Management Resource Solutions Regulatory News (MRS)

14 August 2019

Management Resource Solutions plc

("MRS" or the "Company")

Conclusions of Alerion independent valuation report

Following the acquisition of Alerion Consulting Ltd ("Alerion") in March, MRS requested Leadenhall Services Pty Ltd ("Leadenhall") to prepare a report setting out its opinion as to the fair market value of Alerion as at the acquisition date. The consideration for the acquisition was A$2.2m (valued at the market price at the time of 4.45p per ordinary share at an exchange rate of £1:A$1.85), satisfied by the issue of 26.4 million new ordinary shares.

Leadenhall determined the fair market value of Alerion as at the acquisition date to be in the range of A$2.2million to A$3.0 million. In determining the valuation range, Leadenhall:

·; Applied a discounted cash flow ("DCF") analysis as the primary valuation methodology which

resulted in a value for Alerion of A$2.6 million;

·; Conducted a review of management cash flow forecasts and made adjustments to revenues and EBIT margins where appropriate based on an analysis of progress of licensing and timing of first revenues, now assumed to be in January 2020, likely time to business maturity, the number of jobs undertaken per month at maturity and relevant industry metrics and performance of comparable companies;

·; Determined an appropriate post-tax discount rate based on the relative risk associated with the forecast cashflows and the typical rates of return required by venture capital investors for investments at a similar stage of development as Alerion. Based on this analysis they selected a post-tax discount rate of 28%, correlating to a pre-tax discount rate of 33%, in line with pre-tax required rates of return for start-up and early stage businesses observed in the 2019 Pepperdine Private Capital Markets Report;

·; Conducted a sensitivity analysis to determine the sensitivity of the DCF value to a number of key assumptions as summarised below:

- Discount rate (+/- 5%): results in a value between A$1.8m and A$3.9m

- EBIT margin (+/- 5%): results in a value between A$1.9m and A$3.3m

- Number of jobs per month (+/- 15%): results in a value between A$2.1m and A$3.1m

- Revenue per job (+/- 10%): results in a value between A$2.3m and A$2.9m

- Capex (+/- 10%): results in a value between A$2.5m and A$2.7m

- Long term growth rate (+/- 1.5%): results in a value between A$2.5m and A$2.7m

·; Prepared a cross-check of the DCF value using a capitalisation of earnings analysis, based on revenue multiples and a review of the cost to recreate the Alerion business as at the valuation date. The cross-checks were broadly supportive of the selected valuation range.

Paul Brenton, Chief Executive of MRS commented:

"We always considered Alerion to be a value accretive addition to our business, enhancing the services we are able to provide to our customers and giving us a competitive advantage. At the same time, we recognised that some shareholders had concerns regarding the consideration that was paid by the Company in the transaction. Having commissioned Leadenhall Services to undertake an independent valuation report, we hope its conclusions will now allow us to move forward and focus on building a great business."

For further information:

This announcement includes inside information as defined in Article 7 of the Market Abuse Regulation No. 596/2014 and is disclosed in accordance with the Company's obligations under Article 17 of those Regulations.

About MRS

Management Resource Solutions plc (MRS), through its subsidiaries Bachmann Plant Hire and MRS Services Group, offers plant hire, equipment repair, refurbishment and fabrication, mine rehabilitation, earthmoving, road construction and other support services to a wide base of private and public sector clients in Australia. MRS caters predominately for the mining, civil engineering, construction and infrastructure industries.

Further information on the Company can be found at http://www.mrsplc.info