-
27-08-2020, 08:57 PM
#211
The Silo disaster was where the settlement was to be 'worked off' forwards if memory serves correct
H&C / Automation & MilmeQ offshore Freezing Works Support operations will all to a degree be affected
by current Covid-19 travel restrictions, maybe sometime into the future
They have some good bones of businesses acquired there, if volatile but still continue with other legacy
divisions which still have to demonstrate their ability to fly a fair while & much playing (developing) later..
Lets hope that someone doesn't get wild ideas about borrowing up large to add a new division or two
as bolt on's at a hefty cost -- to thus risk repeat of past destructive cycles evident in MGL's past
when add-ons don't work out or fall apart further down the track..
Last edited by nztx; 27-08-2020 at 09:03 PM.
-
27-08-2020, 08:59 PM
#212
Originally Posted by winner69
nztx ....just as well all that incredible degree of wealth destruction over the years is behind them and the turn around story underway has real momentum and the future is looking really bright
Percy probably got some good stories to tell about Mercer .....but maybe, just maybe, he’s interested now, if so a great investment.
W69 wouldn't put a dollar on that happening, IMO Mr Neal really can pick very long odds companies .
-
27-08-2020, 09:31 PM
#213
Originally Posted by winner69
nztx ....just as well all that incredible degree of wealth destruction over the years is behind them and the turn around story underway has real momentum and the future is looking really bright
Percy probably got some good stories to tell about Mercer .....but maybe, just maybe, he’s interested now, if so a great investment.
Yes,but luckily I have forgotten most of them.!.
So automation "Across these business, MHM Automation provides automated solutions to the global dairy, cheese and protein sectors, packaging technologies, large scale chilling and freezing systems and stainless steel fabrication services."
Sounds great.
Yet PAZ have installed their second huge freeze drier.The first one is the largest in Australasia.Designed by PAZ, and manufactured in China.Most of PAZ's equipment comes from China.
Why?.Because it costs about a quarter to a third of the cost of NZ supplied equipment.
Last edited by percy; 27-08-2020 at 09:36 PM.
-
28-08-2020, 12:00 PM
#214
Originally Posted by nztx
Some of businesses acquired are very very cyclical though
Bear in mind they are operating also in markets overseas where travel is not possible to, so reliant on teams on the ground there already
Interesting the Milmeq acquisition - low cost - high volume - low margin
A bit more on Milmeq. It was a privately owned company, part of the Amalgamated Dairy stable, which is the business arm of the rich lister Goodfellow family. It went into receivership in 2018, although it is probably more correct to say it was allowed to go into receivership. There seems little doubt that the Goodfellows could have saved the company is they had chosen to do so.
From the ODT article at the time
https://www.odt.co.nz/news/dunedin/d...e-cost-40-jobs
-----
Milmeq custom-designs, engineers and manufactures systems for primary food processing, materials handling, chilling and freezing within the protein industry.
Mr Marshall (board chairman) said ''world markets have been challenging'' for the past 12 to 18 months with inter-company consolidations, Australia's drought and the uncertainty surrounding the US-China trade tariff war.
''Companies are just not making reinvestment decisions at the moment.''
-----
I visited Millmeq while visiting Dunedin for the Scott Technology AGM around ten years ago. At that stage Millmeq was doing a lot in the meat processing industry and things were quite buoyant with the two companies seemingly not wanting to tread directly on each others toes.
The story at receivership time talks about the company remnants being split between Wiley and Co,. an Australian project delivery company. From https://www.wiley.com.au/about-us/
"Wiley completed its acquisition of the primary food processing design and engineering consultancy team from Milmeq, New Zealand. The acquisition sees the further establishment of Wiley’s services in the country and their first permanent presence within New Zealand."
and Mercers. But there was a third company involved as well, with Scott Technology purchasing the "Milmeq Spares and Sundries Meat Slaughter Business." You would have to wonder why a potential competitor would take on the job of supporting a dead rival's product. My conclusion is that it must have been to get on good terms with Millmeq's former customers.
Superficially the terms of purchase of "Millmeq Chilling & Freezing" seem quite generous, to Mercer. A sale price of $50k, a $1m interest free working capital facility thrown in by the vendors, a $3.5m bank bond supported by the vendors up to 31-10-2020 in relation to an existing significant contract for the design and delivery of plate freezers to a leading Australian red meat supplier.
Yet within 10 months of purchase "Millmeq Chilling & Freezing" had secured $30m worth of orders! On the surface of it that $50,000 sale price looks too good to be true.
Originally Posted by nztx
The balance sheet shows signs of forward projects heavily funded upfront by customers - see the contract liabilities
This has become more apparent over recent years
That seems very odd. Why would major customers pay up front before the work was completed? Could this customer financing instead be related to the bank bond supported by the Goodfellows which will expire at the end of October 2020?
SNOOPY
Last edited by Snoopy; 28-08-2020 at 12:38 PM.
Watch out for the most persistent and dangerous version of Covid-19: B.S.24/7
-
28-08-2020, 01:00 PM
#215
Originally Posted by Snoopy
A bit more on Milmeq. It was a privately owned company, part of the Amalgamated Dairy stable, which is the business arm of the rich lister Goodfellow family. It went into receivership in 2018, although it is probably more correct to say it was allowed to go into receivership. There seems little doubt that the Goodfellows could have saved the company is they had chosen to do so.
From the ODT article at the time
https://www.odt.co.nz/news/dunedin/d...e-cost-40-jobs
-----
Milmeq custom-designs, engineers and manufactures systems for primary food processing, materials handling, chilling and freezing within the protein industry.
Mr Marshall (board chairman) said ''world markets have been challenging'' for the past 12 to 18 months with inter-company consolidations, Australia's drought and the uncertainty surrounding the US-China trade tariff war.
''Companies are just not making reinvestment decisions at the moment.''
-----
I visited Millmeq while visiting Dunedin for the Scott Technology AGM around ten years ago. At that stage Millmeq was doing a lot in the meat processing industry and things were quite buoyant with the two companies seemingly not wanting to tread directly on each others toes.
The story at receivership time talks about the company remnants being split between Wiley and Co,. an Australian project delivery company. From https://www.wiley.com.au/about-us/
"Wiley completed its acquisition of the primary food processing design and engineering consultancy team from Milmeq, New Zealand. The acquisition sees the further establishment of Wiley’s services in the country and their first permanent presence within New Zealand."
and Mercers. But there was a third company involved as well, with Scott Technology purchasing the "Milmeq Spares and Sundries Meat Slaughter Business." You would have to wonder why a potential competitor would take on the job of supporting a dead rival's product. My conclusion is that it must have been to get on good terms with Millmeq's former customers.
Superficially the terms of purchase of "Millmeq Chilling & Freezing" seem quite generous, to Mercer. A sale price of $50k, a $1m interest free working capital facility thrown in by the vendors, a $3.5m bank bond supported by the vendors up to 31-10-2020 in relation to an existing significant contract for the design and delivery of plate freezers to a leading Australian red meat supplier.
Yet within 10 months of purchase "Millmeq Chilling & Freezing" had secured $30m worth of orders! On the surface of it that $50,000 sale price looks too good to be true.
That seems very odd. Why would major customers pay up front before the work was completed? Could this customer financing instead be related to the bank bond supported by the Goodfellows which will expire at the end of October 2020?
SNOOPY
An interesting Liability line - those Net Contract Liability lines
2020 YE:
Contract Assets $ 2.949 mil
Contract Liabilities $ 9.457 mil
Net Liability $ 6.508 mil
2019 YE:
Contract Assets $ 2.927 mil
Contract Liabilities $ 8.252 mil
Net Liability $ 5.325 mil
2018 YE:
Net Liability $ 1.781 mil
Also interesting are the number of period ends in past 12 years where Negative Working Capital shows
2020: ($ 5.258 mil)
2019: ($ 8.675 mil) - includes borrowings part looks rolled over / part
2018: ($ 1.150 mil)
2018: $ 1.237 mil Surplus
2017: ($ 3.126 mil) - includes borrowings part looks rolled over / part
2016: ($ 3.999 mil) - includes borrowings part looks rolled over / part
Last edited by nztx; 28-08-2020 at 01:01 PM.
-
28-08-2020, 05:34 PM
#216
Originally Posted by nztx
Snoopy wrote:
"Superficially the terms of purchase of "Millmeq Chilling & Freezing" seem quite generous, to Mercer. A sale price of $50k, a $1m interest free working capital facility thrown in by the vendors, a $3.5m bank bond supported by the vendors up to 31-10-2020 in relation to an existing significant contract for the design and delivery of plate freezers to a leading Australian red meat supplier.
An interesting Liability line - those Net Contract Liability lines
2020 YE:
Contract Assets $ 2.949 mil
Contract Liabilities $ 9.457 mil
Net Liability $ 6.508 mil
2019 YE:
Contract Assets $ 2.927 mil
Contract Liabilities $ 8.252 mil
Net Liability $ 5.325 mil
2018 YE:
Net Liability $ 1.781 mil
The jump in Contract Assets corresponds with the February 2019 acquisition of Milmeq, and is consistent with the vendor bond (which could be described as a 'Contract Asset' used to offset a 'Contract Liability') I have referenced above. Situation explained?
SNOOPY
Watch out for the most persistent and dangerous version of Covid-19: B.S.24/7
-
28-08-2020, 06:28 PM
#217
Originally Posted by Snoopy
The jump in Contract Assets corresponds with the February 2019 acquisition of Milmeq, and is consistent with the vendor bond (which could be described as a 'Contract Asset' used to offset a 'Contract Liability') I have referenced above. Situation explained?
SNOOPY
I don't know Snoopy -- the 2020 Annual Report makes reference to what went through P&L as well
As for the earlier period 2018 FY - H&C perhaps ?
It still suggests element of progress payments from Customers coming in IMO, but I may be wrong ..
but MGL Working Capital looks pretty thin so maybe that's the way with Contracts
Last edited by nztx; 28-08-2020 at 06:29 PM.
-
28-08-2020, 07:12 PM
#218
Originally Posted by nztx
I don't know Snoopy -- the 2020 Annual Report makes reference to what went through P&L as well
As for the earlier period 2018 FY - H&C perhaps ?
It still suggests element of progress payments from Customers coming in IMO, but I may be wrong ..
but MGL Working Capital looks pretty thin so maybe that's the way with Contracts
I own Scott Technology shares, and that company earns a lot of money from large contracts that can spill over from one financial year to the next. Here is what is written in SCT AR2019 about Contract Assets and Liabilities under note B3 p44.
"Contract Assets are balances due from customers under long term project contracts that arise when the group receives payment from customers in line with a number of performance related milestones. The group will previously have recognised a Contract Asset for any work performed. Any amount previously recognised as a Contract Asset is reclassified as a Trade Debtor at the point at which it is invoiced to the customer."
"Contract Liabilities relating to long term project contracts are balances due to customers under long term project contracts. These arise if a particular milestone payment exceeds the revenue recognised to date."
My reading of that is that if a progress payment comes in, then that payment extinguishes a trade debtor liability. So progress payments would not normally be found on the balances sheet - ever. The only exception to this is if a payment on a contract is made before the work is done. At that point such a payment becomes a Contract Liability which presumably is removed from the balance sheet once the work is carried out.
SNOOPY
Last edited by Snoopy; 28-08-2020 at 07:19 PM.
Watch out for the most persistent and dangerous version of Covid-19: B.S.24/7
-
29-08-2020, 08:29 PM
#219
Originally Posted by Snoopy
I own Scott Technology shares, and that company earns a lot of money from large contracts that can spill over from one financial year to the next. Here is what is written in SCT AR2019 about Contract Assets and Liabilities under note B3 p44.
"Contract Assets are balances due from customers under long term project contracts that arise when the group receives payment from customers in line with a number of performance related milestones. The group will previously have recognised a Contract Asset for any work performed. Any amount previously recognised as a Contract Asset is reclassified as a Trade Debtor at the point at which it is invoiced to the customer."
"Contract Liabilities relating to long term project contracts are balances due to customers under long term project contracts. These arise if a particular milestone payment exceeds the revenue recognised to date."
My reading of that is that if a progress payment comes in, then that payment extinguishes a trade debtor liability. So progress payments would not normally be found on the balances sheet - ever. The only exception to this is if a payment on a contract is made before the work is done. At that point such a payment becomes a Contract Liability which presumably is removed from the balance sheet once the work is carried out.
SNOOPY
So on that prognosis Snoopy - would you guess either Deferred Income or a payable due to a Customer to be the case ?
-
29-08-2020, 09:18 PM
#220
I am having a little trouble following you nztx
Originally Posted by nztx
I don't know Snoopy -- the 2020 Annual Report makes reference to what went through P&L as well
What reference are you talking about?
Originally Posted by nztx
It still suggests element of progress payments from Customers coming in IMO, but I may be wrong ..
What are you referring to when you say 'It'?
Originally Posted by nztx
So on that prognosis Snoopy - would you guess either Deferred Income or a payable due to a Customer to be the case?
.....to be the case .. where? What specifically are you referring to?
SNOOPY
Last edited by Snoopy; 29-08-2020 at 09:21 PM.
Watch out for the most persistent and dangerous version of Covid-19: B.S.24/7
Posting Permissions
- You may not post new threads
- You may not post replies
- You may not post attachments
- You may not edit your posts
-
Forum Rules
|
|
Bookmarks