Edshann, I think the important thing to remember here is that...

Edshann, I think the important thing to remember here is that they were awarded a $145M contract in 2021 when up to that point, they had just achieved annual record revenues of $70M... I have no doubt they had all the best intentions, but maybe a case of "eyes bigger than their stomach". I note in their October 2021 growth presentation that the intent of cashflows from this project was to be cash neutral, with a mix of contract terms including lump sum.

If we talk in general terms, I think to them this was a perfect steppingstone, a way to open the door to bigger, and better things. A few years later, and a global pandemic, and we all know what transpired. (I note they did mention somewhere I think that two contracts were the cause? Not sure what specifically the second one was).

But back to your question, I think if you are looking at their margins during that period, factor in that they took on a contract twice their existing revenues (5 fold if talking about Simpec alone), and with the intention of being cost neutral. You can see in my original analysis, and specifically int he below, you can see the impacting on OM% this had on Simpec.




To be honest, the fact they were able to survive a contract more than double their previous record revenues, during COVID restrictions, record inflation spikes, lack of resource pool due to closed borders, transport issues, the list really goes on and on.. The fact they survived that, with healthy cash reserves, nil debt, in isolation is honestly pretty impressive..

So, in regards to your question, I think the in the current climate and uncertainty, a TCE has the potential to be beneficial to both parties and still provides enough of a margin to make WSI profitable (relative to their current value), I don't think it means that with the ride DD they also can't explore other options based on each specific opportunity.

AS far as impact on contracts? I don't know if TCE will exclusively have one, but in regard to each group, Altype is predicted to achieve record revenue of over $100M, Simpec looks to be on a small drop post IBO, but did just sign a $105M contract? Watmar, is just a bonus at this stage, and hence not really factored into above calculation, happy for a Suprise though!