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30-08-2020, 11:38 PM
#221
Originally Posted by Snoopy
I am having a little trouble following you nztx
What reference are you talking about?
What are you referring to when you say 'It'?
.....to be the case .. where? What specifically are you referring to?
SNOOPY
I'm rather curious at Note 7 - Page 49 of the 2020 Report:
7 Contract revenue movements
Revenue recognised included in contract liability at the
beginning of the period 2020 - (5,325) ; 2019 - 1,781
Construction contracts
Contract assets - 2020 - $2,949 ; 2019 $2,927
Contract liabilities - 2020 - $(9,457) 2019 - $(8,252)
Net contract liabilities - 2020 $(6,508) ; 2019 - $(5,325)
What do you make of these ?
- How does the Liability arise ?
- Doing a Contract for third parties - surely would produce an Asset, sooner or later receivable at some point
for such work from the third party
- A Liability - surely suggests an element of payment received in advance or maybe something else ?
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31-08-2020, 11:26 AM
#222
Construction accounting (simplistically) works like this:
Invoice (say deposit) to customer:
Debit Receivables (and is eventually paid)
Credit Contract WIP
Costs incurred on contract:
Debit Contract WIP
Credit Payables (and eventually paid)
Each contract is separately tracked. Those with a nett credit balance are classified as contract liabilities at year end, whilst those with a nett debit balance are classified as contract assets.
Profit is released to the P&L on large contracts according to percentage complete, debit Contract WIP, credit P&L.
So the nett credit balance shows good working capital management in that Receivables are ahead of Payables. And while a credit balance is like deferred income, very little will actually be profit (being the project Margin).
Edit: reading p33 of the AR I see nothing that contradicts the above. Think of contract debit balances as a prepayment. The risk with large projects is if you overstate the costs completed to date, then you get a higher % complete and can take a higher % into profit. I'm not saying that is happening (and I haven't checked) but one way of checking this is by looking at the average days in payables to see if there is any any monkey business and/or how many projects have a nett debit balance. The other thing to be wary of is projects with debit balances may be concealing a project loss - again I'm not suggesting that is the case, just providing some background info.
Last edited by Ferg; 31-08-2020 at 12:11 PM.
Reason: Typo + clarification
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31-08-2020, 01:47 PM
#223
Originally Posted by nztx
I'm rather curious at Note 7 - Page 49 of the 2020 Report:
7 Contract revenue movements
Revenue recognised included in contract liability at the
beginning of the period 2020 - (5,325) ; 2019 - 1,781
Construction contracts
Contract assets - 2020 - $2,949 ; 2019 $2,927
Contract liabilities - 2020 - $(9,457) 2019 - $(8,252)
Net contract liabilities - 2020 $(6,508) ; 2019 - $(5,325)
What do you make of these ?
- How does the Liability arise ?
If Mercers had to purchase something, a robot from a third party, and some steel to make a fabricated component, in order to do a job and those components were supplied on pay later terms then that purchase would be a 'Contract liability'.
Originally Posted by nztx
- Doing a Contract for third parties - surely would produce an Asset, sooner or later receivable at some point
for such work from the third party
Yes it would be 'work in progress' (an asset) up until certain parts of the job were invoiced. At that point he work in progress the 'work in progress' inventory goes down and an 'account receivable' (another asset) is created.
Originally Posted by nztx
- A Liability - surely suggests an element of payment received in advance or maybe something else ?
It could be a payment received in advance, although I have never heard of anyone commissioning a substantial build project then 'paying up front' for it. Or it could be buying assets from a third party required to complete the job. That's how I see things.
SNOOPY
Last edited by Snoopy; 31-08-2020 at 01:49 PM.
Watch out for the most persistent and dangerous version of Covid-19: B.S.24/7
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31-08-2020, 03:35 PM
#224
Originally Posted by Snoopy
If Mercers had to purchase something, a robot from a third party, and some steel to make a fabricated component, in order to do a job and those components were supplied on pay later terms then that purchase would be a 'Contract liability'.
Not quite. See my post 222 above. Such purchases would end up as a contract WIP debit and a payable credit. Contract liabilities arise due to bills to customers running ahead of costs on those same projects.
Source: worked with construction accounting in a previous life.
Last edited by Ferg; 31-08-2020 at 03:39 PM.
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28-09-2020, 04:38 PM
#225
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28-09-2020, 10:20 PM
#226
Originally Posted by Sideshow Bob
but same Dog different new spots now painted on
Has the PR spin changed or just more of the same ?
What's happened to make it run faster ? - Special Stainless Booths being manufactured for Covid 19 treatment ? ;-)
Has Mercer been inflicted with a 'Chilled Out" affect to make it look different ?
How's the "Chilled Out" effect going with Moa ?
Last edited by nztx; 28-09-2020 at 10:22 PM.
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29-09-2020, 12:07 AM
#227
Originally Posted by nztx
but same Dog different new spots now painted on
Has the PR spin changed or just more of the same ?
What's happened to make it run faster ? - Special Stainless Booths being manufactured for Covid 19 treatment ? ;-)
Has Mercer been inflicted with a 'Chilled Out" affect to make it look different ?
How's the "Chilled Out" effect going with Moa ?
I feel a little bitterness coming from your reply.
Personally have never invested into " Mercer " before. Also never invested in Moa.
However. A change of " Leadership and percentage ownership " is imho starting to indicate an upward movement.
Tell me I am wrong in 12 months time.. DYOR !.
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29-09-2020, 01:42 AM
#228
Last edited by nztx; 29-09-2020 at 02:15 AM.
Reason: add more
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29-09-2020, 11:52 AM
#229
Originally Posted by nztx
No bitterness .. and a holder
but really .. a couple of not really all that expensive bolt on acquisitions added to the old chassis
the same management & board basically
a new minority shareholder & shift over of what 15 - 20 % of the shares
a shiny new name and a PR spin for feel good to try to automate more market love out there
but really - what has actually changed ?
how many times has the Mercer / Broadway box of bits & bolt-ons done this before over the past decades ?
Decades of bad luck or mix of that and something else ?
The past decade's track record alone suggests destruction of shareholder wealth, with a Cap raise and
share consolidation all thrown in .. large tax losses forfeited previously, dividends being rare and no imputation
credits accumulated.
What has been taunted as large Earnings increase doesn't appear in reality to be that at all
A 10x or 20x multiple of the last FY may well be required to see even a minimal dividend
Shareholders Funds appear to be minimal & net working capital scant, but presumably workable
in the circumstances
It's difficult to see why, on the back of the past track record, industry sector & most other factors unchanged,
the Market may be rating SP currently on the shine off the new name alone
Has a new Earning Guidance been released suggesting 10 or 15 fold bottom line increase or are punters confusing Mercer with Marsden Marine MMH ?
Hopefully MHM will produce the goods quicker quicker than MMH.
Only a little toe in at present.
With such a bad write up one must wonder why you are holding
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14-12-2020, 06:08 PM
#230
http://nzx-prod-s7fsd7f98s.s3-websit...968/337339.pdf
MHM Automation update
Acquisition of Southern Cross Engineering
MHM Automation (MHM) is pleased to announce the acquisition of the Southern Cross Engineering
(SCE) business.
SCE is a Christchurch based diversified engineering firm, established in 1954. It designs, manufactures
and distributes a range of high quality equipment into the meat, dairy, timber and infrastructure
sectors.
More at link
"The acquisition is conditional, with the conditions expected to the satisfied on or before 18th
December. If confirmed, the acquisition is due to settle on 11th January 2021. The purchase price will
be calculated through an earn out over the next two years."
This is about as close as anyone gets to how is consideration to be paid / settled by MHM ..
In the meantime up to today, the MHM SP has steadily risen up through mid 50's to 60c close today
Last edited by nztx; 14-12-2020 at 06:10 PM.
Reason: add more
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