Wednesday, September 27th 2023

Remote Monitoring Sytems Plc

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Nigel Burton on Remote Monitored Systems’ Bright future as GyroMetric gathers traction.

Survey, inspection, and monitoring business Remote Monitored Systems currently sits at 0.6p a share, well below the 1.3p it sat at back in February. With its turnaround complete and its monitoring division posting strong sales and expansion progress, non-exec chair Nigel Burton explains why the firm is worth a look, ahead of a key period of operational development.

Progress period

Remote has undergone considerable change since Burton and executive director Trevor Brown joined stalwart Paul Ryan on the Board as part of a shakeup in January 2018. As well as cutting operations, reducing costs, and completing a refinancing, the team has completed a review of the firm’s surveying division Geocurve.

The arm, which uses modern surveying techniques such as those using drones, experienced a slow start to 2019 after dedicating more time and resources than expected to an Environment Agency project on the Thames. However, with this barrier now passed, Burton says Geocurve’s focus is now on profitability rather than growth, supported by a largely completed cost-cutting programme and should lead to it being self-funding.

Perhaps the most significant development at Remote since Burton and Brown’s appointments, however, has been the acquisition of a majority stake in a firm called GyroMetric Systems, completed in two tranches last year. GyroMetric develops and manufactures digital monitoring and safeguarding equipment for rotating shafts, a critical element in the motors contained within almost all industrial machinery

Traditionally, firms have used vibration sensors to monitor the condition of rotating shaft mechanisms, picking up on irregularities when a problem is occurring. Instead of identifying problems as they occur, GyroMetric’s technology anticipates issues before they happen using real-time monitoring and measuring, and can intervene automatically before significant damage is done.

Burton elaborates: ‘The technology allows users to monitor the position of the rotating shaft down to the thickness of less than a human hair in real-time. This can pick up on minor deviations that suggest something might be going wrong before it happens. This is much more useful than picking up on a fault when it has occurred and is already starting to cause damage. Think of a car engine; it is better to fix it before it seizes up than wait for it to seize up and fix it at a higher cost.’

GyroMetric’s key area of focus to date has been marine engines, particularly those used in tugboats. The firm’s technology can spot when a propeller has snagged on something and cut the boat’s engine in one-thirtieth of a second. According to Burton, there is no other system on the market that can respond in this way:

‘By cutting the engine off before the coupling shears, the owner of the tugboat can avoid long and expensive periods of downtime while damaged equipment is fixed. This can be a huge problem for those who rely on these boats in their day-to-day work.’

In an update last week, Remote reported that GyroMetric’s growth in the marine engine sector has continued to accelerate, driven in particular by the sector’s need to maximise efficiency and minimise environmental impact. Indeed, the business has not only received new orders for installations from its longest-standing end customer, but it is also in talks with a leading marine diesel supplier around the installation of its systems on two ships. A roll-out onto 900 of the un-named organisation’s vessels could potentially follow this trial. Finally, Remote also announced that GyroMetric has also been directly involved with ‘the primary channel to the marine drives market, to train their sales force for an autumn launch of GyroMetric’s standard product’.

New markets

The use of GyroMetric’s technology is not limited to marine engines alone. Indeed, in last week’s update, Remote updated the market on the company’s efforts to roll out its monitoring technology to the offshore wind turbines sector. Burton tells us that GyroMetric’s technology can improve the efficiency, output, and ultimately revenues of wind turbines by optimising their mechanical performance.

Remote witnessed successful testing of GyroMetric’s technology in Blyth last year, at the Offshore Renewable Energy Catapult which is the UK’s leading technology innovation and research centre for offshore wind, wave and tidal energy.

GyroMetric is now working with two major manufacturers to define the part it can play in large trials. Remote said that, while the timescale for these trials is quite extended and open to delays, after 18 months GyroMetric has now been confirmed as the supplier of choice for ‘the largest and most imminent trial’- expected to begin later this year.

Elsewhere, Remote confirmed that GyroMetric is also in discussions with the world’s largest offshore wind turbine operators around their priorities for maximising output and minimising operating costs. ‘We believe that GyroMetric has a unique contribution to make to providing the management information needed by operators to achieve this,’ it added.

Meanwhile, GyroMetric is also looking to roll out its technology into the oil & gas sector, where it can be used to improve the performance of the mud pumps that play a critical role in drilling systems. Because they are used in highly-abrasive environments, mud pumps are prone to incurring substantial maintenance costs and long periods of non-productive time costing $8,000-$15,000-a-day onshore and even more offshore.

Burton tells us that if GyroMetric can demonstrate that its technology can identify potential problems before they arise and help to avoid these costs, it will open up a vast market for the business. Indeed, there are estimated to be almost 1,000 drilling rigs available for operations around the world, and each of these uses at least two mud pumps.

In last week’s update, Remote said that Gyrometric has signed a contract ‘with a well-known UK industrial group’ to provide test instrumentation at their facilities, including those on oil & gas projects. This work is on track for delivery by September and aims to validate GyroMetric’s technology and inform the structure of a potential partnership.

Once the test results start to flow, GyroMetric expects to receive orders for specific applications as well as assessing how GyroMetric’s technology might influence future product design,’ added Remote. ‘Field diagnosis of recurring problems is of particular interest and GyroMetric’s new laser sensor has particular value in ease of installation.’

Exciting point

With GyroMetric also creating a monitor that can cut costs and a new laser sensor alongside its expansion in new and existing sectors, Brown believes that Remote is closing in on an exciting turning point for investors.

‘If you are investing now, then you are coming in at a time when the original turnaround has been completed, we have tied up ongoing issues, and we have gone to focusing on technology on the monitoring side to focusing on sales into deliverable markets,’ he adds. ‘We are now at a very exciting time because, although getting into these new markets and extending our position in our existing markets takes time, we now have specific trials and sales in the works. I am very optimistic that we will see a material increase in monitoring business from later this year.’

With Burton holding a 6% chunk of Remote’s issued share capital, and Brown and seasoned non-exec Ryan owning a further 23% and 8% respectively, the firm’s success is as crucial to its directors as it is to investors. With this point in mind, it will be exciting to see if GyroMetric’s imminent trials and updates will trigger a re-rate in the organisation’s currently depressed share price. The natural caveat is the companies thinning balance sheet which may initiate the boards need to return to the market, the key argument will be if or when and what level further equity will be issued given the substantial shareholding of key personnel.

Remote Monitored Systems focused on profitability for Geocurve in 2019

The author was remunerated but does not hold shares in the company

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