TRANSCRIPTION OF FINANCE NEWS NETWORK INTERVIEW WITH MOBILARM
(ASX:MBO) CEO, LINDSAY LYON
Clive Tompkins: Hello Clive Tompkins reporting for the Finance News Network. Joining me for an update from Mobilarm is CEO, Lindsay Lyon. Lindsay welcome back. A lot has happened since we last spoke, can you bring us up to date starting with your Entitlements Issue. How much are you looking to raise and where will the funds go?
Lindsay Lyon: Well thanks for the offer to come back again Clive. We’re raising $3.1 million in an Entitlements Offer and the purpose of the funds is to acquire a company based out of UK called Marine Rescue Technologies. They’re the dominant provider across Europe for Man Overboard equipment. They are the preferred supplier in the North Sea, off-shore oil and gas, in Spain across the wind farm energy market; so fantastic synergies with Mobilarm’s existing business, takes us well and truly into the European market.
Clive Tompkins: Good thanks Lindsay. Can you tell us how MRT’s technology compliments Mobilarm?
Lindsay Lyon: Look the Sea Marshall Technology – in fact David Marshall the original founder of the business, could quite probably be attributed with inventing the Personal Locator Beacon. So he’s been in the business for a very long time. Their technology is an older technology, it’s called 1.00 to 1.5, it was developed during the Second World War to locate down fighter pilots. Their technology fits in a certain price point. The Sea Marshall is a fantastic brand and we see Sea Marshall fitting into the price point for the commercial fishing industry, which is a bit more price sensitive. The Mobilarm technology for Man Overboard is a little bit more sophisticated, a little bit more advanced and so we’ll continue to position our Crewsafe brand into the top end of the marketplace for off-shore oil and gas. So it broadens our product portfolio. Most importantly is the credibility it adds to the Mobilarm Company overall, because of the length of time that Sea Marshall has been in the marketplace in Europe. Some of the brand’s, companies that they are selling to include BP, Chevron, ConocoPhillips, Bristow Helicopters, Bond Helicopters, so they have fantastic credibility in the market place already. And they’re now the preferred supplier for Siemens who are one of the dominant companies building wind farm energy in off-shore markets across Europe as well.
Clive Tompkins: Good thanks Lindsay, so when will the transaction settle and what is the consideration?
Lindsay Lyon: So the consideration – we’re paying 3.5 times their average EBITDA earning over a three year period. So the total consideration should complete at around 1.7/1.76 million pounds sterling and the transaction should close on the 16th of May this year, following a successful Entitlements Offer.
Clive Tompkins: Can you tell us now about your contract with Apache Energy?
Lindsay Lyon: Oh look Apache Energy is very, very exciting. Apache Energy is off the back of the work we’ve done with BHP Petroleum, where BHP Petroleum and Bristow Helicopters are looking and have moved to mandate the use of our product, for off-shore helicopter transfers in the North West shelf of Western Australia. And Apache Energy have looked at that and what BHP has done to remove the risk in their workplace, and adopted the product for their platforms and rig workers. And that’s starting to roll out now. So it’s a very small order initially, where they’ve started to adopt the product and the product will be fully integrated into the personal work vests of the guys, so they won’t even know they’re wearing it. And so they’ve improved the workplace safety where they can now get automatic alerts and alarms, and track and locate people in a man overboard scenario.
Clive Tompkins: Lindsay another major market for Mobilarm is Defence with the US Navy agreeing to purchase a second tranche of your V200 Submariner Beacons. First up, congratulations, but can you just tell us, you know, how important it is to win a contract of this type?
Lindsay Lyon: Look its fantastic validation for Mobilarm is what it really is. There’s a saying in marketing - if you can’t be the Pope stand as close as possible to him. And so what we’ve been able to do is - we’ve won a sole source contract with the United States Navy to modify our current product and build a submarine version of that product. And actually we’ve now finished the product and I’ve brought one in here with me. This is the completed product, it’s done all the depth testing; it’s done all the submarine escape testing. We’ve done all the field testing and we’re now doing final field validation testing of the product with the United States Navy at a submarine torpedo missile testing facility, down in the Bahamas, it’s called AUTEC (Atlantic Undersea Test and Evaluation Center). And there we’ll be doing field testing where we will have a number of ships, we’ll have a number of helicopters, a number of fixed wing aircraft and some satellites, all of the Navy’s expanse doing field testing. Follow that field testing; we’ll be doing some follow-up presentations at the NATO Conference in July, which will be in Amsterdam. And then leading from there, we expect that the US Navy would move forward with procurement and roll-out of these submarine beacons into their fleet in the last quarter of this year. At this time the US Navy has purchased around 18,000 survival suits at $3600 each. Now our intention and hope is that the US Navy would put one of these products with every survival suit for every sailor that’s escaping. Now we’re charging around $2,000 for these products at this time, so when you look at the scope of that opportunity, the total addressable market within the US Navy alone is around 20,000 units. So it’s a very big piece of business.
Clive Tompkins: Thanks Lindsay and what is the potential to expand the contract into the US Surface Fleet?
Lindsay Lyon: The US Surface Fleet has already implemented the older technology across the Surface Fleet. In fact they’ve actually installed 100,000 beacons across the Surface Fleet using the old technology. Now that technology, it is our understanding, is currently under review. It is far inferior to what we’re providing in the Submarine Fleet, so we see an opportunity without a doubt over the next twelve or twenty-four months, where there’ll be an opportunity to submit product to the Surface Fleet that would replace their existing technology. And I think Mobilarm’s in the best position out of anyone in the world to have a go at that business.
Clive Tompkins: Now Lindsay I see you’ve had a breakthrough for your V100 pocket size Locating Device from the International Telecommunications Union. Is this similar to a drug getting FDA Approval, in that your product is now available to be sold in key markets?
Lindsay Lyon: You are exactly right, it’s a very good comparison and it’s just about been as long and as laborious as an FDA Approval. One of the big inhibitors for Mobilarm has been regulatory approval for our product to be able to be sold into International markets, particularly obviously in Europe and the North American market. So what’s actually occurred is that the ITU, which is the International Telecommunications Union was referred the product by a couple of countries – what do you think, how does it work? And they’ve agreed that if we do a slight modification to the product, it will be acceptable to ship into the worldwide markets and the same has occurred in the North American market. So we’ve made that modification to the product on their recommendation and we agreed with it and put that forward as an offering, if you like. And so by the last quarter of this calendar year, we will have a product that can ship into all International markets and we’ll have International Regulatory Approval. So it’s a major breakthrough for us – that has been a big sales inhibitor for us.
Clive Tompkins: Last question. Lindsay the past six months have been transformational as far as the Company’s concerned, where do you see Mobilarm in say the next twelve to twenty-four months?
Lindsay Lyon: We’ve made a lot of progress over the last twelve and eighteen months. We’ve removed all the technology risk because we’re now shipping product that’s been validated in the marketplace. It’s been well tested in the field by the likes of BHP and Bristow and Bond and etc. etc. We’ve now been validated by the US Navy as a viable supplier and vendor to the US Navy. We expect that will lead us into obviously lots of other Navies and we already have enquiries from a lot of other Navies. So where I see the Company in the next twelve to twenty-four months, is a Company that is cash flow positive and out of that early stage, that it has been in to date. So from a shareholder’s prospective, we’ve removed significant risk from the business now. The acquisition of MRT consolidates our position on an International scale for the new Man Overboard category, and so we expect that the share price will be significantly different than the 5 cents it is today for the Entitlements Offer.
Clive Tompkins: Lindsay Lyon congratulations on the success.
Lindsay Lyon: Thank you very much, appreciate the opportunity.
ENDS
