Member Info for Only1Gibbo

On the flip side you might give credit for the CEO of a £16m mkt cap securing a £500m 20 year contract whilst also keeping the company treading water during a pandemic during which the largest revenue stream (SL) was switched off for 6 months. He also negotiated a similarly superb deal in Iran that would have happened were it not for Trump. I suspect we will see similar sized deals in KSA as he has set up a JV where the other party is headed up by a senior royal. I’m not saying he has never made a mistake, but I think he deserves some credit.

Yrabs, I think there is a huge difference between the two
1. Ferries were not our usual line of business/ knowledge.
2. We were setting up a new business in competition with existing suppliers

Here we know what the pre COVID and current PAX levels are. The Company knows the fee per PAX so it’s really not hard to come up with a sensible forecast. There is no competition. If you fly from one of those 5 airports in the next 20 years, you use WSG services. It’s as simple as that.

Yrabs, I think what you need to remember is that the DRC government have been heavily involved in setting up this contract, so it is in effect ratifying its own decision as I see it. I’m struggling to think of a sensible reason why they would spend at least 18 months negotiating a 20 - 25 year contract to change their minds a couple of weeks later.

Let’s not lose sight of the fact that there is a contract that has been signed by both parties and now just needs ratifying by the government, a standard process apparently.

Ian - I agree I think the market is waiting for ratification. Like AIMing I'm not worried about it. It's like Tema they are getting on with it whilst waiting for the formalities unlike Iran and the Dec '18 African contract (which I think is still a possibility -eventually!) where they didn't do anything post signing.

I think in many ways it would be better to get these new MSCs up and running before another MSC lands unless they can fund it without a share issue. The new banking facilities may certainly help with that particularly if it helps arrange UK export finance facilities. I suspect AIMing is right about KSA being 2022, but BF seems to be moving at pace so that could potentially arrive later this year.

Dodger , DRC has a superb NPV. Multiples of the current Mkt Cap. I think anyone getting in around these levels is going to do very well.

“Based on disclosure by the company and the typical capex and margin structure of these contracts, we believe the DRC contract is conservatively likely worth at least $70m in discounted lifetime value to equity and that is before considering the potential to add cargo screening services on to the deal”

Yes but my point is that a lot of those set up costs will be capitalised and amortised over the life of the asset/project, not expensed immediately.

McDoule - think you have "DRC and Liberia - revenues from these two to fund expenses, so do not expect much profit initially, but less likely to see additional funding to support these two contracts." wrong.

He was taking about capex which will be depreciated over the life of the assets. Arden is forecasting around £5.2m net income next year.

Pre-covid DRC embarking passengers were 1.1m pa. 20 year contract with no break clause and an option to extend 5 years. Contract worth circa $500m over its life. The market has way under-estimated the value of this deal.

Not shares from the placing either, all open market purchases.

Yes we do

Mike that was a 3m+ buy on Friday at 6.2 wasn’t it, not a sell.

Allocations were also significantly scaled back.

Shaml , if you think they managed to blow 2.2m on pre-contract expenses, you’re even dafter than I thought. Care to hazard a guess on what the breakdown of those a expenses might look like?

McDoule, that'll depend on what and where the next project is. Banks like security on their lending, which can be very difficult when the assets are overseas, particularly in emerging markets. As a result that form of funding may not be possible. Vendor financing may be possible too, but again it may depend on where the assets are. Banbury has already been used to secure the Clydesdale facilities. As the business grows and revenues increase from multiple sources, then that may help, but we aren't there yet. It will all depending on the timing of the next deal arriving. Obviously none of us want dilution if it can be avoided, but if is the choice of another one or two £10-20m pa 20 year contracts with some dilution or nothing, I'll take the former.

Good point, I’d forgotten about them Martyn

Martyn - aren’t the Spreadex amounts effectively nominee holdings and hedges against SB positions by PIs. Don’t think I call that an institutional holding.

On contracts such as these, not all of the capital outlay is required at once. So we have enough funding from the last placing and the Clydesdale facilities to get the projects up and running. Future capital outlays can then be met from the revenues from the projects.

Where additional funding may be required is if there is another project (or projects) that are imminent. We know that they are currently setting up a subsidiary in the Far East. That sounds to me that we are expecting an MSC from that direction too in the not too distant future. Then there is KSA too, that has been nearly two years since the JV was set up, so maybe negotiations have progressed on that too. If all the buses arrive together then they will need funding, but that won’t be a bad thing if it is to fund an expanding business , even if it is equity.

Hi Mike, if it is still going ahead I will be there.

When Tema was announced it was envisaged that we would be employing the staff and hence the revenue was expected to be higher. Profit at Tema I suspect is very good given our cost base there.

This deal is top draw. 20 years extendable by another 5. $6m pa based on 50% reduced CV19 passenger numbers. I doubt that funding will be an issue unless another MSC arrives. I doubt all of the kit will be fitted on day 1, so project revenue will most likely be able self fund it. Plus we have cash from the placing to kick it off.

Fingers crossed there are a few more MSCs close behind.

It isn’t a share consolidation - it’s a capital reduction.