SRT Marine Systems plc (AIM:SRT)

AGM 2021

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Sep 22, 2021

And welcome to the Annual General Meeting of vessel 2, Marine Systems PLC. It's now shortly after 11, and as a quorum is present, I declare the meeting duly constituted and open. Let me begin by introducing my fellow directors, Simon Turco, as you know and you'll be hearing a lot from a little later on Simon Rogers, our Non Executive Director and Richard Heard, our Chief Financial Officer. I think you've all had a chance to speak to them individually through the morning. But as I said, Simon will be presenting in a little while. We'll turn now to the formal business of the meeting. The notice at the AGM can be found at the back of your annual report and accounts starting on Page 56. With your permission, I would like to take the notice as read. If there are no objections? Thank you. Resolution 1, firstly, the first item of business before you is to receive the accounts and the report of the directors for the year ended March 31, 2021. Before I put the Resolution 1 to the meeting, do any of the shareholders have any questions regarding the annual accounts? Good. I can't see you very well. Take these off. I now propose that the annual accounts for the year ended 31st March 2021, together with the reports of directors and the report of the auditors be received. All those in favor? Thank you. All those against? Thank you. Our proxy votes were 41 for, 2 against and 3 withheld, Discretionary 1 discretionary being 2,000,007,000 shares, 4,000,000 and 3,000 shares against, 19,700 shares withheld and 100 shares discretionary. Thank you. I declare the resolution carry. Resolution 2 is the reappointment of our auditors. Resolution 2 deals with the appointment of the auditors, and I now propose that Nexia Smith and Williamson Audit Limited be reappointed as auditors. All those in favor? Thank you. All those against? Thank you very much. Proxy votes were 42 for 4 against and 2 withheld, being 1,997,000 shares for 12,305 against and 24,500 shares withheld. Thank you. I declare the resolution carried. Number 3, Resolution 3 is auditors' remuneration. Resolution 3 relates to auditors' remuneration and are now proposed that the directors be authorized to determine the remuneration of Nexius Smith and Williamson Audit Limited. All those in favor? Thank you. And against? Again, thank you. Property votes were 44, for and 3 against, being 2,026,000 shares for and 4,761 shares against. Thank you. The resolution carried. And now on to the reelection of directors. So firstly, Simon Rogers. The company articles of association require onethree of the directors to retire by rotation each year. This year, Simon retires by rotation and being eligible seeks reelection. The directors and the nomination committee has considered his reappointment and recommends reelection to shareholders. All those in favor? Thank you. All those against? Proxy votes were 44,000,000 for and 2 against, and 1 withheld, being 228,000 shares for, 3,000 shares against and 100 shares withheld. Thank you. I declare the resolution carried. Thank you, Simon. Re election of Neil Peneket. Neil Peneket also being eligible seeks reelection. The directors again and nomination committee has considered his reappointment and recommends reelection to shareholders. All those for? All those against? Thank you. Our proxy votes were 44 for and 2 against and 1 withheld, being 228,473 shares for and 3,000 shares against and 100 shares withheld. Thank you. I declare the resolution carried with joy. Resolution 6 deals with the director's authority to allot shares to a nominal value of £54,751 being approximately 30% of the issued share capital. While the directors have no current plans to make use of this authority, this will give the directors flexibility to act in the best interest of the shareholders when opportunities arise when issuing new shares. And they'll propose that the resolution, which is set out in full in the notice of the meeting, be approved. All those in favor? All those against? Thank you. Proxy votes were 39 for, 6 against and 3 withheld, being 1,989,986 shares, 4, 33,144 against and 7,444 shares withheld. Thank you. I declare the resolution carried. I'm now moving on to Special Resolution 7. This special resolution authorizes directors, and it's called the disapplication of preemption rights. This special resolution authorizes directors to issue shares up to approximately 10% of the company issued share capital without offering them to shareholders first. This gives the directors the flexibility to take advantage of business opportunities as they arise. I now propose that this special resolution, which is set out in full in the notice of the meeting, be approved. All those in favor? Thank you. All those against? Thank you. Proxy votes were 35 for, now one more against, I can see. That's 10 against, 4 withheld and 1 discretionary being 1,868,015 shares for 113,241 shares against 41,000 shares withheld and 7,331 shares discretionary. So I have 1 against in the room, but overall, we have a majority to carry. Thank you. And on that basis, I declare the special resolution carried. That concludes the formalities of today's AGM. I would now like to hand over to our Chief Executive Officer, Simon Tookett, who has a presentation on our Marine business and will then answer any questions you may have. Thanks, Simon. Ron? No. That's right. Right. Okay. So if you've got questions, interrupt. I think that's the easiest thing. I want it to be interactive. A lot of this a lot of you will have heard over the years again and again and again. Some of you are new, so maybe you're interested to hear it. And those of you that are online, ask questions. I don't have the tablet at the moment that's being sorted out, but do ask questions and I'll come back to it. And if I'm asked questions here, I'm going to repeat them because the mics won't pick up your questions and nobody here is being filmed. So if you're online and you're anonymous, you can ask spiky, nasty questions and I don't know who you are. So that's fine. You can ask them here if you want as well. So let's do a little summary. The last 18 months, I suppose it's been a period of forced consolidation. The reality is it's been disappointing financially. We've had to do with the contracts have been delayed that we expected. But on the other hand, it's given us time to catch up on the development side and actually catch up on the planning of our delivery of these projects and be able to get ourselves into a real situation where we can we're much more confident about delivering these things smoothly. And I think it's well to remember, and even we have had to sort of wake up to the fact that a $50,000,000 contract is a serious big it's a big number for a big reason, and that year has enabled us to consolidate make a lot of consolidation, a lot of changes, a lot of improvements to be in a position to ramp up much more quickly. On the transceivers side, we've maintained our revenues. We did think it would drop dramatically. The reality is we were level pegging with that. And in the new year, we've seen a return to growth. And I think that's a credit to the product. That's a credit to our dealers. It's a credit to our sales team and support team that has maintained the supply into the market. And I think it's a general reflection of there's this very slow lumbering snowball of more and more people wanting AIS transponders in the leisure and commercial markets. Most commercial vessels have some kind of regulation now that really require them to operate an AIS transponder and smaller and smaller leisure vessels are fitting these standard. The existing systems contract has continued to progress. We received £13,000,000 worth of payments. It was funny when we first sort of signed all these contracts, the first question is, who are these foreign governments, are they going to pay? Well, actually, our experience is I'd rather have a contract with a foreign government than our own government. They pay regularly, sometimes the wrong amounts, and I'm thinking of our guys in the Middle East and stuff, but they pay us. There's no credit risk there. We've got some follow on contracts coming from existing customers that we've got both in the Middle East and also in BIFAR in the Philippines, which will see the start for the first time of material data revenues, recurring revenues. And we're looking at negotiating at the moment a 10 year contract with them. The money shot obviously is the bit at the end, which everyone is waiting for, is these big system contracts. And I'm not going to blame COVID for everything. I think COVID has created a drag. It's been an anchor on the process. But these contracting is complex and government contracting is complex. And all these countries have gone from very loose procurement systems in the last few years to completely the other way, very rigid procurement systems. Why? Because they want to get rid of corruption. And actually, it's not a bad thing for us because we play with a very straight back. We try to win these projects by persuading them that our system is the best. And then it goes through a fair procurement process. And so we've got about £125,000,000 of our VSP and I will talk specifically about this mythical VSP that lots of people have skepticism about that are really there and really won for all intents and purposes. There's about £71,000,000 of those that we expect in this in the latter part of this financial year and about £54,000,000 worth of contracts to come shortly after that. So that's the summary of the business that we're all vested in. So what is our business? Just for those of you to remind you. So we're all about maritime domain awareness. So you can't imagine air traffic control you can't imagine the aviation without sort of air traffic control. And really in the marine world, it's only really coming out of that sort of it's like World War II movie with the scopes with a blip, and you can see this sort of green blip on the horizon. Now people expect to see air traffic control type levels of control, and that comes down to our transceivers business in the leisure and commercial markets, where we're selling safety and navigation transponders and the systems division, where we're providing integrated maritime surveillance, which is delivering intelligence to maritime authorities so they know where to send their patrol boats. They know who's doing the bad things. And actually, it becomes a deterrent because if you can imagine, let's show Southeast Asia. I mean, Philippines is over 2,000,000 square kilometers of EEZ. They have 8,005 I think 8,500 islands at low tide, and that changes at high tide, but inordinate numbers of coverage that they need to monitor. So what are the drivers? I always think that when you're asking me about where are the contracts and all these sorts of things, it actually comes down to do they want to buy the system. And if you don't believe that they want to buy what we're selling, then sell your shares. And so the market drivers are important to understand. The first one is security. All these countries are worried about their maritime security, coastline. We see this on our own coast, boats of immigrants arriving, all this sort of stuff. Can we track them? Do we know if they're coming? Imagine if you're in Southeast Asia where you have all sorts of sovereignty issues. You have Papua New Guinea and the proximity to the Philippines and Indonesia and Malaysia and Brunei, and they're all sort of mixed up together, they're all very worried about their security and their maritime security and border control. Today, there's very little. They don't know who's entering their exclusive economic zones and territorial waters. And so they want systems to be able to give them that maritime security that they've got used to in aviation but that they don't have in the marine world. Environment. So for years, people didn't really worry about the environment. I'll just catch an extra few fish. It's just me quietly on the reef and stuff, or it doesn't matter if I take the coral and things. But it's been so pervasive. Now they're seeing the fishermen now is seeing that the fish are getting smaller and smaller and smaller, and they recognize the need to protect their environment. They recognize the need that the tourists will go to the Philippines and Indonesia if Bali is pristine, but it's not so interesting if the if somebody has been there pouring cyanide into the water or using dynamite to go fishing. You can't believe that somebody would pour cyanide in the water to kill the fish to then catch them because it's easier than sticking a line in, but it happens. So they recognize they need to control these huge beautiful areas of the environment. Safety and it is at the bottom for a reason as a driver. It's actually oddly not the primary driver for them acquiring systems, But it is an important thing. You have in these island nations, you have lots of ferries and stuff and we read every so often, there's a disaster and there's 600 people on it and it gets tipped over because it's hit another boat in the middle of the night and things. And so they want to be able to monitor the traffic and make sure that the ship doesn't hit the oil rig, which is producing the revenues for them through taxes and stuff. So why are they looking to buy these systems? There's a massive need for security, environmental protection and safety. That's why they're starting on this macro trend of I want a surveillance system to tell me where the problem areas are because my area is so big and I can't cover it all with my traditional patrol boats. So what all that comes together is and why we made this decision 5 years ago to get into the systems market from just selling transponders is it's a macro demand trend and that's underpinning this business and I dare say your investment decision and our decision to invest our lives in this business. And as I've said in the systems business, we have governments who suddenly realize that their marine domain is open completely and has no or minimal surveillance. And so we provide them with a solution to that. And that's an integrated maritime surveillance system. We call it the SRT MDA system. And the core of that is our GeoViz software suite, which if you've seen the demo system, you'll realize isn't just a sort of little web app for that with some triangles on it and stuff. This is a complex, sophisticated system and it enables them to remotely persistently have surveillance of their EEZ and beyond, fuses satellite and terrestrial and patrol sensors and really gives them intelligence that they can then act on. In transceivers, you have AIS and VHF and now really the established global data and voice communication systems that's used on boats. You will rarely find a boat of which there are about 26,000,000 worldwide without a VHF radio of some sort. They are gradually fitting AIS. We are still right at the beginning maybe 400,000, 500,000 boats have an AIS transponder. Probably 80% of those have come from Somerset here, which is a remarkable figure over the last decade or so. And so there's increasing regulation. There's increasing requirement for or awareness of safety. Particularly during COVID, people want to go further afield because the boats become more capable. That means that they actually cross shipping lines. And they want to know if they're going to get in inclement weather that they can see each other. And actually just a radar dot or a radar return is just not sufficient. And so we just continue to see that long term trend and that's reflected in the transceivers business, which hasn't met that £10,000,000 revenue target yet, but is not far away. So if I talk about our transceivers division, which is headed by Louise. So we have 3 bits to it. We have our OEM and module. So this is the bit that supplies brands. So if you want to integrate AIS into your product portfolio because of all the demand drivers, you can come to us and you can short circuit that very long and complicated development process of developing what is a sophisticated radio transceiver. And we're particularly clever at doing radio communications transceivers. Remember the heritage of this company for 30 years was we developed satellite transceivers and it was radio and that's how we got into this whole the whole thing. And what we started to see is we saw it when COVID came in, everybody cancelled their orders for new boats. Oh my God, the world's going to be a complete disaster. We all need to move to New Zealand. And they just canceled all their boat orders. And we saw a drop in our OEM and module business. Then some people started to come out of COVID and they renewed all the orders. And actually we're now seeing that come back up again because people think actually boating is an escape. And prices of boats have gone up and all that sort of stuff. So we're now seeing that reverting back to that steady growth. And AIS has gone from an accessory product in big marine electronics brands to being a product segment of its own. And so we see a huge amount of opportunity using our ability to provide a marine electronics brand owner, perhaps somebody like Raymarine or Garmin or somebody like that with an AIS solution to expand into VHF radio supply to them as well and I'll talk about that in a minute. In MTRAC, we saw a drop in sales in the 1st 6 months last year, again because everybody wasn't allowed to go to the marinas. I can't fit go and put an MTRAC transponder on the boat. But pretty quickly that reverted back and again people saw boating in as an escape. And as a result of that, we've seen that really start to accelerate. And there's further regulations, so Greece is a new regulation where more people are required to have it. If you're a foreign boat coming into Greece, you must have 1. A place like Gabon randomly has just introduced a regulation and stuff. So we're seeing really good growth in M Track. And the positioning of M Track, for those that aren't clear about that, is that is our own brand and we sell to dealers and we sell to end users. These are we're selling to marine electronics companies and they're selling to their own dealers and to end users, but they typically buy a big package for their big boats. And finally, but not least, we have our what we call DAS, which is digital aids to navigation. And again, we invested in this about 5, 6 years ago to create a what is the world's best a ton. Why is it the world's best a ton? Predominantly because it's small and has very low power consumption because if you think this needs to go on a buoy, there isn't sort of lots of you know, there isn't just a 3 pin plug that you can plug the thing into. You actually have to have a solar panel system and everything else. So if it consumes lots of power, all of a sudden you have big battery, big solar either topples over because it won't fit or it becomes a much more expensive fit. So we see a huge opportunity here and this because there are tens of thousands of boys that started off by just having a bell and somebody put a light on them and the next thing is to electronically mark them. Why? Because the boats are now having AIs so they can receive those transmissions and they can display them on their PCs and on their chart plotters. So it's all interlinked. But this is a hugely complicated radio product. It also enables long distance environment monitoring as well. From buoys, you've got autonomous vessels as well that need to be marked. So we see a big opportunity in Aton and we're really now starting to see that. And in fact, last year, all of them generated about the same gross profit contribution for the business. So going forward, what are we doing? So in our OEM and module business and in our NTRAP business, we're improving our existing products. We're looking at introducing things like there's an addition to the ARS standard or it's separate called VDES, which provides greater data communication. But we're also looking at bringing in a new product, which combines VHF and AIS, which is called Nexus. And I'm not going to show you any more of the product than that. We're probably halfway through the development. And the market fit here is I just said to you earlier that pretty much every vessel has a VHF radio and more and more of them wanting AIS. They both use a similar sort of communication method and we see a big opportunity of fusing the 2 together in a very innovative way. This is a very big project for us and it enters us into a much bigger market. And from 2023, we expect that to have a substantial effect on our transceivers business in terms of revenue and could be I'm not going to put any forecast out there at the moment. So we believe there's a substantial global market. It plays to our development capability of being able to really integrate VHF Communications in a clever way. We have spent a lot of time forming what's called a product management committee, which comprises a lot of professional sailors and boat people to really get their opinion around the usability of the technology. It's very easy as a technology business. We make something perform fantastically, but then it's rubbish to use. It's very tricky to use. And so we believe that we've come up with a range of products, it's not just one product, that really innovates in the way that the boat owner can access BHF communication and access AIS technology. We will launch this at METS in November this year to OEMs and it will start shipping at the end of next year we hope. Now just for Neil's well, all our benefit here is that the complexity of this product is not to be underestimated why it's valuable. So whilst we're forecasting December next year when we will start shipping, we might be a few months out from that because this is a substantial development. Two questions at once. Go. One question is what launch this year that they were concerned about? Because you launch to OEMs and brand owners, they plan their product portfolio 1, 2, 3 years ahead of time. And so you want to launch it to them. We have the credibility. There's for the if I go and talk to a marine electronics brand, it's not that we lack the credibility to produce this. When you have that discussion, there's none of that. It's a question of the timing so that they have the time to plan how do we integrate that into our product portfolio both marketing wise because they print the brochures for next year, this year. It's not if or when. It's a question of introducing it at the right time and you need a year to they need a year to plan that into their product portfolio. It also has quite a lot of integration possibilities to really integrate with all their various other marine electronics and they need to do some work. Can I ask you what price point that will be in relation to? You can, but I'm not going to answer it. Yes, very competitive. So the key thing here and I think I've made the point here there's a substantial global market at the right price. If it's like $10 everyone's going to go, wow, it's fantastic, but I ain't going to buy it. If it's $5 everybody would buy it. It's not $5 either. So you're actually looking for volumes, you're actually aiming to sell the right price? We're looking to be in the middle market. The volume well correct me if I'm wrong here, the volume the volumes that we operate at don't really make a material difference on the price. It comes down to the integration of the design right at the start. You might the difference between making 5,000 and 20,000 units in electronics might save us a few percentage points, but it's only a few, I don't know, went from 5,000 to 100,000. Would that be fair that you can then maybe Yes. Mobile phone, laptop, TV, millions of components, that's when you really get going to scale at our level of 10 to about that's when you really get coming to scale, but at our level of tens of 1000s, I guess, whether it's 8,000 or 10,000, it's making a difference to component pricing. So we're really excited about that. And that in our transceivers division is a focus of 90% of the R and D right now. And we're just coming up to prototype stage of the first prototype and approving of it, etcetera. We've already started ordering components just to give you an idea how far ahead you have to start to plan all of these things. So we're a long way down the line with this exciting project and it really is in our view game changing in the market. So that's transceivers. Is that clear as to where we're going with that? We've got a great business which is growing 10%, 20% and we've got this product coming at the end of next year which could super turbo charge this. The development cost is written off to go or is it? It's capitalized per our policy, yes. And then we start to amortize it over 5 years once it starts selling. Or if the product stops selling or doesn't sell, we write it off the minute it stops selling. So that is volume dependent though, the write off per item? No, it's a straight line over 5 years. Yes, but if you divide it for the number of items, it costs more per item to write it off if you have a lower volume? No, I believe we just take the capital cost. The amount of the cost that developed products, like, we think that what it must be and then we divide it by 60 months for a 5 year period when So we don't attribute it to each particular unit? No. We don't attribute the amortization to any particular unit or a number of units. It's the setup and the startup process taken care of. That's right. Well, I think the other way to repeat that back to you, if we obviously sell £10,000 a year as opposed to £5,000 a year, the development cost attributable per unit will be higher and lower accordingly. But the way we treat it in the accounts is we just take the costs, let's say £3,000,000 and we're going to sell that for 5 years, we just divide 3 into 5 and take the charge in the accounts each year, keep it simple. Yes, sorry, good question. If you have a do you believe we'll have a material effect on the Transceva business? Any projection of going to be Not yet. And that's the reason why we do a soft. If you look at the VHF radio market alone, I mean it's 10, 20, 30 times bigger than the AIS market. The question is what percentage of that we will take for the price point and we can do all sorts of analysis, which we have done in assumptions and stuff, But I wouldn't want to say anything to the market until we've gone and spoken to the OEMs, which is the initial introduction later this year. Maybe in cautious for a change, yes? Well, we get R and D tax credit, Richard would probably know better than me. There's the Each year, we get an R and D cash. The 130% for me is not really R and D £100, you get £100,000,000, not 5.5 percent. Yes. Thank you. Okay. So the systems division. So, I'm not going to read what it says there but basically our product is the SRTMDA system and that system comprises lots of different components altogether but what it delivers, as I said earlier, to the government is intelligence of what's going on in their maritime domain. And I'll talk about what's unique about our system and why we believe that governments are so interested in buying it. So I drew this diagram because I wanted to sort of try and explain what goes into the system because people always think of us as just transponders business. And of course, our heritage was transponders, but transponders is just part of a project and actually some of our projects there's no transponders. And actually if you ask delivery they're like, yay, no transponders in the project because that is actually the tricky bit and actually the lower margin part. So if we talk about our SRTMDA system, the core of it is the blue bits. That is GeoViz and it's the software that glues together all the data from the sensors that we have supplied, which were agnostic to whichever sensors, with the operators and gives them the functionality that they can see on their screen if you saw the demo where they're able to see a fusion of multiple different satellites, multiple different sensor types on those satellites with terrestrial because satellite is by necessity is a lower resolution than terrestrial. But you need to fuse all of that together and you then need to make sure all that data is distributed. So we have what we call our hub system, which is a set of servers all running our GeoViz hub software. What that does is take in all the data and distributes that around the network because you might have 50 different operators. I mean if you take, our fisheries project in Philippines, there are 17 different fisheries monitoring centers spread across a huge country all in different locations. When they sit in front of their consoles, I think there are about 60 consoles I think on that project, they're all sharing the same data. They're all able to communicate with each other. They but at the same time they can all operate as a team but individually. So it creates a great deal of efficiency and that is our GeoViz console software which then gives them all that functionality. So that is the monitoring system. But it needs to have data and so the data comes from different sensor systems. So it might be a terrestrial coast station and that terrestrial coast station might have different sensors on it. It could have a radar camera, AIS, RF detection which you can triangulate because a vessel might not have an ARS transponder, but it has a radar and you can pick that up and triangulate and therefore you can see that there's something there. And as far as I'm aware, fish and whales don't walk around with a radar on their head, so it must be a boat. So you have the coast stations. You then have satellites when you're further out away from the coastline. So if you're near a coastline, this is what you want out for your territorial waters, which is out to 12 nautical miles. Beyond that, you have satellites. There's thousands of satellites and they're all, thanks to Mr. Musk and all his rich friends and stuff, loads of satellites going up all the time with all sorts of different sensors and all sorts of different data available. We accept all of that from light detection, RF detection, infrared, AIS, could be Iridium, Inmarsat, all of that data can feed into the hub. Patrol vessels, all of our customers, coastguards, even the fisheries will have vessels roaming around. We can stream back from there all the data that their own radar and AI systems are fitting up. So it's like a sort of roving co station if you will, but also drones which are now used and you can stream that back. And finally, field personnel. So we have a product called GeoViz Connect which is enables a mobile phone. They can go and do an inspection in the port, scan the barcode on a vessel or make an inquiry to an owner of a vessel and all that information all feeds back into the hub. All of this will depend on the project. There might be 50 of those. There might be none of those. It might just be satellites. There might be no satellite and just coast stations. There might be none of those and just that. Well, the first phase of the project is just that and some of these and a few of those. It's all modular, so it can be built over time because no one customer comes to you and says, I want the well, they actually do. They start off saying, I want the complete system and thousands of code stations and operators and stuff and you say, well, it's going to cost you $500,000,000 and so actually we're thinking about $20,000,000 So then you sort of start to break that down. And then finally, you have transponders on boats. Not all transponders have boats, but we not all transponders have, but not all boats have transponders and we will now sell the transponders. So the SRTMDA system comprises of all of that and each project is slightly different in its mix, but it will always have our geovis. Sorry, can I ask Kevin earlier on the subject of satellites? Simon, can I ask Kevin, on the subject of satellites? I've read a message from one of your major shareholders the other day talking about Exacta being taken over by Spot App. And I just wondered if there's any particular significance for SRT in that statement? Not particularly. I think it's great. Both I mean Spire is a satellite operator and they've been aggressively putting satellites up. Exact Earth has had its own AI well, had its AIS transceivers on somebody else's satellite systems. And so for us it's just another source of satellite data. So we're agnostic. We don't mind who that is. What we see is the satellite landscape changing all the time. What isn't changing is the requirement for the national authority to be able to use that data in an intelligent way and fuse it with all their other information. I think the point here is no one sensor source gives you the solution. You need multiple sources. And we have designed our system to be agnostic. We source these all of this is sourced externally be it, I don't know, Kelvin Hughes or Therma or Fleur or Silent Sentinel, whoever it might be. And all of that comes together. So if you then deploy that system, you have this multi this unique multilayer system. So here you have the coast stations giving you full and continuous coverage along your coastline and actually that's where the density of the vessels are. As you go further out, you can imagine it's bigger and bigger vessels. It's less and less and less of them. So here when you've got lots of activity and stuff and also little coves and smuggling and all the rest of it, you need to have really high resolution surveillance in your ports, port entry and exits and things and therefore you have your coast stations. You then have satellites that are scanning the whole time and you have different types. They scan for AIS. They scan for radio detection or light detection or radar emissions whatever it might be. You have drones then flying around also scanning and you have the patrol vessels scanning. So this bit beyond the territorial waters is constantly subject to scanning all of that being fed together and so that's actually what the system ends up looking like. What does that mean for us revenue wise is of course once they've got the monitoring system, they want to have and they want to have more and more code stations. So you gradually build that over time. So you have a succession of projects. Once you've actually got the buggers to sign up the first one, you actually can we edit buggers out of that? Probably not, but anyway. You want a succession of contracts for them to expand their co station network. But we will then have more and more satellite data coming as more and more satellites go up and the software they've got, which is JIIV is our software is the one that harnesses it. So I wanted to talk about some of the special bits because again I often get questions about, well, you know, so what? You know, everybody else has got, systems that do analytics and things like that. It's very easy to say all of that. So what's unique about our system? So and why are people buying? It starts with really we're offering our customer intelligence based maritime operations. I think of a coast guard in Southeast Asia that has something like, 200 boats, sounds a lot. They have 2,000,000 square kilometres to cover and 8,500 islands. Just people go out and do a patrol. But actually, what they need to do is to be able to spot the hotspots and go to those particular places or if there's a particular problem, be dispatched there. And actually I was told a story, this morning by somebody who went over to France in their boat, went into the port, came back again and I was amazed actually because we always criticized UK Border Force and UK Border Force was there waiting for them as they came into UK territorial waters because the surveillance system said, oh, that, the pattern of that person is a bit peculiar and so we will dispatch a boat to be waiting for them as opposed to just randomly patrolling and being in the wrong spot at the wrong time and coming across the problem by chance. So this is what it's enabling. So what's unique about it, what we've managed to do in a pretty short period of time is as I said we can integrate and fuse all this data from these different types of sensors, but up to 200 different co station sites, each with multiple sensors on them, 20 different satellite constellations, each with multiple satellites and types. 500 field operators all around in different ports, all randomly at different times accessing the system, getting information, updating the information and 200 system operators all in different locations, all operating as a team. So that hub network, if you remember that blue pillar, that is what's that is enabling and that's a unique ability in a system. This isn't a web delivered system because it's locally in a country because the country wants to control their data. If you go and see a coast guard and say, well okay, well I'm going to your data is going to be stored in a Google service somewhere over in Silicon Valley. As a security organization, national security organization, you'll say forget it. I want control of my system in my country and to achieve all of that without being a web delivered system is quite remarkable on a rock solid reliable basis. But then you've got to think about all the connectivity. I don't know about you, not everybody has glass fibre and perfect internet connectivity. The reality is you go to these countries and it's fluctuating up and down because of usages and attenuation and stuff. And so built into our system is the ability to dynamically manage all of that. Does a camera, coastal camera continue to stream high definition video at 70 frames a second when the connectivity drops or do you then change that to 1 frame a second? Boats don't move that quickly so you don't need to have 70. It's nice to have a high definition definition video, but it's all right to have a picture once a second. You at least see what the thing is. But the effect on the backbone network is dramatic. We have enhanced digital visualization. So in the end, once you've got all that data, we're visual people and so we use dynamic 3 d and things, gaming technology that really delivers advanced situational awareness. We've got used to that with gaming with games and things like that and we've now brought that into the commercial space. Again, not an easy thing to deliver when you're talking about scale. You've seen in the demo system there. Just in that little area in the demo system is 70,000 vessels being tracked and to be able to convert that into a digital environment is tricky. We have an extensive vessel information system, so all the vessel details, but also its ownership, its history of its ownership. What is its license status? Have they been a have they been a naughty ship over the period of time and they've got lots of alerts and things and therefore need to go on a special watch list or whatever it might be. All of that is embedded within that and available to all of these 200 system operators and at any time they can find out where those boats are. Configurable analytics. I think, Jeff made the point to you that we're looking at the demo system that it looks fantastic, 70,000 votes, but if you but most of them are just going about their business. What you need to do is to be able to look at the behavior both individually and relative to each other and spot where there might be a suspicious vessel of interest that you need to investigate a little bit further, get some more information on before you send out a patrol boat and stuff. So we have developed our own analytics engine with some very particular capabilities that enable us to handle that sort of quantity. So you're constantly scanning the whole EEZ the whole time and the bad guys or the vessels of interest are being alerted. Then once you've got the alert, what the hell do you do with it? Often forgotten in these things. Well, we have a whole action management system in there that enables the operator to request to a superior, I need to get a helicopter to go and save those people. I need a huge coast guard boat to go there because a ferry is turned over or I need a gunboat because I think that there's, some smuggling going on and it's likely to be armed in that particular, in particular, area. And so, they can actually do something about it including automated responses. We had one of our customers, in the Middle East and they switched on a whole load of analytics and stuff and within a few days they had sort of 6,000 alerts. Well, what do you do with 6,000 alerts and you have 8 operators? Well, I can tell you what you do, sort of just switch them all off and ignore it unless you have an action management. Most of it's speeding and things like that. Well, the system can generate an email and send that to the guy that was speeding who now goes, gosh, I'm being watched, it becomes a deterrent. I don't know about you guys. These I mean, I find them irritating, the average speed cameras, but they work, right, because you know you're going to get a ticket. And the same principle applies here. Then we have things like electronic fish catch reporting. When you're in fisheries, one thing is going out at the right time and fishing in the right place, but it's how much fish you catch and what you catch. And so we have a system now that goes on their phone or in a kiosk like an ATM thing in the port and they key in what they're catching. As they're catching it, it automatically gets transmitted back to the monitoring system. They can file their mandatory reports and the fishermen can actually see for the first time, oh, when I was over here, I caught all of this and when I was over here, I caught that. The system can say, well, I can see over here that the catch productivity is going down and so what I need to do is to put a temporary quota on that area and stop people going there. So all that intelligence starts to come through. And reporting. If you're going to make policy, you need to have reports as to where all this stuff is happening. And so this is what the MDA system does and the reason I've sort of droned on about this a little bit is that I do think sometimes people wonder why it's taking so long to develop and what and but to have these big ticket prices comes with some serious functionality, which is why these customers are coming to us to buy that to buy this system. And nobody offers this level of integration and functionality in the system. And the reason we've been able to do that is we started 5 years ago from a blank piece of paper. We weren't lumbered by just starting with a port system or a small idea. We were able to say we think we need to people want national maritime surveillance and we were able to start with that vision and build up to that where we are today. I know these are all very wordy slides and Richard did say they're all a bit wordy, thought they stayed because I thought I needed to explain the process. So I thought it'd be worth going through the sales process because I know everybody, including my mum, wonders why it takes so long for us to sign contracts and get to that point and get going. So I just wanted to go through this a little bit. So the first thing is they decide, the government decides they're interested in improving maritime surveillance. That doesn't need us to go and market it to them and show them pretty pictures and stuff. They arrive at that conclusion themselves. The whole world is there already. They want to know what's going on in their marine domain and they then make an inquiry. We are very well known in the industry now. Everybody that's thinking about doing that makes an inquiry to us. Just this week, Gavin, Libya, I think this morning, everybody finds us and comes to us. And so we then exchange information with them. They typically say, I want a maritime surveillance system. Okay, what exactly do you want? Silence normally. They don't really know what they want and what you need to do is to start taking them through what they might want and we present the MDA system in concept and then start to mold it to what their ideas are because all of them are slightly different. Oh, I don't have any way to put a coast station because it will get stolen. So I need to have satellite in that area and I need to but I can put a coast station on that island there and will it give me coverage and I want to see 5,000 miles with it and you have to say, well actually no, you can see 50 miles with it. That's the reality. And what that does is give them the information to enable them to make an internal proposal to their parent agency. Typically a coast guard or a fisheries agency will have no budget. They will have no power to contract on their own. They are an operational agency within the ministry And they need this bit is about getting the information they need to make their idea into a proper proposal with a plan and a budget because their boss will say, well, how much is this going to cost? And they don't know whether it's £10,000,000 £100,000,000 or £1. So at that point, they then go off and try to get some political approvals and what have you. If they get that, the agency starts to intensify their discussions with those that they like, that those that they feel that has the system that fits their needs, has an approach that fits their needs. And it's at this point that you start that you then know that they're serious or not because they won't go past this unless they've had their parent agency say yes, actually this is great, the budget sounds okay, let's work up a detailed project plan. And for us, this is the key bit. This is actually where you win the project, not down here, here because you've got to persuade them that it's your system that they want and therefore they will specify your system because all of the procurement is a competitive tender, full stop. And obviously, what you want to do is to try and make it as hard as possible for everybody else. So therefore, you want to talk about the fusion of terrestrial and satellite. You want to talk about the importance of a dynamic network and visualization and all those different things. That is the key thing. Once they've gone to and you really get a good feel for that because either they're constantly on the phone for you increasingly, increasingly, increasingly or less and less and obviously they're talking to somebody else not you and they prefer somebody else's system for whatever reason. This process can take years. It's not a short process and it's an education process. I've often people say to why don't you charge for it? I can send them the bill, it'll be the last time I speak to them. They don't have a budget to spend with you. It's an opportunity and if we don't do it, somebody else will do it and persuade them to have a simpler, less sophisticated system or whatever, which really isn't what they want. It is an opportunity. It's part of our sales cost. And it doesn't mean you're on the phone daily with them, but it's a pretty relentless long what did you say, Francois, long process and frustrating at times and stuff? Yes, and calls at 3 in the morning and they don't worry about your time and stuff. You do it with them when they want. But it is a long process to educate them because they are serious. They want to understand what system I want, where am I going to put stuff, how is it going to work, how is the operate, the con ops as we call it going to work, all of that sort of stuff. Then you get to the point where they now have an internal system specification and then they take it internally and get the formal approvals. This here is the detailed specification. This is where the co stations are going to go in these particular bits of property and I've got them and these are the I've got the people available to operate it. This is going to be the benefit and everything else. And at this point, they actually get formal political approval and the actual budget allocation for the project. At that point, you know that's going ahead. Again, that can take several months. Sometimes it needs to go to parliament and go from I mean, we've got one country where it goes from what's called the blue book to the green book or the other way around blue to the green blue to the green, yes. And the blue book is once it's got to here, the green book is once it's okay, the money's done as opposed to an indicative budget. Once they've granted that approval, they start their procurement process. Every country has its own procurement process. Frequently, it's done by a separate agency or it requires multiple agencies, particularly now in the Middle East where they have all the checks and balances. And I mean in one particular country, there's 8 agencies, 8 individual ministries and agencies that need to sign off on everything to do with it. And your proposal is a few 100 pages. The paperwork that's produced is thousands of pages for all these approvals and that can take some time and it's just the way it is with government contracting. Once we then get to the tender process, again the rules of the country apply and we prepare and submit a bid. In some countries it's very quick. So we've got one in Southeast Asia where you know it's 4 weeks. Once the tender starts, it's 4 weeks to submit and award. In other countries, in the Middle East in particular, that tender process can be a few months, can be 6 months where Cision Lane, I mean I think there was one in Bangladesh, I mean was it 9 months for them to process and they kept on asking for delays, delays, delays after the tender had been submitted. And then finally once we've put that in, they evaluate it and then they form who the winner is, designate and then they go through their contracting, their final contracting process. So you know we know we've won actually we know we've won here, but now you really know that you're just waiting for the contract that has to be produced. And they don't allow agencies to issue the contracts themselves. They have to be prepared and approved because they're committing a country to pay. And what's happened in the past is an agency has issued a contract to somebody and they've just been freely committing the country to all these payments and then the poor guy with the cheque book in the Ministry of Finance suddenly gets all these bills and they haven't really sort of kept track of it. So this is the process. I mean it looks terrifying, doesn't it? The good news is the ones that I'm talking about with the GBP 125,000,000 is we're down here. When you talk about the VSP, it starts here. And so you've got a large chunk here and they gradually migrate down to here. The problem is when I talk about somebody said to me today, chuckled and said imminent, my word imminent, which I wish I'd never used. You're always told by these people, yes, next week definitely, I'm expecting, to have be in a position to have the contract to issue to you and then next week arise. Well, actually, Bob wasn't there. He's coming back next week and it's currently in that ministry, needs to be signed off. They follow the process, their process and they have no obligation to draw a flow diagram for you. But we're right at the end of these bits here now with a conveyor belt of opportunities now flowing through and that has taken 5 years to develop because of all the processes that people need to go to and the complexity of it, but we are at the end of that conveyor belt, I'm pleased to say. Is that kind of clear? Okay. I don't know if there are any questions yet coming from And I don't know what well, I think the U. K. And Europe and the U. S. Have a different approach. They have established systems in a more of a militaristic system and stuff than and I think probably feel more secure and safe than some of the other places that we go to. So this is BFR. I just want to interrupt have you got any questions from are there any questions from people who are watching or anything like that? I've got 2, Simon actually. The first one is just asking about our system and do we consider it to be the best system on the market given our knowledge of our competitors and why? Okay. So the first question that you heard about was do we consider our system to be the best in the market and why? If you're asking me, yes, yes, of course, I would say that. Jeff, I think would agree as well. Yes. Why? I think I answered that a few slides before. I think it's the integration of all that data, the analytics of all that data and all the action management. So it's all that functionality that glues together. So I'm not going to sort of drone on about that again. Hopefully, that question was answered previously. Is there a second one? The second one is just to do with the R and D on NEXUS. Do we think that would need additional funding from shareholders? Okay. So on NEXUS, which is our new transceiver product that we're developing, the question was, do we think you'll need additional funding from shareholders to fund that? No. Okay. So if there's any more okay, great. So back to the Systems division. So we have an existing project with the Philippines with BFR. They paid us £13,000,000 in cash last year. There are further payments due this financial year, so we agreed a payment plan with them and they've been very good payers. I'm pleased to say we've made good progress. This is the operations room and today the world's largest fisheries system is EMM's system, I'm proud to say. And That's a different, different GBP 13,000,000? No. GBP 13,000,000 is the cash pay. We never announced what the cash payments would be. We signed a contract worth about GBP 32,000,000 with the fisheries a couple of years ago, 2.5 years ago. And we then had staged payments over the 4 year term of the project. So we're 2.5 years into that. And last financial year GBP 13,000,000 of that GBP 32,000,000 was paid as scheduled. That's all we're No. No. No. No. No. No. And despite COVID, there's been really good progress. We've been able to commission all of these monitoring centers. There's still more to come online. On the development side of things, we've significantly improved our the SRTMDA system. So like I said at the beginning, this sort of enforced consolidation of COVID really has allowed our development team to accelerate. Neil's made substantial improvements in our development methods. We've improved our team and the level of functionality is day and night difference and we're continuing to progress that. And about every 4 months, there's a new big release of functionality. So it's a never ending increase in functionality. We see so many different opportunities. 6 months, it hasn't been. There's 10.3, 10.2.8? That's the plan. Yes, that's the plan. There we go. But we tried to okay, so we tried to do 2 big releases a year of major functionality. On delivery, we've refined our model a lot. We as you know, our model is to use local partners to do the installation. It is absolutely fantastical to think that we would have a team here and we'd send them to all these different countries and we would do the installation. You need somebody on the ground with real muscle, real organizational muscle to do the installation. And we have very good local partners. But equally what we want to do is to minimize our engineering delivery team but maximize their efficiency. So what have we done? We now pre built. These are hubs that are pre built ready for the Middle East. Why? Because the Middle East have told us that when they do finally take their time and issue the contract, which we hope isn't very far away, they want this PDQ. So this is all built up and ready to go. It all whereas previously we would ship it all individually in Dell boxes and then we would scrabble around actually in here doing all the installations and configuration and what have you. So we've also improved a lot of the documentation so we can train and support our local partners remotely. We don't have it's impossible for Tess and her team to be in 5 countries, each with 2 different customers, so 10 different projects all at the same time. And yes, there are airplanes and stuff, but it's a long way from the Middle East to Southeast Asia. It's 9 hours and it's just not feasible for the scaling. So we've made a lot of progress with delivery. And on the new business, as I've said, we have our validated contract opportunity pipeline about £550,000,000 71,000,000 well, £125,000,000 are in their contracting procurement phase, right at the end of that long list process and £71,000,000 of those are right, right at the bottom in their final contracting phase. And we just wait actually every day to be told that there it is, having been told in the case of one of them that it's already been won. And then there's some others that follow behind that that we think will be shortly behind that. So a little bit more about Philippines contract. There are some pictures really of what this sort of thing looks like. The monitoring center That's the data center, so the hub. There's 2 of those where all that data is streaming in millions and millions of data points continually. These are some of the towers. There's 15 of these towers that have been built in key ports, so they can monitor all the vessels coming in and out and they have radar and cameras, so they can if somebody is trying to sneak out without their transponder and they've circumvented the anti tamper, they're still picked up in the radar and the camera can zoom in on them. So it's all about catch landings and control and things. These are the transponders that have now been installed. And I'm pleased to say there's nearly 1,000 of those now, installed and we've now got our local partners now got the process going properly. We're doing some marketing support, thanks to Cynthia over there, to actually get the fishermen to think that that's not Big Brother. That's actually a positive and it's a lovely thing, not a scary thing and they'll turn up for appointments for our local partner as opposed to saying yes I'll turn up on Friday to have my transponder and not turn up. So we're making really good progress with that. And I wanted to show you this picture. That is your sort of typical large Philippine fishing boat and this is the installation, so you have the transponder sitting here out of the way and you have what's called your electronic catch terminal up here and this is where they will then key in all their fish. So most a lot of the tuna that we're eating in Waitrose and Tesco's is now being tracked and recorded by our system I'm proud to say and that's what it that's the reality of what it looks like. It's not all pristine and glass cockpits and things and this is the environment that these transponders need to need to live in. The result of that is then the Philippines is able to track their fishing boats every 15 minutes. That's in the middle of the Western Pacific fisheries and you can see all the little dots. Obviously the space is determined by the speed and you can see where he is and what he's doing. Then if you overlay with other vessels, you can see if there's transshipment, if they're doing something a bit, they shouldn't do, if they're actually in the area that they should be, etcetera. So it's a remarkable level of tracking of fishing boats. It just isn't seen. In Europe, they track, what is it, once an hour? Yes. Yes. So we're doing, I think on average, what is it, every 12 minutes or something in reality, thereabouts? 8 minutes. See, I'm not always over optimistic. There we go. And so you can see here, this is a little time lapse of where the fishing boats go. They all come out. Some of them go in their local municipal waters, but a lot of them just go straight over here. And this is what's called packet 1. I see pocket 1. I see pocket 1. So you've got this is all Western Pacific fisheries and this is all sort of governed by a collective of nations here because the tuna are all sort of born here which is the golden triangle, little babies and then they swim over here. And so they've all come to Philippines, got upset that I know that they get bigger over here and worth catching but actually they're mine because they're babies over here, so I'll stop them going here. So they have a I know I'm simplifying it, but they have a but I think that was the principle, right? Kind of. And they now have an organization that controls all of these and they're allowed to fish in this area. So the Philippines is able to track all these fishing all remotely and what they're catching and everything else. And when they come back, it's all electronically recorded like an accounting system. Pretty amazing, I think, from scratch. What happens with a fishing boat? It goes out out of a lot of fish and then just goes off to a big Chinese supersonic ship and it offloads fish there. Be tracked. Do we know what fishing that can be unloaded? Well, you will see it's called transshipment. So the system will automatically detect that, that fishing boat because they can't disable their transponder because it has anti tamper. You'll see them go outside of that area and also you'll see the Chinese fishing boat because we use satellite radar and light detection and things and you'll see them come together and then there'll be an alert. The system will generate an alert. So when that Philippine fishing boat comes back, you can say, well look, can you just explain that to me please? It might not have stopped the event because there are 1,000 miles out at sea, but it becomes a deterrent. And I think the same the fundamental thing with this, if you have a credible system, you have a deterrent. The reality is the fisheries people are not looking to go and beat up the fishermen and stuff. They just and be unpopular. They just in their interests of the fishermen, they want to conserve the fishing stocks and they want to do it in a cooperative way. And actually when you have a credible system, it becomes a deterrent. And by showing them these sorts of things and this is the unenviable task that product management have and Cynthia who's recently joined us to work with delivery to help the customer spread that message to the fishermen because that's all part of the project. And then of course, if it becomes super successful with the fishermen, well, there's another 295,000 of them who also might want to be more proactive about getting on board and that leads to more contracts for us. So we've made really, really good progress for that with all our technology all working in anger on a day to day basis and paying us. So new contracts. We have, 2 particular areas. So we have Middle East. We have 2 significant projects totaling around $80,000,000 over 2 years. 1 in particular is £60,000,000 which will be implemented in 3 phases because of the way they want to divide up the country. The tender process is completed and we were informed in the winter 2020 that we had won it. So we know we've won it. We've had the backs and everything else. We're now waiting since then for them to complete all their contract approval, internal contract approval process. So literally there's about 7 agencies that all need to approve these 4 sets of documents that the particular agency, I nearly said it then, can issue to us. I was there 2 weeks ago with them to confirm a few minor points and, we're really not far away from that now and we're all ready to go to ship these very quickly so we can deliver to their timescale which is what they wanted extremely quickly. In fact, it's 9 months. We have another project, with another country very nearby to the bigger country who is an existing very valued customer of ours who bought an NAIS system, sort of vessel identification system and they want to upgrade that to our MDM system with cameras and radars and things. And they now have the funding source, sorted. So there was a delay on that because they weren't sure where the funding was going to come from. They now know where that is coming from. And they also they're also including a whole bunch of new transponders. They want to replace the ones that were installed 6 years ago. And they've realized through the process, they have 6,000 vessels they didn't think they did have. So actually they want another 6,000 on top of the original 7,500 that they had bought. And so we expect now that will be in the second half of this financial year and we'll start that. Then we have Southeast Asia, where we have some contracts which together are worth about $48,000,000 which are pending. They have an 18 month delivery time and we know that all the specifications are done of those. We've seen those along with other people around the place and we're waiting for their tender processing backlog to be cleared. So all the tenders in that particular country go through one particular agency and I mean they're rife with COVID and it's stop, start, stop, start. They're now back to 30% capacity. So we know we're sort of at the end of that sausage factory. So once they we sort of plop out the bottom then it's a 1 month tender process and we are just waiting for that to happen. There's nothing for us to do. The actual agencies are more frustrated than me and I'm more frustrated than you because they're in desperate need for this. And so those are the ones that we hope I think I was asked earlier that is this the year and I think I've been asked that every year. But I having recently been in the Middle East and sat with these two customers, the heads of these organizations, seen the documentation that is there including the actual contracts and things, short of holding it and showing it to you, I'm not sure what else I can say. I do appreciate that some of those some people sort of wonder about integrity and the credibility that I keep saying all of those things, but I always sort of have to walk a fine line. Is it better not to say anything and just not tell you about any of that until the contract is issued or do I give you a bit of a narrative? And sometimes that means that narrative is wrong on timescales because the agency itself doesn't know and they won't short circuit their processes. The administrators will not short circuit the process because a border guard or a coast guard or a fisheries want to have it today. And my conclusion rightly or wrongly is I prefer to tell you what is going on, to tell you the story factually, good and bad, you know that when there's bad news, we're straight away on the airways as well so that you can understand why you might be invested in SRT and the scale of the projects that we're going after as opposed to just say I'm not telling you anything until we get a contract and you have months on silence. So obviously that, that, means that I get things wrong at times and that's just the way it is. So I want to talk about this, this VSP thing. So it's not a mythical thing for your benefit. It's actually something internally. The problem that we have in sales and you can shout me down if you want for as well is we get so many inquiries. We are not short of inquiries from all sorts of people around the place. We want this, we want that and all the rest of it. And of course the new one's always super exciting because it's fresh opportunity and everything else and you haven't been ground down by the other ones and stuff. And it's so easy to spend huge amounts of time on it to the exclusion of the older ones that perhaps are harder and a little bit more boring, but actually are making steady progress. And the purpose of the validated sales pipeline is who is serious and who's just interested? Who's just exploring the opportunities. And what we have is a set of standard documentation which we're trying to improve and standardize even more that we can just send out. So we don't ignore those inquiries, but we just send those out. But they're not developed sufficiently for us to go and say: Okay, well, I'm going to spend huge amounts of time on that. I'm going to fly backwards and forwards to that country to see them. We're going to invest in a demo and all that sort of all of that consultancy that costs money because everyone gets paid that if it's just a general interest. And so the point here is that we really do talk about is it worth spending the time. We Francois and I every week are just do we does this qualify to get into our validated sales pipeline? Do they have the money? We've had an inquiry from 1. I won't mention the country because we're on camera and stuff. But we just no, we're not going there because we know they don't have any money. They're all super interested in South America, super interested in everything else. But we're just not going to because they haven't proven that they've got a decision to proceed with a system that they really want to do it, that they've had the in principle internal political and budget approvals. They've really sort of thought through what this is going to cost. And we believe that they're serious. It's not just on board today on a Thursday, what I'll do, I'll just call SRT and get them to have a nice presentation and stuff and I can use the conference room which has got air conditioning as opposed to my office, it doesn't. So the VSP is a real thing. And then within that VSP, obviously, there are some that are at the beginning and some that are at the end. So it's not just a sort of made up thing. So it's an actual thing, the tool that we use. And the reason I tell you guys is back to my point earlier is that otherwise how do you evaluate the prospects for this company in the absence of forecast which is difficult for us to do at the moment. And I think the best way is to show these are the scale of the opportunities. This is why we're investing all this money in a really fancy system because actually people are prepared to pay these sorts of sums of money and these are people genuinely interested about 20 of them. So and within that, just to give you some dynamics, the largest is worth about £125,000,000 in that Southeast Asia. The smallest is £400 in Africa. The shortest time scale is 4 months and the longest is 3 years. That doesn't necessarily link in value. The longest isn't the highest value and stuff. Actually, the shortest is that one, by the way, but the longest isn't that one. The majority are Coast Guard and aimed at maritime security, but that also then crosses over with IUU illegal, unregulated, unlicensed fishing. What was that? Unreporting. Unreporting, okay. I've been saying it wrong for years. Now I learn. Several are multi phase projects. So once we've done this one then there's the next one and next one and next one because their appetite today is bigger than their tummy and their tummy being their budget. And so for example, the one in the Middle East, the bigger one is initially what we call an NAIS vessel identification project, but we already know that we're talking to them specifying the next phase where they'll add radars and cameras and all sorts of other fancy stuff. They're constantly wanting to improve like any IT system, you're constantly wanting to improve. And as I said, they're all at different stages and of them about £125,000,000 are in that final step final contracting stage, either just before going to tender where we know that the tender is 4 weeks or after tender where we've been told we've been awarded it and we're waiting for them to issue the contract and have authority to issue the contract. So hopefully that explains to those that are viewing and also hear a little bit more about this VSP that it's not a sort of fanciful thing. And interestingly when we put out these figures, we do need to validate these. I have to get it past Richard who constantly questions me about it and Francois about it and also we then have to validate that with our brokers and stuff. These things aren't just made up. Yes. 3 years or so, the London buses come through. You get 4 or 5 contracts coming through 1 after another. You get sight of more coming through. What additional sort of infrastructure do you need to introduce to hang on, €125,000,000 to €200,000,000 over a 2 year, 3 year process? We have tests, so it's all okay. You can deliver it. We have Jeff, who's specifying it and we have Neil, who's developing it. The answer to your question is we've created the functionality pillars of, if you will, the departments that we need to do all of that in the company. I think if you ask everybody here, there's not enough resources in each of those today, but there's enough to do this and get started and then we can build the resource under that. But because of the way we've developed our business model, it doesn't mean that you suddenly get this great big sucking noise in the bank account that we suddenly get all this gross profit, but it's all spent on people to deliver it and therefore the net that's left over is pointless. The business is scalable. Does that answer your question? Have we had any questions on the okay, gosh. Hi there. Everyone's falling asleep or it's a good presentation. So summary, yes, the last 18 months is frustrating and so we call it this we've made the best of it frankly and we've really moved our product along and our planning to be able to scale up. And I think we're super confident of our ability to do that. We're not in a perfect resource position, but it would have been madness to carry on hiring lots and lots of people if we didn't have the contracts. We're in a good position courtesy of robust financial management. We don't spend a fortune on all sorts of things. We're constantly watching the pennies as you would expect. On the Systems business, we've made really good progress on the development of the product. And on these contract opportunities. They are sitting there. There has been progress. I know you don't sort of hear it and you want progress to be if you sign the contract. And I feel that in the last few months, this sort of quagmire of everything going to Saudi is really starting to speed up. I was particularly, even I sometimes go, cautious, this is ever going to happen, right? When I went to the Middle East the other day, it's clear this is, just dotting of I's and crossing of T's. And then we will have to pedal quickly to do their delivery in the time scale. And then on the transceivers, we're aiming for 10% to 20% annual growth, good margins, cash generation. I know it's not as sexy as the systems business, but this business is now this year is going to be around a £9,000,000 a year business, could be £10,000,000 a year. And with Nexus coming in 2023, that could be multiple times bigger than that. So that's the summary. Any more questions or any questions? Yes, sir. I'm assuming that if the GBP135,000,000 delivers, patients will be rewarded. That will allow either be used for buying a bolt on or possibly starting a dividend? We have a vote. You see it in the back. Yes, we have one. Or possibly, 2, 3 years' time, a dividend policy. Yes. Well, today I don't see that there's any bolt ins to buy at the moment. We've purposely set out to develop all our own stuff and we're quite clear about the core of our systems and where the value is. So in transceivers, nobody does AIS VHF transceivers better than us in my opinion. The technology and our capability and our GeoViz system is truly unique and so we're happy to have invested in those bits. So I don't see that we buy a radar company or anything like that. We would like to build up that buffer and then after that, I think as Warren Buffett says, if we can't deploy that cash and give a return, we should return it in the form of dividends. I know I mean then some people get ratty about: Oh my god, are you going to get taxed on dividends as opposed to capital gains and stuff or we should do share buyback? Let's close these and that's a lovely problem. It's transformational with because of the profitability on the software stuff of these systems and then then we'll decide. Last week I posted I'm going to visit the AGM. Has anybody got any questions? I got one response and that was enjoy the cakes. Yes. And have you did you enjoy the cakes? Yes. Not yet. Okay. Well, everyone's invested for the cakes and this was a complete waste of time. I wouldn't blame you. Try the banana cakes. Well, the banana cake is very good. Well, I don't know what yes, yes, yes, yes. I mean, I wish I could show you other stuff and documentation that I'm not allowed to show you and I think, those that have some smidgen of skepticism, it would disappear. But if they are governments and I can't, you know, when I was, with somebody 2 weeks ago in the Middle East, I was told 10 days And it's the first time I've been given this is a serious guy given actually a time scale and in my head I thought okay, well 10 days is more like 20 days and we're sort of just past that 10 days bit but let's see. He doesn't know. I mean that's the point because of the way the procurement happens. We still don't see any serious institutions being interested in interested in this line? Interested, yes. Not buying. So there's definitely a risk aversion. Our stories have been around there for a while. I think the institutions, which by the way only have money because you give them the money, they're like the government, are looking for slightly shorter term rewards whereas I think we have benefited from the support of our shareholders over a long term to get to where we are. I think when these come in, that will change because there's a huge amount of interest that hasn't been converted into let's make an investment in SRT. Because once these happen, they then understand that it leads on to data sales, it leads on to further contracts, etcetera, particularly a lot of satellite data to be sold into these systems in Southeast Asia. That will come. You mentioned the returns of revenue streams that have been building up. Can you quantify it? Not really. I can talk to you about one particular project. So in Southeast Asia where we have our fisheries project, so you're probably looking at just on that one on just on the transponders they have and think £2,500,000 a year. But then if they expand the transponders, then there's going to be more and so you have each project, they then expand the monitoring system and they need more data, more monitoring system, more data. So it just keeps going. So £2,500,000,000 profit? Correct. Yes, yes. Yes. Yes. Rich? When we first started looking for Philippines project, that was something that to our banks about and considered. And it became apparent that it was a hugely complex activity to do with things like cash deposits for unfavorable forward contracts that might unwind and things like that. So we didn't hedge at the time. And actually, thankfully, we didn't hedge because we probably would have hedged at about Ps.70 to the pound or more. And actually, we've through the life of that contract, we probably achieved about p65 pesos per pound. So actually, we'd be much more profitable as a result. So and that's a sort of quite a volatile relatively volatile currency. So I think in the future with other contracts, they're more likely to be in maybe more stable currencies. It's not something that's off the table and it's something that I would talk to the banks about. It's not something I'm hell bent on at the moment. I think also our contracts, particularly in Middle East, are dominated in U. S. Dollars and the margin, unless there was a complete collapse or something in the currency, I think the margins withstand the reasonable fluctuations that you expect. And I think And a bit of our cost base as well as the U. S. Policy, there are payments to Flextronics and things like that. So you should have a natural hedge there as well, really. I think the default culture here is simplicity and we see hedging as complex and not necessarily beneficial. And so we tend towards just let's just keep it simple. You can fire that back at us next year when the dollar's collapsed or something. It's a profit center for someone else. Sorry? It's a profit center for someone else. Yes. But I suppose everyone makes a profit, don't they, for service stuff. But yes, at the moment, we're not persuaded, I think would be the answer. Okay. Any more questions from anyone on the online? No? Any more questions here? Obviously, we're going to have a bit of lunch and so you can keep asking questions if you like. Okay. So thank you very much and thank you everybody for watching. Hopefully next year, a lot more people and a lot more success to get people here as well. Thank you. Thanks very much. Thanks. Thanks guys.

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