Preliminary Results

RNS Number : 9341T

Managed Support Services PLC

16 June 2009

 



FOR IMMEDIATE RELEASE

16 June 2009

Managed Support Services plc

PRELIMINARY RESULTS FOR THE TWELVE MONTHS ENDED 31 MARCH 2009

Managed Support Services plc ('MSS') announces its preliminary results for the twelve months ended 31 March 2009.  

KEY HIGHLIGHTS

Financial highlights

• Turnover £26.3m (2008: £16.4m) **

• Gross margin improved to 28% (2008: 17%) ** 

• Adjusted* profit before tax £1.65m (2008: Loss £3.2m) **

• Increased net cash balances £12m (2008: £7m)

• Adjusted* diluted earnings per share 1.35p (2008: Loss 5.5p) **

• Statutory profit after tax £121,000 (2008: Loss £8.9m), statutory EPS 0.13p 

(2008: Loss 9.93p) **

• Successful Placing raising £5.6m (net), after expenses, completed in February 2009

(*before restructuring, share based payments, amortisation and exceptional asset sale)

(** comparable figures for 2008 are for the six months to 31 March 2008) 

Operational highlights

• Substantial restructuring with management changes at all levels

• Improved contract management together with an increased focus on maintenance and service revenues contributed to a substantial increase in gross margin

• Acquisition of Delrac in May 2009 to increase recurring revenues and specialist engineering skills

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

'The Group is now a stable, cash rich platform for expansion. A broad range of potential acquisitions are being examined within the building services sector and in other markets, where the Board's management experience is applicable.' 

FOR FURTHER INFORMATION, PLEASE CONTACT:

Managed Support Services plc:
Simon Beart, Chief Executive	07710 444370
Cenkos Securities plc:
Nick Wells	020 7397 8900
Stephen Keys
Buchanan Communications:
Richard Darby	020 7466 5000
Chris McMahon

Notes to editors

Managed Support Services plc is one of the UK's leading suppliers of quality building solutions. The Company provides high levels of customer service in the provision of design, installation and interior fit-out through to maintenance and ongoing servicing. MSS operates in a range of diverse markets with clients in commercial property, hotels, retail and the public sector. Further information is obtainable from www.mssplc.com.   

CHIEF EXECUTIVE'S REVIEW

Overview

The Group has now completed its first full year of trading following management changes at all levels and a substantial restructuring.  Comparative figures are not particularly meaningful since the prior reporting period relates only to the six months ended 31 March 2008, following a change of year end to March.

The interim results for the first half of the reporting year, covering the period to September 2008 were promising, particularly in the context of the extensive changes that had been made to the Group.  As anticipated, the second half of the year showed considerably reduced activity, due to seasonality arising from low activity around the calendar year end, but this was exacerbated by growing evidence of reduced customer activity.  

Due to pre-emptive management action, the Group was still able to report a satisfactory result for the full year, but to achieve this, certain Group activities had to be reduced or substantially restructured.  The related redundancies and closures generated exceptional costs of £865,000.  These measures have greatly reduced the fixed cost base of the Group.  

Trading 

The Group structure and branding were simplified during the year, with each of the four trading units now operating under the MSS brand.  Sales activity is managed on a groupwide basis with performance metrics for each unit.  

MSS Projects undertakes primarily installation work although the exposure to new build projects is negligible.  In the second half of the year, as it became evident that customer volumes in 2009 would reduce, it was unfortunately necessary to undertake a managed exit from the Ventilation operation.  This aspect of MSS Project's activities carried substantial credit risk. In addition, whilst gross margins were reasonable, a high administrative cost meant that net margins were low.  A combination of high credit risk and low net margins, in a declining market, was not supportable.

During the year a management control system was implemented enabling more accurate contract review.  In April of the current year, we further improved our processes by going live on a comprehensive accounting system which is tailored for contract management.

MSS Facilities operates on a nationwide basis providing engineering support and planned maintenance for the Group's larger customers, including international hotel groups and key customers in the commercial and office markets.  Various process improvements were delivered in order to sustain operating margins at competitive levels including the implementation of electronic monitoring systems and a streamlined billing process.  MSS Facilities enjoys visibility of income through the delivery of planned maintenance and the subsequent work that arises from maintenance customers.  Despite market conditions, we expect this unit to grow in the current year and the service offering continues to be expanded, supported by further investment.

To increase the breadth of building services offered, the Group recently acquired further maintenance revenues with the acquisition in May 2009 of Delrac.  This transaction materially increased our recurring revenue base and brought to the Group further specialist engineering skills. 

MSS Southern will be the development platform for all of the Group's activities in the South, where the building services and installation spend is commensurately greater.  MSS Southern has a concentrated customer base in the South East, offering a broad range of building services, catering supply and maintenance services to hotels and other leisure properties.  We expect MSS Southern to be a focus for growth in the coming years. 

MSS Interiors focuses on commercial and retail fit out for a range of retailers and hotel groups.  The fortunes of MSS Interiors are inevitably linked to the strength of High Street spending and investment by retailers in site upgrades.  The exposure of this business to the economic downturn meant that costs had to be reduced substantially in the last quarter of the year, but the operation remains profitable, scalable and the core skills have been maintained. 

It is obviously disappointing that successful and detailed management actions in early 2008 were rewarded with the onset of a reduction in customer volumes, as a result of the current recession.  However, each trading unit now benefits from accounting controls, a monitored sales process and improved IT and delivery platforms.  These achievements will ensure that the Group can continue to trade satisfactorily during what is expected to be a difficult 2009. 

Liquidity 

It was vital for the new Board to preserve and maintain group liquidity during the period of management change and the funding of substantial restructuring.  

The first half of the year was the primary beneficiary. Outstanding contract completions and debtor issues were resolved generating good cash inflows.  In addition, in a well timed move, a surplus Group property was sold in August 2008 at a very satisfactory valuation.  The combination of these actions and a consistent focus on headcount and margin meant that core cash balances were preserved.  

Operating cashflow in the second half of the year has inevitably been lower due to seasonally reduced profitability.  In addition, substantial earn out and restructuring payments were made during the period as well as the payment of a material exit charge in respect of a surplus leased property.  These cash costs were only partly funded by operating cashflow and tax rebates arising from prior year losses.

The Group's surplus cash balances provided balance sheet certainty during the period of restructuring. These cash sums also give the Group an important advantage, during current times, when considering acquisitions.  However, the Board took the view that levels of cash in the range £6-7 million were not sufficient to generate the attention of vendors in respect of larger transactions.  

Further, the Board believes that in the current market circumstances, larger transactions could lead to commensurately greater returns for shareholders. 

Accordingly, to increase cash balances, in February 2009 a small, additional cash placing of shares was undertaken which raised approximately £5.6 million, after expenses, at 8 pence per share. 

The Board was particularly pleased to complete this share issue which represented an endorsement of the proposed acquisition strategy.

As a result, the Group now enjoys surplus cash balances of approximately £12 million and can therefore contemplate significant transactions supported, in the correct circumstances, with further funding from shareholders.

  Earn outs

The only remaining earn out payment which has not already been satisfied in full is an amount potentially due in respect of MSS Southern.  The Board estimates that the total payment, which will be made in cash, will be in the range £500,000-£700,000.  The payments, when agreed, are scheduled to be made in three instalments, the last of which is payable in December 2010.

It is possible that the Board will structure future acquisitions to incorporate deferred consideration, in order to ensure the continued commitment and co-operation of key vendors.

Legal

The Group has taken legal advice from Queen's Counsel in respect of certain matters relating to acquisitions made by the previous management team.

As a result of that advice the Board has instructed solicitors to serve a formal claim under the protocol provisions of the Civil Procedure Rules against HWCA Limited and HW Corporate Finance LLP.  HWCA Limited were the Group's auditors until November 2007.

The Board has taken steps with third parties such that legal redress can be pursued vigorously but without distracting management or incurring material cost.

Prospects

The year has started slowly and the Board does not expect any improvement in the markets in which the Group operates during 2009. As stated in the circular to shareholders dated 10 February 2009, adjusted operating profits will be lower in the current year.

However, with the benefit of enlarged cash balances, the Board is now able to review a broad range of acquisitions.  Potential transactions are being examined within the building services sector and in other markets where the Board's management experience is applicable.

In respect of larger transactions, the Group is able to offer target companies the prospect of a substantial cash injection as well as access to proven management.  In respect of smaller transactions, the Group's existing operating base is now capable of absorbing complementary businesses, whilst generating substantial cost savings.

It is to be hoped that in the next twelve months the scale and activity of the Group can be transformed, either by a substantial transaction or by undertaking a range of smaller acquisitions in related markets offering consolidation gains.  

Simon Beart

Chief Executive

FINANCIAL COMMENTARY

Results 

The results covered in this Report and Accounts relate to trading in the twelve months to 31 March 2009.

This year's results reflect the full benefits of the restructuring and cost saving actions taken by the new management team in late 2007 and early 2008.  Total revenue for the year was £26.3m, of which £16.3m was generated in the first half and £10m in the second half.  This reflects the natural seasonality of the business, but also the impact of the economic environment in which we operate, which worsened materially in late 2008.

The Group achieved a pleasing gross margin of 28 per cent. for the full year.  This figure reflects improved contract management in MSS Projects and the continued refocusing of the Group from lower margin, project based installation work, to higher margin maintenance and service revenues.

The Group's adjusted operating profit (before restructuring costs, amortisation of intangible assets, share based payment charges and the profit on sale of an asset held for sale) was £1.44m.  The statutory profit was £121,000.  The restructuring costs during the year relate to the one off costs incurred as a result of decisions made in late 2008 and early 2009 to make further headcount reductions and rationalise the range of services offered by the Group.  These steps were required to reflect the trading conditions and to continue the refocusing of the Group's activities on maintenance and service revenue, rather than project based work.  

The profit on the sale of assets held for sale was in respect of a property sold in August 2008.  Net cash proceeds were £1.3m.

Balance sheet 

The Group ended the year with substantial net cash balances of £12m and no debt.  The Group's net assets have increased from £5.9m to £12.1m as a result of trading during the year and the new equity placing in February 2009, which raised net cash proceeds of £5.6m.  

Working capital fell significantly in the first half of the year as a result of improved measures to manage debtors and credit control procedures.  However, in the second half of the year working capital increased as a result of reduced supplier credit lines.  The Group has not suffered any material bad debts and debtor days have improved during the year from 52 to 42.  

Adjusted operating cash flow (before payment of restructuring costs) was £1.1m.  Restructuring costs paid during the period of £1.7m comprised the payment of onerous leases and lease terminations of £0.7m, redundancy costs of £0.6m and professional and legal fees in relation to the actions of previous management, £0.4m.  The adjusted operating cash flow reflects a cash conversion ratio to adjusted operating profit of 76 per cent.

At 31 March 2008 total provisions were £2.34m.  These provisions have now fallen to £0.77m (being onerous leases £0.55m and legal fees £0.22m).  The cash cost of these remaining provisions is expected to be approximately £0.4m in the next twelve months with the remaining balance payable over the next four years.

Acquisitions, deferred consideration 

The provision for deferred consideration has fallen from £2.12m last year to £0.7m at 31 March 2009 as a result of the repayment of loan notes of £675,000, and other negotiated deferred consideration payments of £750,000.  

The remaining balance as at 31 March 2009 is an estimated provision of £700,000.  This figure represents the maximum potential figure, negotiations are continuing with the vendor.  The final amount, when agreed, will be paid as to 30 per cent. in the year to 31 March 2010 and the remaining balance in the year to March 2011.

Since the year end, on 1 May 2009, the Group acquired Delrac Services Ltd a London based air conditioning maintenance and service company.  This business has been merged with MSS Southern.

Court reconstruction 

At an Extraordinary General Meeting in July 2008, resolutions were passed to reorganise the parent company's reserves, resulting in the cancellation of the brought forward losses at the date of the Court approval.  This approval was received in late September 2008.  As at 31 March 2009, the parent company had distributable reserves of £1.2m which will be available for the payment of dividends, if considered appropriate.

Tax

No taxation charge has been provided in the year in respect of trading during the period since the Group enjoys significant tax losses carried forward, which have been partially used in the year.  The tax credit arising during the year represents the tax refunds received in cash during the year, in excess of the tax debtor brought forward.

Piers Wilson 

Group Finance Director 

Consolidated Income Statement
for the year ended 31 March 2009
			Year ended				Six months ended
	Note		31 March 2009				31 March 2008
			£'000				£'000
Revenue			26,285				16,440
Cost of sales			(18,899)				(13,586)
GROSS PROFIT			7,386				2,854
Administrative expenses before items identified below			(5,943)				(6,251)
OPERATING PROFIT / (LOSS) BEFORE ITEMS
IDENTIFIED BELOW			1,443				(3,397)
Restructuring of activities			(865)				(2,489)
Amortisation of intangible assets			(812)				(334)
Increase in share based payment reserve			(432)				(213)
Other operating income			-				61
Impairment of goodwill			-				(2,731)
Gain on sale of asset held for sale			292				-
OPERATING LOSS			(374)				(9,103)
Financial income			226				234
Financial expenses			(23)				(37)
LOSS BEFORE TAX			(171)				(8,906)
Income tax	2		292				-
PROFIT/(LOSS) FOR THE PERIOD			121				(8,906)
BASIC PROFIT/(LOSS) PER SHARE (pence)	1		0.13				(9.93)
DILUTED PROFIT/(LOSS) PER SHARE (pence)	1		0.12				(9.93)
All profits are derived from continuing operations

Consolidated statement of changes in equity
for the year ended 31 March 2009
			Year ended			Six months ended
			31 March 2009			31 March 2008
			£'000			£'000
At beginning of period			5,858			13,876
Profit/(loss) for the financial period			121			(8,906)
Issue of share capital			750			32
(Decrease)/Increase in merger reserve			(4,163)			643
Increase in share based payments reserve			432			213
Transfer to retained earnings			55,332			-
Increase in special reserve			4,647			-
Decrease in share premium account			(50,917)			-
AT END OF PERIOD			12,060			5,858
Equity comprises share capital, share premium, merger reserve, share based payments reserve, special reserve and retained profit.
Company statement of changes in equity
for the year ended 31 March 2009
				Year ended		Six months ended
				31 March 2009		31 March 2008
				£'000		£'000
At beginning of period				9,285		10,566
Loss for the financial period				(2,036)		(2,169)
Issue of share capital				750		32
(Decrease)/Increase in merger reserve				(4,163)		643
Increase in share based payments reserve				432		213
Transfer to retained earnings				55,332		-
Increase in special reserve				4,647		-
Decrease in share premium account				(50,917)		-
AT END OF PERIOD				13,330		9,285
Equity comprises share capital, share premium, merger reserve, share based payments reserve, special reserve and retained profit.

Audited Consolidated Balance Sheet
as at 31 March 2009
		Year ended		Six months ended
	Note	31 March 2009		31 March 2008
		£'000		£'000
NON CURRENT ASSETS
Goodwill		2,000		2,000
Other intangible assets		-		666
Property, plant and equipment		84		63
		2,084		2,729
CURRENT ASSETS
Work in progress	3	444		434
Trade and other receivables	4	3,270		5,393
Cash and cash equivalents		12,000		7,064
Assets held for sale		-		1,010
		15,714		13,901
TOTAL ASSETS		17,798		16,630
CURRENT LIABILITIES
Trade and other payables	5	(4,474)		(7,614)
Current tax liability		-		(87)
Obligations under finance leases		-		(34)
Provisions for liabilities	6	(448)		(1,214)
		(4,922)		(8,949)
NET CURRENT ASSETS		10,792		4,952
NON CURRENT LIABILITIES
Trade and other payables	5	(492)		(700)
Provisions for liabilities	6	(324)		(1,123)
		(816)		(1,823)
TOTAL LIABILITIES		(5,738)		(10,772)
NET ASSETS
		12,060		5,858
EQUITY
Share capital	7	1,652		902
Share premium account		4,899		55,816
Merger reserve		-		4,163
Special reserve		4,647		-
Share based payments reserve		886		454
Retained earnings		(24)		(55,477)
TOTAL EQUITY		12,060		5,858

Company Balance Sheet
as at 31 March 2009
		Year ended		Six months ended
	Note	31 March 2009		31 March 2008
		£'000		£'000
NON CURRENT ASSETS
Property, plant and equipment		-		-
Investments in subsidiaries		3,015		3,015
		3,015		3,015
CURRENT ASSETS
Trade and other receivables	4	1,260		2,185
Cash and cash equivalents		10,998		6,361
Assets held for sale		-		1,010
		12,258		9,556
TOTAL ASSETS		15,273		12,571
CURRENT LIABILITIES
Trade and other payables	5	(931)		(1,886)
Provisions for liabilities	6	(339)		(350)
		(1,270)		(2,236)
NET CURRENT ASSETS		14,003		10,335
NON CURRENT LIABILITIES
Trade and other payables	5	(490)		(700)
Provisions for liabilities	6	(183)		(350)
		(673)		(1,050)
TOTAL LIABILITIES		(1,943)		(3,286)
NET ASSETS		13,330		9,285
EQUITY
Share capital	7	1,652		902
Share premium account		4,899		55,816
Merger reserve		-		4,163
Special reserve		4,647		-
Share based payments reserve		886		454
Retained earnings		1,246		(52,050)
TOTAL EQUITY		13,330		9,285

Consolidated Cash Flow Statement
for the year ended 31 March 2009
		Year ended		Six months ended
	Note	31 March 2009		31 March 2008
		£'000		£'000
NET CASH FROM/(USED IN) OPERATING ACTIVITIES
BEFORE PAYMENT OF RESTRUCTURING COSTS	8	1,113		(3,680)
Restructuring cash costs		(1,699)		-
NET CASH USED IN OPERATING ACTIVITIES		(586)		(3,680)
INVESTING ACTIVITIES
Interest received		226		234
Proceeds from sale of assets held for sale		1,301		-
Proceeds on disposal of property, plant and equipment		5		114
Purchases of property, plant and equipment		(54)		(214)
Purchases of businesses		(1,571)		(850)
NET CASH USED IN INVESTING ACTIVITIES		(93)		(716)
FINANCING ACTIVITIES
Repayment of borrowings		-		(1,140)
Repayment of obligations under finance leases		(34)		(112)
Net proceeds of share issue		5,649		-
NET CASH FROM/(USED IN) FINANCING ACTIVITIES		5,615		(1,252)
NET INCREASE/(DECREASE) IN CASH		4,936		(5,648)
CASH AT THE BEGINNING OF PERIOD		7,064		12,712
CASH AT THE END OF THE PERIOD		12,000		7,064

  1.    PROFIT(LOSS) PER SHARE 

The calculation of basic and diluted profit/(loss) per share is based on the following data:
										Year ended		Six months ended
										31 March		31 March
										2009		2008
										£'000		£'000
Profit/(loss)
Profit/(loss) for the purposes and basic and diluted earnings per share										121		(8,906)
Number of shares
Weighted average number of shares for the purposes
of basic earnings per share										96,453,976		89,661,578
Potentially dilutive ordinary shares										6,511,800		-
Weighted average number of shares for the purposes
of diluted earnings per share										102,965,776		89,661,578
Profit/(loss) per share
Basic profit/(loss) per share (pence)										0.13p		(9.93)p
Diluted profit/(loss) per share (pence)										0.12p		(9.93)p
ADJUSTED PROFIT/(LOSS) PER SHARE
Profit/(loss) as above										121		(8,906)
Restructuring of activities										865		2,489
Amortisation of intangible assets										812		334
Increase in share based payment reserve										432		213
Other operating income										-		(61)
Impairment of goodwill										-		2,731
Gain on sale of asset held for sale										(292)		-
Tax effect of items above (at 30%)										(545)		(1,712)
Profit/(loss) for the purposes of adjusted basic and
diluted earnings per share										1,393		(4,912)
Adjusted basic profit/(loss) per share (pence)										1.44p		(5.48)p
Adjusted diluted profit/(loss) per share (pence)										1.35p		(5.48)p

  2.      TAX

			Year ended		Six months ended
			31 March		31 March
			2009		2008
			£'000		£'000
Analysis of tax credit in the year:
Current taxation
United Kingdom credit			292		-
			292		-
On 1 April 2008, the standard rate of corporation tax in the United Kingdom changed form 30% to 28%. The standard rate for the year is therefore 28% (2008: 30%). The actual tax credit for the year differs from the standard for the reasons set out in the following reconciliation:
			Year ended		Six months ended
			31 March		31 March
			2009		2008
			£'000		£'000
Loss on ordinary activities before tax			(171)		(8,906)
Loss on ordinary activities multiplied by the standard rate of corporation tax			(48)		(2,672)
Effects of:
Deferred tax not recognised on losses carried forward			-		1,252
Share based payments charge not deductible			-		64
Expenses not deductible for tax purposes			445		1,290
Timing differences between capital allowances and depreciation			(88)		66
Short term timing differences			103		-
Brought forward losses utilised			(331)		-
Capital loss			(81)		-
Adjustment in respect of prior period			292		-
Current tax credit based on loss for the year			292		-
Deferred Tax
No deferred tax asset is recognised in respect of losses brought forward at a tax written down value of £4,091,000 (2008: £3,472,000). The asset is not recognised as there is insufficient certainty that sufficient taxable profits will arise within the next 12 months.

3.      WORK IN PROGRESS

			Group
			2009		2008
			£'000		£'000
Work in progress			444		634
Less provision			-		(200)
			444		434

4.      TRADE AND OTHER RECEIVABLES 

				Group									Company
				2009			2008						2009								2008
				£'000			£'000						£'000								£'000
Amounts receivable for the sale of goods				3,087			5,850						-								-
Allowance for doubtful debts				(338)			(1,162)						-								-
				2,749			4,688						-								-
Amounts due from Group undertakings				-			-						1,181								2,115
Other debtors				156			117						6								11
Prepayments				286			233						73								59
Corporation tax				79			355						-								-
				3,270			5,393						1,260								2,185
The average credit period taken on sale of goods is 42 days (2008: 52 days). The provision for estimated irrecoverable amounts from the sale of goods was £338,000 (2008: £1,162,000). In determining the recoverability of trade receivables, the Group considers any change in the credit quality of the trade receivable from the date credit was initially granted up to the reporting date. The Group has no significant concentration of credit risk, with exposure spread over a large number of counterparties and customers. Accordingly, the Directors believe that there is no further credit risk provision required in excess of the allowance for doubtful receivables.
The age of financial assets past due but not impaired is as follows:									Group
									2009											2008
									£'000											£'000
More than three months but not more than six months									59											-
									59											-
All financial assets past due and impaired are between three and twelve months.
									Group
									2009									2008
Movement in the allowance for doubtful debts									£'000									£'000
Balance at the beginning of the period									1,162									1,620
Amount provided for in period									184									303
Amounts written off as uncollectable									(1,008)									(150)
Amounts recovered during the period									-									(611)
Balance at the period end									338									1,162
The Directors consider that the carrying value of trade and other receivables approximates to their fair value.
In respect of the Company, the carrying value of amounts due from subsidiaries approximates to their fair values. There are no other receivables.

5.      TRADE AND OTHER PAYABLES

		Group				Company
		2009		2008		2009		2008
		£'000		£'000		£'000		£'000
Trade creditors		2,514		3,481		160		228
Amounts owed to group undertakings		-		-		270		-
Social security and other taxes		95		558		-		-
Other creditors		1,338		2,176		841		2,136
Accruals and deferred income		1,019		2,099		150		222
		4,966		8,314		1,421		2,586
Split as:
Non current liabilities		492		700		490		700
Current liabilities		4,474		7,614		931		1,886
		4,966		8,314		1,421		2,586
Trade creditors and accruals principally comprise amounts outstanding for trade purchases and ongoing costs. The average credit period taken for trade purchases is 52 days (2008: 88 days)
Included in other creditors is deferred and contingent purchase consideration for acquisition of £700,000 (2008: £2,124,750). The Directors consider that the carrying amount of trade payables approximates to their fair value.

6.      PROVISIONS FOR LIABILITIES

				Loss
		Onerous		making		Legal
		leases		contracts		costs		Total
		£'000		£'000		£'000		£'000
Group
Balance at 1 October 2007		-		757		700		1,457
Additional provision in the period		987		268		-		1,255
Utilisation of provision		-		(375)		-		(375)
Balance at 31 March 2008		987		650		700		2,337
Additional provision in the period		250		-		-		250
Utilisation of provision		(686)		(650)		(479)		(1,815)
Balance at 31 March 2009		551		-		221		772
Included in current liabilities								448
Included in non-current liabilities								324
								772
Company
Balance at 1 October 2007		-		757		700		1,457
Transfer of provision in the period		-		(757)		-		(757)
Balance at 31 March 2008		-		-		700		700
Transfer of provision in the period		728		-		-		728
Utilisation of provision		(427)		-		(479)		(906)
Balance at 31 March 2009		301		-		221		522
Included in current liabilities								339
Included in non-current liabilities								183
								522
The onerous lease provision relates to leases to which the Group is committed but for which no future benefit through usage is expected. The provision is expected to be fully utilised over the next four years.
The loss making contracts provisions related to contracts in respect of which further costs were required to remediate or complete work and the Group was unlikely to recover these costs from the client.
The legal costs provision relates to work commenced to start proceedings against certain parties in relation to accounting irregularities in prior periods. These costs are expected to be incurred in the next twelve months.

7.      SHARE CAPITAL

							31 March		31 March
							2009		2008
							£'000		£'000
Authorised
250,000,000 ordinary shares of 1p each (2008: 115,000,000 ordinary shares of 1p each)							2,500		1,150
Issued and fully paid
165,203,976 ordinary shares of 1p each (2008: 90,203,976)							1,652		902
On 26 February 2009 the authorised share capital of the Company was increased by £1,350,000. Between 27 February 2009 and 2 March 2009, 75,000,000 new ordinary shares were placed at 8 pence per share.

8.      NOTES TO THE CASH FLOW STATEMENT 

						Group					Company
						2009			2008		2009		2008
						£'000			£'000		£'000		£'000
Operating loss from continuing activities						(374)			(9,103)		(2,235)		(2,360)
Adjustments for:
Depreciation of property, plant and equipment						4			458		-		10
Amortisation of intangible assets						812			334		-		-
Impairment of goodwill						-			2,731		-		-
Impairment of investments						-			-		-		3,175
Share based payments						432			213		432		213
(Profit)/loss on disposal of property,    plant and equipment				(267)					170		(291)		-
Operating cash flows before movement in working capital				607					(5,197)		(2,094)		1,038
(Increase)/decrease in work in progress					(10)				1,460		-		548
Decrease in receivables					2,123				2,964		925		3,190
(Decrease)/increase in payables					(2,268)				(2,300)		1,311		(4,510)
Decrease in provisions					(1,565)				-		(906)		-
Decrease in net intercompany					-				-		(323)		(3,241)
Cash utilised by operations					(1,113)				(3,073)		(1,087)		(2,975)
Income taxes received/(paid)					550				(570)		-		-
Interest paid					(23)				(37)		-		(21)
Net cash flow from operating activities					(586)				(3,680)		(1,087)		(2,996)
Restructuring costs paid in period					1,699				-		-		-
Net cash flow from operating activities before payment of restructuring costs					1,113				(3,680)		(1,087)		(2,996)
Restructuring costs paid during the year comprised onerous lease payments and lease settlements (£0.7m); redundancy costs (£0.6m) and legal and professional fees (£0.4m)
Cash and cash equivalents (which are presented as a single class of asset on the face of the balance sheet) comprise cash at bank and other short term, highly liquid investments with a maturity of three months or less.

9.     POST BALANCE SHEET EVENT 

      On 1 May 2009, MSS Southern Limited acquired 100% of the share capital of Delrac Services Limited.

    10.     The accounting policies adopted in the preparation of this audited preliminary announcement are consistent with those 
              set out in the audited Group financial statements for the twelve months ended 31 March 2009.  This financial information
              does not  constitute the Company's Statutory Accounts.

    The Statutory Accounts for the twelve months ended 31 March 2009 will be delivered to the Registrar of Companies in due    
   course.

    It is intended to post the Annual Report to shareholders before the end of June 2009, copies of this report will be available
   from the Company Secretary at One Crown Square, Church Street East, Woking, Surrey. GU21 6HR and from the Company's 
   website www.mssplc.com. 

   This announcement was approved by the Directors on 12 June 2009.

 

END

 

 

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