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And down it goes again without any explanation - all of May’s optimism wiped out in one day. There was a time when such big moves would elicit a Company comment on trading or geopolitical issues. But I suppose no point these days when so many significant moves are nothing but market manipulation by human and algo traders.

Article in The Times today announcing that America is launching an initiative to counter Chinese AI based marine surveillance systems in the Asia-Pacific region. Hope they know about SRT!

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Over on the other board the headline compilers are obviously projecting next years position - Market Capitalisation at 200.50 trillion!

Are we due an update webcast?

If Cavendish’s projections materialise, that would justify the relatively short term price target of £1.22 projected from Sharecast data.

If we were honest with ourselves I think most of us LTHs always assumed that a software oriented business would deliver much higher net profits, but we were disabused on that score with the YE results. Much was propounded at the time (by us, not Simon) that this was likely the result of front-end loading of costs but, if anything, the picture (and resultant expectation) has worsened.

The concern now is that this is actually a low margin, high overhead business which is unlikely to throw off attractive returns and makes financing deals for new contracts more difficult.

I certainly don’t like the description of ‘possible’ upside from the commencement of Nexus deliveries. This has been a long and protracted product development which I think we assumed would have already absorbed most of the costs. Surely these sales will have a significant effect on Cash flow even if accounting provisions suppress the individual net profit.

Assuming £10m PBT for the FY (which might be a stretch based on the trend) would suggest a PE of around 23 at current SP. Perhap fully valued at present?

Is this the same article first posted by Qd22 on 20th Dec when SP was 77? Certainly had the desired effect!

The next boost should be confirmation of the roll-out of the 5000 Nexus units promised for January.

If I’m reading both the Budget content and the SP rise here correctly, then I presume what investors are expecting is a surge in retirement fund contributions in the long period before Budget plans implementation.

If I’m reading it right we finally have a positive EPS to strike a representative P/E of 105 based on an EPS 0.82p at year-end and today’s SP - a bit on the steep side even in today’s AI/tech stock bubble. So seems a limited upside to SP growth. If the Nexus shipments start in January and, as mentioned in the briefing, most of the costs have already been absorbed, then that perhaps suggests net profit could double this year, but that would still present a P/E of around 50 based just on the current SP.

Posts here have often projected an SP of up to £2-3 but perhaps, in the medium term, that would only be borne of takeover speculation. The cost would be peanuts to any of the big players and their resources would allow faster implementation of the existing and validated pipeline, together with the development of the land and airspace environments mentioned today.

No more ‘exposure’ please - plays havoc with SP!

Presumably an update is due in the next few weeks?

The only announcement which would likely have a positive impact on the SP would be contractual confirmation of a significant part of the theoretically ‘validated’ £1.4B order pipeline. Any product which takes over a year to ‘cross ‘t’s and dot ‘i’s must be seriously questIoned as to its actual viability.

Usual problem, though - it’s one thing to identify potential suspects and the potentially insurmountable one of actually doing something to avoid the damage. Charts already identify cable routes and areas of awareness and even then almost 50% of damage is done by fishing activities. If a ‘hostile actor’ is involved then the only solution is to police and patrol vulnerable areas, which is just not practical. Maritime activity awareness would no doubt identify potential culprits but always after the fact by linking real-time service degradation with real-time monitoring.

Hi Truro - I think you are talking about the sensitivity of individual contract margins rather than overall margins which are of public record from the Company Accounts. The Company achieved a 28% Gross Margin in the 15 months to June’24.

I want to believe that there are profit levels achievable which would justify a much higher SP but these may be a long way off. In the meantime, the SP will be totally dependent on solid news, with it retreating if there is lack thereof. Even the existing, relatively high SP, comes after projecting c.£115m Revenue and c.£10m net Profit. This would equate to a P/E of c.20 based on the current price level and therefore it would seem that there is little upside in the near future unless the Market feels a far higher multiple is justifiable or more contracts are initiated. I’ll say it again - certainly not the sort of margins or price levels I think most of us were expecting based on a £300m+ order book.

Extrader

In response to the webcast notification I did indeed ask Simon if he could explain margins in detail but he chose not to acknowledge my request. Simon did however refer to a query from Cavendish who also appeared to be concerned about margins. Any meaningful explanation appeared to concentrate on ‘jam tomorrow’ when he talked about additional contract margins dropping straight through to the bottom line (fixed overheads now approaching maxing out?).

Might I also make clear that my observation regarding margin levels referred to speculation on this chat room not from the Company itself. I look forward to the detailed Accounts which should provide more insight than the bare results just provided. I will be particularly interested in Gross Margins and the transparency of Overheads breakdown relative to Variables. and if these are simply contract-specific.

I think we’ll all be paying particular attention to the Overheads when the detailed results emerge. The sooner we have a better understanding of the achievable margins the better because these results are well short of the levels mentioned on several occasions.

Unfortunately, this remains a waiting game in terms of trying to extrapolate potential results from the £300k+ contracts forecasted to be completed in what is now less than 2 years. The summary numbers leave more than questions than relevant future guidance. Perhaps Simon will address this during his presentation on Friday. It also looks like we are being prepared for missing yet another Nexus rollout deadline.

Hi Truro - my comment was more about being able to confirm commencement of shipments rather than sales which I presume will not fall in the period anyway. I’m sure Simon would like to report actual release rather than yet another delay.