Share Name Share Symbol Market Type Share ISIN Share Description
Management Resource Solutions Plc LSE:MRS London Ordinary Share GB00B8BL4R23 ORD EUR0.01
  Price Change % Change Share Price Shares Traded Last Trade
  0.00 0.0% 2.30 0.00 00:00:00
Bid Price Offer Price High Price Low Price Open Price
0.00 0.00 0.00 0.00 0.00
Industry Sector Turnover (m) Profit (m) EPS - Basic PE Ratio Market Cap (m)
Support Services 52.30 4.57 2.29 1.0 5
Last Trade Time Trade Type Trade Size Trade Price Currency
- O 0 0.00 GBX

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DateSubject
12/12/2019
08:20
Management Resource Solu... Daily Update: Management Resource Solutions Plc is listed in the Support Services sector of the London Stock Exchange with ticker MRS. The last closing price for Management Resource Solu... was 2.30p.
Management Resource Solutions Plc has a 4 week average price of 0p and a 12 week average price of 0p.
The 1 year high share price is 5.70p while the 1 year low share price is currently 1.80p.
There are currently 223,346,002 shares in issue and the average daily traded volume is 0 shares. The market capitalisation of Management Resource Solutions Plc is £5,136,958.05.
28/3/2019
15:35
12bn: Management Resource Solutions PLC 28 March 2019 28 March 2019 Management Resource Solutions PLC ("MRS" or the "Group") Acquisition of Alerion Consulting Ltd MRS strengthens service offering with acquisition of unmanned aerial vehicle specialist Transaction Highlights -- Acquisition complements MRS' civil operations across both existing divisions -- Provides Group with competitive advantage through cutting edge UAV technology -- Group expected to benefit from cost savings as a result of more efficient aerial mapping and surveying capabilities -- Potential to benefit from new revenue streams Management Resource Solutions Plc ("MRS"), a leading Maintenance, Fabrication, Civil and Earthworks company, is pleased to announce the acquisition of Alerion Consulting Ltd ("Alerion") from its founder Elliott Talbott and others for a consideration of GBP1,320,000 to be satisfied by the issue of 26.4 million ordinary shares of MRS at an agreed price of 5p per share, credited as fully paid (the "Consideration Shares"). The acquisition will be made by Aerial Survey Solutions Pty Ltd ("Aerial") a newly formed wholly-owned subsidiary of MRS incorporated in Australia. Application will be made for the Consideration Shares to be admitted to trading on AIM at 8.00 a.m. on or around 4 April 2019. Alerion owns the intellectual property and other assets relating to unmanned aerial systems developed under the program name "Aerial Cinematics." Aerial Cinematics is an Unmanned Aerial Systems ("UAS") based photography, mapping and surveillance systems design project. The program is focused on the building and deploying of modular UAS payloads and flight pattern optimisation on fixed wing "transition" (vertical take-off and landing) Unmanned Aerial Vehicles ("UAV"). Included in the acquisition are full ownership rights of all Aerial Cinematics IP and a full suite of ground control systems and payloads. Alerion was incorporated on 3 August 2018 and, apart from acquiring the assets relating to Aerial Cinematics, has not traded, whilst it has been in the technology development phase. MRS has secured the company and its IP before its commercial deployment. Alerion made a loss before tax of GBP88,800 during the period from 3 August 2018 to 12 March 2019 and had tangible assets of GBP47,650, according to unaudited management information. Complementary to the civil operations in both MRS' divisions, Aerial Cinematics will provide precision aerial mapping of open pit mines and earthworks including volumetric calculations, railway maintenance, water erosion mapping and terrain modelling with full geo-referencing. This will be carried out using Aerial Cinematics' innovative build out of a transitional UAV, LiDAR (Light Detection and Ranging) scanners/photogrammetry system and fully automated and optimised flight paths that form the full UAS. In a single 90 minute flight, the Aerial Cinematics UAS is able to survey an area that would normally take a full team of ground-based surveyors approximately four days to complete, returning data either as a live feed or fully processed the next day. In addition to these new potential revenue streams, Aerial Cinematics will also save MRS and its Bachmann subsidiary approximately $240,000 AUD in current third party fees and deliver same day information on demand, as opposed to the 30 day lead time provided by the once a month external vendor it currently contracts. In addition to the surveying services offered, the Aerial Cinematics intellectual property will allow MRS to add blast mining mapping, planning and site safety to its services using a combination of UAV and a propriety payload including precision ground marking, LiDAR mapping and thermography sensors. The directors consider that the availability of this facility will considerably enhance the efficiency and growth potential of MRS's services. Several other new revenue streams will also be opened up as a result of the UAV's modular payload system including forestry, waterway, rail, highway, land clearance mapping, and power line development and maintenance. MRS is also pleased to announce that Aerial has secured the services of Elliott Talbott, Director of Alerion, under the terms of a service agreement for an initial period of one year and then subject to six months' notice. In his new role, Elliott will lead the build-up and deployment of MRS' new UAV based services and brings with him seventeen years of aerospace experience. He was recently responsible for the management of Facebook's ground-breaking multi-million dollar project Aquila, a long endurance fixed wing UAV. As a senior manager at Facebook's Connectivity Labs, Elliott was also responsible for the facility build, aircraft production, structural testing, avionic and electrical build and integration, export and shipping and flight test of this bleeding edge solar UAV. The vendors of Alerion have agreed that they will not dispose of any Consideration Shares for a period of six months following completion of the Acquisition and that thereafter they will comply with the terms of the MRS Share Dealing Code. John Zorbas, Chairman of MRS, commented: "We are very pleased to have acquired Alerion which is an exciting business that will complement the service offering of the MRS Group, further enhancing the industry-leading services we offer to our customers. The acquisition demonstrates the Group's business model of acquiring complementary businesses while securing cutting edge, technology-enhancing products, giving MRS a significant advantage in its field. "MRS would also like to welcome Elliott Talbott to the Company and is extremely pleased to have engaged someone with such extensive experience in program management and UAV fields. This is an exciting time in the Group's development and should now demonstrate the Company's ability to secure the expertise and services of key influential figures in their field, as we look forward to further expanding the Company's portfolio." ENDS
13/12/2018
08:17
smoggyg: Worth reading again,my thanks to the author.//////Management Resource Solutions (MRS) Dig a single digit PE that is growing Michael TaylorNovember 5, 2018 8:42 am 0 Management Resource Solutions (MRS) is a UK listed company operating in the Hunter Valley in Australia, offering maintenance support, mining services, and labour hire. It has seen many a drama, including a long suspension, several board bust-ups, board changes, a deeply discounted placing, and a revolving door of sellers. Despite this I believe, should its debt be refinanced, that there is significant scope for a re-rate. Opportunity MRS consists of Bachmann Plant Hire and MRS Services Group (formally Subzero). The company is on track for 2p earnings per share and this is set to grow. With a share price of 6.5p this gives the company a current year PE of just above 3, which is either priced to fail or screamingly cheap! MRS will never achieve a PE like the FANGs, but could easily trade at 10x earnings given other support services group ratings. A revolving door of sellers has created an artificially depressed price and therefore there is (in my opinion) scope for a re-rate through the earnings cycle, but also as the market re-rates it on a more traditional PE for the sector and earnings prospects. MRS Service Group (MRSSG) MRSSG predominantly provides coal industry support services in the Hunter valley in New South Wales (Australia). No contract with MRSSG is bigger than 25% of revenues, which means the company is not dependent on any single customer. The contracts are not just single contracts but they are a multitude of contracts within a client contract. The pricing framework is agreed upon upfront, and once it starts work is often added as and when needed due to the nature of the industry. Some work may be mine work, some work might be vehicle repair, equipment repair etc, all different sectors within the industry. This is why we do not see huge contracts announced with their clients BHP, Rio, Yancoal, Glencore, because a framework is agreed rather than a specific contract. We did see recently an additional contract with Glencore for rehabilitation works. As long as MRS is on the PSL (Preferred Supplier List) and the company produces good quality work and delivers, it will continue to receive more work. Work is initially agreed upon, and then more work is piled on top additionally. Plenty of client machinery that has been mothballed is now being refurbished due to the miners working flat out, and so there are plenty of large one-off contracts for this. Though these are, of course, not sustainable, this then translates into recurring maintenance revenue. More equipment online simply means more work. An example of a new business stream is buying pre-cut patented buckets (these buckets are huge, big enough to fit a small house into!) and MRS welding them together. This is a completely new revenue stream that did not exist a year ago. Plenty of low margin business has been discontinued but only if it doesn't add value to the bigger picture. MRS will literally replace windshields for Glencore (GLEN), which means they are doing the same work that Autoglass do in the UK. This is very low margin but if Glencore want something doing it makes sense to respond “ they are a large customer and a FTSE 100 company. A good working relationship is necessary. Bachmann Plant Hire (BPH) Bachmann Plant Hire works within the civil construction industry as bulk earthworks specialists. They are the providers of wet plant hire solutions and have over fifty years of service in the civil construction industry. BPH has room for growth in a new strategy of securing opportunities in remote and challenging locations; this means less competition and higher bargaining power on pricing. Currently BPH is operating with a 17% net profit margin and is likely to continue to grow. This is because of the Ipswich Economic Development Plan 2016 to 2031, an initiative driven by the local government, which will require 500 new residential homes every month in order to achieve this plan, meaning there will be no shortage of work should the government keep pressing on. Recent accelerated bookbuild and turnaround One of the warning signs that I previously highlighted was that management did not own any shares. They were not incentivised to act as owners and this was shown in the recent placing which was done at the very bottom of the range (6.5p) to allow management and the board in at a lower price than in the previous months trading range. One of the advantages was that this did provide some cash for the company, and finally aligned the board with shareholders. The full 14 million shares (£910,000) were taken up by the board, employees, and contractors which is a strong show of confidence in the company. The swing in MRSs fortunes are there to be seen in the HY results. From an AUD$4 million loss the company delivered a half year profit of AUD$ 2.5 million net profit after tax, equating to £1.4 million. This is ~0.7p EPS and the company released a trading update recently stating that 2p EPS was on target. The £3.4m expected NPAT versus the companys £12.8 million market cap at 6.5p puts the company trading on a PE of slightly above 3. I am not aware of a company that is trading on such a low earnings multiple and growing such PE ratios are usually value traps, where the share price is falling faster than profits! Competition There are several slightly smaller companies that are competition but the competitive advantage is that MRS has a big shed, which means a lot of work can be done indoors as opposed to outdoors. This makes a difference in the quality of the welding; doing it inside is better than in a dusty environment. A tent can be used but inside is much more practical given the huge size of some of the trucks, diggers, etc. being repaired. Local competitor Austin Engineering closed its Muswellbrook Upper Hunter facility and also provided an influx of labour; one of the challenges of recruiting more employees is the remoteness of the location and so with the competitor closing this had two positive effects. The shed The shed was bought by MRS for $3.0m which was satisfied in cash on completion. Further finance was arranged in order to complete outstanding work in order to bring the shed to its full potential. MRS had bid for the shed and winning was the best possible outcome there was a lot of work that needed doing on the shed and so they were able to submit a competitive bid. As owners, they are now able to complete necessary work at a lower cost and the money pocketed can be spent elsewhere. Owning the shed provides the company with an asset, lower costs, and no future worries over tenancy agreements. With regards to the shed, a quarter of the space has been cleared and the rest used more efficiently and this has enabled 50% more work to be done in the same shed. Debt and cost savings One of the reasons for MRSs lowly rating is likely to be its debt. The Hermes facility is 18-20% interest including charges they are the lenders of last resort, so this is very expensive as at the time the company did not have much of a choice (source: previous NED, confirmed at AGM by Chairman). A review of the debt is on the agenda and would significantly de-risk the company and free up a lot of cash. Another concern was that maintenance capex was being delayed and so a cash call would come in the future the company invested $AUD2.4m in existing and additional plant and equipment from June to December 2017 of which all was funded through free cash flow. Trade receivables are likely to stay high as the blue chips tend to pay between 45-60 days and so also not of a concern. The majority of cost savings have been done and which will continue to show benefits each year; for example rentals have been replaced with leases this is cheaper and saves on future expenditure too. The fat has been trimmed resulting in a much leaner and streamlined business. Conclusion MRS is not without risk if the company is unable to pay off its debts then clearly it could have serious problems. However, with several operational updates showing good progress, a new and invested board, and a growing macroeconomic environment, I believe MRS offers substantial upside with much of the downside priced in.
04/12/2018
13:35
smoggyg: Worth reading again,my thanks to the author.//////Management Resource Solutions (MRS) Dig a single digit PE that is growing Michael TaylorNovember 5, 2018 8:42 am 0 Management Resource Solutions (MRS) is a UK listed company operating in the Hunter Valley in Australia, offering maintenance support, mining services, and labour hire. It has seen many a drama, including a long suspension, several board bust-ups, board changes, a deeply discounted placing, and a revolving door of sellers. Despite this I believe, should its debt be refinanced, that there is significant scope for a re-rate. Opportunity MRS consists of Bachmann Plant Hire and MRS Services Group (formally Subzero). The company is on track for 2p earnings per share and this is set to grow. With a share price of 6.5p this gives the company a current year PE of just above 3, which is either priced to fail or screamingly cheap! MRS will never achieve a PE like the FANGs, but could easily trade at 10x earnings given other support services group ratings. A revolving door of sellers has created an artificially depressed price and therefore there is (in my opinion) scope for a re-rate through the earnings cycle, but also as the market re-rates it on a more traditional PE for the sector and earnings prospects. MRS Service Group (MRSSG) MRSSG predominantly provides coal industry support services in the Hunter valley in New South Wales (Australia). No contract with MRSSG is bigger than 25% of revenues, which means the company is not dependent on any single customer. The contracts are not just single contracts but they are a multitude of contracts within a client contract. The pricing framework is agreed upon upfront, and once it starts work is often added as and when needed due to the nature of the industry. Some work may be mine work, some work might be vehicle repair, equipment repair etc, all different sectors within the industry. This is why we do not see huge contracts announced with their clients BHP, Rio, Yancoal, Glencore, because a framework is agreed rather than a specific contract. We did see recently an additional contract with Glencore for rehabilitation works. As long as MRS is on the PSL (Preferred Supplier List) and the company produces good quality work and delivers, it will continue to receive more work. Work is initially agreed upon, and then more work is piled on top additionally. Plenty of client machinery that has been mothballed is now being refurbished due to the miners working flat out, and so there are plenty of large one-off contracts for this. Though these are, of course, not sustainable, this then translates into recurring maintenance revenue. More equipment online simply means more work. An example of a new business stream is buying pre-cut patented buckets (these buckets are huge, big enough to fit a small house into!) and MRS welding them together. This is a completely new revenue stream that did not exist a year ago. Plenty of low margin business has been discontinued but only if it doesn't add value to the bigger picture. MRS will literally replace windshields for Glencore (GLEN), which means they are doing the same work that Autoglass do in the UK. This is very low margin but if Glencore want something doing it makes sense to respond “ they are a large customer and a FTSE 100 company. A good working relationship is necessary. Bachmann Plant Hire (BPH) Bachmann Plant Hire works within the civil construction industry as bulk earthworks specialists. They are the providers of wet plant hire solutions and have over fifty years of service in the civil construction industry. BPH has room for growth in a new strategy of securing opportunities in remote and challenging locations; this means less competition and higher bargaining power on pricing. Currently BPH is operating with a 17% net profit margin and is likely to continue to grow. This is because of the Ipswich Economic Development Plan 2016 to 2031, an initiative driven by the local government, which will require 500 new residential homes every month in order to achieve this plan, meaning there will be no shortage of work should the government keep pressing on. Recent accelerated bookbuild and turnaround One of the warning signs that I previously highlighted was that management did not own any shares. They were not incentivised to act as owners and this was shown in the recent placing which was done at the very bottom of the range (6.5p) to allow management and the board in at a lower price than in the previous months trading range. One of the advantages was that this did provide some cash for the company, and finally aligned the board with shareholders. The full 14 million shares (£910,000) were taken up by the board, employees, and contractors which is a strong show of confidence in the company. The swing in MRSs fortunes are there to be seen in the HY results. From an AUD$4 million loss the company delivered a half year profit of AUD$ 2.5 million net profit after tax, equating to £1.4 million. This is ~0.7p EPS and the company released a trading update recently stating that 2p EPS was on target. The £3.4m expected NPAT versus the companys £12.8 million market cap at 6.5p puts the company trading on a PE of slightly above 3. I am not aware of a company that is trading on such a low earnings multiple and growing such PE ratios are usually value traps, where the share price is falling faster than profits! Competition There are several slightly smaller companies that are competition but the competitive advantage is that MRS has a big shed, which means a lot of work can be done indoors as opposed to outdoors. This makes a difference in the quality of the welding; doing it inside is better than in a dusty environment. A tent can be used but inside is much more practical given the huge size of some of the trucks, diggers, etc. being repaired. Local competitor Austin Engineering closed its Muswellbrook Upper Hunter facility and also provided an influx of labour; one of the challenges of recruiting more employees is the remoteness of the location and so with the competitor closing this had two positive effects. The shed The shed was bought by MRS for $3.0m which was satisfied in cash on completion. Further finance was arranged in order to complete outstanding work in order to bring the shed to its full potential. MRS had bid for the shed and winning was the best possible outcome there was a lot of work that needed doing on the shed and so they were able to submit a competitive bid. As owners, they are now able to complete necessary work at a lower cost and the money pocketed can be spent elsewhere. Owning the shed provides the company with an asset, lower costs, and no future worries over tenancy agreements. With regards to the shed, a quarter of the space has been cleared and the rest used more efficiently and this has enabled 50% more work to be done in the same shed. Debt and cost savings One of the reasons for MRSs lowly rating is likely to be its debt. The Hermes facility is 18-20% interest including charges they are the lenders of last resort, so this is very expensive as at the time the company did not have much of a choice (source: previous NED, confirmed at AGM by Chairman). A review of the debt is on the agenda and would significantly de-risk the company and free up a lot of cash. Another concern was that maintenance capex was being delayed and so a cash call would come in the future the company invested $AUD2.4m in existing and additional plant and equipment from June to December 2017 of which all was funded through free cash flow. Trade receivables are likely to stay high as the blue chips tend to pay between 45-60 days and so also not of a concern. The majority of cost savings have been done and which will continue to show benefits each year; for example rentals have been replaced with leases this is cheaper and saves on future expenditure too. The fat has been trimmed resulting in a much leaner and streamlined business. Conclusion MRS is not without risk if the company is unable to pay off its debts then clearly it could have serious problems. However, with several operational updates showing good progress, a new and invested board, and a growing macroeconomic environment, I believe MRS offers substantial upside with much of the downside priced in.
04/12/2018
08:25
smoggyg: Worth reading again,my thanks to the author.//////Management Resource Solutions (MRS) Dig a single digit PE that is growing Michael TaylorNovember 5, 2018 8:42 am 0 Management Resource Solutions (MRS) is a UK listed company operating in the Hunter Valley in Australia, offering maintenance support, mining services, and labour hire. It has seen many a drama, including a long suspension, several board bust-ups, board changes, a deeply discounted placing, and a revolving door of sellers. Despite this I believe, should its debt be refinanced, that there is significant scope for a re-rate. Opportunity MRS consists of Bachmann Plant Hire and MRS Services Group (formally Subzero). The company is on track for 2p earnings per share and this is set to grow. With a share price of 6.5p this gives the company a current year PE of just above 3, which is either priced to fail or screamingly cheap! MRS will never achieve a PE like the FANGs, but could easily trade at 10x earnings given other support services group ratings. A revolving door of sellers has created an artificially depressed price and therefore there is (in my opinion) scope for a re-rate through the earnings cycle, but also as the market re-rates it on a more traditional PE for the sector and earnings prospects. MRS Service Group (MRSSG) MRSSG predominantly provides coal industry support services in the Hunter valley in New South Wales (Australia). No contract with MRSSG is bigger than 25% of revenues, which means the company is not dependent on any single customer. The contracts are not just single contracts but they are a multitude of contracts within a client contract. The pricing framework is agreed upon upfront, and once it starts work is often added as and when needed due to the nature of the industry. Some work may be mine work, some work might be vehicle repair, equipment repair etc, all different sectors within the industry. This is why we do not see huge contracts announced with their clients BHP, Rio, Yancoal, Glencore, because a framework is agreed rather than a specific contract. We did see recently an additional contract with Glencore for rehabilitation works. As long as MRS is on the PSL (Preferred Supplier List) and the company produces good quality work and delivers, it will continue to receive more work. Work is initially agreed upon, and then more work is piled on top additionally. Plenty of client machinery that has been mothballed is now being refurbished due to the miners working flat out, and so there are plenty of large one-off contracts for this. Though these are, of course, not sustainable, this then translates into recurring maintenance revenue. More equipment online simply means more work. An example of a new business stream is buying pre-cut patented buckets (these buckets are huge, big enough to fit a small house into!) and MRS welding them together. This is a completely new revenue stream that did not exist a year ago. Plenty of low margin business has been discontinued but only if it doesn't add value to the bigger picture. MRS will literally replace windshields for Glencore (GLEN), which means they are doing the same work that Autoglass do in the UK. This is very low margin but if Glencore want something doing it makes sense to respond “ they are a large customer and a FTSE 100 company. A good working relationship is necessary. Bachmann Plant Hire (BPH) Bachmann Plant Hire works within the civil construction industry as bulk earthworks specialists. They are the providers of wet plant hire solutions and have over fifty years of service in the civil construction industry. BPH has room for growth in a new strategy of securing opportunities in remote and challenging locations; this means less competition and higher bargaining power on pricing. Currently BPH is operating with a 17% net profit margin and is likely to continue to grow. This is because of the Ipswich Economic Development Plan 2016 to 2031, an initiative driven by the local government, which will require 500 new residential homes every month in order to achieve this plan, meaning there will be no shortage of work should the government keep pressing on. Recent accelerated bookbuild and turnaround One of the warning signs that I previously highlighted was that management did not own any shares. They were not incentivised to act as owners and this was shown in the recent placing which was done at the very bottom of the range (6.5p) to allow management and the board in at a lower price than in the previous months trading range. One of the advantages was that this did provide some cash for the company, and finally aligned the board with shareholders. The full 14 million shares (£910,000) were taken up by the board, employees, and contractors which is a strong show of confidence in the company. The swing in MRSs fortunes are there to be seen in the HY results. From an AUD$4 million loss the company delivered a half year profit of AUD$ 2.5 million net profit after tax, equating to £1.4 million. This is ~0.7p EPS and the company released a trading update recently stating that 2p EPS was on target. The £3.4m expected NPAT versus the companys £12.8 million market cap at 6.5p puts the company trading on a PE of slightly above 3. I am not aware of a company that is trading on such a low earnings multiple and growing such PE ratios are usually value traps, where the share price is falling faster than profits! Competition There are several slightly smaller companies that are competition but the competitive advantage is that MRS has a big shed, which means a lot of work can be done indoors as opposed to outdoors. This makes a difference in the quality of the welding; doing it inside is better than in a dusty environment. A tent can be used but inside is much more practical given the huge size of some of the trucks, diggers, etc. being repaired. Local competitor Austin Engineering closed its Muswellbrook Upper Hunter facility and also provided an influx of labour; one of the challenges of recruiting more employees is the remoteness of the location and so with the competitor closing this had two positive effects. The shed The shed was bought by MRS for $3.0m which was satisfied in cash on completion. Further finance was arranged in order to complete outstanding work in order to bring the shed to its full potential. MRS had bid for the shed and winning was the best possible outcome there was a lot of work that needed doing on the shed and so they were able to submit a competitive bid. As owners, they are now able to complete necessary work at a lower cost and the money pocketed can be spent elsewhere. Owning the shed provides the company with an asset, lower costs, and no future worries over tenancy agreements. With regards to the shed, a quarter of the space has been cleared and the rest used more efficiently and this has enabled 50% more work to be done in the same shed. Debt and cost savings One of the reasons for MRSs lowly rating is likely to be its debt. The Hermes facility is 18-20% interest including charges –; they are the lenders of last resort, so this is very expensive as at the time the company did not have much of a choice (source: previous NED, confirmed at AGM by Chairman). A review of the debt is on the agenda and would significantly de-risk the company and free up a lot of cash. Another concern was that maintenance capex was being delayed and so a cash call would come in the future the company invested $AUD2.4m in existing and additional plant and equipment from June to December 2017 of which all was funded through free cash flow. Trade receivables are likely to stay high as the blue chips tend to pay between 45-60 days and so also not of a concern. The majority of cost savings have been done and which will continue to show benefits each year; for example rentals have been replaced with leases this is cheaper and saves on future expenditure too. The fat has been trimmed resulting in a much leaner and streamlined business. Conclusion MRS is not without risk if the company is unable to pay off its debts then clearly it could have serious problems. However, with several operational updates showing good progress, a new and invested board, and a growing macroeconomic environment, I believe MRS offers substantial upside with much of the downside priced in.
20/11/2018
08:16
smoggyg: Worth reading again,my thanks to the author.//////Management Resource Solutions (MRS) – Dig a single digit PE that is growing Michael TaylorNovember 5, 2018 8:42 am 0 Management Resource Solutions (MRS) is a UK listed company operating in the Hunter Valley in Australia, offering maintenance support, mining services, and labour hire. It has seen many a drama, including a long suspension, several board bust-ups, board changes, a deeply discounted placing, and a revolving door of sellers. Despite this I believe, should its debt be refinanced, that there is significant scope for a re-rate. Opportunity MRS consists of Bachmann Plant Hire and MRS Services Group (formally Subzero). The company is on track for 2p earnings per share and this is set to grow. With a share price of 6.5p this gives the company a current year PE of just above 3, which is either priced to fail or screamingly cheap! MRS will never achieve a PE like the FANGs, but could easily trade at 10x earnings given other support services group ratings. A revolving door of sellers has created an artificially depressed price and therefore there is (in my opinion) scope for a re-rate through the earnings cycle, but also as the market re-rates it on a more traditional PE for the sector and earnings prospects. MRS Service Group (MRSSG) MRSSG predominantly provides coal industry support services in the Hunter valley in New South Wales (Australia). No contract with MRSSG is bigger than 25% of revenues, which means the company is not dependent on any single customer. The contracts are not just single contracts but they are a multitude of contracts within a client contract. The pricing framework is agreed upon upfront, and once it starts work is often added as and when needed due to the nature of the industry. Some work may be mine work, some work might be vehicle repair, equipment repair etc, all different sectors within the industry. This is why we do not see huge contracts announced with their clients BHP, Rio, Yancoal, Glencore, because a framework is agreed rather than a specific contract. We did see recently an additional contract with Glencore for rehabilitation works. As long as MRS is on the PSL (Preferred Supplier List) and the company produces good quality work and delivers, it will continue to receive more work. Work is initially agreed upon, and then more work is piled on top additionally. Plenty of client machinery that has been mothballed is now being refurbished due to the miners working flat out, and so there are plenty of large one-off contracts for this. Though these are, of course, not sustainable, this then translates into recurring maintenance revenue. More equipment online simply means more work. An example of a new business stream is buying pre-cut patented buckets (these buckets are huge, big enough to fit a small house into!) and MRS welding them together. This is a completely new revenue stream that did not exist a year ago. Plenty of low margin business has been discontinued but only if it doesn’t add value to the bigger picture. MRS will literally replace windshields for Glencore (GLEN), which means they are doing the same work that Autoglass do in the UK. This is very low margin but if Glencore want something doing it makes sense to respond – they are a large customer and a FTSE 100 company. A good working relationship is necessary. Bachmann Plant Hire (BPH) Bachmann Plant Hire works within the civil construction industry as bulk earthworks specialists. They are the providers of wet plant hire solutions and have over fifty years of service in the civil construction industry. BPH has room for growth in a new strategy of securing opportunities in remote and challenging locations; this means less competition and higher bargaining power on pricing. Currently BPH is operating with a 17% net profit margin and is likely to continue to grow. This is because of the Ipswich Economic Development Plan 2016 to 2031, an initiative driven by the local government, which will require 500 new residential homes every month in order to achieve this plan, meaning there will be no shortage of work should the government keep pressing on. Recent accelerated bookbuild and turnaround One of the warning signs that I previously highlighted was that management did not own any shares. They were not incentivised to act as owners and this was shown in the recent placing which was done at the very bottom of the range (6.5p) to allow management and the board in at a lower price than in the previous months’ trading range. One of the advantages was that this did provide some cash for the company, and finally aligned the board with shareholders. The full 14 million shares (£910,000) were taken up by the board, employees, and contractors which is a strong show of confidence in the company. The swing in MRS’s fortunes are there to be seen in the HY results. From an AUD$4 million loss the company delivered a half year profit of AUD$ 2.5 million net profit after tax, equating to £1.4 million. This is ~0.7p EPS and the company released a trading update recently stating that 2p EPS was on target. The £3.4m expected NPAT versus the company’s £12.8 million market cap at 6.5p puts the company trading on a PE of slightly above 3. I am not aware of a company that is trading on such a low earnings multiple and growing – such PE ratios are usually value traps, where the share price is falling faster than profits! Competition There are several slightly smaller companies that are competition but the competitive advantage is that MRS has a big shed, which means a lot of work can be done indoors as opposed to outdoors. This makes a difference in the quality of the welding; doing it inside is better than in a dusty environment. A tent can be used but inside is much more practical given the huge size of some of the trucks, diggers, etc. being repaired. Local competitor Austin Engineering closed its Muswellbrook Upper Hunter facility and also provided an influx of labour; one of the challenges of recruiting more employees is the remoteness of the location and so with the competitor closing this had two positive effects. The shed The shed was bought by MRS for $3.0m which was satisfied in cash on completion. Further finance was arranged in order to complete outstanding work in order to bring the shed to its full potential. MRS had bid for the shed and winning was the best possible outcome – there was a lot of work that needed doing on the shed and so they were able to submit a competitive bid. As owners, they are now able to complete necessary work at a lower cost and the money pocketed can be spent elsewhere. Owning the shed provides the company with an asset, lower costs, and no future worries over tenancy agreements. With regards to the shed, a quarter of the space has been cleared and the rest used more efficiently and this has enabled 50% more work to be done in the same shed. Debt and cost savings One of the reasons for MRS’s lowly rating is likely to be its debt. The Hermes facility is 18-20% interest including charges – they are the lenders of last resort, so this is very expensive as at the time the company did not have much of a choice (source: previous NED, confirmed at AGM by Chairman). A review of the debt is on the agenda and would significantly de-risk the company and free up a lot of cash. Another concern was that maintenance capex was being delayed and so a cash call would come in the future – the company invested $AUD2.4m in existing and additional plant and equipment from June to December 2017 of which all was funded through free cash flow. Trade receivables are likely to stay high as the blue chips tend to pay between 45-60 days and so also not of a concern. The majority of cost savings have been done and which will continue to show benefits each year; for example rentals have been replaced with leases – this is cheaper and saves on future expenditure too. The fat has been trimmed resulting in a much leaner and streamlined business. Conclusion MRS is not without risk – if the company is unable to pay off its debts then clearly it could have serious problems. However, with several operational updates showing good progress, a new and invested board, and a growing macroeconomic environment, I believe MRS offers substantial upside with much of the downside priced in.
15/11/2018
12:35
smoggyg: /Management Resource Solutions (MRS) “ Dig a single digit PE that is growing Michael TaylorNovember 5, 2018 8:42 am 0 Management Resource Solutions (MRS) is a UK listed company operating in the Hunter Valley in Australia, offering maintenance support, mining services, and labour hire. It has seen many a drama, including a long suspension, several board bust-ups, board changes, a deeply discounted placing, and a revolving door of sellers. Despite this I believe, should its debt be refinanced, that there is significant scope for a re-rate. Opportunity MRS consists of Bachmann Plant Hire and MRS Services Group (formally Subzero). The company is on track for 2p earnings per share and this is set to grow. With a share price of 6.5p this gives the company a current year PE of just above 3, which is either priced to fail or screamingly cheap! MRS will never achieve a PE like the FANGs, but could easily trade at 10x earnings given other support services group ratings. A revolving door of sellers has created an artificially depressed price and therefore there is (in my opinion) scope for a re-rate through the earnings cycle, but also as the market re-rates it on a more traditional PE for the sector and earnings prospects. MRS Service Group (MRSSG) MRSSG predominantly provides coal industry support services in the Hunter valley in New South Wales (Australia). No contract with MRSSG is bigger than 25% of revenues, which means the company is not dependent on any single customer. The contracts are not just single contracts but they are a multitude of contracts within a client contract. The pricing framework is agreed upon upfront, and once it starts work is often added as and when needed due to the nature of the industry. Some work may be mine work, some work might be vehicle repair, equipment repair etc, all different sectors within the industry. This is why we do not see huge contracts announced with their clients BHP, Rio, Yancoal, Glencore, because a framework is agreed rather than a specific contract. We did see recently an additional contract with Glencore for rehabilitation works. As long as MRS is on the PSL (Preferred Supplier List) and the company produces good quality work and delivers, it will continue to receive more work. Work is initially agreed upon, and then more work is piled on top additionally. Plenty of client machinery that has been mothballed is now being refurbished due to the miners working flat out, and so there are plenty of large one-off contracts for this. Though these are, of course, not sustainable, this then translates into recurring maintenance revenue. More equipment online simply means more work. An example of a new business stream is buying pre-cut patented buckets (these buckets are huge, big enough to fit a small house into!) and MRS welding them together. This is a completely new revenue stream that did not exist a year ago. Plenty of low margin business has been discontinued but only if it doesn't add value to the bigger picture. MRS will literally replace windshields for Glencore (GLEN), which means they are doing the same work that Autoglass do in the UK. This is very low margin but if Glencore want something doing it makes sense to respond –; they are a large customer and a FTSE 100 company. A good working relationship is necessary. Bachmann Plant Hire (BPH) Bachmann Plant Hire works within the civil construction industry as bulk earthworks specialists. They are the providers of wet plant hire solutions and have over fifty years of service in the civil construction industry. BPH has room for growth in a new strategy of securing opportunities in remote and challenging locations; this means less competition and higher bargaining power on pricing. Currently BPH is operating with a 17% net profit margin and is likely to continue to grow. This is because of the Ipswich Economic Development Plan 2016 to 2031, an initiative driven by the local government, which will require 500 new residential homes every month in order to achieve this plan, meaning there will be no shortage of work should the government keep pressing on. Recent accelerated bookbuild and turnaround One of the warning signs that I previously highlighted was that management did not own any shares. They were not incentivised to act as owners and this was shown in the recent placing which was done at the very bottom of the range (6.5p) to allow management and the board in at a lower price than in the previous months trading range. One of the advantages was that this did provide some cash for the company, and finally aligned the board with shareholders. The full 14 million shares (£910,000) were taken up by the board, employees, and contractors which is a strong show of confidence in the company. The swing in MRSs fortunes are there to be seen in the HY results. From an AUD$4 million loss the company delivered a half year profit of AUD$ 2.5 million net profit after tax, equating to £1.4 million. This is ~0.7p EPS and the company released a trading update recently stating that 2p EPS was on target. The £3.4m expected NPAT versus the companys £12.8 million market cap at 6.5p puts the company trading on a PE of slightly above 3. I am not aware of a company that is trading on such a low earnings multiple and growing such PE ratios are usually value traps, where the share price is falling faster than profits! Competition There are several slightly smaller companies that are competition but the competitive advantage is that MRS has a big shed, which means a lot of work can be done indoors as opposed to outdoors. This makes a difference in the quality of the welding; doing it inside is better than in a dusty environment. A tent can be used but inside is much more practical given the huge size of some of the trucks, diggers, etc. being repaired. Local competitor Austin Engineering closed its Muswellbrook Upper Hunter facility and also provided an influx of labour; one of the challenges of recruiting more employees is the remoteness of the location and so with the competitor closing this had two positive effects. The shed The shed was bought by MRS for $3.0m which was satisfied in cash on completion. Further finance was arranged in order to complete outstanding work in order to bring the shed to its full potential. MRS had bid for the shed and winning was the best possible outcome there was a lot of work that needed doing on the shed and so they were able to submit a competitive bid. As owners, they are now able to complete necessary work at a lower cost and the money pocketed can be spent elsewhere. Owning the shed provides the company with an asset, lower costs, and no future worries over tenancy agreements. With regards to the shed, a quarter of the space has been cleared and the rest used more efficiently and this has enabled 50% more work to be done in the same shed. Debt and cost savings One of the reasons for MRSs lowly rating is likely to be its debt. The Hermes facility is 18-20% interest including charges they are the lenders of last resort, so this is very expensive as at the time the company did not have much of a choice (source: previous NED, confirmed at AGM by Chairman). A review of the debt is on the agenda and would significantly de-risk the company and free up a lot of cash. Another concern was that maintenance capex was being delayed and so a cash call would come in the future the company invested $AUD2.4m in existing and additional plant and equipment from June to December 2017 of which all was funded through free cash flow. Trade receivables are likely to stay high as the blue chips tend to pay between 45-60 days and so also not of a concern. The majority of cost savings have been done and which will continue to show benefits each year; for example rentals have been replaced with leases this is cheaper and saves on future expenditure too. The fat has been trimmed resulting in a much leaner and streamlined business. Conclusion MRS is not without risk if the company is unable to pay off its debts then clearly it could have serious problems. However, with several operational updates showing good progress, a new and invested board, and a growing macroeconomic environment, I believe MRS offers substantial upside with much of the downside priced in.///// My thanks to the author.
13/11/2018
07:49
smoggyg: Good find but it was found last week.//////Biggest Bill7 Nov '18 - 10:31 - 2340 of 2361 0 1 0 Interesting article from lse: hxxps://cube.investments/management-resource-solutions-mrs-dig-for-a-single-digit-pe-that-is-growing/ SmoggyG7 Nov '18 - 14:37 - 2341 of 2361 Edit 0 2 0 Thanks BB,here is the article./////Management Resource Solutions (MRS) – Dig a single digit PE that is growing Michael TaylorNovember 5, 2018 8:42 am 0 Management Resource Solutions (MRS) is a UK listed company operating in the Hunter Valley in Australia, offering maintenance support, mining services, and labour hire. It has seen many a drama, including a long suspension, several board bust-ups, board changes, a deeply discounted placing, and a revolving door of sellers. Despite this I believe, should its debt be refinanced, that there is significant scope for a re-rate. Opportunity MRS consists of Bachmann Plant Hire and MRS Services Group (formally Subzero). The company is on track for 2p earnings per share and this is set to grow. With a share price of 6.5p this gives the company a current year PE of just above 3, which is either priced to fail or screamingly cheap! MRS will never achieve a PE like the FANGs, but could easily trade at 10x earnings given other support services group ratings. A revolving door of sellers has created an artificially depressed price and therefore there is (in my opinion) scope for a re-rate through the earnings cycle, but also as the market re-rates it on a more traditional PE for the sector and earnings prospects. MRS Service Group (MRSSG) MRSSG predominantly provides coal industry support services in the Hunter valley in New South Wales (Australia). No contract with MRSSG is bigger than 25% of revenues, which means the company is not dependent on any single customer. The contracts are not just single contracts but they are a multitude of contracts within a client contract. The pricing framework is agreed upon upfront, and once it starts work is often added as and when needed due to the nature of the industry. Some work may be mine work, some work might be vehicle repair, equipment repair etc, all different sectors within the industry. This is why we do not see huge contracts announced with their clients BHP, Rio, Yancoal, Glencore, because a framework is agreed rather than a specific contract. We did see recently an additional contract with Glencore for rehabilitation works. As long as MRS is on the PSL (Preferred Supplier List) and the company produces good quality work and delivers, it will continue to receive more work. Work is initially agreed upon, and then more work is piled on top additionally. Plenty of client machinery that has been mothballed is now being refurbished due to the miners working flat out, and so there are plenty of large one-off contracts for this. Though these are, of course, not sustainable, this then translates into recurring maintenance revenue. More equipment online simply means more work. An example of a new business stream is buying pre-cut patented buckets (these buckets are huge, big enough to fit a small house into!) and MRS welding them together. This is a completely new revenue stream that did not exist a year ago. Plenty of low margin business has been discontinued but only if it doesn’t add value to the bigger picture. MRS will literally replace windshields for Glencore (GLEN), which means they are doing the same work that Autoglass do in the UK. This is very low margin but if Glencore want something doing it makes sense to respond – they are a large customer and a FTSE 100 company. A good working relationship is necessary. Bachmann Plant Hire (BPH) Bachmann Plant Hire works within the civil construction industry as bulk earthworks specialists. They are the providers of wet plant hire solutions and have over fifty years of service in the civil construction industry. BPH has room for growth in a new strategy of securing opportunities in remote and challenging locations; this means less competition and higher bargaining power on pricing. Currently BPH is operating with a 17% net profit margin and is likely to continue to grow. This is because of the Ipswich Economic Development Plan 2016 to 2031, an initiative driven by the local government, which will require 500 new residential homes every month in order to achieve this plan, meaning there will be no shortage of work should the government keep pressing on. Recent accelerated bookbuild and turnaround One of the warning signs that I previously highlighted was that management did not own any shares. They were not incentivised to act as owners and this was shown in the recent placing which was done at the very bottom of the range (6.5p) to allow management and the board in at a lower price than in the previous months’ trading range. One of the advantages was that this did provide some cash for the company, and finally aligned the board with shareholders. The full 14 million shares (£910,000) were taken up by the board, employees, and contractors which is a strong show of confidence in the company. The swing in MRS’s fortunes are there to be seen in the HY results. From an AUD$4 million loss the company delivered a half year profit of AUD$ 2.5 million net profit after tax, equating to £1.4 million. This is ~0.7p EPS and the company released a trading update recently stating that 2p EPS was on target. The £3.4m expected NPAT versus the company’s £12.8 million market cap at 6.5p puts the company trading on a PE of slightly above 3. I am not aware of a company that is trading on such a low earnings multiple and growing – such PE ratios are usually value traps, where the share price is falling faster than profits! Competition There are several slightly smaller companies that are competition but the competitive advantage is that MRS has a big shed, which means a lot of work can be done indoors as opposed to outdoors. This makes a difference in the quality of the welding; doing it inside is better than in a dusty environment. A tent can be used but inside is much more practical given the huge size of some of the trucks, diggers, etc. being repaired. Local competitor Austin Engineering closed its Muswellbrook Upper Hunter facility and also provided an influx of labour; one of the challenges of recruiting more employees is the remoteness of the location and so with the competitor closing this had two positive effects. The shed The shed was bought by MRS for $3.0m which was satisfied in cash on completion. Further finance was arranged in order to complete outstanding work in order to bring the shed to its full potential. MRS had bid for the shed and winning was the best possible outcome – there was a lot of work that needed doing on the shed and so they were able to submit a competitive bid. As owners, they are now able to complete necessary work at a lower cost and the money pocketed can be spent elsewhere. Owning the shed provides the company with an asset, lower costs, and no future worries over tenancy agreements. With regards to the shed, a quarter of the space has been cleared and the rest used more efficiently and this has enabled 50% more work to be done in the same shed. Debt and cost savings One of the reasons for MRS’s lowly rating is likely to be its debt. The Hermes facility is 18-20% interest including charges – they are the lenders of last resort, so this is very expensive as at the time the company did not have much of a choice (source: previous NED, confirmed at AGM by Chairman). A review of the debt is on the agenda and would significantly de-risk the company and free up a lot of cash. Another concern was that maintenance capex was being delayed and so a cash call would come in the future – the company invested $AUD2.4m in existing and additional plant and equipment from June to December 2017 of which all was funded through free cash flow. Trade receivables are likely to stay high as the blue chips tend to pay between 45-60 days and so also not of a concern. The majority of cost savings have been done and which will continue to show benefits each year; for example rentals have been replaced with leases – this is cheaper and saves on future expenditure too. The fat has been trimmed resulting in a much leaner and streamlined business. Conclusion MRS is not without risk – if the company is unable to pay off its debts then clearly it could have serious problems. However, with several operational updates showing good progress, a new and invested board, and a growing macroeconomic environment, I believe MRS offers substantial upside with much of the downside priced in.
07/11/2018
14:37
smoggyg: Thanks BB,here is the article./////Management Resource Solutions (MRS) – Dig a single digit PE that is growing Michael TaylorNovember 5, 2018 8:42 am 0 Management Resource Solutions (MRS) is a UK listed company operating in the Hunter Valley in Australia, offering maintenance support, mining services, and labour hire. It has seen many a drama, including a long suspension, several board bust-ups, board changes, a deeply discounted placing, and a revolving door of sellers. Despite this I believe, should its debt be refinanced, that there is significant scope for a re-rate. Opportunity MRS consists of Bachmann Plant Hire and MRS Services Group (formally Subzero). The company is on track for 2p earnings per share and this is set to grow. With a share price of 6.5p this gives the company a current year PE of just above 3, which is either priced to fail or screamingly cheap! MRS will never achieve a PE like the FANGs, but could easily trade at 10x earnings given other support services group ratings. A revolving door of sellers has created an artificially depressed price and therefore there is (in my opinion) scope for a re-rate through the earnings cycle, but also as the market re-rates it on a more traditional PE for the sector and earnings prospects. MRS Service Group (MRSSG) MRSSG predominantly provides coal industry support services in the Hunter valley in New South Wales (Australia). No contract with MRSSG is bigger than 25% of revenues, which means the company is not dependent on any single customer. The contracts are not just single contracts but they are a multitude of contracts within a client contract. The pricing framework is agreed upon upfront, and once it starts work is often added as and when needed due to the nature of the industry. Some work may be mine work, some work might be vehicle repair, equipment repair etc, all different sectors within the industry. This is why we do not see huge contracts announced with their clients BHP, Rio, Yancoal, Glencore, because a framework is agreed rather than a specific contract. We did see recently an additional contract with Glencore for rehabilitation works. As long as MRS is on the PSL (Preferred Supplier List) and the company produces good quality work and delivers, it will continue to receive more work. Work is initially agreed upon, and then more work is piled on top additionally. Plenty of client machinery that has been mothballed is now being refurbished due to the miners working flat out, and so there are plenty of large one-off contracts for this. Though these are, of course, not sustainable, this then translates into recurring maintenance revenue. More equipment online simply means more work. An example of a new business stream is buying pre-cut patented buckets (these buckets are huge, big enough to fit a small house into!) and MRS welding them together. This is a completely new revenue stream that did not exist a year ago. Plenty of low margin business has been discontinued but only if it doesn’t add value to the bigger picture. MRS will literally replace windshields for Glencore (GLEN), which means they are doing the same work that Autoglass do in the UK. This is very low margin but if Glencore want something doing it makes sense to respond – they are a large customer and a FTSE 100 company. A good working relationship is necessary. Bachmann Plant Hire (BPH) Bachmann Plant Hire works within the civil construction industry as bulk earthworks specialists. They are the providers of wet plant hire solutions and have over fifty years of service in the civil construction industry. BPH has room for growth in a new strategy of securing opportunities in remote and challenging locations; this means less competition and higher bargaining power on pricing. Currently BPH is operating with a 17% net profit margin and is likely to continue to grow. This is because of the Ipswich Economic Development Plan 2016 to 2031, an initiative driven by the local government, which will require 500 new residential homes every month in order to achieve this plan, meaning there will be no shortage of work should the government keep pressing on. Recent accelerated bookbuild and turnaround One of the warning signs that I previously highlighted was that management did not own any shares. They were not incentivised to act as owners and this was shown in the recent placing which was done at the very bottom of the range (6.5p) to allow management and the board in at a lower price than in the previous months’ trading range. One of the advantages was that this did provide some cash for the company, and finally aligned the board with shareholders. The full 14 million shares (£910,000) were taken up by the board, employees, and contractors which is a strong show of confidence in the company. The swing in MRS’s fortunes are there to be seen in the HY results. From an AUD$4 million loss the company delivered a half year profit of AUD$ 2.5 million net profit after tax, equating to £1.4 million. This is ~0.7p EPS and the company released a trading update recently stating that 2p EPS was on target. The £3.4m expected NPAT versus the company’s £12.8 million market cap at 6.5p puts the company trading on a PE of slightly above 3. I am not aware of a company that is trading on such a low earnings multiple and growing – such PE ratios are usually value traps, where the share price is falling faster than profits! Competition There are several slightly smaller companies that are competition but the competitive advantage is that MRS has a big shed, which means a lot of work can be done indoors as opposed to outdoors. This makes a difference in the quality of the welding; doing it inside is better than in a dusty environment. A tent can be used but inside is much more practical given the huge size of some of the trucks, diggers, etc. being repaired. Local competitor Austin Engineering closed its Muswellbrook Upper Hunter facility and also provided an influx of labour; one of the challenges of recruiting more employees is the remoteness of the location and so with the competitor closing this had two positive effects. The shed The shed was bought by MRS for $3.0m which was satisfied in cash on completion. Further finance was arranged in order to complete outstanding work in order to bring the shed to its full potential. MRS had bid for the shed and winning was the best possible outcome – there was a lot of work that needed doing on the shed and so they were able to submit a competitive bid. As owners, they are now able to complete necessary work at a lower cost and the money pocketed can be spent elsewhere. Owning the shed provides the company with an asset, lower costs, and no future worries over tenancy agreements. With regards to the shed, a quarter of the space has been cleared and the rest used more efficiently and this has enabled 50% more work to be done in the same shed. Debt and cost savings One of the reasons for MRS’s lowly rating is likely to be its debt. The Hermes facility is 18-20% interest including charges – they are the lenders of last resort, so this is very expensive as at the time the company did not have much of a choice (source: previous NED, confirmed at AGM by Chairman). A review of the debt is on the agenda and would significantly de-risk the company and free up a lot of cash. Another concern was that maintenance capex was being delayed and so a cash call would come in the future – the company invested $AUD2.4m in existing and additional plant and equipment from June to December 2017 of which all was funded through free cash flow. Trade receivables are likely to stay high as the blue chips tend to pay between 45-60 days and so also not of a concern. The majority of cost savings have been done and which will continue to show benefits each year; for example rentals have been replaced with leases – this is cheaper and saves on future expenditure too. The fat has been trimmed resulting in a much leaner and streamlined business. Conclusion MRS is not without risk – if the company is unable to pay off its debts then clearly it could have serious problems. However, with several operational updates showing good progress, a new and invested board, and a growing macroeconomic environment, I believe MRS offers substantial upside with much of the downside priced in.
17/8/2018
15:31
dave4545: Just 137k of pi sales today after a very strong week. Just says it all atm with the momentum and strength of the mrs share price.
10/2/2018
14:35
vilage_idoit: The below commentary is the opinion and the opinion only of @vilage_idoit, and is not investment advice, nor should it be used as such. The author is not responsible for any decisions made due to this material and recommends that you do your own full research. Management Resource Solutions (MRS) is a UK listed company operating in the Hunter Valley in Australia, offering maintenance support, mining services, and labour hire. The MRS Group consists of Bachmann Plant Hire and MRS Services Group (formally Subzero). The story of MRS is something that could be made into a film – what started out as an acquisitive business was suddenly suspended due to accounting implications, and would remain so for nearly six months before coming to the market with a heavily discounted 5p placing. As someone who bought at 15p quite literally a few minutes before suspension, I must surely win an award for worst trade of 2016. I met with Joe Clayton and Tim Jones after last year’s AGM along with another PI and I believe we shared similar feelings. Distrust in them both and worried. They refused to appoint Trevor Brown and Nigel Burton as NEDs because allegedly the lenders believed they were “in cahoots” with Paul Morffew and would pull the plug on the borrowings sending the co into administration. We now know this to be false and that the old board were spouting untruths. TB and NB were appointed along with John Zorbas as Chairman, and the board participated heavily in the placing despite no obligation to do so. Since then, we have seen a share price as low as 3p and under due to a profit warning and the claim. After speaking to a few successful PIs I decided to be a contrarian buyer and buy at these lows, though in hindsight (of course) I wish I’d filled my boots. Since the claim was rebutted, the directors have steadily bought more, and we have had several operation updates to show that the turnaround is well on track. That the co is on track to deliver EPS of not less than 2p currently shows the hard work of the incumbent board and that this is now a completely different company to the MRS of 2016. The current share price values the company at a PE ratio of <4. With a PE this low means that MRS is either a value trap, the sort of company that fails to deliver on profits and the share price falls even further, or a screaming contender for buy of the year. I recall buying CRL on a single digit PE at 6p despite there being no interest, and sadly I did not buy enough or hold onto them long enough as the share price reached 40p+ this year. I do not intend to make the same mistakes here (assuming the story and reasons for being invested continue to be the same). There has been a recent disagreement between TB and the board which has resulted in him leaving the board and selling some shares. He still owns a major stake and has said that he does not doubt the fundamentals of the business, but is not happy with the board at the moment and thinks there could be positive changes to be made. This is perhaps not unfair, but he has said he is not selling any more and from the trades that appears to be the case. Another PI has contacted him and he has said both to him and Nigel that he is not a seller at this level, having reduced his holding to a more comfortable level. Everyone is a seller at some point – if he wants to sell then so be it. It is odd he is not selling at a higher level but the worry due to him selling has caused a great opportunity. At this price I see a huge bargain and have significantly added to my holding. Recently I spoke with Nigel on the phone and added to my position. Here is why: Contract risk: No contract with MRSSG is bigger than 25%. The contracts are not just single contracts but they are a multitude of contracts within a client contract. The pricing framework is agreed upon upfront, and once it starts work is often added as and when needed due to the nature of the industry. Some work may be mine work, some might be vehicle repair, equipment repair etc, all different sectors within the industry. This is why we do not see huge contracts announced with their clients BHP, Rio, Yancoal, Glencore etc, although I expect there will be contracts to announce. When MRS is on the preferred supplier list (PSL) and the co does good quality work and delivers then they get more work. Work is initially agreed upon then more work is piled on top additionally. Plenty of client machinery that has been mothballed is now being refurbished and so there are plenty of quite large one-off contracts for this which are of course not sustainable, but then also the recurring maintenance work will need to be done. More equipment online simply means more work. It is possible for MRSSG to grow 50% if the labour and the workspace is there. This is very unlikely to be achieved in the next six months but it is possible in the fullness of time. Unexpected cash call: It is highly unlikely there will be any unexpected cash calls because ongoing capex is already accounted for and factored into the budgets and expected results. Capex is not a huge cost and the company has the resources to achieve 2p EPS without raising cash. Bachmann has already spent on capex for expansion and the board will do so where necessary. MRS can operate and spend on normal capex without raising cash. The Hermes facility is 18-20% interest including charges – they are the lenders of last resort, so this is very expensive as at the time the co did not have much of a choice. A review on the debt may come after February with the interims as this is what lenders need to start to look at refinancing this facility. Majority of cost savings have been done and which will continue to show benefits each year; for example rentals have been replaced with leases – this is cheaper and saves on future expenditure too. Trade receivables are quite high but blue chips pay slowly, between 45-60 days. This is unlikely to change. Competition: There are several slightly smaller companies that are competition but the competitive advantage is that MRS has a big shed, which means a lot of work can be done indoors as opposed to outdoors. This makes a difference in the quality of the welding; doing it inside is better than in a dusty environment. A tent can be used but inside is much more practical given the huge size of some of the trucks/diggers etc being repaired. The shed: With regards to the shed, a quarter of the space has been cleared and the rest used more efficiently and this has enabled 50% more work to be done in the same shed. The shed is currently being sold by the liquidators and expressions of interest closed in December. MRS have bid for the shed. Whilst winning should be good for the business (lower costs and an asset), if they do not win it doesn’t matter as they have a tenancy agreement and can’t be kicked out. MRS have submitted a competitive bid and have the advantage that there is a lot of work that needs doing on the shed. This means that if they are the owners they may be able to do what is necessary at a lower cost and the money can be spent elsewhere. Cyclicality of the business: There will be a downturn in the sector eventually but that is likely to be years away. Plenty of mines that were uneconomic are now being considered or brought into use, with plenty of machinery and equipment being brought out of storage too. The goal is to deleverage which will be complete in around three years and the group will face any downturn with no debt and a streamlined business. Bachmann’s urban regeneration work is disconnected to the cycle, but they are looking to drive business elsewhere and grow it. Some of this new business will be of a cyclical nature, but Bachmann will be a growing business. It is working at full capacity but this does not mean that the business cannot grow any further, just that they have more work than they can manage at the moment. Revenue growth and revenue streams: An example of a new business stream is buying pre-cut patented buckets (these buckets are huge, big enough to fit a small house into!) and MRS welding them together. This is a completely new revenue stream that six months ago did not exist. The next big growth contracts will be for refurbishing; as the miners have been working flat out with current machinery and equipment plenty of it will need work done on repairs and maintenance. Plenty of low margin business has been discontinued but only if it doesn’t add value to the bigger picture. MRS will literally replace windshields for Glencore, which means they are doing the same work that Autoglass do in the UK, and it is very low margin, but if Glencore want something doing it makes sense to do it as they are a large customer and a FTSE 100 co. A good working relationship is necessary. Exit plan: Any dreams of one of the ‘big boys’ taking over MRS can be quashed. These large cos see MRS as a supplier and it is noncore to them; put simply they are happy to outsource the work and focus on what is their priority core business. The board have not spoken about acquisitions as the priority now is to focus on the growth and efficiency of the business – any acquisition would need to be complementary and not a case of ‘diworseification’, as coined by Lynch. It cannot be ruled out that another company may view MRS with a predatory eye in the future, but this would have to be at the right price. Nigel has not spoken much to institutions because he would much rather do so after another solid set of results when hopefully the share price is in the mid teens. It is much better to get a consistent record of operational results and the share price up before speaking to them. Although there is no plan to raise funds, and no need to do so, if the right opportunity to invest more to grow revenue and earnings arises the company would consider it. He would prefer to raise in the double digits if a raise is necessary, and this should be closer to 20p than 10p. This is only his opinion and not to be considered as fact. MRS is not without risk – if the company is unable to pay off its debts then it would become a problem. However, with several operational updates showing clear progress, a director with a large holding, a new CEO and board, and a growing macroeconomic environment, I feel this share is in the right place at the right time. In a period where momentum and growth (high PEs) are punished I see Management Resource Solutions as a value and turnaround play for the investor looking for high returns. All of this is my own opinion and as clearly stated at the start, you should do your own research and not rely on anyone else. I hold shares in Management Resource Solutions. Management Resource Solutions Solutions £mm mc @ 7p It is highly unlikely there will be any unexpected cash calls because ongoing capex is already accounted for and factored into the budgets and expected results. Capex is not a huge cost and the company has the resources to achieve 2p EPS without raising cash. Bachmann has already spent on capex for expansion and the board will do so where necessary. MRS can operate and spend on normal capex without raising cash. The Hermes facility is 18-20% interest including charges – they are the lenders of last resort, so this is very expensive as at the time the co did not have much of a choice. A review on the debt may come after February with the interims as this is what lenders need to start to look at refinancing this facility. No contract with MRSSG is bigger than 25%. The contracts are not just single contracts but they are a multitude of contracts within a client contract. The pricing framework is agreed upon upfront, and once it starts work is often added as and when needed due to the nature of the industry. Some work may be mine work, some might be vehicle repair, equipment repair etc, all different sectors within the industry. This is why we do not see huge contracts announced with their clients BHP, Rio, Yancoal, Glencore etc, although I expect there will be contracts to announce. When MRS is on the preferred supplier list (PSL) and the co does good quality work and delivers then they get more work. Work is initially agreed upon then more work is piled on top additionally. There are several slightly smaller companies that are competition but the competitive advantage is that MRS has a big shed, which means a lot of work can be done indoors as opposed to outdoors. This makes a difference in the quality of the welding; doing it inside is better than in a dusty environment. A tent can be used but inside is much more practical given the huge size of some of the trucks/diggers etc being repaired. The shed is currently being sold by the liquidators and expressions of interest closed in December. MRS have bid for the shed. Whilst winning should be good for the business (lower costs and an asset), if they do not win it doesn’t matter as they have a tenancy agreement and can’t be kicked out. MRS have submitted a competitive bid and have the advantage that there is a lot of work that needs doing on the shed. This means that if they are the owners they may be able to do what is necessary at a lower cost and the money can be spent elsewhere.
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