So here is my take on a few things;I will focus on Surveying as...

So here is my take on a few things;

I will focus on Surveying as that is the bulk of their business, clearly under performing and also my area of expertise outside of VRS.

The east coast infrastructure boom has a bit to run yet as per their slide in the presentation.. We have not reached peak. If the economy slows, or continues to slow, and the federal government follows the RBA encouragement more infrastructure spend will be added to this, presumably short term to give the economy the immediate sugar effect but also over the long term the RBA wants more infrastructure investment....how the Feds and the states fund this is not for discussion here. I believe in addition to the chart more infrastructure spend will happen and it won't taper away as steeply as the chart says.

Saying that however Veris's work in infrastructure surveying would be its lowest margin work and be where they have focused on volume rather than margin hence the comments about "getting control" of pricing. Now this low margin work will be locked in for some time be it 12 months to 36 months typically.

I understand that they are doing well in QLD but suffering in parts of NSW, VIC and WA is a big problem - other areas are going OK but aren't where the turnover is. They are yet to announce where they are withdrawing from

I am not sure how the civil infrastructure market will respond to Veris price increases or whether competitors will then win the work as they will have slashed their costs to keep their margin in place.

In the end VRS will loose market share here and resi is already causing them headaches.

In residential, many (not all) of the 9 firms they purchased had strong residential exposure. This previously would have been the high margin part of these businesses and the part that mostly relied on relationship management from the incumbant owners/partners. Relationship businesses are always a big risk with corporatization of professional services. As "client management improvements" appears on their improvement list I feel that they have not kept most of the lucrative relationships going. This will have put further pressure on margins as some of this work has disappeared and further pressure on local management to win work with the only lever being price and further points to the "getting control" of pricing.

With costs I think the $3m in overhead savings is material but not the savior - they need to find 2-3 times that in margin. Turning over $93m in surveying they should be getting margin back into the mid teens in surveying. Whether they can execute that is another thing.

Labour - their biggest cost is labour. I can't see anywhere it is broken out. I reckon this is where a large undisclosed problem lies in that they have lost control of their labour cost for surveying. Typically total payroll costs in this industry needs to be below 50% of revenue ideally mid forties. The spatial industry continues to be in a skills shortage. Has been for the 15 years I have been involved and the latest industry analysis has it to continue for the next 8 years. Without any new infrastructure spend the labour supply gap narrows in about 2023 but then expands primarily due to the fact that technological improvements do not make up for the greater number of people leaving the industry than being an entrant to the industry.

This puts continued upward pressure on wages. I do know that VRS pay well for the people I know that work there - most of them are ther because it is cruise-ee (inefficient), well resourced (equipment) but hate the culture but the pay is good, about 5% higher than they get at other reputable places. That combined with their low pricing would have me guess their payroll costs are past 60% of revenue. To work this out I have made grand assumptions from the indsutry, inside and public information I have. This is why their margin is shot and why I think the $3m of overhead savings is chicken feed. (it also looks like Brian Mangano received a payout of circa 12 months pay of $360k)

So to fix things they need to win work at 10% higher revenue rates than they have now across the board and keep their wages flat. If as I expect wages increase 3-5% pa in the industry they really do need to score a 15% increase in like for like revenue. I am not sure they have the deep pockets to support that transition.

Cash - I see they got their receivables down by $5m, it still is very high of $25m for their revenue. Also the cash advance facility reduced from $25m available to $17m. Their secured lender must be getting concerned.

What do I see happening? I have no idea but I think the only sensible strategy is a controlled but significantly large contraction of the Surveying business to focus on their current profitable work and also to obtain more higher margin work as they say they want to. They need to understand where they make their money - I doubt they do. I suspect the 80/20 rule will apply to their business and in fact that they have some projects loosing them money even though they are on hourly rates. They need to extract themselves quickly from those contracts. Do they have any vertical supply chain benefits with Elton? They should maximize that.

For the industry itself the best thing to happen would be that their secured lender works an exit plan selfishly for themselves and call it a day and that would demonstrate to the industry that pricing work for a profit does matter and would get sensibility back into wages to match pricing. I would say we are 12 months of poor performance from that position.

Big question for shareholders is the incumbent board a better option than the former Finance Director and his colleagues.