SRT Marine Systems plc (SRT) Earnings Call Transcript & Summary

Good afternoon, ladies and gentlemen. Welcome to the SRT Marine Systems plc Interim Results Investor Presentation. [Operator Instructions] The company may not be in a position to answer every question during the meeting itself. However, the company will review all of the questions submitted today and publish responses where it's appropriate to do so. Before we begin, I would like to submit the following poll. And if you could give that your kind attention. I'm sure the company would be most grateful. And I'd now like to hand you over to CEO, Simon Tucker. Good afternoon, sir.

Good afternoon. Thank you for the introduction. Hello, ladies and gentlemen. Thank you for joining. I think some of you will know a little bit about SRT. So I'm sorry if some of this presentation is perhaps repeating what you already know. But for completeness, I'm going to go through it. As was just said, please ask as many questions as you like. I will answer them all. I won't skip any of the questions that you ask. If there's anything that I can't reveal that would make you inside or breaks any of our confidentiality given some of our customers, then I'll just advise at the time. So without further ado, I'm going to crack on. So we're all about solving this problem of global maritime domain awareness. And actually, in reality, once we become used to everybody knowing where everything is on the land, very little is known about the seas and the oceans. And there is very little maritime surveillance and tracking. And I think that's probably become pretty evident to us all when we see on the news about we can't even track rubber boats coming across the small bit of water between France and the U.K. Well, this is prevalent around the world and there's a little bits around small satellite systems and stuff with websites and things like that. But that's sort of commercial standard stuff. There is very little around that is enabling national agencies to gain what is called maritime domain awareness, which is understanding the traffic that is moving around in their marine areas for a variety of reasons and identifying where the problem areas are and in particular in places like Southeast Asia, Middle East, Africa, South America, where you have hundreds of thousands of vessels just to give you a feel for that. Vietnam has -- alone has 62,000 fishing boats. The Philippines has 300,000 fishing boats. Europe in total has 42,000 commercial fishing boats. So hundreds of thousands of boats moving around and they want to understand where the bad guy is so they can actually direct their operations and thwart whatever that might be. We recognized that market some time ago. We recognized that the technology has existed, albeit very disparate to bring maritime domain awareness, and we set out on that path many, many years ago to develop the products and the technologies that enable that to happen and establish ourselves in the market as a leading player. It has taken us a long time to get to where we are today. But today, we are the leader in that world. And we're right at the beginning of that long-term multiyear, multi-decade market. So financial summary. You can see there on the left-hand side of your screen, the graph how we dropped during COVID. We have 2 businesses in our company. The blue one there is our transceivers business and the orange one is our systems business. The transceivers business is about selling black boxes that enable digital navigation, safety of navigation, autonomous navigation and our systems business is about maritime surveillance. During COVID, countries just stopped investing in anything at all other than vaccines and health care as we know. That stopped all revenue of that for 2 years. It didn't stop us developing our products. And now, we're seeing that reengaged and catching up, hence that big leap for this year. We started the first half of this year very well. We did GBP 18.8 million worth of revenue, generated a profit after tax of just over GBP 2 million. And our transceivers business grew nearly 24%. And overall, we grew our revenues 300% as well as increasing our gross profit margin. So it's a good start to the financial year, as I would say, but I think, to quote [ Ronnie ], "you ain't seen nothing yet." So we're an established business, and we're entering our phases of rapid growth. So it's a big market that we're targeting. It's a multibillion dollar market. There are robust demand drivers, which I'll talk about later on, things like security, safety, commercial, so that's efficiency and obviously, environment monitoring. We have the product that fits the market. I'm not sitting here with you today to talk about the products that we need to develop to fit that market. We have them today. Of course, we're continuing to develop them. And on the growth side, we're structured to support that growth. We have over 1,100 in-country partners all around the world. We're able to manufacture tens of thousands of units. We have the people in place to and the local partners in place to actually deliver our systems. So we've built up all of those technologies and products and position in the market over those years to be where we are today. So for those of you that have been perhaps a shareholder for some time, it seems to have taken a long time. But what I'm describing here is moats around our business. If you want to come and compete with us now because suddenly you recognize that market, you need -- you have years and years ahead of you to develop that technology, develop that product, develop that position in the market. Moats around our business, real protection going forward. So the segments of that market that we target specifically are as follows: fisheries. Fisheries is engaged 4 million of the world's 26 million-odd boats are engaged in commercial fishing. Overfishing is a massive problem. It's called IUU, illegal, unregulated, unlicensed fishing. Our systems help countries prevent that. Coast Guard, security. There is a picture of the Bahrain Coast Guard, where they apprehended that little boat coming across from Iran to attack them with loads of Kalashnikovs and things detected by our system that they bought from us 6, 7 years ago. They have a very wide remit to not only people smuggling, drug smuggling, protection of infrastructure. Digital navigation. We saw earlier this year -- sorry, last year, the year after, year before when a single container ship of the 150,000 that go around the world got stuck in the Suez Canal and the effect that, that had. So we're now looking at autonomous navigation, digital navigation and this all comes down to the deployment of digital technology, a thing called AIS, which we are the leader in. And of course, the environment. This supports a lot of tourism. And also it supports what everybody is talking about down in Bali at the moment, saving our environment and protecting the oceans and things from fishermen losing their gear to making sure that boats don't go where they're supposed to go. I mean, I always look at the business that we've gone into as a parallel with air traffic control. In the '60s, this was all done by the military. And then somebody said, well, actually, most of the aircraft in the world that we're monitoring now are civil aviation. So really, we should have a civil aviation, a civil defense, a civil system monitoring and controlling air traffic control. And today, we have NATS in the U.K. And this has happened worldwide. You can't imagine we would want to fly on an aircraft without having air traffic control. And there are 30,000 commercial aircraft worldwide, and that has given birth to a $9 billion a year market. Today, there are 26 million boats, of which 8 million are commercial and there is minimal maritime domain awareness systems. And so that is the market, and those are the segments that we are pursuing. So we've got the products, as we've just said. On the left-hand side there are our digital AIS transceivers, all designed and developed in the U.K. We contract out our manufacturing to Flextronics, which is based in southern Ireland, which is the world's second largest electronics manufacturer. To-date, we've manufactured -- I mean that figure now is out of date, over 360,000 transceivers, representing about 90% so far of the deployed market. And on the right-hand side, you see our integrated MDA system. That is an image of a command center that we will deliver as one of our systems in the Middle East. And essentially, that's what the customer is buying. They're buying the software that sits on all of those fancy screens and desks, which link into sensors, which give them maritime domain awareness. And today, we have GBP 70 million worth of existing contracts that we're part of the way through and a pipeline -- a validated pipeline of contracts worth about GBP 600 million, of which GBP 230 million we hope to be signing in the next -- in this half now, with further opportunities going on after that. Each time we sign an account, their systems are built up with a succession of contracts. So the first contract is always just the start. We have both repeat and recurring revenues. So what do we mean by repeat? Repeat revenues is where we have a customer, let's say, Philippines Fisheries. They've given us their first contract, GBP 32 million to build the start of their fisheries monitoring system. There will be a next contract after that as we expand that to further coverage. The first contract covered 5,000 of their largest fishing boats. They have between 250,000 and 300,000 fishing boats. The next contract that we see coming further down the line in about a year's time will be a multitude times bigger than that, and we'll address more of those fishing boats, and there'll be one after that. So it's a repeat because we have that as an account and we expect to see contracts going forward years and years and years ahead with increasingly larger. Within that repeat revenue, we're selling them a system, and that is made up of sale of our software as well as sale of hardware. So that might be PCs or radar as well as support services such as warranty and support. We then have recurring revenues, which is where we have data sales. So with our systems, you also rely on buying data from satellite systems. Everyone and their dog is putting up satellites. Satellite data is coming down in price because there's so much choice. We buy in that raw data, which is food for specific functionality in our systems. So as those customers then complete their systems, we carry on with long-term agreements of which we're probably a year away from really starting to see meaningful revenues of that on data sales. So our business has 2 divisions: transceivers and systems. So our transceivers division is all about the digitization of navigation, and that's driven by safety, traffic control, navigation safety and efficiency, environment monitoring. We have specialist transceivers that sit on buoys that help with real-time monitoring of the environment, so water quality, emissions, all those sorts of things. And autonomous shipping, which is a big thing. I mean, just as an interesting point here. Europe has 52,000 kilometers of navigable canals over which most of the energy, gas and oil and stuff go on what are called Inland Waterway vessels. And all of those are flying down, going down canals, they need to know when locks are open, when they're closed. Is there enough gap between the water, them and the bridge or is the tide in. All of those things now are being done by putting what are called AIS transponders, which transmit the information in real time to the vessel as well as to the control centers, and then make it the -- and into the autopilot on the vessel. And so you have this continuous real-time exchange of information. And in the marine domain, it has to be direct, you can't go by via a network. And that is a crucial difference between land and the sea. And it's all being done on this technology called AIS, which we first got into about 15 years ago and are now #1. So today, we have the current product range on the left-hand side there, mature products. Different transponders for different types of boats. Just a matter of note, the one with the sort of chart screen on the left-hand side goes on vessels that are over 300 tonnes. Some of the smaller black boxes go on smaller leisure and commercial vessels, be it a Sunseeker or a RIB. The orange one in the back, the sort of tube is what's called a search and rescue transponder, which you would keep in a grab bag in case you are sinking and it transmits to everybody around you that you are in trouble. And basically what it does is it puts a dot on their chart, and they can see exactly where you are and who you are. As I've explained, we distribute all of that through over 1,100 distributors under our own brand, which is em-trak, but we also then supply a lot of OEM manufacturers, so existing marine electronics manufacturers who are seeking to get into AIS or need to have AIS as part of their product portfolio. And most AIS products that you buy or see on the shelf are all derived from little old SRT in Somerset. We, of course, continue to develop our product range, and we have a new product that we've been in -- which we've been developing for the last 2 years called NEXUS, which is the one at the bottom. Those are the NEXUS family have 2 products, the base unit, which is on the right, and then a handheld. And what this does is take us into a new segment. Instead of just data, it's data and voice. And those of you who may know a bit about boats, VHF radio is the thing that's prevalent for communication with boating and use VHF radio for voice communication. AIS is also VHF. What NEXUS does is bring that all together into a single box. Now that in itself is not a new thing, but what is new is the level of convenience it delivers to the boater because what we have managed to do is to enable it to integrate with your mobile phone, which is the main device now that boaters are using for navigation when they're on the boat. They drive to the boat using their mobile phone. And they want to then just link to all their navigation equipment and use the navigation apps that are on their mobile phone. And so what NEXUS does is enable your mobile phone to become your VHF radio. So now you can make normal phone calls as well as boat-to-boat calls in real time using your mobile phone. You can also use that as a private intercom on your boat, also as MOB devices. So it is really a revolution in convenience for maritime communications. It's been a big project of ours. We've invested about GBP 2.5 million to date. And it's now into its test phase, and that will start coming to the market in June of next year. So our transceivers business in the first half grew 24% year-on-year. We expect that to carry on through going forward. We then expect on top of that, to see greater growth around our DAS division, which is all about autonomous shipping and NEXUS, which we'll launch next year. And so we would see that, that business should be growing over the next 2 to 5 years from where it is today, which is probably GBP 11 million, GBP 12 million a year business into a plus GBP 30 million a year business, if not more. So the systems business, obviously, the bit that people get super excited about because it comes with big contracts and things. So our 2 target markets for our systems business are coast guards and national fishing agencies. The real segment that we're looking at is civil defense. It's not military, it's civil defense. And this is an area that's really been overlooked, but actually, this is where the day-to-day action takes place. The coast guards are responsible for protecting the coastal areas, all the critical infrastructure, all the EEZs, which is out to 200 nautical miles. And they have hundreds of thousands of vessel movements the whole time. And their problem is they perhaps have maybe, I can think of one country in the Southeast Asia that we're talking to at the moment. They have nearly 2 million square kilometers of EEZ, 8,500 islands and 300,000 daily vessel movements, and they have 1,000-odd patrol boats They need to know where to send those patrol boats. They, therefore, need intelligence to tell them where the bad guy is, where the problems are, so they know where to patrol. That is the solution that we're selling to them. On the fishing agency, separately to that, they need to monitor and manage their fishing boats. They need to stop overfishing in order to conserve stock so that the actual fish that's being caught, which is very important for protein, very important for their economy is sustainable. And this is a major demand driver of buying these systems. So these are the 2 agencies where we sell -- what we call the SRT-MDA system. So essentially, what anybody buying our SRT-MDA system is getting is, typically, they'll get a really fancy control room, which we'll go and install in one of their buildings. We supply the desks and the computers and all the rest of it. But the bit that they're paying for is the software, the software that you see on the screen, which is our GeoVS software. And what it's doing is it's constantly scanning all the vessels in their EEZ. It is using very clever analytics that we've developed over many years to look at the behavior of each and every single vessel on its own and in proximity to each other and to generate an alert based on a characterization of its behavior and then to give the operator a suggestion as to what to do. Is it just speeding in an area so we send the guy a ticket? Or actually, as you remember, I just spoke about Bahrain, is this a situation where there's an attack coming and they need to dispatch something to [ tweet ] to deal with it. So it's narrowing down from maybe tens, hundreds of thousands of movements down to a few hundred that can be dealt with by operators and the assets that they've got. So what we're doing here, our system comprises of lots of different components. And what it does, is we have co-stations. So along the coast line, in real time, you'll have sensors on towers, and we may be commissioned to build those towers, supply the sensors that will go on there, which are co-stations. They have patrol vessels, which are going around with drones. There are satellites, all sorts of satellites flying around the place with all sorts of data on them. And then, of course, human intelligence. And what our system does is bringing that all together into a single system, a fusion of that data into which we then apply analytics. We also then apply things like visualization techniques because we're visual people, so the operator can visualize what's happening hundreds if not thousands of miles away in the maritime domain, make an informed suggestion to his boss about what they should do about it and then instruct that action to go forward. The systems are fully autonomous in country. This is very important to these countries these days. They're not interested in web-delivered platforms for their civil defense systems. For example, I'm not criticizing Flight Tracker, it's great business and everything for what it is, but you wouldn't be very comfortable if Heathrow air traffic control was run from Flight Tracker, you want it run from a professional system. So this is a professional system for coast guards and fisheries and national authorities. We've proven to be able to deliver it. So it's all very well having the technology. That was hard enough to develop, but actually to physically go and install that in these countries is tough. So there are just a few pictures there. Picture of me signing with the Minister of Interior of Bahrain. And I suppose the relevance to that is these are very high-profile projects of national importance. We're not going to sell these customers anything. They come to us for solutions for what they want. There's a command center there, which will be going into the Middle East. There's a picture there on the right in the top row of one of our transponders on a Philippine fishing boat. You have to -- that's designed and developed in Somerset, manufactured in southern Ireland by our contractor, installed by our local partner in the Philippines and will sit and monitor that Philippine fishing boat out into the Western Pacific fisheries, where it's catching tuna, which you will ultimately buy in Waitrose and Waitrose know that it was caught legally. On the bottom left-hand side is some of the equipment that is now just gone to the Middle East for the GBP 40 million contract we signed in January. We buy all the equipment, the data centers. We build them up in our logistics center in Somerset, put our software on it, configure it, then it gets shipped to the customer. And the middle picture there is what a data center might look like in one of our systems. It is actually a data center in one of the countries, it is installed and commissioned. And then on the right is a picture of one of the radar surveillance towers at a strategic point. We'll have that built for us, and then we'll turn up and have radars and sensors put on top of that. So we've got a proven track record now of being able to deliver these things. And that is well known in the industry and has been driving inquiries from lots of different entities. So growth opportunities. Well, we have GBP 70 million worth of existing contracts. One -- that are active. One in the Philippines, where we're building the world -- the first phase of the world's biggest and most sophisticated fisheries monitoring system at GBP 32 million. We will complete that in June next year. They're very happy, and there will be a follow-on contract after that. We also have a Middle Eastern in contract with a national coast guard, and we signed that in January. We've completed the first phase. And the second and third phases, we're going to run serially, they will now run parallelly. We then have what we call this validated sales pipeline of opportunities, which is about worth today about GBP 600 million. Those are opportunities where we're very close to the customer. We've been in discussions with them some time, taking their idea of a maritime surveillance system and dividing that, creating that as a project specification and then make -- and then slicing that into individual projects that meet their annual budgets because they've got -- they need to build these things up over time. So that GBP 600 million is just the start of these entities building up their projects. This rather complicated diagram, which people either love or hate is our attempt to try to give you some sense of timing and granularity on this. We use these [ acronyms ] and if you look carefully, G1 and G2 because we're not really able to name the countries, our customers that are extremely sensitive about who else reads this, and this is a matter of national security. Obviously, G1 is our Philippine contract. And that shows you that in the gray area, 2022, '23, that is in our forecast for this year, which is GBP 56 million of revenue and just over GBP 6 million worth of profit. And G2 is our Middle Eastern project, which we assumed would go across 3 financial years in the forecast that is out in the market. But actually, what that's happening per green arrow is down now it's coming forward. And actually, all that revenue will now fall into this financial year and next financial year. We then have pending contract of G3, which is with a southeastern coast guard. It's actually likely to be about GBP 10 million larger than that. And we are hopeful that, that will be signed during the second half. We then have the ones below that of high timing confidence. I'm not going to go through each individual one. But the one of note there, there's a GBP 130 million coast guard project, which we said that we hope would be signed towards the beginning of the next financial year. That might be a little bit earlier, depending on the process of the government and their internal approval processes. But the ones in the gray and the orange there really were a passenger on the process of the government. There's nothing we can do to speed it up or slow it down or change it. They've made their decision. It's a question now of when. And then further down, you can see how the -- we try to forecast when those contracts will come in. It's a constant changing face. I can tell you, for example, G9 there of GBP 20 million following on the fisheries project, I'm not going to name the country, it's probably more like GBP 100 million now and coming forward a little bit. So what I'm trying to show here is there is a conveyor belt of projects that are coming that will drive our revenues. This here tries to explain to you how we do our revenue recognition. So we're very straightforward with this in that we don't do percentage completes on projects. What we do is very simply in the contracts, there are a list of deliverables according to what it is that we have to deliver, and each bit is assigned to value, which is agreed with the customer. Perhaps maybe that's a data center. And the data center will have 2 bits to it, which is delivering the component parts of the data center, which is M1, so the hardware and the software. And we'll -- when we deliver it and they accept it, we will invoice them and they will pay us. We will then go and commission that. And once it's commissioned, they will check that it's commissioned per the contract, and that becomes M2, and we will invoice them and they will pay us. And we go through all the component parts of the system. And then you get to the end, where it's all come together and complete, which is M3 and they say, "Yes, the system is all working beautifully." And then we invoice them for M3, as typically 10%. So M1 is typically anywhere between 40% and 50%; M2, between -- around 40%; and then you have M3, which is 10%. Our customers are very good payers as governments. I often I remember when we signed our first contract in the Middle East, everyone was, "Oh my gosh, are they going to pay" and everything else. On the button, every time, reliable payers. So it takes a long time to get the contracts and to work with the customer to get the contracts, but they're extremely well-run organizations from the Philippines to Indonesia to across the Middle East, and they pay on the button. The driver is they want these systems, this is not something we have to try to persuade them to have. The bottom chart there is then trying to explain to you how once we have a customer, the first contract is really just a lead on to the next one to the next one to the next one. They're building up their systems. If you take a country in Southeast Asia, I don't know, perhaps like Malaysia or something, then they'll start with a dream of having full coverage for the whole of their islands and all their maritime domain and that might, in order to achieve that, require them to invest $500 million. But they might not have that today. They might to invest that over 10 years. And therefore, what they do is split that aspiration into 10 projects. And so we will get over to our first contract would be system contract 1 for, let's say, $50 million. We will complete that. They will be applying for the budget for the next contract. We will then get the next contract. It's a long-term business, and we're right at the beginning of all these countries that have got a coastline, building these systems. And each one is like the top -- each contract is like that top graph there. So the takeaway from that is that these projects require -- when we sign them, a little bit of investment in equipment, which we marry with our software, which we deliver, which is the monitoring system. We bill them for that. They pay us. That is then providing the working capital for the contract and then you just keep going, keep going, keep going. So the outlook on the transceivers, we expect to see the first half of the year's growth of 24% to carry forward. We have ended the half with a solid order book for H2. And those of you who are interested, we are exhibiting at METS in Amsterdam, which started today and we've been awash with new demand from dealers and what have you because of the quality of our product and its known performance. Everybody from U.S. Coast Guard to RNLI, Trinity House, Panama Canal, Suez seek out and buy from SRT our transceivers. On our systems business, we have existing contracts that we're executing on, and we've got about GBP 230 million worth of contracts which we believe have a high likelihood of converting and coming under contract during H2. There's no guarantees with any of those things because we are a passenger on their process, but that is looking good. Then we start to deliver those. It would probably take between a year and 2 years to then deliver those projects, physically go and install them and set them up and commission them and what have you. And in the meantime, over that 2 years, there's going to be more contracts that are in the pipeline than coming in. So I think that gives you a, hopefully, a very good summary of our business and I won't drone on about the summary there because it's just repeating what I've already said. And hopefully, you've understood what I've said. But I will just talk a little bit about the management. So as myself, as CEO I'm really a salesperson and somebody that's been able to spot markets a long time ahead. That's been luck. Richard Hurd is our CFO. We have a very tightly controlled finances. He has a lot of experience, both on the audit side and on the commercial side. Neil Peniket looks after the product. So it's the development of the product and the delivery -- manufacturing, the delivery of the product. He's a chartered electronics engineer, started life as an actual hardware engineer, developing hardware, truly understands that, went into project management and manufacturing large volume products in China and all over the place. So very experienced as is the rest of the team underneath him. Jean-Francois Bonnin -- he was -- used to be in the French Navy quite high up. He was then the Sales Director of a fisheries company, has intimate knowledge of our domain. It was a relatively recent arrival to us. We then have our non-exec directors, Kevin, who has a lot of international business, particularly in the automotive industry, which might sound a bit weird because people say, you're in the marine business, you need to understand boats. Nonsense. It's all about logistics. And if you want to look for slip logistics go to the automotive industry, and he helps us with that. Simon Barrell, he's an FCA, not an FAC. So that's wrong, so we need to change that. A huge breadth of experience. Man of, as with Simon Rogers, independent wealth. And what that means is making sure that we're not making short-term decisions, et cetera, making the right decision for our shareholders. Simon Rogers, extremely successful entrepreneur, very insightful, very dispassionate about making -- us making the right decisions for the business. He was one of the original supporters of the company when nobody was supporting it whatsoever. And so we have a very well-functioning, very open board and any investor is welcome to come and talk to me or any of these guys and indeed, come down and see us in Somerset and kick the tires. So I'm now going to have a look at some of the questions and try and answer as many of these as I can, which is -- there's a lot.

Simon, if I may just jump back in there and thank you very much indeed for your presentation. I'll just give you a moment to have a look at some of the questions that have made their way through. In the meantime, ladies and gentlemen, please do continue to submit your questions, just by clicking the Q&A tab, that's situated on the right-hand corner of your screen. But just while Simon takes a few moments to review those questions that were submitted already. I would like to remind you that a recording of this presentation, along with a copy of the slides and the published Q&A can be accessed via your investor dashboard. Simon, as you can see, we have received a number of questions throughout your presentation this afternoon. And thank you to all of those on the call for taking the time to submit their questions. Simon, if I could just hand back to you to address those where it's appropriate to do and then I'll pick up from you at the end. Thank you.

Okay. Thank you very much for the questions a lot. Excuse my brevity. I'm not going to say names or anything, but I will read them out so that -- can I ask? Can everyone see those questions or just me?

Only you, Simon, so if you could just read them out.

Okay. So I'll read them out. I'm going to read them out. So with the land -- first one, with the landing of any of the major contracts, you're anticipating great cash flow problems for SRT? And if so, how might you expect to address them? So if we landed GBP 600 million worth of contracts tomorrow, yes, because we then need to go and buy the equipment, some of the equipment, you don't go and buy the whole lot all in one go because it's phased over a period of time. You need to buy stuff the way our contracts are structured to be able to deliver it to invoice them the stuff. We have working capital arrangements in place with -- there's a group called LGB that gives us loan notes, temporary loan notes, which we can easily dip in. That's basically syndicated loans for high net worth individuals. That's a GBP 20 million facility in place. And also, there's a lot of UKEF and banking -- temporary banking arrangements that are available. So export credit guarantees, there is a particular program called GECF, the General Export and Credit Facility that's available as well that enables us to finance all of that. So actually getting to that first point of cash positivity is, I would say, is easy, but it's easily bridgeable and financeable. And we thought that through carefully, but that's an astute question. Can you give an update on your cash needs going forward? Hopefully, I think I've just answered that as well as within the presentation. I don't believe that we need further fundraisings on cash. But then we always keep that under advice. So it depends on the -- how aggressively all these projects come in. You can imagine that all these entities, they don't sort of think, "Oh, well, okay, my neighboring country has signed with SRT. So I'll wait a little bit." They actually sort of tend to cluster and start to move together. So we will just be -- we're cautious on that. And I think the other thing I would say to that is it's in our gift to manage each of the projects working capital requirements. They very quickly become cash positive because the software is what gets delivered first, and that's where we've already done 8 years' development. And so we actually get that billed and interest very quickly. As an example, could you describe the accounting treatment for revenue of, say, a GBP 10 million contract signed in April 2023 and the cash flow resulting from that? Okay. So if I say a GBP 10 million 1-year contract so -- or GBP 10 million contract for a system, let's say the monitoring system part is GBP 5 million and the sensors are GBP 5 million. So immediately, what we would do would be order the sensors. Well, they typically take 6 months to arrive, and we don't pay for those until after they've arrived. So we place the order for that stuff. Then we've got to deliver the monitoring stuff. Typically, on the monitoring system side, the actual margin is about 90%. So we would probably have to spend about GBP 500,000 in order to buy the Dell and server equipment on which we put the software to then go and deliver that GBP 5 million worth of monitoring system. And if you'll remember, we break that down into M1 and M2. So the first bit would be we take that -- we deliver that equipment and software, and we build GBP 2.5 million, and that would be done within 6 weeks. And so we would deliver that. The equipment arrives, it's inspected by the customer. We invoice the customer GBP 2.5 million. They pay us 30 days later. And that's for GBP 500,000 worth of equipment. So now that is now cash generated nearly GBP 2 million. We then go and commission that equipment a few weeks later, perhaps probably a couple of months later by the time you've commissioned it and tested it and what have you, and you bill the next GBP 2.5 million, which is now mostly profit, except for your installation costs. To now 6 months into that project. And now the sensors have arrived, which we will probably have paid -- we would probably cost us about 50% of what we're selling them for, GBP 2.5 million, but we've now got that cash from the initial bit. We will now go and deliver that equipment, we will invoice the customer GBP 2.5 million, which is 50% of the GBP 5 million. We'll then go and install that. Once it's installed and commissioned, we then bill the rest. Hopefully, that gives you a feel for how that would progress. I'm sorry I'm going so quickly. There's a lot of questions. You may have seen or heard the question that came up on Stockopedia yesterday -- no, I haven't -- about your debt situation in the interim report GBP 20 million facility with a GBP 6 million headroom implying GBP 14 million drawn down, but only GBP 6 million, yes, shown in the other loans. Can you clarify the situation? Yes. So we have a loan note program. And so when we take out, which as we've agreed, a GBP 20 million set of loan notes. And so once you agree that, you have your set of loan notes. We have issued over a period of time, GBP 14 million of those GBP 20 million of loan notes, but we've repaid GBP 8 million of them and so we have GBP 6 million of residual sitting on the balance sheet. And because we've used GBP 14 million of them, we have GBP 6 million left. So hopefully, that clarifies. I can see how then people think, well, you used GBP 14 million, so where is that on your balance sheet? That is just once you have a loan note and you repay it, it's canceled, it's gone. And that's through LGB, and if you have other investees, I would tell them to beat a path to LGB. This syndicated loan process is fantastic and has given us very flexible working capital, almost limitless for when we need it, which means we don't have to come back with dilutive equity. Given the small boat crossing issue between France and U.K., do your products have suitable offering for U.K., French government? Yes. They do. It's a question whether anybody would get their act together and do something about it. I think the real problem actually in understanding the marine domain here is the distance between France and the U.K. is so short. So by the time everybody rushes onto the beach for the rubber boat and gets going, they're already out to French territory waters into U.K. waters. Even if you had detected them, you need to have a boat there to stop them. So I certainly think our systems can be used for greater detection so I think that the U.K. government would organize itself enough to sort that out. No, sorry to say. Given the pace at which technology changes, do you think your policy around the capitalization, amortization of limit cost is reasonable? Yes, I do because the technology you're talking about that's evolving in the sensor systems. Our focus on our technology is around -- first of all, it's not consumer technology. It's around the analytics and the visualization. It's around the system technology. And in the commercial world, it doesn't move anything like as rapidly as you might think. And actually, core technology doesn't. I mean the mobile phone technologies we're using today in our fancy iPhones that's produced by Qualcomm and the like is pretty much the same as it's been 10 years ago. There's not actually much that's changed. It's more about the gooey and things like that around it. So I think our capitalization amortization is extremely conservative actually. If I talk about most of our transponders we would expect to be making for 10 to 15 years in the same format without any updates. Has SRT been making use of government research and development tax release scheme? Yes, we have done and do when we're allowed to. It is a big growth forecast. Will you need additional shareholder funding? I think I have already answered that. We recognize that -- we are signing a lot more contracts, much bigger contracts, and we've got more sophisticated about sourcing those funding using UKEF, proper banking, whereas in the past, we've just done it ourselves. And so we've got a lot more sophisticated about that. We're not perfect. We're learning about it, but we're very alive to that issue. Because of the demand for our systems, we can negotiate how those projects are implemented to make sure that they are cash balanced. How do you use your unique position in the market to change from being a passenger on government programs to offering them a slot on your delivery program? I don't know is the answer to that question. I don't think governments work like that. Governments have processes, anticorruption, all that sort of stuff. And frankly, I wouldn't want that to change because it's product-led. So it's just process, and that's just one of those things. I actually sort of see it now, although I do get frustrated why it takes so long sometimes. It protects us because we understand those processes. There is no magic to that. So yes, I don't think there's any magic bullet to that one, I'm afraid. On the contract forecast slide, what do the red arrows mean and they -- do they mean that the timing has slipped? Yes. It does mean that timing has slipped from when we had expected that, yes. And the green ones mean they've come forward. It has been reported that the Rhine has had very low water levels this year, has SRT been involved in helping vessels navigate the river? Yes. So every single one of those vessels have one of our transponders on them. It's mandated. One of our Class A transponder. And they're increasingly now deploying DAS, so AtoNs, which enable them to level -- to monitor the level of the waters because I mean it's very clear when you see the canal bed is dry. Well, the boat can't go there. But actually, the danger is when the clearance underneath the vessel, which is typically -- probably only a couple of feet suddenly becomes 6 inches and then lower, they don't want to -- they want to make sure that as long as there's an inch, they'll keep going. But if it's less than that, obviously, things come to a halt. And so these systems enable that to dynamically monitor it because these levels are going up and down the whole time. And equally, when the water is too high, because then the vessel can't fit underneath the bridge because then the water has come too high, so they call it the average gap. And all of that is all about this autonomous digital shipping that is coming down the track. So I think I've answered everybody's question. So I pass back to you guys. I'm sorry if that was a rush, but I don't want to bore everybody.

Absolutely, Simon, thank you very much indeed for addressing all of those questions that came in from investors this afternoon. And of course, if there are any further questions that do come through, we'll make these available to you immediately after the presentation has ended for you to review and then add any additional responses where it's appropriate do so. Simon, perhaps before redirecting those on the call to provide you their feedback, which I know is particularly important to yourself and the company, if I could please just ask you for a few closing comments to wrap up with, that would be great.

So I think SRT is a great combination of British brains and British capital. It's taken us a long time to get here, and that means good technology, good products, established. We're in a very defensible competitive position in a market that's just begun. We're not without risk. We're not without challenge going forward, but do a little bit of research on us. Come and see us, come and talk to some other people other than me and then make your investment decision.

Simon, that's great. And thank you, once again, for updating investors this afternoon. Could I please ask investors not to close this session as you'll now be automatically redirected for the opportunity to provide your feedback in order that the management team can better understand your views and expectations. This will going to take a few moments to complete, but I'm sure will be greatly valued by the company. On behalf of the management team of SRT Marine Systems plc, we would like to thank you for attending today's presentation. That now concludes today's session. So good evening to you all.

Thank you, everyone.