no doubt we need globally more oversight in the oceans. Undoubtedly a huge opportunity but developing business always costs a lot more than one expects. My post was really asking if anyone has any transparency on the question of how much capital will be needed?
It all depends on timing! Last January we started a $40 Mill contract which has been accelerated and should complete within some 18 months. This provides a good base for this years accounts. We also signed a small contract to complete by March and this is supposed to be the start of a lot of similar small contracts. The transceiver business can sell as much as the shortage of 'chips' allows the company to make and the order book is growing.
What we really need is a couple of Domain contracts to anchor next years accounts. The chip shortage will apparently ease as we head into the next financial year. So with the back order book growing and Nexus on the horizon the transceiver business could be set for a record year. And don't forget previous Domain customers often look for expansions and upgrades.
There is a contract valued at 160 Mill - now that would be a bit of fun!
I continue to try and understand if they will need a fund raise. Really like their prospects but to be fair they have promised for a long time. They seem to have about £6m in cash and last 2 years have spent 5£m to £6m a year. Shares in issue have increased by 20% since 2020. There is some serious dilution going on. If the orders arrive and get delivered this shouldn't matter but if there is more disappointment I wonder if funders would lose faith requiring a deeply discounted raise. If that was the case now would be a good time to raise whilst sp strong. Like many jam tomorrow stocks share holders equity has been decreasing for a few years. I continue to be bullish but in a world with diminishing funds as the Fed calls in cash it isn't without risks.
Article in the Sunday Times said that the Pound has fallen some 10-12% against the Dollar. As we invoice in Dollars this is a major plus for us. We will be paying more for components and manufacturing but will really gain on our margins. At long last something in our favor!
When I've exercised options I've only paid tax ( sale price minus option price) if I sold the at a profit and was over my CGT allowance. Mind you this was from a different source - SAYE schemes.
A supernumerary has pointed out elsewhere ..Surely the salient fact is that he [Hurd] doesn't seem to be selling any to cover his tax bill, which is the usual procedure?
I've spoken to Hurd at an AGM and he seems a practical kind of guy - as you would expect of course. If we sign one contract before March and one in the first quarter of the next financial year and add in the transponder revenues then that's the next financial years revenue sorted! Not many companies have that visibility.
Late RNS suggests CFO agrees with you !
.."Richard Hurd, Chief Financial Officer of the Company exercised share options over a total of 500,000 ordinary shares of 0.1p each in the Company ("Ordinary Shares") at a strike price of 20p each. These share options were due to expire on December 18, 2022, being 10 years from the grant date.
Following this acquisition, Mr. Hurd is interested in 600,000 Ordinary Shares, representing approximately 0.3 per cent of the Company's issued share capital."
£100k is probably a material outlay from the CFO and is usually a good sign : 'follow the money'....
Exercise of zero cost options is tokenism ; Hurd has actually put more of his financial eggs in the SRT basket.
;->
Hi Hardboy, I think we are on the edge of great things and while you're right re the timing of milestone payments this will become standard fare as new contracts are signed.
There were three things holding us back. 1. Is the various governmental bureaucratic delays t 2 Was the Covid delays which compounded the governmental delays. However both have combined to create a backlog of approaching contracts. 3. The 'chip' delays which, although we have increased transponder revenue, has in fact also created a 'bonus' backlog order book. Once the 'chip' shortages decline we will have increased order book income plus the new Nexus.
The good news is that this years revenue to March is in and we have some 15 months to build next years revenue. We only need one new contract before March to improve the SP. The current MC is 85 Mill and the potential in the VSP is far greater than that. Buying and selling is all about timing and if I'm right below 50P will seem a snip in 12 months!