Member Info for troutisout

Joe Bop,

1. It is not unusual when leasing a commercial property that you have an interest in buying for some or all of your rental payments to go against the final purchase price.
2. You honestly believe that Administrators will hold on for the best price.
3. You do realise the construction work is to extend the size of the shed.
4. You have watched to see how the whole area is booming at the moment with Thermal Coal demand and the big miners expanding. How many facilities are about to do the sort of repairs and maintenance needed on their machines to support this growth.

As for the black cab analogy, shows you are not really making a credible argument, if you used property that might have been better, but you know your argument wouldn't work then....

Joe Bop,
Do you not think they were able to get a good deal as they had been renting the property first?
Do you not think they got a good deal because they bought it from the administrators for the previous owners?
Do you not think it will be worth more after the building works are completed and maximising it's full potential?
Do you not think the demise of their nearby competitor makes their soon to be facility more valuable?

You can't run this type of business without finance, no company could go out and buy new equipment and plant only when they had enough cash to do so.
As you say the shed is an investment, it is an asset which they value at between $9m and $10m when complete (it cost us $5m)

"During FY18, MRS Property No1 Pty Ltd (PN1) purchased the land and the partially completed buildings for $3.0m which MRSSG operates from in the Hunter Valley. At the time of acquisition, the land and buildings had a valuation of $4.8m. The cost to complete the building is approximately $2.0m, which is fully funded through a construction facility. The completion of the construction is progressing well and to budget. The estimated valuation per management, of the completed facility in use, is approximately $9.0m to $10.0m."

Get your teeth into this,

https://drive.google.com/file/d/18GQq00yh0Xbvq2Lw479jdSpOJ_n3ajAs/view

I think the facts are there are now 5 forms of debt the Company have,
1. The debtor financing and this is at a high level and needs to be refinanced. There is a total of $9.6m in these facilities for BPH and MRSSG. However this is an invoice finance facility, so the amount can change all the time, They are basically factoring invoices in advance at a certain rate and that rate is high.
2. Commercial bills and these were set up on the restructure of the group in Feb 2017. There was initially $4.3m, then at last Interims they were $2.8m, they are expected to be fully repaid in early 2020. They are currently amortising at $100k per month.
3. Equipment Finance, this was where BPH and MRSSG were acquired partially with 48 month $4.2m equipment finance facilities, both of these are being paid down ($100k a month each) and there were 25 payments left at Dec 2017 a year ago, so 13 monthly payments to go.
4. Property finance, the mortgage for the shed $3m and amortising at $100k a month.
5. Property construction finance $2m to be used to complete the construction works on the shed. Not drawn down yet.

So as you see we have two new debt facilities, no one knows what the interest or terms of these are.
We have the equipment finance and Commercial bills being paid down and just over a year left on those
The debtor finance facility which needs to be at a better rate.

Is there a lot of mischief being spouted about the debt, the Company did state this in the results, it looks like the majority of CAPEX came through free cash flow last year, are people looking back too far now?

"Property, Plant & Equipment

During FY18, the Group invested $13.7m in Property, Plant & Equipment, with a further $2.0m in Capital Work In Progress. The majority of the capital expenditure (CAPEX) has been funded through free cash flow, new debt contributed $5.0m, with $2.0m equipment finance and $3.0m property finance. The cashflow constraints of prior years' have not allowed for CAPEX. However, during FY18 the Company has focussed on ensuring CAPEX has been invested, extending the life of the capital equipment and supporting the Group's sustainable growth."

Greenhills,
Can you please explain to us what debt you are worried about please.
It's time to be specific about this, so please state which of the debts most concern you and why?

So guzzler, it appears you are posting out of bitterness, along with a few others.
You say the amount of MRS you hold isn't worth worrying about, yet you bemoaned being 36% down in an earlier post.
Make your mind up....
I have said to others they seem to be here you just see MRS holders lose out, as they did in URU and ANR, that doesn't make it better for them but it is human nature in some to want to see others fail to make their own failures seem better.

I hope you are not one of those?

Greenhills,
We have just had the final results with Director's remuneration in, but that is up until June this year.
It will have reduced as a total with less Directors now.
Zorbas was on about $98k per annum. That's about £56k, he purchased 4m shares at 6.5p in the bookbuild so £260k cost.
He also bought 219,080 at an average of 6.76p in Oct 2017 in the market (cost £15k) and 2,350,000 warrants at 5p which cost him £117.5k

I am not attacking people but come on URU, ANR and then MRS, if you were so worried about Zorbas you have done a great job in following him around and investing in his stocks, so something is awry.

I have been investing for many years and when, and it happens a lot, a company goes to **** and the Directors you feel are culpable, you don't invest in their next venture. I don't understand how so many posters seem to be invested in 2 or 3 Zorbas involved companies and yet are now acting like wise sages....

Couldn't buy 250k in one go just then, so they aren't really awash with seller's stock down here. The MMs just widened the spread to put buys through as sells as well. I think as soon as they have washed the 350k at 4.55p through, the price will start to rise. The other sells this morning were around 4.8p, so they won't sell many more below that before they need either more sellers or to raise the offer.

Guzzler,
Can I ask whether you hold shares in MRS? Only you and others seem to be saying that if Zorbas goes then the SP will recover, when it is clear that every time someone goes they sell down their holding and the SP drops, Trevor Brown, Morffew and Bachmann have all been selling their holdings down and the SP drops due to this pressure.
So not sure why you think it would go up if Zorbas was removed.
I think there has been a concerted effort by some URU shareholders to try and spread woe about Zorbas when perhaps URU was always a dog and you got suckered into it.
This statement seems odd,
"He holds 13.8% of ANR which is a dog. His holding in just over a year has gone from £125K, to £1.5M and all the way back down to £170K."
I don't know whether the amount of shares he held changed, but he has increased the value of his holding by 35% in just over a year and if shareholders sat while the share bagged and then still sat while it dropped again, then that is their fault. I know when you lose money it is easy to blame someone else, but perhaps also look at yourself, if it was so obvious he is bad for Company SP's then why were you still invested? Take some responsibility.

As for MRS it is a different company, it is making profits and has a good cashflow going through, it is also investing in growth and future business, $2m in new equipment loans and $3m in the purchase of the shed and $2m to build the shed out which will give us an asset that they value at $10m, but more importantly gives us enough space to work on far more from a central base and with the competition next door gone, there is a lot of potential to come from the shed and new equipment.

What trades have gone through elsewhere???

Greenhills,
Forgive me as I am not an accountant and late to the party so not sure on the finance terms of the previous debt.

1. Wasn't it the Debtor Finance facility that was attracting the large interest costs? BPH had $2.6m facility and MRSSG now had $7m (increased from $6m in May 2018). These are $1m higher on this accounting date (I assume this changes all the time depending on invoicing). This facility is, I believe, what needs refinancing?

2. Current Borrowings has increased by nearly $5m since last accounts, $1m is the above Debtor Finance and the Company tell us they have taken $2m facility for equipment and $3m to purchase the shed. So some of the previous debt has been paid down.

3. Non current Borrowings has reduced by $3.4m.

4. Overall Borrowing had increased by $1.5m by year end. Yet we know they took on another $5m in Borrowings for equipment and shed purchase and increased the MRSS G debtor financing by $1m.

So they are paying some of the debt down (albeit they have taken out other facilities, However I would assume that these would be at better terms?)

On Equipment Finance they had 25 repayments left at December 2017, so I assume there is only another 13 to go. They are amortising at $100k a month each.

On Commercial Bills they say there is only one remaining amortising at $100k a month. We were told there was $2.8m left at December 2017, so we have had another year of amortising from that figure.

The building purchase loan amortises at $100k a month, this is our asset now though and the other $2m construction loan will have started to be drawn down, increasing the Borrowings for this year.

So I believe they are paying old Borrowings down, but have invested in equipment and the shed so added new borrowings. The amortising of these borrowings is at $400k a month from what they have said. Can anyone state what the rental payments on the shed were each month, because some of these loans are the company mortgaged and owning rather than renting the shed.

Any Company should always look to get the best deal from their lenders, I am sure after these accounts they can work towards some better deals, especially for the debtor finance facility.

It will be interesting to see what the debt situation is at the end of this month when we are half way through FY2019.

I haven't sold down and actually added some more today, but I am not as gloomy as you about the borrowings because they are paying down the old facilities, the figures are skewed by the new facilities they have taken on for more equipment and the shed purchase and construction work. These loans are buying us the potential to earn more revenue, take on more work, increase profits and save on rental payments for the shed, those are all valid reasons to increase the borrowings at this time.

Gige,

Not sure what you want me to do about it, apart from to re-iterate again if you are unhappy sell up and move on, because if you are right then you will lose even more money. If you are wrong then so be it, you will have had the courage of your conviction and followed what you believed.
There is no point posting on BBs about how bad it is and then moaning when the SP drops and you are losing money.
I should imagine a lot of people are down after today's moves.....

Lots of people with holdings under 3%?

MasterRSI
Having looked at it again the majority of the deficit is due to the $609k tax charge, which is says is 'deferred'. I am no accountant but that looks to have stopped them hitting the 2p. The extra shares weren't that much as the bookbuild was after year end and the exchange rate does go against them but not by too much.
I am not that worried, as the EPS is still positive and a huge turnaround from last year's losses.

win4call,
Try and look at the motives of those that keep trying to put barriers up on every advancement. This share suffers from traders and those that have lost money either here or at URU/ANR.
They want to see this drop, the traders as they sold on the news, the others because they want others to share their pain.

The NOMAD is a real red herring. Northland are being taken over by SP Angel and they have voluntarily agreed to lose their NOMAD status. They haven't resigned as NOMAD for MRS, they have left the market and every Company that had them as NOMAD is going through the same process of replacing them as NOMAD. There is quite some time until 1st February so I don't see them needing to rush through the process, there may well be quite a few companies approaching the same new NOMADs increasing their workload. It does take a few weeks for the NOMAD to do their DD and as I state above there is plenty of time. We also are now into the festive season and that won't deliver any extra urgency.
I would say the debt before any renegotiation was already priced into the current SP, if more favourable terms are brokered then the SP should appreciate.
Today's trading is more to do with results day shenanigans than a pointer to the future. In a way it is good to clear some of these sellers and anyone buying can't ask for a better discount....

Just to look back at the bookbuild RNS, which we can now see why it was needed ($50k cash at end of June 2018), but here was their guidance then, look at the EBITDA figure and you can see they beat that. Strange to keep an EPS forecast when you know you are issuing more shares though.

"Trading update

The Board of MRS refers to its previously released earnings forecast for the year ending 30 June 2018 of 2p per share, equivalent to an EBITDA of approximately $11.5 million, which, on the basis of current estimates and subject to audit is expected to be achieved."

They did buy the shed and equipment with new debt, but they have to keep investing in plant to grow and satisfy their client's workload and the shed purchase is an asset and also a reduction in ongoing costs.

"During FY18, the Group invested $13.7m in Property, Plant & Equipment, with a further $2.0m in Capital Work In Progress. The majority of the capital expenditure (CAPEX) has been funded through free cash flow, new debt contributed $5.0m, with $2.0m equipment finance and $3.0m property finance"

MasterRSI,
That was sort of explained by the change in exchange rate, the tax and extra shares in issue from when that statement made. Take those back to how it was and they would have shown an EPS of 2.07p.

"Comparison of a normalised EPS calculation to the original guidance results in MRS generating an EPS of 2.07 pence per share, which is 4% above guidance. However, the effects of a higher than expected weighted average number of shares, decline in the exchange rate and $0.6m of tax expense, resulted in an EPS of 1.74 pence per share.