Final Results & Trading Update

Management Resource Solutions plc

EPIC: MRS

20 December 2017

Management Resource Solutions plc

("MRS" or "the Company")

Results for the year ended 30 June 2017 and trading update

Management Resources Solutions plc, the company which provides plant hire and civil earthworks services in Southern Queensland and coal industry support services in the Hunter Valley of New South Wales is pleased to announce its results for the year ended 30 June 2017 and to provide an update on current trading.

Financial Results for the year ended 30 June 2017

All references to dollars or $ relate to Australian dollars, the Group's presentational currency.

The results for the financial year to 30 June 2017 ('FY17' or '2017'), of a Net Loss After Tax of $10.8m (2016: Net Loss After Tax $4.6m) on Revenue of $52.4m (2016: $13.3m), reflect a significant restructuring of the MRS Group during the year, with $4.2m (2016: $nil) of the loss relating to restructuring costs and discontinued operations.

As previously reported in several RNS announcements including the FY16 Annual Report issued on 30 March 2017, FY17 saw the acquisition of various assets from SubZero Group Limited on 30 September 2016, and the closure of the consulting business in November 2016. Also, as a result of the need to quarantine the group from the high risk underperforming contracts in Papua New Guinea and at Rosehill, Sydney, MRS Guernsey Limited (the operating entity of the Papua New Guinea contract), Management Resource Solutions Pty Ltd and MRS PNG Limited were placed into voluntary liquidation on 15 December 2016, 7 February 2017, and 17 February 2017 respectively.

As part of this restructuring the continuing operations, comprising Bachmann Plant Hire Pty Ltd ("BPH") and MRS Subzero Pty Ltd (trading as MRS Services Group, "MRSSG") were transferred to a new holding company, Holdings (MRS) Pty Ltd ("HMRS").

In addition, both the Board and Executive Management underwent considerable change, and a Placing to re-finance the business was undertaken in April 2017, enabling the shares to return from suspension in May 2017.

As a result, the FY17 results include considerable non-recurring costs. Furthermore, the continuing operations of the MRS Group (being the holding companies MRS PLC and HMRS plus the two operations, BPH and MRSSG) have significantly changed from what was presented in the FY16 Annual Report. The focus has changed from oil, gas and construction industries to a strong presence in plant hire and civil earthworks around Ipswich in Southern Queensland (BPH) and coal industry support services in the Hunter Valley of New South Wales (MRSSG).

The full Report and Accounts for the year ended 30 June 2017 are attached and available to download from the Company's website at www.mrsplc.info and will be posted to shareholders shortly.

Trading Update and Outlook

The markets which BPH and MRSSG service are the strongest they have been in years. BPH is currently working at fully capacity and has a strong pipeline of work to complete. MRSSG is experiencing strong demand, with revenues now exceeding $4.0m per month.

The Hunter Valley thermal coal price has been strong and stable providing confidence for the coal mines to commit to repairs and maintenance and Yancoal has recently completed the acquisition of the Rio Tinto assets in the Hunter Valley.

Both BPH and MRSSG were run as separate operations with little interaction or utilisation of shared services and group purchasing during the financial years 2015-16 ('FY16') and 2016-17 ('FY17'). During late FY17 and 2017-17 ('FY18') the new Board prioritised significant cost cutting and restructuring, and has restructured the senior management, which now includes Group Human Resources, Group Asset Management, Group Procurement and Group Financial Management. Further changes include the recent recruitment of a General Manager - Civil and Earthworks, as part of succession planning at BPH.

The cost cutting and restructuring programme is now substantially complete. As the drive to grow revenues continues, the Board is committed to focusing on earnings growth and shareholder value for the remainder of FY18 and beyond. 

For FY18, first half expectations are for Profit after Tax and earnings per share to exceed $2.2m and 0.8p respectively, whilst for the full year earnings per share of not less than 2.0p are in prospect.

Further progress is anticipated in 2018-19 as debt continues to be repaid from the strong operational cash-flow generated by the major changes which are now taking effect.

On behalf of the Board, I'd like to thank all employees for their continued commitment to working safely and to all stakeholders of MRS including employees, customers, suppliers, funders and shareholders for maintaining their support for the Company.

For further information:

Management Resource Solutions plc

John Zorbas, Chairman +1 778 938-7631

Nigel Burton, Director +44 7785 234447

Trevor Brown, Director +41 7941 55384

Northland Capital Partners Limited +44 (0) 20 3861 6625

(Nominated Adviser and Joint Broker)

Tom Price

Gerry Beaney

Peterhouse Corporate Finance Limited +44 (0)20 7469 0932

(Joint Broker)

Charles Goodfellow

Lucy Williams

This announcement includes inside information as defined in Article 7 of the Market Abuse Regula􀆟on No. 596/2014 and is disclosed in accordance with the Company's obligations under Article 17 of those Regulations. On the publication of this announcement via a Regulatory Information Service ("RIS"), this information is considered to be in the public domain.

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

Management Resource Solutions PLC

Annual Report

Year Ended

30 June 2017

Company number: 8046513

Management Resource Solutions PLC

Annual Report

for the year ended 30 June 2017

Officers and advisers....................................................................................................... 1

Chairman's Statement and Strategic Report................................................................... 2

Directors' Report............................................................................................................. 6

Statement of directors' responsibilities......................................................................... 11

Independent auditor's report......................................................................................... 12

Consolidated Statement of profit and loss and other comprehensive income............... 17

Consolidated Balance Sheet18

Consolidated Statement of Changes in Equity19

Consolidated Statement of Cash Flow20

Notes to the consolidated financial statements21

Parent company Balance Sheet52

Parent company Statement of Changes in Equity53

Notes to the parent company Balance Sheet54

Management Resource Solutions PLC

Officers and advisers

Directors

John Zorbas Chairman

Timothy Jones Finance Director

Nigel Burton Non-Executive Director

Trevor Brown Non-Executive Director

Company secretary

Timothy Jones

Registered number

8046513

Registered office

Reading Bridge House, George Street, Reading, Berkshire, RG1 8LS

United Kingdom

Australian office

2/2 Market Street, Newcastle, NSW 2300, Australia

Nominated adviser and joint broker

Northland Capital Partners Limited, 60 Gresham Street, London, EC2V 7BB,

United Kingdom

Joint broker

Peterhouse Corporate Finance Limited, 15-17 Eldon Street, London, EC2M 7LD,

United Kingdom

Auditors

James Cowper Kreston, Reading Bridge House, George Street, Reading, Berkshire, RG1 8LSUnited Kingdom

Solicitors as to English Law

Memery Crystal LLP, 44 Southampton Buildings, London, WC2A 1AP,

United Kingdom

Solicitors as to Australian Law

McCullough Robertson, 66 Eagle Street, Brisbane, QLD 4000, Australia

Share registry

Equiniti, Aspect House, Spencer Road, Lancing, West Sussex, BN99 6DA,

United Kingdom

Websites

www.mrsplc.info 

www.mrsplc.net

www.bph.net.au

www.mrssg.net

Management Resource Solutions PLC

Chairman's Statement and Strategic Report

Dear Shareholders,

Financial Results and Financial Key Performance Indicators

All references to dollars or $ relate to Australian dollars, the Group's presentational currency.

The results for the financial year to 30 June 2017 ('FY17' or '2017'), of a Net Loss After Tax of $10.8m (2016: Net Loss After Tax $4.6m) on Revenue of $52.4m (2016: $13.3m), reflect a significant restructuring of the MRS Group during the year, with $4.2m (2016: $nil) of the loss relating to restructuring costs and discontinued operations.

As previously reported in several RNS announcements including the FY16 Annual Report issued on 30 March 2017, FY17 saw the acquisition of various assets from SubZero Group Limited on 30 September 2016, the closure of the consulting business in November 2016, and as a result of the need to quarantine the group from the high risk underperforming contracts in Papua New Guinea and at Rosehill, Sydney, MRS Guernsey Limited (the operating entity of the Papua New Guinea contract), Management Resource Solutions Pty Ltd and MRS PNG Limited being placed into voluntary liquidation on 15 December 2016, 7 February 2017, and 17 February 2017 respectively.

As part of this restructuring the continuing operations, comprising Bachmann Plant Hire Pty Ltd ("BPH") and MRS Subzero Pty Ltd (trading as MRS Services Group, "MRSSG") were transferred to a new holding company, Holdings (MRS) Pty Ltd ("HMRS").

In addition, both the Board and Executive Management underwent considerable change, and a Placing to re-finance the business was undertaken in April 2017, enabling the shares to return from suspension in May 2017.

As a result, the FY17 results include considerable non-recurring costs. Furthermore, the continuing operations of the MRS Group (being the holding companies MRS PLC and HMRS plus the two operations, BPH and MRSSG) have significantly changed from what was presented in the FY16 Annual Report. The focus has changed from oil, gas and construction industries to a strong presence in plant hire and civil earthworks around Ipswich in Southern Queensland (BPH) and coal industry support services in the Hunter Valley of New South Wales (MRSSG).

Management Resource Solutions PLC

Chairman's Statement and Strategic Report

Management Resource Solutions plc and Holdings (MRS) Pty Ltd

The combined Continuing Operations loss of MRS PLC and HMRS for FY17 was $5.2m. However, this included $3.5m of net non-recurring restructuring (bad debt write-offs, consultants, legal fees, accounting fees, Deed Of Company Arrangement costs, AIM penalties and the foreign exchange impacts of these), and tax effect adjustments. Continuing operational costs for MRS PLC and HMRS for FY17 totalled $1.6m.

Management Resource Solutions Pty Ltd, MRS Guernsey Ltd and MRS PNG Limited.

Management Resource Solutions Pty Ltd, MRS Guernsey Ltd and MRS PNG Ltd were placed into voluntary administration during FY17. A number of provisions and impairments were included in the FY16 accounts, however, it was not until the completion of the FY17 accounts (and further review of the FY16 accounts) that the total cost of the closure of these businesses has been realised. Significant losses within the discontinued operations have been offset by the gains on debt forgiveness by the other parts of the group, resulting in an FY17 profit of $9.1m (FY16 loss $4.1m).

Bachmann Plant Hire

Bachmann Plant Hire Pty Ltd ("BPH") is based in Ipswich, approximately 40km west of Brisbane, and specialises in bulk earthworks for the civil construction industry. BPH provides plant and solutions both with and without operators (known as 'wet' and 'dry' hire respectively).

The Ipswich Economic Development Plan 2016 to 2031, enacted by the Queensland Government, is an ambitious plan to attract 292,000 people to 20 employment and population growth areas in the vicinity of Ipswich, resulting in an additional 120,000 jobs. More than 500 new residential dwellings are required to be completed every month to achieve the plan, resulting in the fastest growing residential growth corridor in Australia.

BPH has a 50-year history and an experienced workforce of long term employees, and is perfectly located to exploit these opportunities. Most contracts are based on bulk earthworks within a small, well defined area of a residential or commercial sub-division to a final level finish of +/- 50mm. Although operations can be hampered by excessive rainfall, overall BPH operates in a relatively low risk contracting environment. Whilst contracts are generally relatively short (2 to 6 months in length), there is a steady pipeline of work to complete.

FY17 was the first full year contribution by BPH to the MRS Group, with a Net Profit After Tax of $1.5m (FY16 loss $0.2m - 5 months) on Revenue of $22.2m (FY16 $10.9m - 5 months). During FY17 BPH operated at close to full utilisation of its Plant & Equipment. There are no discontinued operational costs in the table below.

Unaudited Half Year Results

The Board has approved capital expenditure to provide access to additional Plant & Equipment, to enable BPH to grow revenues where they are expected to be earnings enhancing.

Management Resource Solutions PLC

Chairman's Statement and Strategic Report

MRS Services Group

MRS Services Group ("MRSSG") was created through the acquisition of various assets from SubZero Group Limited on 30 September 2016.

MRSSG is strategically located in the heart of the coal mining region of the Hunter Valley in New South Wales, approximately 125km North West of the coal exporting port of Newcastle and about 240km north of Sydney. Some 90% of revenues are derived from blue chip miners including Yancoal, Rio Tinto, BHP and Glencore. Demand for high quality coal (with high energy content with low ash and pollutants) from the Hunter Valley remains strong and is expected to grow, in particular for export to China and East Asia where over 1,000 new High Energy Low Emissions (HELE) Ultra-Supercritical Coal Fired Power Stations coal fired power stations are planned or under construction.

The majority of MRSSG's work in the Hunter Valley is low risk, derived from selling trade labour at hourly rates. The fabrication and mine rehabilitation businesses are based on longer-term contracts in well-established work relationships and well understood risk profiles.

Initially the business suffered from a lack of working capital, an excessive cost base and a lack of commercial and financial discipline, with the first 6 months of operating the MRSSG assets proving particularly challenging. However, the quality of the work provided by MRSSG, and strong demand for the services provided by MRSSG, have enabled management to grow revenues. Furthermore, as outlined in the interim results announcement on 7 April, an initial programme of rationalisation, relocation and reductions in both overheads and operating costs has been implemented, subsequently returning the MRSSG business to profitability in May 2017.

FY17 was the first year of contribution for MRSSG, with a Net Loss After Tax of A$7.4m on Revenue of A$30.1m in the 9 months to 30 June. This loss includes approximately $1.0m of one off costs including relocation, finance, and redundancy.

Unaudited Half Year Results

MRSSG has contributed profit on a monthly basis since May 2017, with performance continuing to improve as revenue growth continues and further cost saving strategies are implemented.

Management Resource Solutions PLC

Chairman's Statement and Strategic Report

MRS Outlook

The markets which BPH and MRSSG service are the strongest they have been in years. BPH is currently working at fully capacity and has a strong pipeline of work to complete. MRSSG is experiencing strong demand, with revenues now exceeding $4.0m per month.

The Hunter Valley thermal coal price has been strong and stable providing confidence for the coal mines to commit to repairs and maintenance and Yancoal has recently completed the acquisition of the Rio Tinto assets in the Hunter Valley.

Both BPH and MRSSG were run as separate operations with little interaction or utilisation of shared services and group purchasing during the financial years 2015-16 ('FY16') and 2016-17 ('FY17'). During late FY17 and 2017-17 ('FY18') the new Board prioritised significant cost cutting and restructuring, and has restructured the senior management, which now includes Group Human Resources, Group Asset Management, Group Procurement and Group Financial Management. Further changes include the recent recruitment of a General Manager - Civil and Earthworks, as part of succession planning at BPH.

The cost cutting and restructuring programme is now substantially complete. As the drive to grow revenues continues, the Board is committed to focusing on earnings growth and shareholder value for the remainder of FY18 and beyond. 

For FY18, first half expectations are for Profit after Tax and earnings per share to exceed $2.2m and 0.8p respectively, whilst for the full year earnings per share of not less than 2.0p are in prospect.

Further progress is anticipated in 2018-19 as debt continues to be repaid from the strong operational cash-flow generated by the major changes which are now taking effect.

On behalf of the Board, I'd like to thank all employees for their continued commitment to working safely and to all stakeholders of MRS including employees, customers, suppliers, funders and shareholders for maintaining their support for the Company.

John Zorbas

Chairman

Management Resource Solutions PLC

Directors' Report

for the year ended 30 June 2017

The Directors present their report and the audited financial statements for the year ended 30 June 2017.

Principal activities

The principal activities of the Group during the year were 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.

Issue of Shares

Details of Ordinary Shares issued during the year are set out in notes 24 to 26 of the Financial Statements.

Share based payments

Share based payments are detailed in note 26 to the Financial Statements.

Results and dividends

The results for the year are set out on page 17.

The Directors do not recommend the payment of a dividend.

Business and financial review

All references to dollars or $ relate to Australian dollars, the Group's presentational currency.

A review of the business and future developments is given in the CEO's Statement and Strategic Report on page 2.

Revenue from continuing operations for the period amounted to $52.4 million (2016 - $13.3 million).

Net loss after tax for the period amounted to $10.8 million (2016 - loss of $4.6 million).

At 30 June 2017, the Group had net assets of $3.7 million (2016 - net liabilities of $2.8 million), of which cash amounted to $2.0 million (2016 - $0.9 million).

Going concern

The financial statements have been prepared on the going concern basis as, in the opinion of the Directors, at the time of approving the financial statements, there is a reasonable expectation that the Group will continue in operational existence for the foreseeable future.

In order to arrive at this opinion, the Directors have prepared detailed cash flow forecasts for the Group, which demonstrate that it will be able to meet its liabilities as they fall due for a period of at least twelve months from the date of approval of the financial statements.

Further information on the going concern assumption is provided in note 1 to the consolidated financial statements.

Key performance indicators

The Group's current key performance indicators are safety, building revenue and profitability, and expanding our diverse client base. Relevant information is reported in the Chairman's Statement.

Management Resource Solutions PLC

Directors' Report

for the year ended 30 June 2017

Principal risks and uncertainties

There are risks associated with the Group's business. The Board regularly reviews the risks to which the Group is exposed and has in place a strategy to mitigate these risks as far as possible. The following summary, which is not exhaustive, outlines some of the key risks and uncertainties facing the Group at its present stage of development:

1 General risks

Reliance on key management

The responsibility of overseeing the day-to-day operations and the strategic management of MRS depends substantially on its senior management and its key personnel. There can be no assurance given that there will be no detrimental impact on MRS if one or more of these employees cease their employment.

2. Risks relating to MRS's Businesses

2.1 General

2.1.1 Operating risks

The Group's business planning is carried out on the basis of expected future work. The Group is reliant upon securing new contracts. There is a risk that expected contracts will not be won. The directors mitigate this risk by monitoring the pipeline of future contracts.

The operations of MRS may be affected by various factors, including operational and technical difficulties encountered in resources; difficulties in commissioning and operating plant and equipment; mechanical failure or plant breakdown; adverse weather conditions; industrial and environmental accidents; industrial disputes; and unexpected shortages or increases in the costs of consumables, spare parts, or plant and equipment.

2.1.2 Additional requirements for capital

MRS's capital requirements depend on numerous factors. To fully realise its growth plans MRS may require further financing. Any additional equity financing will dilute shareholdings. Any debt financing, if available, may involve restrictions on financing and operating activities

2.2 Specific

2.2.1 Personnel subject to workplace safety on client sites

The Company's personnel deliver services on site. Consequently, personnel may be subjected to risks to their health and safety through the actions, inactions and negligence of third parties. Numerous losses may stem from injury or death to personnel in such a scenario and such losses may have an adverse effect on MRS's profits, its results, its balance sheet and its financial position.

Refer to note 23 for Financial risk.

Management Resource Solutions PLC

Directors' Report

for the year ended 30 June 2017

The Directors regularly monitor such risks and will take actions as appropriate to mitigate them. The Group manages its risks by seeking to ensure it is in compliance with the terms of its agreements, and through the application of appropriate policies and procedures, and via the recruitment and retention of a team of skilled and experienced professionals.

Directors

The Directors of the Company during the period and the remuneration, including pension contributions, they received were as follows:

Joe Clayton resigned as a Director on 21 August 2017.

Directors' Interests, including family interests, in Ordinary Shares of the Company and in options and warrants to subscribe for Ordinary Shares were as follows (see note 24 for details of share based payment arrangements):

Management Resource Solutions PLC

Directors' Report

for the year ended 30 June 2017

Substantial Shareholdings

At 20 December 2017, the Company was aware of the following interests in 3% or more of the issued share capital of the Company:

%

Karrabin Investments Pty Ltd 9.9

Leon Hogan 9.8

URU Metals Limited 9.8

Trevor Brown 5.4

Paul and Santina Morffew (including SCOPN Pty Ltd) 4.2

Macquarie Bank Limited 3.8

Daniel Smith 3.4

Management Resource Solutions PLC

Directors' Report

for the year ended 30 June 2017

Financial instruments

Details regarding the Group's use of financial instruments and their associated risks are given in note 23 to the consolidated financial statements.

Indemnity Provision for Directors

MRS has insurances to cover Directors' and Officers' liabilities for an amount of £10,000,000 which the Directors believe to be sufficient for the business.

Statement as to disclosure of information to auditors

All the current Directors have taken all the steps that they ought to have taken to make themselves aware of any information needed by the Company's Auditors for the purposes of their audit and to establish that the Auditors are aware of that information. The Directors are not aware of any relevant audit information of which the Auditors are unaware.

Subsequent events

Refer to note 31 of the consolidated financial statements.

Auditors

James Cowper Kreston have expressed their willingness to continue in office and a resolution to re‑appoint them will be proposed at the Annual General Meeting which will be held at 09:30 on 26 January 2018 at the offices of Memery Crystal, 44 Southampton Buildings, London, WC2A 1AP.

Approved by the board of Directors on 20 December 2017 and signed on behalf of the board by

John Zorbas

Chairman

Management Resource Solutions PLC

Statement of Directors' Responsibilities for the year ended 30 June 2017

The Directors are responsible for preparing the strategic report, the directors' report and the financial statements in accordance with applicable law and regulations.

Company law requires the Directors to prepare financial statements for each financial year. Under that law the Directors have elected to prepare the Group financial statements in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union and to prepare the parent company accounts in accordance with UK accounting standards including FRS 101 "Reduced Disclosure Framework". Under company law the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Group and Company and of the profit or loss of the Group and Company for that period. The Directors are also required to prepare financial statements in accordance with the rules of the London Stock Exchange for companies trading securities on the Alternative Investment Market.

In preparing these financial statements, the Directors are required to:

· select suitable accounting policies and then apply them consistently;

· make judgements and accounting estimates that are reasonable and prudent;

· state whether the group accounts have been prepared in accordance with IFRSs as adopted by the European Union, subject to any material departures disclosed and explained in the financial statements;

· state whether the parent company accounts have been prepared in accordance with applicable UK accounting standards, subject to any material departures disclosed and explained in the financial statements.

· prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business.

The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company's transactions and disclose with reasonable accuracy at any time the financial position of the Group and Company and enable them to ensure that the financial statements comply with the requirements of the Companies Act 2006. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

Website publication

The Directors are responsible for ensuring the annual report and the financial statements are made available on a website. Financial statements are published on the Company's website www.mrsplc.info in accordance with legislation in the United Kingdom governing the preparation and dissemination of financial statements, which may vary from legislation in other jurisdictions. The maintenance and integrity of the Company's website is the responsibility of the Directors. The Directors' responsibility also extends to the ongoing integrity of the financial statements contained therein.

Management Resource Solutions PLC

Independent auditor's report

to the members of Management Resource Solutions PLC

Independent auditor's report to the members of Management Resource Solutions plc

Opinion

We have audited the financial statements of Management Resource Solutions plc (the 'company') for the year ended 30 June 2017 which comprise the consolidated statement of comprehensive income, the consolidated and parent company balance sheets, the consolidated cash flow statement, the consolidated and parent company statements of changes in equity and the related notes, including a summary of significant accounting policies.

The financial reporting framework that has been applied in the preparation of the consolidated financial statements is applicable law and International Financial Reporting Standards as adopted by the European Union. The financial reporting framework applied in the preparation of the parent company financial statements is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 101 "Reduced Disclosure Framework" (United Kingdom Generally Accepted Accounting Practice).

In our opinion, the financial statements:

· give a true and fair view of the state of the group and parent company's affairs as at 30 June 2017 and of the group's loss for the year then ended;

· have been properly prepared in accordance with the financial reporting frameworks as outlined above; and

· have been prepared in accordance with the requirements of the Companies Act 2006.

Basis for opinion

We conducted our audit in accordance with International Standards of Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further discussed in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC's Ethical Standards as applied to listed entities, and we have fulfilled our ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Effect of audit opinion in previous year

We were unable to express an audit opinion on the previous year's financial statements as it was not possible for us to obtain sufficient appropriate audit evidence over multiple material elements of those financial statements, details of which were outlined in our audit report on those previous year's financial statements. Our audit report on the previous year's financial statements also included a disagreement regarding the accounting treatment of a provision for future maintenance costs.

Management have corrected the accounting treatment referred to above and we have, retrospectively, been able to perform appropriate procedures to eliminate the impact of the previous year's disclaimer of opinion on our opinion on the current year's financial statements.

We do not give any opinion on the previous year's financial statements.

Management Resource Solutions PLC

Independent auditor's report

to the members of Management Resource Solutions PLC

Conclusions relating to going concern

We have nothing to report in respect of the following matters in relation to which the ISAs (UK) require us to report to you were:

· the directors' use of the going concern basis of accounting in the preparation of the financial statements is not appropriate; or

· the directors have not disclosed in the financial statements any identified material uncertainties that may cast significant doubt about the company's ability to continue to adopt the going concern basis of accounting for a period of at least twelve months from the date when the financial statements are authorised for issue.

An overview of the scope of our audit

Our audit was scoped by obtaining an understanding of the group and its environment, assessing the risks of material misstatement in the financial statements and planning and performing appropriate audit procedures in response to those risks.

All of the group's operations, management and accounting function resides in Australia. Accordingly, the majority of the audit work was undertaken by a local firm of auditors. We directed, supervised and reviewed their work appropriately to enable us to form an opinion on the financial statements.

Key audit matters

Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) we identified, including those which had the greatest effect on: the overall audit strategy; the allocation of resources in the audit; and directing efforts of the engagement team. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

Revenue recognition

Risk description

There is an inherent risk of misstatement of revenue in most trading businesses, whether amounting from fraud or error.

How the scope of our audit responded to the risk

To assess the appropriateness and completeness of revenue recognised in the year the following procedures were performed:

· examined a sample of revenue transactions by reference to underlying contractual terms;

· examined a sample of items of accrued revenue on incomplete projects by reference to contractual terms, stage of completeness and subsequent invoices

· considered the appropriateness and application of the company's accounting policy for revenue recognition; and

· considered the disclosures in the financial statements regarding revenue.

Key observations

The results of our testing were satisfactory and we consider the disclosure surrounding revenue to be appropriate.

Management Resource Solutions PLC

Independent auditor's report

to the members of Management Resource Solutions PLC

Risks arising from qualifications to prior year audit report

Risk description

We were unable to express an audit opinion on the previous year's financial statements as it was not possible for us to obtain sufficient appropriate audit evidence over multiple material elements of those financial statements. This cast doubt over the opening balance sheet and, accordingly, over the current year income statement.

How the scope of our audit responded to the risk

Additional audit procedures were undertaken this year to address, retrospectively, those matters that gave rise to the qualification of the prior year audit report, so far as they were relevant to the current year's financial statements.

Key observations

The results of our testing were satisfactory.

Acquisition accounting

Risk description

The group undertook a material acquisition in the year. The accounting for acquisitions is potentially complex and can involve significant judgements and/or management estimates.

How the scope of our audit responded to the risk

We reviewed the acquisition accounting by reference to the contractual arrangements and considered in detail whether the accounting was in accordance with International Financial Reporting Standards including, inter alia, the relevant requirements to account for the consideration and net assets acquired at fair value.

Key observations

The results of our testing were satisfactory.

Risks related to the liquidation of subsidiaries

Risk description

The group liquidated three of its subsidiaries during the year giving rise to a material gain on disposal and the need for extensive disclosures regarding discontinued activities.

How the scope of our audit responded to the risk

We reviewed the accounting for the disposal (loss of control) of the liquidated entities in detail including reviewing the balance sheets of the liquidated entities as at the date they exited the group. We considered whether the group was exposed to any material liabilities resulting from the liquidation events and further reviewed and considered the adequacy of the disclosures in respect of discontinued operations.

Key observations

The results of our testing were satisfactory.

Property, plant and equipment

Risk description

The group holds a material amount of property plant and equipment (PPE) which are held in various physical locations. There are various risks associated including existence, valuation and impairment risk.

How the scope of our audit responded to the risk

Testing was performed on a sample basis to obtain assurance that assets existed and were recorded at an appropriate value. Management's impairment reviews and the conclusions drawn therefrom were reviewed and considered in detail.

Key observations

The results of our testing were satisfactory.

Management Resource Solutions PLC

Independent auditor's report

to the members of Management Resource Solutions PLC

Our application of materiality

We define materiality as the magnitude of misstatement in the financial statements that makes it probable that the economic decisions of a reasonably knowledgeable person would be changed or influenced. We use materiality both in planning the scope of our audit work and in evaluating the results of our work.

Based on our professional judgement we determined materiality for the financial statements as a whole to be $800,000 (2016: $300,000), based primarily on the loss from continuing operations.

We agreed with the directors that we would report all audit differences in excess of $25,000 (2016: $15,000) as well as differences below that threshold that, in our view, warranted reporting on qualitative grounds. We also report on disclosure matters that we identified when assessing the overall presentation of the financial statements.

Other information included in the annual report

The directors are responsible for the other information which comprises the information included in the annual report, other than the financial statements and our auditor's report thereon. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated we do not express any form of assurance conclusion thereon. In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit of otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement in the financial statements or a material misstatement in the other information. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

Opinions on other matters prescribed by the Companies Act 2006

In our opinion, based on the work undertaken in the course of the audit:

· the information given in the strategic report and the directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and

· the strategic report and the directors' report have been prepared in accordance with applicable legal requirements.

Matters on which we are required to report by exception

In the light of the knowledge and understanding of the company and its environment obtained in the course of the audit, we have not identified material misstatements in the strategic report or the directors' report.

We have nothing to report in respect of the following matters in relation to the financial statements which the Companies Act 2006 requires us to report to you if, in our opinion:

· adequate accounting records have not been kept, or returns adequate for the audit have not been received from branches not visited by us; or

· the financial statements are not in agreement with the accounting records and returns; or

· certain disclosures of directors' remuneration specified by law are not made; or

· we have not received all the information and explanations we require for our audit.

Management Resource Solutions PLC

Independent auditor's report

to the members of Management Resource Solutions PLC

Responsibilities of directors

As explained more fully in the directors' responsibilities statement set out on page 11, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the directors are responsible for assessing the company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors' either intend to liquidate the company or to cease operating, or have no realistic alternative but to do so.

Auditors' responsibilities for the audit of the financial statements

This report is made solely to the Company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the Company's members those matters we are required to state to them in an Auditors' report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company's members as a body, for our audit work, for this report, or for the opinions we have formed.

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statement.

A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council's website at: frc.org.uk. This description forms part of our auditors' report.

Alan Poole BA (Hons) FCA (Senior Statutory Auditor)

For and on behalf of

James Cowper Kreston

Statutory Auditors

Reading

Date: 20 December 2017

Management Resource Solutions PLC

Consolidated Statement of profit and loss and other comprehensive income

for the year ended 30 June 2017

There was no other comprehensive income for the year (2016-nil).

Management Resource Solutions PLC

Consolidated Balance Sheet

at 30 June 2017

The financial statements were approved by the board of Directors and authorised for issue on 20 December 2017 and were signed on its behalf by:

John Zorbas Timothy Jones

Director Director

Management Resource Solutions PLC

Consolidated Statement of Changes in Equity

for the year ended 30 June 2017

Management Resource Solutions PLC

Consolidated Statement of Cashflow

for the year ended 30 June 2017

Management Resource Solutions PLC

Notes to the consolidated financial statements

for the year ended 30 June 2017

1 Accounting policies

Basis of preparation

The principal accounting policies adopted in the preparation of the financial statements are set out below. The policies have been consistently applied to the periods presented, unless otherwise stated.

These financial statements have been prepared on the historical cost basis, on the basis of going concern and in line with International Financial Reporting Standards (IFRS) and IFRIC interpretations issued by the International Accounting Standards Board (IASB) adopted by the European Union and in accordance with applicable UK law.

The preparation of financial statements in conformity with IFRS requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and factors that are believed to be reasonable under the circumstances, the results of which form the basis of making judgements about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. See note 2 for more details.

Going concern

The financial statements have been prepared on the going concern basis as, in the opinion of the Directors, at the time of approving the financial statements, there is a reasonable expectation that the Group will continue in operational existence for the foreseeable future.

Closure of the former consulting business has brought major cost savings and the market environment in the Hunter Valley coal mining sector has resulted in a significant increase in demand for the Group's services. Based on these developments and on the Group's ability to modify expenditure outlays further if required, and to source additional funds, the Directors consider there are reasonable grounds to believe that the Group will be able to pay its debts as and when they become due and payable, and therefore the going concern basis of preparation is considered to be appropriate for the financial report for the year ended 30 June 2017 (as indicated in the Chairman's Report) .

The Group enjoys a strong relationship with its banker, and the Directors believe they would be able to undertake a combination of the following courses of action should additional funding be required:

- continue the close relationship with the bank and restructure existing financial obligations

- negotiate alternate financing arrangements

- access additional equity funding

The Directors believe that the Group will be successful in managing the above matters and accordingly, they have prepared the financial report on a going concern basis.

Basis of consolidation

Where the Group has control over an investee, it is classified as a subsidiary. The Group controls an investee if all three of the following elements are present: power over an investee, exposure to variable returns from the investee, and the ability of the investor to use its power of affect those variable returns. Control is reassessed whenever facts and circumstances indicate that there may be a change in any of these elements of control. Subsidiaries are fully consolidated from the date that control commences until the date that control ceases. The consolidated financial statements present the results of the Company and its subsidiaries ("the Group") as if they formed a single entity. Intercompany transactions and balances between Group companies are therefore eliminated in full.

Management Resource Solutions PLC

Notes to the consolidated financial statements

for the year ended 30 June 2017 (continued)

1 Accounting policies (continued)

Business combinations

The consolidated financial statements incorporate the results of business combinations using the purchase method. In the consolidated balance sheet, the acquiree's identifiable assets, liabilities and contingent liabilities are initially recognised at their fair value at the acquisition date. The results of acquired operations are included in the consolidated income statement from the date on which control is obtained.

The Company was incorporated on 26 April 2012 for the purpose of acquiring the entire issued share capital of Management Resource Solutions Pty Ltd, which was previously the ultimate parent company of the Group. This acquisition took place on 24 August 2012 by the issue of the entire ordinary share capital of the Company to the shareholders of Management Resource Solutions Pty Ltd in exchange for their shareholdings in the Company.

This reconstruction is accounted for as an acquisition under common control. Accordingly, the financial statements present the Group results as a continuation of the results of the Group previously headed by Management Resource Solutions Pty Ltd.

Corporate Income Tax

The income tax expense (income) for the year comprises current income tax expense (income) and deferred tax expense (income).

Current income tax expense charged to the profit or loss is the tax payable on taxable income. Current tax liabilities (assets) are measured at the amounts expected to be paid to (recovered from) the relevant taxation authority.

Deferred income tax expense reflects movements in deferred tax asset and deferred tax liability balances during the year as well as unused tax losses.

Current and deferred income tax expense (income) is charged or credited outside the profit and loss when the tax relates to items that are recognised outside the profit and loss.

Except for business combinations, no deferred income tax is recognised from the initial recognition of an asset or liability where there is no effect on accounting or taxable profit or loss.

Deferred tax assets and liabilities are calculated at the tax rates that are expected to apply to the period when the asset is realised or the liability is settled and their measurement also reflects the manner in which management expects to recover or settle the carrying amount of the related asset or liability. With respect to non-depreciable items of property, plant and equipment measured at fair value and items of investment property measured at fair value, the related deferred tax liability or deferred tax asset is measured on the basis that the carrying amount of the asset will be recovered entirely through sale. When an investment property that is depreciable is held by the Company in a business model whose objective is to consume substantially all of the economic benefits embodies in the property through use over time (rather than through sale), the related deferred tax liability or deferred tax asset is measured on the basis that the carrying amount of such property will be recovered entirely through use.

Deferred tax assets relating to temporary differences and unused tax losses are recognised only to the extent that it is probable that future taxable profit will be available against which the benefits of the deferred tax asset can be utilised.

Discontinued operations

Discontinued operations represent cash generating units that have been placed into voluntary administration and ceased operating. The post-tax profit or loss of the discontinued operation is presented as a single line

Management Resource Solutions PLC

Notes to the consolidated financial statements

for the year ended 30 June 2017 (continued)

1 Accounting policies (continued)

on the face of the consolidated income statement. The presentation of discontinued operations within prior periods is restated to reflect consistent classification of discontinued operations across all periods presented.

Prior period adjustments

The completion of the 30 June 2017 audit identified a number of errors in the disclaimed 30 June 2016 annual report. Refer to Note 32 for details for these corrections

Operating segments

IFRS 8 "Operating Segments" requires the disclosure of segmental information for the Group on the basis of information reported internally to the chief operating decision-maker for decision-making purposes. The Group considers that the role of chief operating decision-maker is performed collectively by the Board of Directors.

Management Resource Solutions plc is a holding company that operates two businesses in Australia, Plant Hire and Mining Contracting. Its customers are based in Australia.

Financial information (including revenue and profit before tax and intra-group charges) is reported to the board on a segmental basis. Segment revenue comprises sales to external customers and excludes gains arising on the disposal of assets and finance income. Segment profit reported to the board represents the profit earned by each segment before tax and intra-group charges. For the purposes of assessing segment performance and for determining the allocation of resources between segments, the board reviews the noncurrent assets attributable to each segment as well as the financial resources available. All assets are allocated to reportable segments. Assets that are used jointly by segments are allocated to the individual segments on a basis of revenues earned.

All liabilities are allocated to individual segments. Information is reported to the board of directors on a segmental basis as management believes that each segment exposes the Group to differing levels of risk and rewards due to their varying business life cycles. The segment profit or loss, segment assets and segment liabilities are measured on the same basis as amounts recognised in the financial statements. Each segment is managed separately.

Management Resource Solutions PLC

Notes to the consolidated financial statements

for the year ended 30 June 2017 (continued)

1 Accounting policies (continued)

Where temporary differences exist in relation to investments in subsidiaries, branches, associates, and joint ventures, deferred tax assets and liabilities are not recognised where the timing of the reversal of the temporary difference can be controlled and it is not probable that the reversal will occur in the foreseeable future.

Current tax assets and liabilities are offset where a legally enforceable right of set-off exists and it is intended that net settlement or simultaneous realisation and settlement of the respective asset and liability will occur. Deferred tax assets and liabilities are offset where: (a) a legally enforceable right of set-off exists; and (b) the deferred tax assets and liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities, where it is intended that net settlement or simultaneous realisation and settlement of the respective asset and liability will occur in future periods in which significant amounts of deferred tax assets or liabilities are expected to be recovered or settled.

Property, Plant and Equipment

Property, plant and equipment are measured on the cost basis and are therefore carried at cost less accumulated depreciation and any accumulated impairment losses. In the event the carrying amount of plant and equipment is greater than its estimated recoverable amount, the carrying amount is written down immediately to its estimated recoverable amount and impairment losses recognised either in profit or loss or as a revaluation decrease if the impairment losses relate to a revalued asset.

Goodwill

Goodwill arising on the acquisition of a subsidiary represents the excess of the fair value of the consideration given over the fair value of the identifiable net assets acquired. Goodwill is initially recognised as an asset at cost and is subsequently measured at cost less any accumulated impairment losses. Goodwill impairment reviews are undertaken annually, or more frequently if events or changes in circumstances indicate potential impairment. The carrying value of goodwill is compared with the recoverable amount, which is the higher of the value in use and the fair value less costs to sell. Any impairment is recognised immediately as an expense, separately disclosed in the intangible fixed asset note to the financial statements, and is not subsequently reversed.

Where the fair value of the identifiable net assets acquired exceeds the fair value of the consideration given, the excess is recognised as a gain in the Consolidated Statement of Profit & Loss.

Depreciation

The depreciable amount of all fixed assets including buildings and capitalised lease assets is depreciated on a straight-line basis over the asset's useful life to the consolidated group commencing from the time the asset is held ready for use. Leasehold improvements are depreciated over the shorter of either the unexpired period of the lease or the estimated useful lives of the improvements.

The depreciation rates used for each class of depreciable assets are:

The assets' residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period. An asset's carrying amount is written down immediately to its recoverable amount if the asset's carrying amount is greater than its estimated recoverable amount. 

2 Critical Accounting Estimates and Judgements

The Directors evaluate estimates and judgments incorporated into the financial statements based on historical knowledge and best available current information. Estimates assume a reasonable expectation of future events and are based on current trends and economic data, obtained both externally and within the Group.

Key estimates and judgements

(i) Impairment

The Group assesses impairment at the end of each reporting period by evaluation of conditions and events specific to the Group that may be indicative of impairment triggers. Recoverable amounts of relevant assets are reassessed using value-in-use calculations, which incorporate various key assumptions.

(ii) Revenue recognition

Revenue on long-term contracts requires estimates to be made of the degree of completion and accordingly the amount of revenue and direct costs to recognise at accounting dates.

(iii) Purchase consideration - Bachmann Plant Hire Pty Ltd ('BPH')

Under the term of the acquisition, deferred payments will become due to the vendors computed by reference to earnings achieved by BPH in future periods. The total consideration has been computed on the assumption that the earnings targets specified will be achieved but not exceeded.

(iv) Losses on termination of contracts

Following the decision to terminate these contracts, full provision has been made for all contract costs incurred and it has been assumed that no further amounts will be received in respect of the outstanding sales invoices at 30 June 2017.

(v) Going concern

As explained in the accounting policy set out in note 1, the financial statements have been prepared on the going concern basis which assumes that the Group will continue in operational existence for the foreseeable future.

Management Resource Solutions PLC

Notes to the consolidated financial statements

for the year ended 30 June 2017 (continued)

Revenue represents amounts invoices to customers for services provided, exclusive of Value Added Tax and similar taxes.

4 Operating segments

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The chief operating decision-maker has been identified as the Board of Directors.

Segmental information is as follows:

Management Resource Solutions PLC

Notes to the consolidated financial statements

for the year ended 30 June 2017 (continued)

4 Operating segments (continued)

Revenues from transactions with customers exceeding 10% of total revenue were as follows:

5 Administrative expenses

Acquisition expenses of $1,570,300 (2016-$792,202) represent the professional fees and other associated costs incurred in the acquisition of MRS SubZero in FY17 and Bachmann Plant Hire Pty Ltd in FY16.

Details of the share based payments charge are set out in note 26.

Management Resource Solutions PLC

Notes to the consolidated financial statements

for the year ended 30 June 2017 (continued)