Half Yearly Report

RNS Number : 4696X

Managed Support Services PLC

07 December 2010

 



FOR IMMEDIATE RELEASE                                                                    7 December 2010

Managed Support Services plc

INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2010

Managed Support Services plc ("MSS") announces its Interim Results for the six months ended 30 September 2010.

KEY HIGHLIGHTS

·          Turnover increased to £11.2m (2009: £7.8m)

·          Recent contract gains announced with the Co-operative Group and Thomas Cook

·          Adjusted* operating profit turnaround to £0.5m  (2009: loss £0.5m)

·          Two acquisitions successfully integrated.  ECS increases scale and capability in the Building Services market;  Data Sound increases visibility of earnings

·          Statutory loss for the period £0.4m (2009: £2.5m)

·          Launch of new software product "Compleye" to improve electronic interface with Health & Safety customers

Commenting on the results, Simon Beart, Chief Executive said:

"Our recently announced contract gains and acquisitions have transformed the prospects for the Group.  We anticipate further market share gains and we look forward to the next financial year with increasing confidence".

* adjusted for intangibles amortisation, share based payments and acquisition related fees.  

FOR FURTHER INFORMATION, PLEASE CONTACT:

Managed Support Services plc:
Simon Beart, Chief Executive          Piers Wilson, Finance Director	07710 444370 01483 735703
Cenkos Securities plc:
Nick Wells / Stephen Keys	020 7397 8900
Merchant Securities:
Graeme Cull / Simon Clements	020 7382 0933
Buchanan Communications:
Richard Darby / Helen Chan	020 7466 5000

Notes to editors

Managed Support Services plc is a leading supplier of Environmental Compliance and technical Building Services.  The Group provides a broad range of Environmental Compliance services and HVAC building maintenance services for commercial properties.  MSS operates in a range of diverse markets with customers managing or owning commercial property, hotels and retail buildings.  Further information is obtainable from www.mssplc.com.

CHIEF EXECUTIVE'S REVIEW

Overview

It is a pleasure to report a return to profitable trading and important new contract gains.  These developments demonstrate success in executing the Group's new strategy.

The current year represents the first year of trading for the Group in pursuit of our strategy to assemble and develop a nationwide, Technical Building Services and Compliance services group.

To achieve the current level of progress has required the recruitment of a capable management team, the acquisition and integration of a number of trading entities and the creation of an efficient trading platform in order to meet the needs of our customer base.

It is satisfying therefore, to be reporting a profitable six months at the same time as meeting all the other challenges of building the Group and integrating acquisitions.  Turnover has increased materially to £11.2m and will continue to grow as the effect of the recent ECS acquisition and the newly announced contract gains are recognised in the second half.  Adjusted operating profit (before intangible amortisation, share based payments and acquisition related fees) has also shown a sharp turnaround with profits of £0.5m compared to losses last year in the comparable period of £0.5m.

The current financial year to March 2011 will continue to see further development and investment across the Group in order that the next financial year provides a full return for shareholders.

Strategy

The Group is now focused on developing a strong presence in the Technical Building Services market and in the related Compliance markets.  For our customers, this service provision covers Health & Safety management, Water quality and control and the management of Fire and Electrical risk within buildings, as well as the full range of HVAC (Heating, Ventilation, Air Conditioning) services.

Our service offerings are complementary, with the common theme being the risks and costs that our customers have to manage as a result of owning and occupying buildings.  The competitive tenant environment and legislative pressure create numerous challenges for our customers and we wish to provide services that can contain cost and manage risk on their behalf.

We continue to see the Building Services and Compliance markets as fragmented and in many cases served by small scale enterprises that can no longer meet all the needs of customers.  The opportunity therefore, is to become a substantial and credible supplier in these markets by offering the right range of services and by maintaining a strong balance sheet. 

The Group now has over 300 employees with the principal operating hubs being in London and Manchester.  This coverage means we are able to remain responsive to our clients' daily needs, whilst offering industry proven management and the transparency benefits of listed status. 

We will continue to examine small acquisitions where the services available are attractive or where we feel we can provide additional opportunity for the customer.

Contract gains

We announced the new contract with The Co-operative Group on 11 November 2010.  This contract commenced delivery on 1 December 2010.

We have also announced today a further significant new contract with Thomas Cook UK Limited.  These developments confirm that the Group now has the resources and the management talent to compete nationally and offer complex services in business critical environments. 

Acquisitions

We completed the acquisition of Environmental Control Services Ltd ("ECS") at the end of the trading period, on 30 September 2010.  The total net cash consideration for the business was £3.2m, funded principally by an equity fundraising.

ECS is a complementary operation we understand well, having been a successful competitor to our Southern Building Services operations.  ECS enjoys an impressive level of contracted maintenance revenues and a good reputation in the market for the delivery of the additional works and services that flow from managing the building maintenance needs of customers.

The acquisition of ECS allowed us to crystallise obvious cost saving opportunities, given the geographical overlap of customers and operations, without altering service levels.

We continue to be impressed with the energy and commitment of the ECS team since the acquisition.  This has been reflected in good trading since completion, including further growth in the recurring revenue element of the business.

The acquisition of ECS also increases materially our scale and capability in the Building Services market, particularly in the South East and we believe this will be attractive to existing and potential customers.  In particular, increased scale and low indebtedness are relevant to our larger corporate customers who are looking for a reliable supplier at a time when there is considerable uncertainty in the market.

At the beginning of the reporting period we acquired Data Sound which now trades under the Group brand as MSS Health & Safety.  This business has performed well since acquisition and enjoys a robust business model with the majority of turnover delivered on a contracted, pre scheduled basis. 

MSS Health & Safety provides a fully outsourced solution for customers looking to manage their growing Health & Safety obligations, without incurring unnecessary cost or distraction.  The unit is fortunate to have a large team of very experienced Consultants who provide customers with advice both on occupational issues and on all environmental control matters.  As a result, our Consultants are advising customers on their Water quality, Fire and Electrical risks, all of which are services we can now offer in-house.

In order to improve the electronic interface with our contracted Health & Safety customers, we will be launching a new software product for customers.  This new product will give greater visibility of risk management processes for customers, as well as providing an improved document management facility.  The product, Compleye, is being developed internally from Group resources.  The Group therefore has ownership of the intellectual property and we hope to enjoy recurring revenues as the product is rolled out through the base.

Results

Turnover for the six months to 30 September 2010 was £11.2m, a substantial increase over the prior period of £7.8m, primarily as a result of acquisitions.  Activity levels within the Group's existing operations recovered slightly during the period but we continue to be highly selective in respect of project related opportunities. 

Gross margins have improved from 22% to 32%.  This reflects careful management of the direct workforce as well as the beneficial margin mix from our Compliance activities.  However, we expect the gross margin to be somewhat lower for the full year, as a result of the altered revenue mix following the acquisition of ECS.

Indirect costs and administrative expenses rose in line with increased turnover, again largely as a result of acquisitions.  Following the acquisition of ECS at the very end of the reporting period, we have been able to generate overhead savings across the Group, the costs and benefits of which will arise in the second half. 

The adjusted operating profit for the period was £0.5m (2009: loss £0.5m).  The Group is operationally geared and therefore fixed costs and to a large extent, administrative expenses will not increase directly in line with the Group's growing turnover.  In addition, we expect our Water division to make a very modest contribution to operating profit in the second half as compared to small losses in the first half.

We were obliged to make an investment in working capital in the first half of the year, partly as a result of sales growth but also as a consequence of negotiated strategic supplier arrangements with the Group's core suppliers.  These arrangements attract supplier discounts and offer margin enhancement in exchange for agreed payment terms.

The recently announced contract gains will have only a modest beneficial effect in the current year with the most recently announced contract gain not commencing delivery until mid January 2011.  We anticipate however, that these contract gains will make a meaningful contribution in the next financial year to March 2012.

Financial

The balance sheet at the half year includes certain cash balances held within ECS.  These cash balances, totalling £1.6m, were transferred to the ECS vendors shortly after the period end, under the terms of the acquisition agreement.  Adjusting for the ECS related cash balances, total net indebtedness at the half year was £0.5m.  The movement from the net cash position as at March 2010 of £3.9m reflects the cash consideration payments for Data Sound at £2.8m, deferred payments in respect of previous acquisitions of £1m, together with the net cash cost of acquiring ECS.  The acquisition of ECS was funded from the net proceeds of a share placing raising a net £2.9m and the Group's own resources.   

Outlook

The commercial environment was certainly challenging during the first half.  We are assuming that the Building Services market will continue to be competitive for the balance of the year, particularly for lower margin services, although some customers are now committing to major refurbishment projects which were previously on hold.

The demand for our Health & Safety consultancy services continues to be good and we also expect to see growth in our other, smaller Compliance operations, particularly since our Water division has now entered into profit. 

Our significant contract gains demonstrate the success of our overall strategy, even though the associated revenues will come on stream later than initially planned.  These new contracts and our pipeline confirm that major, corporate customers now see the Group as a competitive, nationwide provider.

The remainder of the year will see the completion of the Group's operating platform and the integration of ECS.  The Board has increasing confidence for the next financial year. 

Simon Beart

Chief Executive

Managed Support Services plc

Consolidated Income Statement

For the period ended 30 September 2010

		Six months ended		Six months ended		Year ended
	Note	30 September 2010		30 September 2009		31 March 2010
		£'000		£'000		£'000
Revenue		11,236		7,820		15,318
Cost of sales		(7,631)		(6,098)		(11,598)
GROSS PROFIT		3,605		1,722		3,720
Administrative expenses before items identified below		(3,129)		(2,240)		(5,389)
OPERATING PROFIT / (LOSS) BEFORE ITEMS		476		(518)		(1,669)
IDENTIFIED BELOW
Restructuring of activities		-		(949)		(573)
Amortisation of intangible assets		(326)		-		(136)
Increase in share based payment reserve		(150)		(167)		(334)
Closure of MSS Projects		-		-		(1,229)
Loss on disposal of assets		-		-		(11)
Impairment of goodwill		-		(1,000)		(1,000)
Costs associated with acquisitions	3	(348)		-		-
OPERATING LOSS		(348)		(2,634)		(4,952)
Financial income		4		44		54
Financial expenses		(27)		-		(3)
LOSS BEFORE TAX		(371)		(2,590)		(4,901)
Income tax	4	-		88		50
LOSS FOR THE PERIOD		(371)		(2,502)		(4,851)
Loss is attributable to:
Owners of Managed Support Services plc		(364)		(2,502)		(4,851)
Non controlling interest in subsidiary entity		(7)		-		-
		(371)		(2,502)		(4,851)
LOSS PER SHARE (pence)	5
Basic		(0.22)		(1.51)		(2.94)
Diluted		(0.22)		(1.51)		(2.94)
ADJUSTED PROFIT / (LOSS) PER SHARE (pence)
Basic		0.27		(0.23)		(0.96)
Diluted		0.27		(0.23)		(0.96)
All results are derived from continuing operations.

Managed Support Services plc

Consolidated Statement of Changes in Equity

For the period ended 30 September 2010

		Six months ended		Six months ended		Year ended
		30 September 2010		30 September 2009		31 March 2010
		£'000		£'000		£'000
At beginning of period		7,568		12,060		12,060
Loss for the financial period		(364)		(2,502)		(4,851)
Issue of share capital		446		-		-
Increase in share premium account		2,479		-		-
Increase in share based payment reserve		150		167		334
Minority interest		(7)		-		25
AT END OF PERIOD		10,272		9,725		7,568
Equity comprises share capital, share premium, merger reserve, share based payments reserve, special reserve and retained profit.

Managed Support Services plc

Consolidated Balance Sheet

For the period ended 30 September 2010

 

	Note	30 September 2010		30 September 2009		31 March 2010
		£'000		£'000		£'000
NON CURRENT ASSETS
Goodwill		7,500		1,548		4,000
Other intangible assets		4,571		-		2,165
Property, plant and equipment		653		105		495
		12,724		1,653		6,660
CURRENT ASSETS
Work in progress		676		-		205
Trade and other receivables		6,655		3,310		3,885
Cash and cash equivalents		2,212		9,826		4,135
Assets held for sale		-		-		180
		9,543		13,136		8,405
TOTAL ASSETS		22,267		14,789		15,065
CURRENT LIABILITIES
Trade and other payables		(6,883)		(4,296)		(5,059)
Deferred income		(1,245)				(522)
Short term borrowings		(1,129)		-		(177)
Deferred consideration		(2,329)		(280)		(1,266)
Current tax (liability) / asset		(227)		51		(117)
Obligations under finance leases		(38)		-		(68)
Provisions for liabilities		(66)		(281)		(190)
		(11,917)		(4,806)		(7,399)
NET CURRENT (LIABILITIES) / ASSETS		(2,374)		8,330		1,006
NON CURRENT LIABILITIES
Obligations under finance leases		(12)		-		(22)
Provisions for liabilities		(66)		(258)		(76)
		(78)		(258)		(98)
TOTAL LIABILITIES		(11,995)		(5,064)		(7,497)
NET ASSETS		10,272		9,725		7,568
EQUITY
Share capital	10	2,098		1,652		1,652
Share premium account	10	7,378		4,899		4,899
Special reserve		4,647		4,647		4,647
Share based payment reserve		1,370		1,053		1,220
Retained earnings		(5,239)		(2,526)		(4,875)
Equity attributable to owners of the Company		10,255		9,725		7,543
Non-controlling interest		18		-		25
TOTAL EQUITY		10,272		9,725		7,568

Managed Support Services plc

Consolidated Cash Flow Statement

         For the period ended 30 September 2010

		Six months ended		Six months ended		Year ended
	Note	30 September 2010		30 September 2009		31 March 2010
		£'000		£'000		£'000
NET CASH USED IN OPERATING ACTIVITIES	8	(545)		(1,559)		(3,911)
INVESTING ACTIVITIES
Interest received		4		44		54
Proceeds on disposal of property, plant and equipment		150		-		9
Purchases of property, plant and equipment		(99)		(43)		(270)
Acquisition of businesses
Cash paid including acquisition costs	7	(6,947)		(896)		(4,450)
Cash acquired		1,678		280		710
NET CASH USED IN INVESTING ACTIVITIES		(5,214)		(615)		(3,947)
FINANCING ACTIVITIES
Repayment of obligations under finance leases		(41)		-		(21)
Increase in borrowings		952		-		(11)
Net proceeds of share issue		2,926		-		-
Net proceeds of share issue in subsidiary		-		-		25
NET CASH FROM / (USED IN) FINANCING ACTIVITIES		3,837		-		(7)
NET DECREASE  IN CASH		(1,922)		(2,174)		(7,865)
CASH AT THE BEGINNING OF PERIOD		4,135		12,000		12,000
CASH AT THE END OF THE PERIOD		2,212		9,826		4,135

Managed Support Services plc

Notes to the Financial Statements

For the period ended 30 September 2010

1

GENERAL INFORMATION AND ACCOUNTING POLICIES

These interim consolidated financial statements are for the six months ended 30 September 2010.  The interim financial report, which has not been audited or reviewed, has been prepared in accordance with International Financial Reporting Standards (IFRS) adopted for use in the European Union.

The information for the period ended 31 March 2010 does not constitute statutory accounts as defined in section 434 of the Companies Act 2006.  A copy of the statutory accounts for that year has been delivered to the Registrar of Companies.  The auditors reported on those accounts: their report was unqualified, did not draw attention to any matters by way of emphasis and did not contain a statement under section 498(2) or (3) of the Companies Act 2006.

The annual financial statements are prepared in accordance with IFRSs as adopted by the European Union.  The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with International Accounting Standard 34 "Interim Financial Reporting", as adopted by the European Union.

The same accounting policies, presentation and methods of computation are followed in the condensed set of financial statements as applied in the Group's latest audited financial statements, except as described below.

Adoption of new and revised standards

The following new standards and amendments to standards are mandatory for the first time for the financial year beginning 1 April 2010.

IFRS3 (Revised) Business combinations and consequential amendments to IAS 27 Consolidated and separate financial statements, IAS 28 Investments in associates and IAS 31 Interests in joint ventures, are effective prospectively to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after 1 July 2009.

The revised standard continues to apply the acquisition method to business combinations but with some significant changes compared with IFRS 3.  All payments to purchase a business are recorded at fair value at the acquisition date.  All acquisition costs are expensed.

Going concern

The Directors are satisfied that the Group has sufficient resources to continue in operation for the foreseeable future, a period of not less than 12 months from the date of this report.  Accordingly, they continue to adopt the going concern basis in preparing the financial statements.

2

BUSINESS AND GEOGRAPHICAL REPORTING

Information regarding the Group's operating segments is reported below.  The Group's operations were only in the United Kingdom.  The segments reported below are determined by the legal and reporting structure of the Group.  The CEO, the chief operating decision maker, reviews information and makes decisions at this level and impairment reviews are also done at this level.

The revenues disclosed below within the operating segments are broadly equivalent to the revenues from each group of similar products and services and accordingly no additional disclosure is included.

2	BUSINESS AND GEOGRAPHICAL REPORTING (continued)
	SEGMENT REVENUES AND RESULTS
	The following is an analysis of the Group's revenue and results by reportable segment for the six months to 30 September 2010.
								Building												Central and
								Services						Compliance						Other					Consolidated
								Six months ended						Six months ended						Six months ended					Six months ended
								30 September						30 September						30 September					30 September
								2010						2010						2010					2010
								£'000						£'000						£'000					£'000
	Revenue
	External sales							10,123						1,113						-					11,236
	Inter-segment sales							251						57						(308)					-
	Total revenue							10,374						1,170						(308)					11,236
	Inter-segment sales are charged at prevailing market prices
	Result
	Segment result before items below							676						273						(473)					476
	Restructuring of activities							-						-						-					-
	Amortisation of intangible assets							(326)						-						-					(326)
	Increase in share based payment     reserve							-						-						(150)					(150)
	Costs and fees associated with acquisitions							-						-						(348)					(348)
	Operating (loss) / profit							350						273						(971)					(348)
	Net finance costs																								(23)
	Loss before tax																								(371)
	Tax																								-
	Loss after tax																								(371)
2	BUSINESS AND GEOGRAPHICAL REPORTING (continued)
	The following is an analysis of the Group's revenue and results by reportable segment for the six months ended 30 September 2009.
							Building														Central and
							Services						Compliance								Other					Consolidated
							Six months ended						Six months ended								Six months ended					Six months ended
							30 September						30 September								30 September					30 September
							2009						2009								2009					2009
							£'000						£'000								£'000					£'000
	Revenue
	External sales						7,820						-								-					7,820
	Inter-segment sales						384						-								(384)					-
	Total revenue						8,204						-								(384)					7,820
	Inter-segment sales are charged at prevailing market prices
	Result
	Segment result before items below						(83)						-								(435)					(518)
	Restructuring of activities						(1,029)						-								-					(1,029)
	Impairment of goodwill						(1,000)						-								-					(1,000)
	Increase in share based payment reserve						-						-								(167)					(167)
	Costs associated with acquisitions						80						-								-					80
	Operating (loss) / profit						(2,032)						-								(602)					(2,634)
	Net finance income																									44
	Loss before tax																									(2,590)
	Tax																									88
	Loss after tax																									(2,502)
2	BUSINESS AND GEOGRAPHICAL REPORTING (continued)
	The following is an analysis of the Group's revenue and results by reportable segment for the year ended 31 March 2010.
										Building											Central and
										Services					Compliance						Other					Consolidated
										Year ended					Year ended						Year ended					Year ended
										31 March					31 March						31 March					31 March
										2010					2010						2010					2010
										£'000					£'000						£'000					£'000
	Revenue
	External sales									15,318					-						-					15,318
	Inter-segment sales									521					-						(521)					-
	Total revenue									15,839					-						(521)					15,318
	Inter-segment sales are charged at prevailing market prices
	Result
	Segment result before items below								(635)					-							(1,045)					(1,680)
	Closure costs of MSS Projects Limited								(1,229)					-							-					(1,229)
	Restructuring of activities								(486)					-							(87)					(573)
	Amortisation of intangible assets								(136)					-							-					(136)
	Increase in share based payment reserve								-					-							(334)					(334)
	Impairment of goodwill								(1,000)					-							-					(1,000)
	Operating (loss) / profit								(3,486)					-							(1,466)					(4,952)
	Net finance income																									51
	Loss before tax																									(4,901)
	Tax																									50
	Loss after tax																									(4,851)
	For the purposes of monitoring segment performance and allocating resources between segments, the Group's Chief Executive monitors the tangible, intangible and financial assets attributable to each segment. All assets are allocated to reportable segments with the exception of investments in associates, other financial assets (except for trade and other receivables) and tax assets. Assets used jointly by reportable segments are allocated on the basis of the revenues earned by individual reportable segments.

3	COST OF ACQUISITIONS
									Six months ended			Six months ended							Year ended
									30 September			30 September							31 March
									2010			2009							2010
									£'000			£'000							£'000
	The cost of acquisitions reported in the Income Statement were as follows:
	Legal fees								142			n/a							n/a
	Advisor fees								166			n/a							n/a
	Due diligence fees								40			n/a							n/a
									348			-							-
4	TAX
	The Corporation tax charge for the six month period has been estimated at £nil (six months ended 30 September 2009: £nil). No deferred tax asset has been recognised in relation to the losses in the period.
5	EARNINGS PER SHARE
	The calculation of basic and diluted loss per share is based on the following data:						Six months ended				Six months ended							Year ended
							30 September				30 September							31 March
							2010				2009							2010
							£'000				£'000							£'000
	Loss
	Loss for the purposes of basic and diluted earnings per share						(371)				(2,502)							(4,851)
	Number of shares
	Weighted average number of shares for the purposes of basic earnings per share						165,203,976				165,203,976							165,203,976
	Potentially dilutive ordinary shares						3,500,000				n/a							n/a
	Weighted average number of shares for the purposes of diluted earnings per share						168,703,976				165,203,976							165,203,976
	Loss per share
	Basic loss per share (pence)						(0.22)				(1.51)							(2.94)
	Diluted loss per share (pence)						(0.22)				(1.51)							(2.94)
	ADJUSTED EARNINGS / (LOSS) PER SHARE
	Loss as above						(371)				(2,502)							(4,851)
	Restructuring of activities						-				949							573
	Amortisation of intangible assets						326				-							136
	Increase in share based payment  reserve						150				167							334
	Acquisition costs						348				-							-
	Closure costs of MSS Projects						-				-							1,229
	Gain on sale of asset held for sale						-				1,000							1,000
	Profit / (loss) for the purposes of adjusted earnings per share						453				(386)							(1,579)
	Adjusted basic profit / (loss) per share						0.27				(0.23)							(0.96)
	Adjusted diluted profit / (loss) per share						0.27				(0.23)							(0.96)
6	ACQUISITION OF SUBSIDIARIES
	Data Sound Limited
	On 15 April 2010, the Group acquired 100% of the issued share capital of Data Sound Limited for a cash consideration of £2,942,000. This transaction has been accounted for by the purchase method of accounting.
													Provisional						Total
													fair value						Provisional
								Book value					adjustments						Fair value
								£'000					£'000						£'000
	Net assets acquired
	Plant, property and equipment							80					(73)						7
	Trade and other receivables							612					(108)						504
	Cash and cash equivalents							60					-						60
	Deferred income							(433)					(470)						(903)
	Trade and other payables							(306)					(35)						(341)
								13					(686)						(673)
	Goodwill																		2,000
	Intangible assets																		1,615
	Total consideration																		2,942
	Satisfied by:
	Cash																		2,942
	Net cash outflow arising on acquisition
	Cash consideration																		2,942
	Less cash and cash equivalents acquired																		(60)
																			2,882
	Environmental Control Services Limited
	On 30 September 2010, the Group acquired 100% of the issued share capital of Environmental Control Services Limited for a cash consideration of £2,627,000. This transaction has been accounted for by the purchase method of accounting.
													Provisional						Total
													fair value						Provisional
								Book value					adjustments						Fair value
								£'000					£'000						£'000
	Net assets acquired
	Plant, property and equipment							835					108						943
	Stock							100					(50)						50
	Trade and other receivables							2,064					(34)						2,030
	Cash and cash equivalents							1,618					-						1,618
	Trade and other payables							(1,470)					(316)						(1,786)
								3,147					(292)						2,855
	Goodwill																		1,500
	Intangible assets																		1,025
	Total consideration																		5,380
6	ACQUISITION OF SUBSIDIARIES (continued)
	Environmental Control Services Limited (continued)																		£'000
	Total consideration satisfied by:
	Cash																		2,627
	Proceeds from property sale																		750
	Deferred consideration																		2,003
																			5,380
	Net cash outflow arising on acquisition
	Cash consideration																		2,627
	Less cash and cash equivalents acquired																		(1,618)
																			1,009
7	ANALYSIS OF CASH FLOWS USED FOR ACQUISITIONS
									Six months ended				Six months ended						Year ended
									30 September				30 September						31 March
									2010				2009						2010
									£'000				£'000						£'000
	Purchase of businesses
	Acquisition of Environmental Control Services Limited								(2,627)				-						-
	Acquisition of Data Sound Limited								(2,942)				-						-
	Acquisition of Delrac Group of companies								-				(720)						(720)
	Acquisition of Status Group of companies								-				-						(3,000)
	Acquisition of net assets of Workplace Engineering								-				-						(130)
	Costs associated with acquisitions								(348)				(151)						(366)
	Deferred consideration paid								(1,030)				(25)						(234)
									(6,947)				(896)						(4,450)
	On 15 April 2010, the Group acquired 100% of the share capital of Data Sound Limited.
	On 30 September 2010, the Group acquired 100% of the share capital of Environmental Control Services Limited.
8	NOTES TO THE CASH FLOW STATEMENT
									Six months ended				Six months ended						Year ended
									30 September				30 September						31 March
									2010				2009						2010
									£'000				£'000						£'000
	Operating loss from continuing activities								(348)				(2,634)						(4,952)
	Adjustments for:
	Depreciation of property, plant and equipment								131				24						101
	Amortisation of intangible assets								326				-						136
	Impairment of goodwill								-				1,000						1,000
	Share based payments								150				167						334
	Acquisition costs								348				-						-
	Profit  on disposal of property, plant and equipment								-				-						11
	Operating cash flows before movement in working capital								607				(1,443)						(3,370)
8	NOTES TO THE CASH FLOW STATEMENT (continued)
									Six months ended				Six months ended						Year ended
									30 September				30 September						31 March
									2010				2009						2010
									£'000				£'000						£'000
	Operating cash flows before movement in working capital								607				(1,443)						(3,370)
	(Increase) / decrease in work in progress								(421)				444						267
	(Increase) / decrease in receivables								(191)				169						1,908
	Decrease in payables								(254)				(584)						(2,323)
	Decrease in provisions								(184)				(253)						(506)
	Cash utilised by operations								(443)				(1,667)						(4,024)
	Income taxes (paid) / received								(75)				108						116
	Interest paid								(27)				-						(3)
	Net cash flow from operating activities								(545)				(1,559)						(3,911)
9	DIVIDEND
	No dividend is proposed in respect of the period to 30 September 2010 (2009: £nil).
10	SHARE CAPITAL
								30 September					30 September						31 March
								2010					2009						2010
								£'000					£'000						£'000
	Authorised
	250,000,000 ordinary shares of 1p each (2009: 250,000,000 ordinary shares of 1p each)							2,500					2,500						2,500
	Issued and fully paid
	209,802,191 ordinary shares of 1p each (2009:165,203,976 ordinary shares of 1p each)							2,098					1,652						1,652
	On 29 September 2010, a total of 44,285,715 new ordinary shares were placed at 7 pence per share and a further 312,500 new ordinary shares were issued at 8 pence per share to a vendor of ECS.
11	RELATED PARTY TRANSACTIONS
	Apart from the remuneration of the Directors, who are key management personnel of the Group, there have been no other material transactions with the Board.

12     RISKS AND UNCERTAINTIES

The Board continuously assesses and monitors the key risks of the business.  The key risks that could affect the Group's medium term performance and the factors which mitigate these risks have not changed from those set out on pages 9 and 10 of the Group's 2010 Annual Report, a copy of which is available on the Group's website www.mssplc.com.  The Chief Executive's Review includes consideration of uncertainties affecting the Group in the remaining six months of the year.

RESPONSIBILITY STATEMENT

The Directors confirm that this consolidated interim report has been prepared in accordance with IAS34 'Interim Financial Reporting' and that the Chief Executive's review includes a fair review of the information required by DTR 4.2.7R (indication of important events during the first six months and description of principal risks and uncertainties for the remaining six months of the year); and of the information required by DTR 4.2.8R (disclosure of related parties' transactions and changes therein).

 

END

 

 

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