There's been a little speculation about competing bids and the possibility of Pemba lifting its bid for MSL, despite the Board's recommendation that shareholders should accept. Pemba today announced that $0.295 per share was its best and final offer.

"Pemba confirms today that the all cash consideration of $0.295 per MSL share under the Scheme (“Scheme Consideration”) is its best and final offer and will not increase its offer.

We continue to believe the Scheme Consideration is highly compelling for MSL shareholders for the following reasons:

1. Attractivepremium:The Scheme Consideration of $0.295per MSLsharere presents asignificant premium to the recent historical MSL share prices and well above average market transaction premia:

• ▪ 80.7% premium to the $0.163 one-month volume weighted average price of MSL shares up to and including 14 November 2022 (being the last trading day prior to the announcement of entry into the SIA);
• ▪ 78.0% premium to the $0.166 three-month volume weighted average price of MSL shares up to and including 14 November 2022; and
• ▪ 81.4% premium to the $0.163 six-month volume weighted average price of MSL shares up to and including 14 November 2022.

2. Compelling multiples: the Enterprise Value implied by the Scheme Consideration represents extremely attractive multiples for MSL:

▪ Implied EV / FY22A EBITDA multiple of 21.0x1; and

▪ Implied EV / FY22A Cash EBITDA multiple of 25.0x2.

3. Certaintyofvalue: The all cash Scheme Consideration provides MSLshareholders with certainty of value and the opportunity to realise their investment in MSL for cash, which is particularly relevant in the context of highly uncertain and volatile macro economic conditions.

4. The Independent Expert has concluded that the Scheme is in the best interests of MSL shareholders in the absence of a Superior Proposal, and the Scheme Consideration is significantly above the Independent Expert’s assessed value of the equity in MSL of $0.230 to $0.266 per MSL Share."

A bit late to comment on the recent takeover offer from Pemba, which is at once an opportunistic and yet fair bid.

Given the difficult market environment which is likely to continue into FY23, it is good to see some of the latent value realisation being brought forward.

I added to my position some weeks before this offer at 16c, so I consider myself lucky to be a beneficiary. In general though, I prefer to see companies realise their full potential as listed entities.

Announcement this morning that they are being bought out at 29.5c a share, about 80% premium to recent prices.

Long term holder IRL, not sure what I really think of this one but I’ll end up with a tidy profit. Just another case of M & A in this beat up market.

Hold a small position and like the disciplined and consistent manner on how MSL operate.

Trading at 2x current sales with no debt and over 9mil in cash and profitable represents value when you consider the growth channels that lie ahead.

Can see a dividend being paid at a future point as cash flows grow .

Gold Coast Suns select MSL SwiftPOS for Metricon Stadium.

5yr = 800k deal.

Another nice win. Overtime these wins will slowly accumulate into considerable ARR. The share price received a nice bump. MSL looks to be in a position to surge higher if the company can announce a couple of new wins in succession.

Note: I hold iRL.

Full ASX release below…

https://newswire.iguana2.com/af5f4d73c1a54a33/announcements/msl.asx/2A1396263/MSL_Announcement_2A1396263.pdf?download=1

Good coverage of results and strategy on Coffee Microcaps last segment 1:30. Backs up @wtsimis straw. Growth in digital has the most potential.

Queensland stadium contract revenue not included in FY22. MSL has won 7/7 of the last stadium tenders. MSL system can operate even if the connectivity goes down unlike Square for example

Well off where I bought in RL.

Solid results for MSL solutions for year

Revenue to 33.9mill or up 37.6% and gross margins holding firm at 75.4%.

Nice increase to cash balance which is at 9.39 million

With six new venue announcements announced in 2022 should continue to see some organic growth in revenue in 2023 and with strong cash position option for a modest acquisition is a possibility.

Trading modestly at 1.8x sales and under 11x EBITDA with disciplined management prospects for out performance in share price remain positive for FY23 and beyond

@Strawman, agreed. With MSL bringing in just under 25m of revenue last year, a minimum of 3.6m over a 5-year period isn’t exactly what I would call material. If no further income is received, the figure equates to around 700k per year.

That said -- and as you note -- this is great endorsement for MSL’s POS software and further business opportunities will likely arise. Queensland is arguably the biggest sporting hub in the country for international events (think Comm Games, Olympics etc) so to establish a contract with Stadiums Qld is pretty impressive.

Surprisingly, the announcement doesn’t allude to next year’s Women’s World Cup, scheduled to be held in Australia and NZ. Brisbane is one of the major host cities for the event, with Suncorp one of four principal stadiums. Suncorp Stadium will be used extensively throughout the event, and will also host the quarter finals and third place match. In fact, MSL have contracts with most of the main stadiums scheduled to be used throughout the event – eg Eden Park in Auckland and AAMI stadium in Melbourne. They are building quite the impressive customer base. 

Seems like a decent win for MSL:

Compared with guidance for over $32m in revenue for FY22 it's not huge in and of itself (especially with the $3.6m spread over 5 years). But this is a big client and it seems there'd be scope to roll out the solution to another 7 stadiums. Also, it's always good to have more high profile reference sites (they won Eden Park in NZ in the last 12 months), and it's a good foot in the door for increasing the offering (and no doubt prices once the system is installed).

Full announcement here

Shares in MSL are presently on (roughly) 10x EBITDA or 1.7x sales. The company has over $8.5m in cash.

Not held.

I thought the recent trading update was decent enough, but I was a little more bearish than @wtsimis.

Relating to revenue, they have used the classic PCP comparison like many do (my biggest bugbear!) and not elected to compare vs H1 figures….I wonder why?  

Revenue in H2 was 16.9m. With MSL projecting between 32-33.5m, we aren’t seeing any revenue growth in the previous sixth-month period, despite the update citing new SwiftPOS sites and 68 new OrderMate venues in the APAC region alone.

Excluding the recent acquisition, organic growth appears to have stalled. They have announced many wins (above) yet this hasn’t shifted through to top line growth. Maybe they are seeing solid organic growth, but are losing customers through churn? Hard to know….but something to keep an eye on. It might be harsh, but I am marking this one down as an orange flag.

That said, the solid fundamentals still look appealing to me – a healthy cash balance that once again has increased, no debt and EBITDA more than doubling in the last reporting period.

Take the good with the bad – but I want to see evidence of organic growth in the next reporting period. 

Very positive update with a month to go in the 2022 financial year form MSL today.

Rev growth on FY21 to be up 30%-35% to 32.33.5mil

EBITDA impressively to be up 5-5.3mil or 60%plus on a year ago and

Cash on hand expected to up to 8.5-9mill or 57% plus

Disciplined approach to operations paying off with acquisitions adding to the EBITDA line.

Trading at approx 2x sales and 13x EBITDA not expensive especially in light of the growing margins

Opportunity to add more .

A dividend distribution or buy back might be on the cards over the coming 6-18months ???

Disc Held in RL not SM

Non-executive Director, Dr Richard Holzgrefe, acquired 46,671 shares on-market recently -- spending almost 9k. He already owns a heap of shares, so perhaps a strong signal that he considers the current share price attractive.

Disc: held

@Strawman, agreed. This is their 6th consecutive quarter achieving cashflow positive, in addition to having no debt and sufficient cash on hand. This is a good example of a business I want to be owning in the face of increasing interest rates and the market re-rating companies with lofty valuations. It is also not lost on me that I had another small buy order in the night before the trading update was released. DOH.

For the sake of being fair, lets exclude the OrderMate acquisition for a minute. MSL expect to announce H1 revenue growth of more than 25% pcp. In H1 FY21, MSL revenue was 11.6m (with 1.6m EBITDA after overheads). Based on this H1 FY22 has seen a revenue increase of around 3m – taking FY22 revenue to the region of 14m>. Positive cashflow has increased from 1.2m to 1.4m pcp (before govt subsidies). These metrics are all heading in the right direction. In a Straw a few months ago, I noted that one of the strengths I see in MSL is its capital light business model - CapEx costs have traditionally been incredibly low. Provided they keep staff costs under control (the CEO seems like a tidy capital manager, so no real concerns here atm), I think the business will continue to scale well. This has has been touched on by members in the past but I think its worth another mention: the company look well placed for significant operating leverage, particularly through their inhouse software where gross margins are much higher. Over the next 12 months I will continue to look for evidence that customers onboarded are directly contributing to their bottom line - this occurring should lead to a market re-rate.

All in all, this is a solid update that demonstrates MSL’s resilience, despite the difficult environment it has been forced to operate in. With a backlog of closed sales still to contribute to H2 FY22 figures, in addition to the continued relaxation of restrictions in most of MSL’s main markets, H2 will likely be another strong reporting period for the company. The company also included a cheeky mention of early interest from stadium customers in the US (via their partnership with Taubman Capital). Hopefully we see more traction in this market.

Disc: held 

(Props to management for providing two revenue figures – one accounting for OrderMate and the other with it excluded)

MSL has told the market to expect a pretty strong first half result, with revenue, EBITDA and cash flow all moving in the right direction.

Excluding OrderMate, which was acquired in September, revenue grew by over 25% from the previous first half. Including one quarter's worth of contribution from OrderMate, Revenue is expected to come in 40% stronger.

Operating profit (EBITDA) is likely to come in above $2m, which is 3x what it was last year, even excluding any Government subsidies, while operating cash flows should be around 16% stronger at $1.4m.

The business remains debt free with $7.5m of cash on hand.

Annualising this latest half -- which is undercooking things given there will be a full 6m contribution from OrderMate and (hopefully) some added growth -- the business is trading on a forward Price-to-Sales of 3.4, and an EV/EBITDA of 18.

Doesn't seem too unreasonable given the company's growth ambitions (check out our meeting with CEO Pat Howard from October last year for more insight there).

ASX announcement is here