Home | About | Portfolio | Contact
HARKELL
- Exeter -

Portfolio>MRS>Investment Rationale
MRS Investment Rationale

Reasons for invesment:
- Temporary pessimism due to negative profits after failed takeover
- Hidden optionality in push to find new acquisition targets for complementary offering and synergystic purposes
- Hidden optionality in forthcoming tendering for new contracts

Merits:
- Competent and well-incentivised management of whom have built the company
- Good acquisition plan focusing on extending complementary service offerings and utilising cost synergies where applicable
- EBITDA positive (ignoring costs of failed takeover) and expected to return to profitability and remain profitable in the long-term
- Strong market outlook for the contract personnel business
- Stable dependable cash flows and a strong record of winning new contracts
- Net assets of A$600k providing a stable price floor for the forseeable future
- Committed dividend plan (two-thirds of Net Profits)

Concerns:
- Lagging oil & gas sector in Australia due to adverse price movements in the energy commodities markets (the future will not factor into decision as random-walk commodities pricing is assumed)
- Acquired business risk exposure could see price below 7p should consolidated profit be temporarily driven into negative values