Hydrotech International - Engineering and Tecnology play

[bear]

Hydrotech International Limited

This is a nice little company that specializes in the design, installation and supply of proprietary technology in the area of prevention of water ingress into subterranean concrete and masonry structures.

Hydrotech is also developing technology in other areas, such as water table protection, irrigation and oil retrieval.

Hydrotech commercialises its intellectual property by providing water ingress solutions to corporations that own structures requiring a reliable and highly sophisticated process to de-water them. Hydrotech has offices in United Kingdom, Hong Kong, China and Australia.


This is one for those that like technology based solutions to common issues in most countries where water can be an issue.
Has many proposals and potential contracts in the pipeline (at least 40 proposals) and successful current operation in the Hong Kong Central subway.
A foot in the door with success in Hong Kong to China subway operators and positive comments from the demonstration of the technology products from Henderson Land and Swire Properties for property development and management of basements
Successful re-negotiation with Metronet in the UK following Metronets financial woes from last year – see boardroom radio below
On track to be cash flow positive by June 2008 as per earlier announcements
Ground floor opportunity well off its recent lows with cash for at least 3 more quarters
Low market cap 155m shares @ 10.5c so around $A16m
Major re- rating invitable and will be a multi bag prospect

Some links
http://www.hydro-usl.com (http://www.hydro-usl.com/)
http://www.hydro-usl.com/presentations/IPO_Presentation.pdf (http://www.hydro-usl.com/presentations/IPO_Presentation.pdf)
http://www.hydro-usl.com/pdfs/BoardroomRadio_presentation.pdf (http://www.hydro-usl.com/pdfs/BoardroomRadio_presentation.pdf)
http://www.brr.com.au/event/46372 (http://www.brr.com.au/event/46372)

happy reading and listening

Bear

Discl. hold and very happy with progress since purchase :D

[bear]

I should add the code is HTI

Bear

[The Big Ease]

bear,

thanks for a great intro post.
this company is a little ripper. where were you when they were at 5.5 cents?!!!
3 directors buying at those prices too.

i think its good buying at 10 cents and outrageous value at 5.5 cents given the indicative value of the stage 1 and 2 tenders, the efficacy of its brilliant tech and the little choice its customers have to solve their problems!

market opp is significant. afterall, water is everywhere.
will be interesting to see how their WET tech comes along too.

water is obviously going to be the big issue along with energy for decades to come.
this company may just have a big part to play.

my main concern is the nature of their clients ie governments and their agencies.
they love nit picking on delivery and delaying payment.

watching but looking to buy.

edit: the other thing that i didnt quite understand was their pricing co.ntracts
mentions something along the lines of cost plus 20% of the value of the works undertaken. so regardless of how big the job is, they charge an extra 20% for margin.

so does that mean they would have EBIT of 20% of a 35m pipeline of works? have i got that right?
if so, the next twelve months could look something like this:


Shares (M) 155
SP 0.105
Market Cap (M) 16

Pipeline (M) 35
Mark-Up 20%
EBIT (M) 7
PE 10
Prospective SP 0.45

[bear]

bear,

thanks for a great intro post.
this company is a little ripper. where were you when they were at 5.5 cents?!!!
3 directors buying at those prices too.

i think its good buying at 10 cents and outrageous value at 5.5 cents given the indicative value of the stage 1 and 2 tenders, the efficacy of its brilliant tech and the little choice its customers have to solve their problems!

market opp is significant. afterall, water is everywhere.
will be interesting to see how their WET tech comes along too.

water is obviously going to be the big issue along with energy for decades to come.
this company may just have a big part to play.

my main concern is the nature of their clients ie governments and their agencies.
they love nit picking on delivery and delaying payment.

watching but looking to buy.

edit: the other thing that i didnt quite understand was their pricing co.ntracts
mentions something along the lines of cost plus 20% of the value of the works undertaken. so regardless of how big the job is, they charge an extra 20% for margin.

so does that mean they would have EBIT of 20% of a 35m pipeline of works? have i got that right?
if so, the next twelve months could look something like this:


Shares (M) 155
SP 0.105
Market Cap (M) 16

Pipeline (M) 35
Mark-Up 20%
EBIT (M) 7
PE 10
Prospective SP 0.45


What confirmed this for me was when i was researching the Directors were buying big chunks at around 5.5c - i managed to get some at 6c so nice gain so far :D

This area of Engineering will only grow and water is a big issue

Metronets previous demise was probably the only reason for its drop to ridiculous prices

With Chinese link and with metronet back up this is very promising

Bear

[Huang Chung]

I posted the following in September last year on the 'blood on the floor' thread....

My industrial spec is Hydrotech International (HTI). Amazing potential, but no revenue as yet. Worth keeping an eye on, for sure.

I'd got in on the float, but have since sold (luckily before the big fall). I also picked HTI for the 2008 ASX comp here on Sharetrader.

I am a little bit concerned about the lack of progress to date at getting contracts signed and revenue in the door. If the technology is so good and needed, you would think that they would have had more contracts signed, or alternatively, they would have been taken out by a big construction or civil engineering player.

I understand the new Chairman is pretty eager for HTI to score some runs.

I will wait until I see some meaningful revenue before I consider a re-entry....this one is just so far off people's radar, there will undoubtedly be time to get set if they start earning in a meaningful way.

[bear]

I posted the following in September last year on the 'blood on the floor' thread....

My industrial spec is Hydrotech International (HTI). Amazing potential, but no revenue as yet. Worth keeping an eye on, for sure.

I'd got in on the float, but have since sold (luckily before the big fall). I also picked HTI for the 2008 ASX comp here on Sharetrader.

I am a little bit concerned about the lack of progress to date at getting contracts signed and revenue in the door. If the technology is so good and needed, you would think that they would have had more contracts signed, or alternatively, they would have been taken out by a big construction or civil engineering player.

I understand the new Chairman is pretty eager for HTI to score some runs.

I will wait until I see some meaningful revenue before I consider a re-entry....this one is just so far off people's radar, there will undoubtedly be time to get set if they start earning in a meaningful way.

Good comments there HC but am confident not only in the technology but also the delivery of the product and revenue. It must be remebered that the company was severley hamstrung by the demise of metronet in the UK.

Unfortunately all their eggs were on a successful implementation of the program with Metronet but this did not occur.

The key turning point was the successful implementation and operation has occured in the Hong Kong Central Subway and that Metronet has been revived and still interested.

Also key has been the positive statements from property development companies such as Henderson Land and Swire Properties.

The key components is that the technology is replicatable, it works, has many applications, and is a world wide issue.

The company earlier this year declared it would be cashflow positive by June and there has been no news to suggest otherwise. I must however say that some slippage has occured (a few weeks) on finalising tenders.

A re-rating will occur as soon as cashflow positive unless bought out before hand :)

Bear

[The Big Ease]

anyone have a target range of earnings for 2008?
based on their stage1 and 2 tender classification, i have come up with the following, which gives eps of about 3.4cents. that is assuming they nail the projects in the next twelve months and not taking into account that these numbers are 3 months old. apparently they are bidding for >5 tenders per week, often without competition.


Stage 1 Stage 2
Ave. Price 38 25
Sqm 900,000 1,200,000
Value 34,200,000 30,000,000
Probability 0.5 0.7
Probable Value 17,100,000 21,000,000

EBIT @ 20% (M) 3,420,000 4,200,000
NPAT 2,394,000 2,940,000

[Huang Chung]

The Big Ease - 'apparently they are bidding for >5 tenders per week, often without competition'.


Still concerned that they are not converting tenders to actual contracts, ESPECIALLY, if as you say there is often no competition.

You would also think that the type of work they are going after (prevention of water ingress) would be rather time sensitive......i.e. if HTI are offering a cost effective viable solution, a contract would be signed fairly quickly.

If they do start signing contracts, this stock should fly.

[The Big Ease]

The Big Ease - 'apparently they are bidding for >5 tenders per week, often without competition'.


Still concerned that they are not converting tenders to actual contracts, ESPECIALLY, if as you say there is often no competition.

You would also think that the type of work they are going after (prevention of water ingress) would be rather time sensitive......i.e. if HTI are offering a cost effective viable solution, a contract would be signed fairly quickly.

If they do start signing contracts, this stock should fly.

they are signing contracts, they just announce the big ones ie metronet, CC expressway etc not all of the contracts are big enough to announce and also keep in mind that they are at the beginning of their commercialisation process. these things can take time, especially if they are part of an overall construction tender.


one last thing;directors are buying.

i forgot to write last time that they actually have a book of work in the order of 8million sterling and increasing.

[The Big Ease]

the chairman has filled his boots.
now holding 10mill shares.

good signs, surely...
i bought some more overnight @ 9 cents, only to see someone has dumped a load at 8 cents and more buying at 7.7cents!! seems a downward trend (not that i am a techie), so perhaps there will be further opps to buy at lower prices. too illiquid to tell though..anything could happen.

it has been a while since a market update, so perhaps some announcements due.

[bear]

the chairman has filled his boots.
now holding 10mill shares.

good signs, surely...
i bought some more overnight @ 9 cents, only to see someone has dumped a load at 8 cents and more buying at 7.7cents!! seems a downward trend (not that i am a techie), so perhaps there will be further opps to buy at lower prices. too illiquid to tell though..anything could happen.

it has been a while since a market update, so perhaps some announcements due.

Ask Big Ease and you get :)

http://www.asx.com.au/asxpdf/20080620/pdf/319rdw7y96b3k3.pdf

As predicted things progressing well and good priced placement of 23,990,000 shares @ 10c (almost 30% premium to closing price) to Lippo Securities.

http://www.asx.com.au/asxpdf/20080620/pdf/319r2cvwrg75dq.pdf

In the long run Lippo Securities got a bargin

should see some price appreciation on Monday

Bear

[The Big Ease]

you wouldnt believe it bear, but i sent an email to david ledger and he replied last night (london time) with the hint of a capital raising
Hi David,

Thank you for you reply.

"Further strengthen the balance sheet in the near term" - sounds suspiciously like a capital raising. This would be disappointing after the reassurances that were given about having sufficient cash levels to develop a cashflow positive business. Not a red card, but it would be disappointing.

Also, could you please tell Mr Phil Gray that he has demonstrated sufficient support for the company in his share purchases and it would be appreciated if he would get the hell out of the market so I could buy some more at lower prices!?!?!

Finally, I really like the HTI story and am encouraged by the recent and significant directors purchases, but let's get some contracts David!!


Be under no illusion; we are all totally focused on getting contracts and nothing else.

Appreciate the support. We need to deliver results and know that more than well.

just an update on the figures i posted up there.
The quoted charge out rates are in fact the full amount of revenue due to the company should they enter into an agreement. Not as i had presumed, the full contract value of which HTI only received 20%.

Mr Ledger wrote that the material costs were minimal and hti had little requirement to hold significant inventories in advance of contracts.

"V.High margin business" were his words.
i think this is turning into a super little business actually.
i am quite confident it will become my first ten and possibly 20 bagger within 3 years.

how exciting does china look right now?!?!
MOU to prepare work for 19 underground stations and a total pipeline of 23 million in china alone! that would present NPAT of approx 10-15mill alone.

[The Big Ease]

the chairman is not messing about.
just went sub.

what do you make of lippo holding some of his securities and then bobbing up with a placement of 2.3 mill?
all the right noises lately.


wont anybody buy my 1 remaining share at 8 cents? hehe hilarious.

[The Big Ease]

philip gray has just boosted his holdings to 16 million shares @ 10 cents, 25% above closing price. good vote of confidence. he hasnt wasted anytime. lots more to come, im sure....

EDIT: Metronet have formally accepted the MPS technology, currently is use at their walthamstow station. more work to come.

announcment RE: China underground network, "expected soon".

the next six months will hit a juicey sweet spot for the company.

[OutToLunch]

Sounds like a nice story -- just got some a few mins ago for the bottom drawer. Now watch the bottom drop out of her. :)

[The Big Ease]

welcome aboard OTL.

lots of things heading in the right direction.

this could go anywhere from here. 30 cents in the short term is not unreasonable.

[OutToLunch]

Thanks -- yes it sounds like an interesting situation (high potential, in growth phase, niche market, unrecognised by market, strong insider buying). Sounds good to me.

Out of interest, whatever happened to Sovereign Hydrology? Part of the recently imploded Financial Resources Group (FRL) -- they had a very promising technology for dealing with water ingress issues and I thought they had good potential. However the whole thing disappeared and as a holder of FRL options I was disappointed at the lack of communication on where things went wrong.

Anyway -- here's hoping for more luck with HTI. :)

[The Big Ease]

http://www.mining-technology.com/contractors/roofing/sovereign-hydro/

this?
yeah very different. i tried logging onto the sovereign hydrology website, but i got a malware warning.
these guys seem to waterproof a structure with a layer of their rubber seal. so it would require excavation on existing structures, which would be very expensive. the mps system makes the water disappear in the same way it came in, through osmosis.

i would love to hear of any negatives on HTI. i cant think of any, other than technology/patent vulnerability. though given the major contruction/engineering firms would be all over any alternatives and have signed up to be licensees, then this must be the beez kneez.

[OutToLunch]

Thanks, yep that's the one, looks like they're still around. Perhaps FRL had to liquidate their stake as part of their receivership, who knows. We holders weren't told!

Might have to spend some time comparing the two -- re excavation, Sovereign have this to say:

>>
WATER SEALING BELOW GROUND LEVEL

Below ground level - NOH20 has successfully sealed waste disposal sites, concrete roofs and slabs, pool decks, basements and cellars, underground parking garages, underground tunnels, dam walls, reservoirs, retaining walls, lift wells, subways, dewatering pits, grain silo's and pipes encased in concrete.
We do not use surface applicators or excavate to gain access to the ground side of a structure. All repairs are completed by means of injecting N0H20 into the water bearing areas of the structure. The effect is comparable to applying a waterproof membrane to the soil side of the structure, without the need for excavation. NOH2O is rubber based and will not crack or tear when normal construction or ground movement takes place.
>>



It'd be interesting to see if they present serious competition to HTI or not -- perhaps their approaches are very different. Wonder if HTI know about them?

[The Big Ease]

there may be some areas where this technology is preferred, i would imagine they are very few. just have a read of the independent expert's report on hti's website. it gives a very good recommendation. I have also asked a friend who is a water engineer about mps' electro osmotic process and he seemed quite positive.

mps cannot be used on concrete structures that are not continuous (see independent expert's report), where SH's rubber seal mayb be able to.

im not an engineer, but SH's seal sounds rather clunky when compared to hti's mps system. mps atually repels the water through the same capillary structure through which it came using the very same forces. very simple and easy installation, low cost, fast and can be maintained through remote access. to me, it sounds like a more sophisticated yet simpler to install alternative for the types of structures hti is aiming for.

you couldnt put a rubber seal on a 2 km dam wall and maintain it too easily.
where do you put the rubber seal when you have the watertable seeping through the basement?
and what about reclaimed land?
how much rubber seal would be needed for an underground train network?

it just sounds messy, especially considering it has the same viscosity as water. how would you ensure a tight seal is achieved and maintained? mps doesnt have any of these issues.

[bear]

nice announcement re Uk activities with more to come from China/ Hong Kong very soon

Those participants in the recent placement would have liked what they saw so upside is still very good (price is at what placement holders paid) - may average up myself

Welcome aboard OTL - you won't be disappointed on this one - timing and price were v. good.

positive cashflow won't be far away and watch the re-rating when that occurs

Bear

[The Big Ease]

revised pipeline. Keep in mind that:
*they have expressed a high level of confidence RE: stage 2 proposals and have stated that these are moving towards contracts being ratified by clients. I have conservatively allowed for only 30% conversion.
*these have all been achieved prior to the high profile installation at walthamstow being formally accepted by metronet
*they are being asked to submit approx. 5 proposals per week and increasing
*they are getting significant traction in china where they already have a pipeline of 23m in submissions.


Stage 1 Stage 2
Ave. Price (AUD) 40 28
Sqm 900,000 1,200,000
Value 36M 33.6M
Probability 0.15 0.3
Probable Value 5.4M 10M

[The Big Ease]

12 month projection


Shares (M) 180
SP 0.100
Market Cap (M) 18

Revenue(M) 15.48
Profit 7.74
PE 14
EPS 0.043

Prospective SP 0.60
Gain 502%
Market Cap (M) 108.36

[The Big Ease]

table below shows the outcomes of 50K AUD invested @ 10 cents per share given the row and column variables below.

row: potential PE ratio
column: % of stage 2 business awarded (assuming only 15% of stage 1 is awarded and profit margin is 50% of revenue)



0.30 0.40 0.50 0.60 0.70 0.80
8 122,000 159,333 196,667 234,000 271,333 308,667
10 165,000 211,667 258,333 305,000 351,667 398,333
12 208,000 264,000 320,000 376,000 432,000 488,000
14 251,000 316,333 381,667 447,000 512,333 577,667
16 294,000 368,667 443,333 518,000 592,667 667,333
18 337,000 421,000 505,000 589,000 673,000 757,000
20 380,000 473,333 566,667 660,000 753,333 846,667
22 423,000 525,667 628,333 731,000 833,667 936,333
24 466,000 578,000 690,000 802,000 914,000 1,026,000
26 509,000 630,333 751,667 873,000 994,333 1,115,667
28 552,000 682,667 813,333 944,000 1,074,667 1,205,333
30 595,000 735,000 875,000 1,015,000 1,155,000 1,295,000
32 638,000 787,333 936,667 1,086,000 1,235,333 1,384,667

[bear]

12 month projection


Shares (M) 180
SP 0.100
Market Cap (M) 18

EBIT (M) 15.48
Profit 7.74
PE 14
EPS 0.043

Prospective SP 0.60
Gain 502%
Market Cap (M) 108.36


i'd like this price in 12months:D

nice numbers there Big Ease

bear

[OutToLunch]

That'd be fine with me too. :D

Thanks too Big Ease for comments re. Sovereign, yeah I agree it sounds more complicated, and if you missed a bit in the seal you'd still have water problems. HTI's approach is very novel.

Let's go. :)

[The Big Ease]

i'd like this price in 12months:D

nice numbers there Big Ease

bear
hehe me too.
i couldnt resist and picked up some more this morning.
big spread opening up between buyers/sellers. its going to have to make a break one way or another.


anyhow, im obviously quite positive about this one. cant help but feel everything is lining up. metronet, hong kong and the bolt from the blue; china!

[The Big Ease]

if you want to know why i am so positive about this company, take a look at this presentation http://www.brr.com.au/event/36480

* pay particular attention to the "China" section as well as "Hong Kong".
* finalising agreement for work on a 78km tunnel in china after the trial on a 40 metre section was completed!
* 5mill revenue for work on a dam. this is just a small section of one dam before further work will be considered in that dam and others. there are 22,000 dams in china, many of which are 70 years old and suffering from water ingress.

since then, the metronet opportunity has come back online, which is also quite significant.

OTL,

david ledger makes specific reference to "bentonite" mats that had previously been used for these purposes. apparently they tend to wear out after a few years. (slide 12).

i was gutted when the rpm rug was pulled out from under us. but i think this has even more potential. thanks to the bear for bringing it to our attention.

[OutToLunch]

Checked out the brr presentation yesterday, thanks for the link. Looks/sounds very positive.

But... what do you take from the SSH notices filed today?

[Lizard]

Interesting technology, but given the fact it is unpatented, then the implied value at float seems a little high - i.e. 116m existing shares at 20cps = $23m pretty much all goodwill.

Looking forward, I would estimate maybe $2.4m NPAT for 08/09 if everything went very well on their proposals. However, I think they'd probably absorb another $5m of capital to achieve the value of contracts required and I would say the timeframe to ramp up would be very challenging.

Reality more likely to be slower than this - and competition likely to spring up quickly as the technology becomes accepted and copied.

[The Big Ease]

Interesting technology, but given the fact it is unpatented, then the implied value at float seems a little high - i.e. 116m existing shares at 20cps = $23m pretty much all goodwill.

Looking forward, I would estimate maybe $2.4m NPAT for 08/09 if everything went very well on their proposals. However, I think they'd probably absorb another $5m of capital to achieve the value of contracts required and I would say the timeframe to ramp up would be very challenging.

Reality more likely to be slower than this - and competition likely to spring up quickly as the technology becomes accepted and copied.

it is patented. not sure where you get that from. source plz?
the electro-osmotic process has been around for a while. it is the ability to apply, monitor and maintain this electric pulse that is the difficulty. this is what the mps system does and is patented.

the tech is most definitely patented.

OTL,

i have read that there were a couple of sellers in financial distress, hence the fairly large off-market buying that had been undertaken by the chairman. i am not sure of the details.

as for earnings in this financial year; i am not particularly concerned about what they clock up, so long as contracts are signed. david ledger has previously stated that they have ~33m of proposals that have been accepted by clients and are awaiting ratification of the formal contract. as you can see in the projections i have posted, even if they only get 30% of this work, it should make for a tidy profit.

[OutToLunch]

Hi Lizard,

This from the home page of Hydrotech's website: "Hydrotech owns 100% of the intellectual and commercial property rights to Electo-Osmotic technology and its own fully patented Multi Pulse Sequencing System."

Thanks Big Ease for the note on the distressed sellers -- if that's what it was all about then potentially a real scoop for Mr Gray.

[The Big Ease]

Looking forward, I would estimate maybe $2.4m NPAT for 08/09 if everything went very well on their proposals. However, I think they'd probably absorb another $5m of capital to achieve the value of contracts required and I would say the timeframe to ramp up would be very challenging.


agree on those approx. numbers.
im interested in where you think that 5mill in capital would be absorbed?
to my thinking, they would only need that much capital if they had to fulfil more than 30mill in contracts, which would surely be a good thing:

the installations are not particularly difficult, though some of the bigger/technical installations may take some time. once the surveying/designs have been completed, it really is just a matter of cobbling a bit of titanium wire into the structure and connecting it to the pulse box. the simpler installations can take a couple of weeks.

50% of the contract value is paid upfront, so they should have plenty of cashflow once they sign these contracts.

[bear]

Interesting technology, but given the fact it is unpatented, then the implied value at float seems a little high - i.e. 116m existing shares at 20cps = $23m pretty much all goodwill.

Looking forward, I would estimate maybe $2.4m NPAT for 08/09 if everything went very well on their proposals. However, I think they'd probably absorb another $5m of capital to achieve the value of contracts required and I would say the timeframe to ramp up would be very challenging.

Reality more likely to be slower than this - and competition likely to spring up quickly as the technology becomes accepted and copied.

The Big Ease and OTL have beat me to a response Lizard .. but i think with a bit more research you'll find the company has huge prospects and is not high but actually fairly cheap considering the risk reward profile.

Have a listen and read to some of the recent announcements and broadcasts as they provide an up to date position.

The chairman's still buying as is Ledger ... distressed seller selling so nothing to worry about. Lippos recent placement above current price is also reassuring

Bear

holding and looking to add

[The Big Ease]

agree with all that bear.
to me the most reassuring aspect of recent events is that both ledger and gray have been buying bucket loads of shares and that major engineering, construction and property companies have endorsed the technology and/or agreed to work closely with hti on addressing properties suffering from water ingress.

i have done some desktop research and every other competitor i have come across merely attempts to seal the structure with a membrane of sorts. nobody does anything as effective as hti. its by far and away the most advanced tech i have come across and its efficacy according to previous installations/endorsements is impressive.

it just makes sense that the best way to repel water is through the same process it came through the structure in the first instance. minimum interference with the structure and its surrounds. no excavation required. permanent solution that is remotely monitored. low cost maintainence and operation.

[Lizard]

Thanks for all the responses. I took the "unpatented" view from the prospectus of May 2007, which stated on page 40 of the pdf under Intellectual Property":

None of the Company's intellectual property is patented or the subject of patent applications

The pro-forma balance sheet also refers to goodwill which is described in the notes as relating to acquisition of "unpatented technology"

Seems I must have overlooked something, so I will try and get clarity at some stage.

Big E, I think your margins are probably overstated and also ignore corporate costs which I'd probably figure at about $5-$8m at the kind of turnover being suggested by the contract figures. However, I'd have high hopes for the run-rate on actually winning the contracts. The extra $5m is just what I figure they probably need in additional working capital to manage that kind of turnover. It could be a balancing act between speed of growth and amount of capital required. If 50% upfront is a reality on all contracts, then they are in a good position and the need for external capital seems a little less likely.

Don't get me wrong, I thought it looked very interesting and rough valuation of 22cps, even taking into account extra capital. But am also suspicious of companies which list to get funds for commercialisation of a new technology, as the results are more often disappointing or involve alot more capital than early investors envisage.

More than likely, as is frequently the case with promising "commercialisation" prospects, the share price rises to well above fair value - and then the very best of the companies finally fulfil their promise and catch up to a static share price, while the worst of them sink back into ignominy.

[The Big Ease]

Thanks for all the responses. I took the "unpatented" view from the prospectus of May 2007, which stated on page 40 of the pdf under Intellectual Property":


The pro-forma balance sheet also refers to goodwill which is described in the notes as relating to acquisition of "unpatented technology"

Seems I must have overlooked something, so I will try and get clarity at some stage.

Big E, I think your margins are probably overstated and also ignore corporate costs which I'd probably figure at about $5-$8m at the kind of turnover being suggested by the contract figures. However, I'd have high hopes for the run-rate on actually winning the contracts. The extra $5m is just what I figure they probably need in additional working capital to manage that kind of turnover. It could be a balancing act between speed of growth and amount of capital required. If 50% upfront is a reality on all contracts, then they are in a good position and the need for external capital seems a little less likely.

Don't get me wrong, I thought it looked very interesting and rough valuation of 22cps, even taking into account extra capital. But am also suspicious of companies which list to get funds for commercialisation of a new technology, as the results are more often disappointing or involve alot more capital than early investors envisage.

More than likely, as is frequently the case with promising "commercialisation" prospects, the share price rises to well above fair value - and then the very best of the companies finally fulfil their promise and catch up to a static share price, while the worst of them sink back into ignominy.


Lizard, i appreciate the questions. It encourages me to be more thorough in my research. I do recall coming across info in both the brr interviews and on the website that the MPS system is patented.

I have gone through and noted the section of the prospectus you have quoted and there is obviously a contradiction in what was written in may/2007 and what is currently sitting on their homepage.

I have written to david ledger to obtain clarification on this and will post when i have received a response. it may be that they have since obtained a patent or there is an obvious mix-up about their IP protection.

as for their corporate costs.
At the moment, they are running at 4-5mill per year in costs. As they win contracts, more of this will be paid for by the client as their licensing and revenue model is a matter of cost plus, which means the client will pay for the work that is undertaken, plus materials.

in anycase, assume that this 5mill will still be incurred and that there will be an additional 2mill in business related expenditure, whether business development, materials, admin, flights etc which will give you approx. 7mill in total costs. I also assume that their existing levels of personnel will be able to fulfil contracts with a value to HTI of 15mill AUD and any further work will incur a cost of 50% of the marginal revenue.

it is possibly generous, but as its been explained to me, they have a very lean structure and the cost of materials is quite low.

to quote d.ledger "very high margin business". i would consider this to be around 50% given the info.
EDIT: i have just re-read d.ledger's previous email and he actually uses the term "extremely high margin". subjective i know, but he sure does sound confident about the company's prospects.



this is a great point you make about commercialisation.
i put 2K on arasor at the beginning of this year just to keep my interest in it.
since then it has plmmetted to 22 cents from 1.50 and awaiting the outcome of a "restructure" hehe
it has some excellent "potential", but commercial execution has been a complete shambles.

in this regard, i take some heart from the endorsements hti have received by significant operators in this space, right across the globe, as well as the insiders buying big.

[Lizard]

Hi Big Ease - thanks for writing to the company for clarification on IP - I will be interested to hear the result. There are very rigorous standards of proof required for a prospectus - and therefore if that is assumed to have been correct at time of production, then I would have thought any technology detailed in the prospectus could be considered to be in the public domain and therefore not patentable.

However, hopefully the company can provide the basis of the statements made on their web-site and clarify the extent of IP patents owned by the company.

[OutToLunch]

Hi guys, thanks for the useful discussion here. Admittedly the insider buying was my strongest reason for buying as I interpret that as the ultimate distillation of the facts by those who know the company the best. Reasons for insider selling are a bit more murky, as we've seen, but strong inside buying is (usually) a very strong positive signal. The more I read about the co. the more I like it.

As you say Lizard that 50% upfront payment on contracts is significant and means HTI are more likely to be self-funding as they take on new work, rather than having to pass the hat around in the interim. Sounds good to me.

[The Big Ease]

hi guys,

just got a reply from D. Ledger.

reading this is like hot chicken soup on a winters day.....very comforting indeed! hehe
i have tried, but i cant think of any negatives with this company. I find imhaving to temper my enthusiasm when i think of the scope of opportunities out there.

22,000 dams in china
60-70% suffering from water ingress
given the 5million dollars in work (revenue to hti. contract value ~20mill) on a small part of one dam hti have submitted on, how much is work on the whole dam?
then there are the underground networks
above ground rail
buildings
ports and harbours

btw, i do hold. average price of 9.4cents. i figured if 10 cents was good enough for the director/chairman, then why hold out and potentially miss out if a big announcement is made. there are many expected in the next couple of months.



On the Hydrotech prospectus (page 40), it states:

"INTELLECTUAL PROPERTY
None of the Company’s intellectual property is patented or the
subject of patent applications."


However, on Hydrotech's homepage it clearly states:

"Hydrotech owns 100% of the intellectual and commercial property rights to Electo-Osmotic technology and its own fully patented Multi Pulse Sequencing System."

Could you please clarify this apparent contradiction? we cannot patent electro osmosis as it has been know about for over 200 years. What we can patent, and have, is the method by which to regulate it through the MPS System


1. Has HTI obtained patent protection for its MPS system since the prospectus was issued? If so, when? we continue to refine the patents for MPS as we change and develop the design of it

2. Has HTI applied for patent protection for its MPS system? If not, why? na

3. If HTI has not done so already, does it intend to apply for patent protection of its MPS system? If not, why? If so, by when? What has been holding this process thus far? it is not as crucial as you are making out. Others have had 200 years to try and figure it out and have failed. The biggest impediment to anyone doing this is going through what we have done. Being signed off by the major authorities to implement the system

4. What is to prevent your technical team in Norway leaving to set up a competitor to HTI using the same technology or any other staff from passing on commercially sensitive technical information to potential competitors? we have all the right belt and braces around the issue of conflict. Besides, the Norwegians are all invested in this company and the intellectual property remains the rights of HTI

[Lizard]

Well I'm not sure that "comforting" is the right description for finding out that the technology is less patent-protected than you first thought and that the company appears to misrepresent the level of IP ownership on its web-site...

...but, to be fair, here's a link to a patent application (http://www.freshpatents.com/Electro-osmotic-pulse--eop--treatment-system-and-method-of-use-therefor-dt20070329ptan20070068814.php) (belongs to US company, OsmoTech, I think) which cites a 1994 patent (U.S. Pat. No. 5,368,709) and a 2000 patent (U.S. Pat. No. 6,126,802) which are attributed to "MPS system inventor", Kjell Utklev (not sure if he has actually been employed by Hydrotech though - just mentioned as working in partnership with Syverson).

Apart from looking up "OsmoTech", it's also worth a look at their subsidiary, "Drytronic" and at "Electro Pulse Technologies" - the latter seem to have had some association with Kjell Utklev and his patents. Would be useful if we could figure out the nature of relationships between all these parties - I've only had a quick browse, but here's a fairly recent publication (http://www.erdc.usace.army.mil/pls/erdcpub/docs/erdc/images/ERDCFactSheet_Product_EOP.pdf) which has a few clues.

[The Big Ease]

Hi Lizard. Good post.
i had known electro osmosis wasnt patented by hti. id also known that mps was patented before i invested, though you threw me with your reference from the prospectus. its good to have these things confirmed. its for discussions like these that i joined this board, rather than speculating about the daily price fluctuations evident in some other threads.

kjell utklev is employed as a consultant in the R&D unit of HTI.
he also is an equity investor in HTI. as d.ledger refers above, the IP has been transferred to HTI and they have the relevant confidentiality, non-disclosure and perhaps non-compete clauses in there as well. i assume these are the "belts and braces".


as for this document: http://www.erdc.usace.army.mil/pls/erdcpub/docs/erdc/images/ERDCFactSheet_Product_EOP.pdf
it uses exactly the same pictures of that basement in hong kong as the hti documents. i am just guessing, but i reckon this is a previous incarnation of the commercial application of mps. recall that it has been in existence since 1987 (?) and they have been using it in structures since then. HTI was formed to take the technology to a global market. it is a very recent document though, so im curious. any ideas?

the outgoing MD, Ian Dallas was a former investment banker/funds manager who came across the technology being applied to a structure in hong kong (where he has worked for decades) and thought there has to be a bigger market for this.

there could be more to it, but i doubt it.
would you invest 1-2million of your own money into a company with questionable patent protetion of your sole bread winner?

p.gray, chairman 16 million shares
d.ledger about the same

both are very recent purchases.

the former managing director of the snowy mountain engineering company in australia has left his employer of 20 odd years to head up the chine office and with him 2 other colleagues; 1 to work with him in china and the other to head up hong kong.

the people involved in the company are heavily invested in its success. both financially and career wise.
engineers usually make considered decisions.

[Lizard]

Hi Big E - yes, we need to work out the links between OsmoTech (http://www.goosmo.com/company.htm) (whose people seem to have some similar US patent applications), Electro Pulse Technologies (who seem to be linked to North American licensing) and HTI. If I get the time, I might dig further, but the last 20% of information is always 80% of the effort!

As for director buying, I'm no longer a convert on that theory - especially in these types of start-up situations. Sometimes they seem to be more to do with issues of control. For instance, I recall BQT supporters had similar theories about (now departed CEO) John Genner's regular purchases at around 20-30cps.

From my info (screening companies with a market cap under $200m) the companies with the most director buying in the 12 months up until Mar 2008 were SLA, FNP, IMA, HRS, CEH, QRS, ITC, TMR, PDO, BOL... hmmm, check the charts - while timing is everything, I'm guessing a monkey with a dartboard would have made more money than these directors (excepting HRS).

[The Big Ease]

The only link i can come up with is kjell utklev working for Electronic Pulse Technologies Commercial Inc. Note that he didnt transfer ownership of the technology, simply licenced it to them for a royalty of 6% of contract value. Given who kjell is working for and is an equity owner in hti, i think its safe to assume EPTC is dead in the water.

Looking at this: http://www.secinfo.com/$/SEC/Registrant.asp?CIK=1097366
it would seem this company went out of business at least 6 years ago and deregistered their securities.

my assumption at this point would be that they tried to commercialise the technology and failed for whatever reason. however, this does little to diminish hti's current prospects in the UK, China and HK.

we have 2 major properties groups, numerous engineering and construction groups, the london underground and hong kongs mass transit rail (the underground network operator) all accepting the solution and seeking to work together with hti on further projects of significant value to hti's bottom line.

as for osmotech, i havent been able to find anything on them whatsoever. nothing in the SEC filings at all. have you had better luck?

[Lizard]

Hi Big E - here's a summary of how I think it links up - but I have a few gaps:

Drytronic seems to be an old US business which had licensed technology from Powershield for a similar application. They were challenged in court by Electro Pulse Technologies - who had the North American licensing for Utklev's patents. Eventually they settled and decided that since Drytronic had already made progress in commercialisation, they would merge and combine the rights to Utklev IP with Drytronic (Dec 1999). Shortly afterwards, they merged with Electronic Engineering and Design - see here (http://www.secinfo.com/d118et.52e.htm) for a very interesting read (including licensing arrangements etc).

Here's the gap - I'm not sure what happened in the years between 2000 and 2004. But in about 2004, Drytronic set up Osmotech. Drytronic seems to have been working with CERL and ERDC (engineers/army engineers) to commercialise "electro osmotic pulse" technology. They then seem to have spun out Osmotech to as the main implementation/commercialisation arm. Osmotech staff seem to have their own patents, as do some of the army engineering staff.

What I am not sure is what happened to EPT and whether Drytronic still licenses Utklev's patents or whether they have managed to work around them - i.e. whether a cooperative or antagonistic relationship. The fact EPT is still mentioned in regard licensing in that Jan 08 brochure suggests a cooperative one? I'm assuming the american EPT was a subisidiary of the Nordic one?

Not sure where all this detail take us except to say that it appears Osmotech are well down the line with this technology vs Hydrotech from commercialisation aspect. However, if they are both licensing Utklev patents (and it seemed as though the licensing in North America at least was exclusive) then that leaves them happily confined to separate patches of the world - possibly with separately evolving technologies at this stage.

Osmotech has also managed to prove commercial acceptance which helps Hydrotech indirectly. Though I think looking at some of the history will suggest the amount of capital required to build up to profitable business is not as small as might be hoped.

[The Big Ease]

Lizard,

thanks for your summary. i think you have come across much more than i was able to find.

I emailed osmotech asking them about hti, whether they have any relationship and what differentiated them from hti. no reply. are you sure it is still a going concern? i couldnt find anything about them in the sec search i conducted and it looked to me as though the other companies had been wound up. i could be wrong.


anyhow, i was just listening to the brr interviews again and noted that most of the stage 1 submissions d.ledger had previously detailed were to do with metronet/london underground and were being held up due to metronet's administration (which they have come out of now). given they have now formally accepted the walthamstow installation and that hti have submitted on a further 5 installations with metronet, it would be fair to assume that 10-15 million of stage 1 moves into stage 2, where they "have a greater level of confidence that the proposals have been accepted and are now moving towards formal contract acceptance".

i think the next couple of months will be quite interesting.
to watch out for:
chinese dam project
chinese tunnel/s
chinese underground network mou for the installation of 19 stations
gammon construction of HK government HQ
metronet/london underground
network rail in the UK

this could mean we have approx. 45m in contracts awaiting conversion in the next 3-6 months. id be happy with one for now...





Stage 1 Stage 2
Ave. Price (AUD) 40 28
Sqm 900,000 1,200,000
Value 36M 33.6M
Probability 0.15 0.3
Probable Value 5.4M 10M

[OutToLunch]

Thanks Lizard and Big Ease for the thorough research you've both done here -- much appreciated. :)

[The Big Ease]

no probs otl.
just putting the pieces together from the announcements.
i think the process of establishing hti's business development capacity has been well underway for some time now. the potential contracts above have been in the pipeline for a while to the extent that hti have actually demonstrated their technology either in trials or smaller sections of a larger asset. my assumption is that they are now dealing with the process of getting board level sign off from their customers as many of these larger contracts have a total value in the tens of millions.

in this regard, you can only take ledger on face value.
hti seems to be congruent in their interviews/announcements.
a couple of decent sized contracts and we could reasonably expect mid 20's or fresh highs.

EDIT: here is a really good technical presentation of what MPS does with some excellent pictures to illustrate its efficacy. The presentation was made by Dr Ian Mcfeat Smith, Technical Director (Hyrdotech Asia), to the Hong Kong Institute of Engineers.
http://personal.cityu.edu.hk/~appchung/HKIE%20hp/HKIE%20Presentation%2016May08%20An%20innovative%20 and%20proven%20solution%20for%20repelling%20water% 20ingress%20into%20concrete%20structure.pdf (http://personal.cityu.edu.hk/~appchung/HKIE%20hp/HKIE%20Presentation%2016May08%20An%20innovative%20 and%20proven%20solution%20for%20repelling%20water% 20ingress%20into%20concrete%20structure.pdf)

[The Big Ease]

it is now more than 3 months since they released their stage 1 and 2 projections.
they are either going to finish the year in a flurry of contract signings or ive got this one all wrong.

"advanced contract discussions" (after a proposal has been accepted) dont usually take more than 3 months.

[Huang Chung]

Engineers are a conservative bunch.

IF they sign some contracts, further signings should come a bit more easily you would think.....everyone waiting for someone else to go first.

However, the continuing absence of contracts still makes me feel that something isn't quite right.

[The Big Ease]

Engineers are a conservative bunch.

IF they sign some contracts, further signings should come a bit more easily you would think.....everyone waiting for someone else to go first.

However, the continuing absence of contracts still makes me feel that something isn't quite right.
true.
now that metronet is back online i would speculate they would be keen to get something installed in the other sites before the onset of the northern winter (when most of their disruptions occur due to persistent rain).

i think my expectations are getting the better of me. perhaps i should take a holiday and come back in a few weeks......or maybe just get a job :D

[Lizard]

it is now more than 3 months since they released their stage 1 and 2 projections.
they are either going to finish the year in a flurry of contract signings or ive got this one all wrong.

"advanced contract discussions" (after a proposal has been accepted) dont usually take more than 3 months.

Just so you don't feel forced to get a job, Big E, they have scored a (1500m2) pilot with Guangzhou metro...

[The Big Ease]

hehe just saw that.
its too late though, i was offered a contract this morning. it looks like i will be working for a while...

this is a very significant announcement. the potential revenue from the full roll out would be quite lucrative. its great that they are being considered on such a major infrastructure piece, especially given the short space of time they have been in the region. the guy running the show in China looks to be a bit of a gem.

let's hope for some more news regarding dams in china and the metronet opps.

[Huang Chung]

More on the pilot with Guangzhou metro released in the quarterly today, and what could happen thereafter.

Revenue from customers for the year....$4k.

I reckon the next 6 months will be make or break for HTI.

[The Big Ease]

agree chungy.
i think that is quite clear.
the positive is they have many irons in the fire.

my expectation is for a contract with metronet to come to fruition next quarter and then for further works to be generated from china/hk.

if all goes to plan, the chinese underground contract should come in ~9 months, adding to the momentum.
in between, i think there will be other smaller trials and contracts.

[Huang Chung]

Oh dear......

http://www.asx.com.au/asx/statistics/showAnnouncementPDF.do?idsID=00869211

[The Big Ease]

yeahhh
what do you make of it?

[Huang Chung]

Hard to know really....is it a case of falling on your sword, or being engineered out?

I really don't know.

[The Big Ease]

i wonder about the latter given the out of context paragraph about corporate governance to finish off a recent announcement.

he owns 4 million shares, 2million options and he has been given the arse for a 16k transaction. why couldnt he have simply sold them back onto the market straight away to do away with any perception of gaining a benefit?

this is the first real moment to give me some concerns about the company.
this shouldve been worked out. it seems a tad harsh to me and perhaps there is more to the story than meets the eye.

i hope not.

[OutToLunch]

I agree something doesn't seem quite right.

I was also a bit underwhelmed by the recent boardroom radio broadcast in which DL sounded more 'hopeful' than 'confident'. Maybe this has been borne out by yesterday's developments?

[The Big Ease]

have been in contact with DL.
says asx wanted to see action, despite the "mistake", (my emphasis).
still committed to his shareholding: "absolutely no intention of selling stock"
some good news is expected very soon.
he will continue to stay close to the company and will probably maintain his PR activities.

[The Big Ease]

each friday i walk out of work and make my way to the tube. sometimes its aldgate, sometimes its aldgate east. as i make my way, hti often crosses my mind (the aldgate reference in the brr presentation) and think this is another week that has gone by without a contract.

*significant contracts waiting board ratification, having *achieved customer acceptance.
*directors buying large slabs with real cash
*lippo placement at a market premium
*lul acceptance

these are all solid signs of positive prospects. but seriously, how long does it take to get a contract from customer acceptance to dotting the i's and crossing t's?

it is now more than 4 months since the stage 1&2 pipeline was released, with no progress or update given. thats nearly 1/2 a year of nothing.

[OutToLunch]

Another month and still no news. In fact nothing but a deafening silence all round. Not too inspiring really, esp with the collapse in the share price (albeit on low volumes). Some kind of update would be welcome.:confused:

[The Big Ease]

yes, have been thinking much the same OTL.
i contacted the company (chairman anf f.boucher now that ledger is gone) and he pretty much said:

they did not want to prejudice contract negotiations by providing further details to the market.
there would be further detail in the annual report, until such time they are in a "reporting blackout".
they are still a small company with limited resources for PR and ongoing investor relations. basically, youll know when we tell the market.

the only reassuring aspects in the absence of further info are the chairman's and ledger's significant on market purchases a few mnths back and the reasonably comfortable buffer of cash on hand.

the rest will only mean something when they begin signing contracts and revenue.

the SP has sunk, but id say its on a volume of about 500K sahres that took it from 8 cents to where it is now over 2 months.

annual report due before the end of the month. lets see what they have to say.

[Huang Chung]

yes, have been thinking much the same OTL.
i contacted the company (chairman anf f.boucher now that ledger is gone) and he pretty much said:

they did not want to prejudice contract negotiations by providing further details to the market.
there would be further detail in the annual report, until such time they are in a "reporting blackout".
they are still a small company with limited resources for PR and ongoing investor relations. basically, youll know when we tell the market.

the only reassuring aspects in the absence of further info are the chairman's and ledger's significant on market purchases a few mnths back and the reasonably comfortable buffer of cash on hand.

the rest will only mean something when they begin signing contracts and revenue.

the SP has sunk, but id say its on a volume of about 500K sahres that took it from 8 cents to where it is now over 2 months.

annual report due before the end of the month. lets see what they have to say.

A bit of funny attitude for sure.....doesn't cost very much putting out an ASX release giving a bit of an update.

It's been a while since I've followed this stock closely, but as anyone ever seen a picture of the inside or outside of their research facility? (in Norway, if my memory serves me correctly). I hope its not some guys garage or back shed :confused:.

The thing I'd watch for is if they start talking about 'diversifying' into some other sort of activity.....I reckon that would be as good as the kiss of death for MPS.

[The Big Ease]

chungy there are plenty of signs from lots of major operators that mps goes alright.
i dont have a problem with the tech, its the execution of the commercial plan that has me a little frustrated.

i havent seen the "research facility". i was thinking exactly along these lines just the other day. I wouldnt be surprised if it was something "lowkey".

[The Big Ease]

full year accounts out.
a few confessions and some light at the end of the tunnel.

i think we have a very pragmatic and realistic chairman.

given the chairman and ledger were buying big chunks recently, i dont believe we were misled about the timing of contracts.

disappointing that contracts have not yet been signed, but ill put these in the bottom draw as i reckon there are very good things to come.

[Huang Chung]

full year accounts out.
a few confessions and some light at the end of the tunnel.

i think we have a very pragmatic and realistic chairman.

given the chairman and ledger were buying big chunks recently, i dont believe we were misled about the timing of contracts.

disappointing that contracts have not yet been signed, but ill put these in the bottom draw as i reckon there are very good things to come.

I like this guy (Phil Gray) :)...seems like a straight shooter.

Well worth reading his report.

http://www.stocknessmonster.com/news-item?S=HTI&E=ASX&N=422434

[OutToLunch]

Certainly a refreshing change from the spin we usually hear from the top brass.... and who would have thought that Saudi Arabia would have had problems with excess water?

Seems that HTI have a few challenges ahead, but also a lot of opportunities and I'm happy to hold for the longer term... after all she can only drop a few more cents from here at the most.... a bit like a cheap option but with no expiry date. :)

[Huang Chung]

Phil Gray picks up another 5 grands worth.

Not exactly a ringing endorsment by the Chairman, but sure is preferable to him selling.......

[Huang Chung]

Hydrotech wins a contract!

http://www.stocknessmonster.com/news-item?S=HTI&E=ASX&N=426707

A small step, but maybe they're finally on their way.....

[The Big Ease]

take this with a grain of salt:
one of the posters on HC reckons hti held a phone conference with some brokers last month, during which gray mentioned there would be meaningful (1mplus) contracts before the year is out.

combine that with the former CEO (who is managing the bigger commercial relationships like metronet in the UK) going sub with a massive purchase last week and gray continuing to buy (albeit small parcels, though he does hold 10mill plus), it looks like the insiders really have confidence in this thing, despite what the SP has been doing.

i have got more than 700K of these little buggers now so I am hoping i/they am/are right.

i really like the story here and see some good signs emerging.

http://http://www.tharg.com/webcam/images/jimyoung/Guildhall.jpg

http://http://www.bbc.co.uk/wales/southwest/webguide/images/guildhall_wtb400.jpg

[Huang Chung]

Another frank assessment from HTI Chairman Phil Gray.....

http://www.asx.com.au/asx/statistics/showAnnouncementPDF.do?idsID=00896943

[The Big Ease]

yes, interesting quite frank. i like his forthright manner.
i wonder who that contract is with?
im sure they wouldve liked to have had that to announce before the agm.
things are brewing and they have enough cash to get them through the year. one or two major contracts would do wonders for this company.

[The Big Ease]

http://www.brr.com.au/event/53021

holy moly!
gray says a government body is about to mandate the mps system as mandatory for ALL NEW PROJECTS in that country!

edit: http://www.stocknessmonster.com/news-item?S=HTI&E=ASX&N=427802

just saw this announced. Its HONG KONG!!!
wow! This is an amazing development with enormous upside consequences.

[The Big Ease]

movement at the station?
up 70% today on small volumes.

[The Big Ease]

600 bill stimulus package in china.
hmmmm could be interesting given the pipeline of works hti is prospecting in that country.

[The Big Ease]

the first two seem very impressive and have a good fit with what the business needs. Tony Mckee sounds like Mr Concrete. His mid-east experience should come in handy with the sudden interest in that area. this is beginning to line up nicely...

Mr James McKenzie
Acting CEO

Mr James McKenzie is a Chartered Accountant with in excess of 25 years of professional and commercial experience and during his career has held positions of Group Managing Director, Finance Director and Company Secretary in several companies working within the private and listed sector.

He has extensive experience in project and contract management within the construction development sector both from finance and operational positions.

During the last 10 years he has actively concentrated on private company turnarounds and preparing ailing companies for growth and sale.

He holds a BA in Accountancy and is a member of the Institute of Business Consultancy and also a member of the Association of Business Recovery Professionals.



Mr Tony McKee
Sales Director, Hydrotech Asia Limited

Mr McKee studied Civil and Structural Engineering at Birmingham Polytechnic before developing a successful career in sales and marketing of solutions for concrete problems.

From 1986 to 2003 he worked Fosroc, a leading supplier of repair systems for concrete structure, running offices in the UAE, China and Hong Kong. He was responsible for introducing a range of innovative methods for repairing and protecting concrete structures and these included the first developments of fluid micro concrete for repairs to concrete with high density/congested steel reinforcement and the introduction of high build sprayed mortars for jetties and other confined spaces. He introduced a range of protective coatings for concrete structures including anti-carbonation systems used on highway and petro-chemical facilities. He was also involved in the introduction of galvanic protective systems for refurbishment of concrete structures and assisted in the development and marketing of high build semi flexible mortars for external rendering.

Over the past 5 years, Mr McKee has been involved in the introduction of Polyurea systems for waterproofing of water features and podium roofs as well as a range of silane paste impregnation products for the prevention of mould and algae growth on concrete surfaces. He has also undertaken consultative work on concrete repair systems for new construction and has given many presentations on concrete repair systems, most recently on the introduction of adhesive systems in compliance with EU standards.

Previous projects that Mr McKee has worked on include:

* Concrete repairs to Midland Links Motorway in the UK
* Concrete repairs to Ruwais and Das Island Oil and Gas facilities in Abu Dhabi
* Concrete protection to Habsan On Shore Gas Project and the LNP/LPG tank Farm, Das island in Abu Dhabi
* Specification of concrete protective coating systems for road infrastructure projects, Abu Dhabi
* Below ground waterproofing, Burj Al Arab Hotel, Dubai
* Replacement of sealants, Hong Kong Airport
* CEDD repairs to Ferry Piers, Hong Kong
* Silane application to Tsing Ma Bridge and Stonecutters Bridge, Hong Kong
* High build rendering systems for remedial works for Hong Kong Housing
* High build lightweight mortars for Disney Hong Kong

Tony currently manages the Hong Kong office and all Sales and Marketing activities in the Asia region and is responsible for devising and implementing strategies to maximise Hydrotech’s opportunities.

Mr Steve Morris
Sales & Business Development Manager, Hydrotech Europe

Mr Morris is responsible for Sales at Hydrotech Europe Plc, building a UK, Ireland and Europe sales strategy to develop new business.

In 1976 he started as an electronics engineer travelling worldwide with De La Rue Systems before moving to Volker Craig as Engineering Manager. From 1991 he joined RS Components as a Sales Engineer moving through the Sales force leaving 2000 as Key Account Manager.

From 2000 to 2008 he worked for Bureau Veritas and held sales positions culminating in Regional Sales Manager and Deputy UK Sales Director managing a team of 14 field based sales personnel. This role included the management of the UK sales business with the Director, personal responsibility for Major Accounts and development of strategies and targets for the UK inspection division, reporting to Board level in a global corporate environment.

Mr Morris started with Hydrotech in September 2008 and is based at the UK offices in Milton Keynes.

With both a keen engineering background and extensive sales experience at all levels he provides the commercial and technical abilities to build and develop customer relationships and confidence in the services delivered by Hydrotech.

[OutToLunch]

Tasty little pilot project announced by HTI yesterday... insignificant in its own right, but if it goes well and the Chinese decide to stick with the MPS system, HTI could be looking very very good. I just hope that the remaining money in the bank is enough to carry HTI through to when it starts earning meaningful revenues....

[The Big Ease]

there is so much potential in this company.
once they sign and finish a major project like the london underground or the chinese metro line (for which they have a pilot running now), the rest will follow.

also good to see the mid-east coming on board too. those guys are very decisive.

like you wrote OTL, if we get a major contract before the cash runs out, then this thing will have a steep up trend.

[OutToLunch]

A high risk-reward situation for sure, but I do like the story and agree that there is a lot of potential. Anyone want to fill my low-ball bid at 3.5 cents? :)

[Huang Chung]

Not overly optimistic commentary, but, gee, they're giving it a good shake.

http://www.asx.com.au/asx/statistics/showAnnouncementPDF.do?idsID=00928747

I wouldn't be wanting to hold stock right now, that's for sure.

[The Big Ease]

Not overly optimistic commentary, but, gee, they're giving it a good shake.

http://www.asx.com.au/asx/statistics/showAnnouncementPDF.do?idsID=00928747

I wouldn't be wanting to hold stock right now, that's for sure.

its all on the line now, thats for sure.
i hold a bucketload :)


expect severe dilution.

[OutToLunch]

Looks like SS Hydrotech is nearly out of coal and they're now ripping up the deck to keep the fires going... question is how much will be left of the good ship by the time she finds port? What a shame.... had the world economy not gone off a cliff when it did they'd probably be laughing by now.

Not really worth selling at 1c so I guess that makes me a long term holder!

[The Big Ease]

i reckon it might be up for sale.
it will surely get more than its 2 million market cap.

with nearly 2 mill in cash and equivalents, anything can happen on the contracts front.
so near, yet so far. oh well.

[OutToLunch]

The MPS system clearly works, and Hydrotech hold the patent for it. I agree that this has to be worth more than 1c/share but the trouble lies with covering the company's outgoings until some meaningful contract revenues come in. While we're seeing some very early signs of a possible bottoming out of the global recession, it's a long way from over and there are certainly more hard times ahead this year and probably next year too. If HTI can survive until things turn around then we'll be fine, but it's far from certain.

At least Mr Gray has a bit of skin in this one so he'll be doing his best to keep things going.

[Huang Chung]

Another wonderfully frank assessment from Chairman Phil Gray.

http://www.asx.com.au/asx/statistics/displayAnnouncement.do?display=pdf&idsId=00949098

[The Big Ease]

yeahh.
So close, yet so far away.
He has done all he could. I dont hold much hope for a recovery, though still possible.

[Huang Chung]

My God! HTI won themselves a contract.

http://www.asx.com.au/asx/statistics/displayAnnouncement.do?display=pdf&idsId=00970019

Still hanging in there TBE?

[The Big Ease]

Nah took the loss on the chin.
Notch that one up for experience.
Obviously you don't want to have to prove yourself to a conservative industry in the worst economic conditions for 80 years. hehe

90% loss, but yeah. Live and learn.
So close, yet so far. I still don't quite understand where they went wrong with the London Underground.

One other thing, there was an FX loss of 1million some time ago that went unexplained, but IMO resulted in a change of CEO. This is when Gray rolled his sleeves up.

If not for that loss, we would not have had to issue capital, or if we did it would not have been at 0.7 cents.

Nevermind, I have moved onto other stocks but will keep an eye on this.
I figure this has had such a wretched run that even when they sign a m ajor contract, there will be further opportunity to buy up. In the meantime......let me tell you about a stock by the name of ETC hehe

I love a good growth story. I should seek help for it :)

You were spot on with this one when you questioned why it took so long to sign contracts.

[Lizard]

Contract win in our own back yard - with Higgs Builders in Christchurch. Might come good yet - though going to need alot more than this one contract.

[The Big Ease]

though I am out, i reckon this one will eventually pick itself off the floor.

Chairman has done an outstanding job under very difficult circumstances.
Staff management and directors have all shared the pain with significant salary cuts across the board. They will be rewarded down the track with options and salary increases imo and well deserved too. Pity I took a big loss on this one, but just a case of circumstances getting the better of a pretty decent company with great prospects.

[Huang Chung]

though I am out, i reckon this one will eventually pick itself off the floor.

Chairman has done an outstanding job under very difficult circumstances.
Staff management and directors have all shared the pain with significant salary cuts across the board. They will be rewarded down the track with options and salary increases imo and well deserved too. Pity I took a big loss on this one, but just a case of circumstances getting the better of a pretty decent company with great prospects.

Couldn't agree more TBE.

[OutToLunch]

I'm still in. Didn't take part in the capital raising (shame about that, nice rise off 0.7c since then) but I'm happy to leave my tiny parcel where it is. HTI crossed my mind recently while I was dealing with a minor water ingress issue in the house we've just bought (ie., it might have been a quick way to double HTI's current revenues)? Seriously though, these recent contracts are indeed very small but they do help with longterm credibility and market acceptance of the MPS system. Full marks to Gray for sticking with it and battling it out against a pretty crappy market overall.

[Lizard]

Time to dig this one out of obscurity.

Looks like the MPS business is on the up.

Probably going to need some more funds for working capital and not expecting them to move to profitability until FY12, so still early days. But seems largely priced in at 0.8cps (market cap about $3.8m).

Added:

Just went back over the early part of this thread and there was talk about their US equivalent, Osmotech. Just checked on them and they are now "electrotechCP" (http://Osmotech.net/), while the "Drytronic" (http://www.drytronic.com/homepage.htm) name seems to have turned up in Europe.

[Lizard]

Well there's an odd one...

... Just as the revenue reached a record $1.1m for the half year (up about 120% on pcp), the directors all agree that is in the best interest of shareholders to let management take over the business, so long as they take over a $US100k debt.

Given the liabilities being left with shareholders are well in excess of $600k, it is hard to see how shareholders do any better out of this than they would out of an administration. It hardly seems an attractive shell. Surprise of the day is that anyone was actually buying the shares and letting the shareholders flee at a paltry 0.2cps. Obviously there is a bit more of a plan here.

Still, it is sorry to see Hydrotech go. It was a fast-growing business and Philip Gray appeared to do his utmost to stand by holders in the old-fashioned way - at least until now. It seems a shame.

[Huang Chung]

Yes, it's a shame to see that the game, as we know it, appears to be over. The potential was obvious. Converting a great idea into firm sales was the problem.

[The Big Ease]

A real pity. They tried very hard to make something of it but I don't get this move.