Final Results

RNS Number : 5608O
Managed Support Services PLC
01 July 2010
 



 

 

FOR IMMEDIATE RELEASE                               

                                                                                                                                    1 July 2010

Managed Support Services plc

 

PRELIMINARY RESULTS FOR THE TWELVE MONTHS ENDED 31 MARCH 2010

Managed Support Services plc ("MSS") announces its preliminary results for the year ended 31 March 2010.

KEY HIGHLIGHTS

 

·          Group now trading profitably following losses incurred in the year to March 2010

 

·          Jamie Reynolds appointed to Main Board

 

·          New operational management team

 

·          Recent acquisitions performing well

 

·          Strong balance sheet

 

·          Legacy issues from original Group resolved

 

 

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

 

"The new team has achieved a great deal in a short time.  We are now profitable with a strong platform and we expect rapid growth both organically and by acquisition."

 

 

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

020 7397 8900

         Stephen Keys


Buchanan Communications:


         Richard Darby

020 7466 5000

         Nicola Cronk


 

Notes to editors

 

Managed Support Services plc is one of the UK's leading suppliers of compliance and technical building services.  The Company provides compliance services, fabric and building maintenance, and ongoing servicing of commercial properties.  MSS operates in a range of diverse markets with clients in commercial property, hotels and retail buildings.  Further information is obtainable from www.mssplc.com.



 

 

CHIEF EXECUTIVE'S REVIEW

 

Overview

 

The trading performance of the Group during the first nine months of the year reflected the further retrenchment required by the recession, the effects of which became clear in mid 2009.  However, this is more than balanced by the successful acquisition strategy undertaken in the last quarter of the year, including the recruitment of a high profile management team with proven expertise in the Building Services market.

 

The Group did examine other markets, but whilst considerable effort was undertaken during the year to identify a suitable, substantial transaction, no such opportunity was available at a reasonable price.  Accordingly, the Board elected to develop further in the Building Services market, having identified the availability of a management team to lead the consolidation process. 

 

It is pleasing to note that following a period of intense management activity, the year ended with the new teams in place and all units trading profitably.  The costs of achieving this turnaround have been substantial and many of the payments required were in cash, but the Group has entered the new year operating from a well invested platform and with a much improved offering for customers.

 

Trading

 

The interim results for the first half of the year showed a greatly reduced turnover and operating losses following a promising period of profitability in the prior year.  This trend continued with full year turnover reducing to £15.3 million compared to the prior year of £26.3 million.  Operating losses also continued. 

 

These figures do not however, contain the annualised contribution from the acquisitions made in the last quarter.  Furthermore, underlying turnover, on a full year basis is now running at approximately the same rate as the year ending March 2009, being some £26 million, but with a superior mix of businesses and operations. 

 

The substantial restructuring charges and closure costs of £1.8 million were incurred as our previously profitable projects operation and parts of our London based catering services activities witnessed severe declines in turnover.  To an extent this reduction in activity was driven by Group actions since management was not prepared to compete in markets where margins were contracting sharply, coupled with increased credit risk.  The Group effectively withdrew from any material projects related activity and this led to the closure of the related subsidiary, MSS Projects Ltd, after incurring trading losses.

 

The Group is prepared to manage projects, but only on behalf of key Group customers, on a direct basis, where the terms of trade and risk are acceptable.  It is important to offer a full service to customers but the business model of pursuing new business in the wider projects market has been halted.

 

The emphasis of the Group for the future is to maximise the delivery of recurring services where possible, whilst enjoying a direct relationship with the customer. 

 

In order to manage our service delivery profitably and efficiently, considerable infrastructure investment was made during the year, in addition to the costs of restructuring the legacy assets.  This substantial investment included software, re-branding and the consolidation of customer helpdesks.  This has helped to create a competitive platform from which we will be able to deliver much greater business volumes than are currently being enjoyed.  The new management team have considerable experience in developing and successfully managing our customer services model. 

 

This restructuring process, involving the rationalisation of the activities of several offices and reporting lines took place during the final quarter.  The benefits of these actions are being reflected in current trading. 

 

 

 

Acquisitions

 

The most important acquisition during the year was the purchase of the Status Building Services Group for consideration of £3.7 million in cash.  Annual revenue at the time of acquisition was approximately £8 million of which some 50 per cent. comprised contracted maintenance revenues.  The acquired customer base is primarily based in London and the South East.

 

Following this purchase it became possible to rationalise the other Groupwide maintenance activities that were previously being conducted in separate locations across the UK.  This consolidation of activities has led to better monitoring and performance, as well as cost efficiencies.

 

The Group sales activity was also rationalised as a result of the merger of our national maintenance activities and we now have sales teams operating throughout the UK with clear reporting lines. 

 

In December 2009, we also acquired certain assets and liabilities of Workplace Engineering, a subsidiary of the quoted Johnson Service Group plc.  Whilst the consideration for this acquisition was modest, at an anticipated £230,000 acquired revenue was approximately £2 million.  We anticipate competitive levels of profitability now that the underlying contracts have been rationalised and absorbed into our existing operations and management structure.  This acquisition brought with it important relationships with substantial customers and we hope these represent a further development opportunity.

 

The most recent acquisition of Data Sound Limited was made very shortly after the year end on 15 April 2010, for a net cash consideration of £2.8 million all of which was satisfied at completion.

 

Data Sound is a long established provider of Health & Safety consultancy to a broad range of customers and the majority of its income is based on multi year contracts in exchange for which Data Sound provides comprehensive risk management consultancy. 

 

The business has since been integrated into the Group and the administrative functions have been moved to our low cost London office.  The former premises have been vacated at nominal cost.

 

The continuing management team at Data Sound, which has now been renamed MSS Health & Safety Limited is highly experienced.  The consultant teams have also been with the company for many years.

 

We intend to invest further in this market in order to grow sales and we also expect that there will be useful opportunities for selling the Group products across the enlarged customer base.

 

Finally, in the year to March 2011, we are investing in a start up operation in order to self deliver water treatment and related Environmental Compliance services, which we currently outsource to other suppliers.  We believe this function is a key part of our offering and therefore operationally and economically should not be outsourced on a wholesale basis.  We are making an investment in a new team and we expect, after modest start up losses, that this unit will make a positive contribution to EBIT by the last quarter of the current fiscal year.  Thereafter, in future years, we expect rapid growth and the management team has been incentivised with the prospect of a capital payment in the event that the unit achieves certain operating profit targets.

 

Group strategy

 

The Group has now built the basic platform from which to expand.  We have a national footprint for the delivery of higher value M&E services, fabric maintenance and the delivery of an increasing range of specialist services through our Environmental Compliance unit.  We have also acquired a secure platform from which to offer existing and new Group customers an outsourced Health & Safety Compliance solution. 

  

We will continue to monitor the opportunities for acquisitions in these core areas and with a strong balance sheet we would expect to be in a position to make additional acquisitions using the company's own resources.

 

The legacy issues relating to the original Group have been fully addressed.  The property obligations have reduced materially, only one small legacy earn out payment remains and following the further disappointing headcount reductions in the year to March 2010, we do not expect to incur additional rationalisation costs.

 

The Group is now dedicated to growing a material presence in the specialist Building Services market.  We intend to remain within the more skilled, higher margin areas where delivery is complex and barriers to entry are higher. 

 

The Group is unlikely therefore to pursue the concept of Total Facilities Management since this requires the delivery and management of a range of low value added services such as cleaning which are largely commoditised and seen as of limited strategic interest by most customers.  Instead, it is the intention that the Group should focus on technical Building Services and the related Environmental Compliance and Health and Safety needs of the customer base.  

 

We believe this marketplace is fragmented and characterised by a multitude of small to medium sized enterprises, many of which are struggling to grow due to issues of credibility with customers and the financial challenges of managing growth in a very difficult market.  This creates opportunity for experienced management. 

 

Prospects

 

The period of rationalisation and reorganisation during the last quarter of last year has produced a simplified and cost efficient Group structure.  As a result, it is a pleasure to report that profitable trading has been re-established and whilst it is very early in the year, we would expect the first quarter to be in line with management expectations. 

 

Growth in current markets is obviously a challenge but we have a broad range of Building Services revenue streams, much of it recurring, negligible exposure to Government spending and a large sales force, supported by a strong balance sheet and a clear strategy. 

 

The Board therefore expects that the current trading year will see the Group emerge as a profitable and successful provider of technical Building Services.

 

 

 

 

Simon Beart

Chief Executive

 

 

 

 


 

 

FINANCIAL COMMENTARY

 

Results

 

This year's results reflect the very difficult trading environment experienced in 2009, together with the significant costs of exiting the MSS Projects Ltd business and restructuring our operations following the acquisition of the Status Building Services Group in December. 

 

Revenue for the year was £15.3m, a reduction of £11m from the prior year figure of £26.3m.  This decline in revenue was a result of the decision during the year to close MSS Projects Ltd and cease accepting long term projects from non maintenance customers.  

 

The Group achieved a gross margin of 24 per cent. for the full year.  This was an improvement on the 22 per cent. achieved at the half year but significantly short of the Group target.  The gross margin will improve materially in 2010 as the mix of revenue improves.  The Group's adjusted operating loss (before restructuring and closure costs, amortisation of intangible assets, share based payment charges and impairment of goodwill) was £1.68m.  The statutory operating loss was £4.85m. 

 

The non recurring restructuring costs during the year relate to the one off costs of the closure of MSS Projects Ltd, the related impairment of goodwill and the costs incurred in order to restructure and reorganise the Group following the acquisition of the Status Building Services Group in December 2009.

 

Balance sheet and cash flow

 

The Group ended the year with net cash balances of £3.9m and net assets of £7.6m.  

 

Total working capital increased during the year as a result of acquisitions, delays in certain customer payments and provision usage.  At year end Group debtor days increased to 48 from 42 last year.  

 

The level of provisions to fund onerous leases and legacy legal issues has fallen in the year from £772,000 to £266,000.  The onerous lease provision is in respect of three leases, one of which has been surrendered post year end and another has expired in June 2010.  The remaining property has a break option in 2012 which has been exercised.  All costs are fully provided to that date.  

 

Adjusted operating cash flow (before payment of restructuring and closure cash costs) was £1.77m.  Restructuring and closure costs paid during the period totalled £2.14m of which £1.4m (2009: £nil) related to the closure of MSS Projects Ltd.

 

Capital expenditure in the year was £270,000 of which £259,000 was invested in IT equipment and the development of the new IT platform, call centre and related systems.  This investment will improve the management of contracts and enable better utilisation and productivity of mobile engineers. 

 

Acquisitions and deferred consideration

 

The Group made three acquisitions in the year with total cash consideration including fees of £4.2m.  Additional deferred consideration in respect of these acquisitions of £0.8m is due to be paid in 2010.

 

The three acquisitions resulted in the recognition at year end of an intangible asset (customer relationships) of £2.3m and goodwill of £3m.  The intangible asset is being amortised over a period of six years.

 

The provision for deferred consideration has increased to £1.3m at 31 March 2010 from £0.7m last year as a result of the additional £0.8m related to new acquisitions, less payments made of £0.2m.

  

Since the year end, the Group has acquired Data Sound Ltd, a London based Health and Safety consulting business for cash consideration of £2.8m.

 

MSS Building Services Ltd

 

MSS Building Services Ltd was created in 2009 prior to the acquisition of the Status Building Services Group.  Following a Group reorganisation on 31 March 2010, MSS Building Services is now the main trading business within the Group.  In order to incentivise the new senior operational management of the Group in a tax efficient structure, certain senior employees including Jamie Reynolds, acquired, for cash, 5 per cent. of the ordinary equity of MSS Building Services Ltd.

 

Bank facilities

 

Since the year end the Group has agreed a new working capital facility with Lloyds Banking Group, the Group's bankers.

 

Going concern

 

In determining that the Group's results can be presented on a going concern basis the Directors have considered all relevant factors including forecast cash flows, borrowing facilities and risks related to its business activities.  The full benefits of the restructuring and closure costs incurred in the year to March 2010 are expected to be realised in the year to March 2011 and the Group Budget indicates operating profits and positive operating cash flow in this period.  Having considered all these factors the Directors are satisfied that the Group has sufficient resources to enable it to continue to trade for at least twelve months from the date of signing the financial statements.  Accordingly the financial statements have been prepared on a going concern basis. 

 

Tax

 

No taxation charge or deferred tax asset has been provided in the year in respect of trading during the period.  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.  During the year the Group reached agreement with HMRC as to the quantum of losses transferred to MSS Building Services Ltd and the basis upon which these losses could be applied to future profits.  The Directors believe this will allow the Group to pay minimal cash taxes for the next several years, however, to be prudent no deferred tax asset has been recorded as at 31 March 2010.

 

 

 

 

Piers Wilson

Group Finance Director

 



 






Consolidated Income Statement

for the year ended 31 March 2010







Year ended


Year ended


Note

31 March 2010


31 March 2009



£'000


£'000






Revenue


15,318


26,285

Cost of sales


(11,598)


(18,899)

GROSS PROFIT


3,720


7,386






Administrative expenses before items identified below


(5,400)


(5,943)






OPERATING (LOSS) / PROFIT BEFORE ITEMS





IDENTIFIED BELOW


(1,680)


1,443






   Restructuring of activities


(573)


(865)

   Closure costs of MSS Projects Limited


(1,229)


                   -

   Amortisation of intangible assets


(136)


(812)

   Impairment of goodwill


(1,000)


                   -

   Increase in share based payment reserve


(334)


(432)

   Gain on sale of asset held for sale


                   -


292






OPERATING LOSS


(4,952)


(374)






Financial income


54


226

Financial expenses


(3)


(23)

LOSS BEFORE TAX


(4,901)


(171)






Income tax

2

50


292






(LOSS) / PROFIT FOR THE PERIOD


(4,851)


121











 

 





BASIC (LOSS) / PROFIT PER SHARE (pence)

1

(2.94)


0.13






DILUTED (LOSS) / PROFIT PER SHARE (pence)

1

(2.94)


0.12






All results are derived from continuing operations.





















 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consolidated statement of changes in equity





for the year ended 31 March 2010





 



Year ended


Year ended



31 March 2010


31 March 2009



£'000


£'000






At beginning of period


12,060


5,858

(Loss)/profit for the financial period


(4,851)


121

Issue of share capital


-


750

Decrease in merger reserve


-


(4,163)

Increase in share based payments reserve


334


432

Transfer to retained earnings


-


55,332

Increase in special reserve


-


4,647

Decrease in share premium account


-


(50,917)

Issue of shares to minority shareholders


 25


 -






AT END OF PERIOD


7,568


12,060











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 2010












Year ended


Year ended



31 March 2010


31 March 2009



£'000


£'000






At beginning of period


13,330


9,285

Loss for the financial period


(2,126)


(2,036)

Issue of share capital


-


750

Decrease in merger reserve


-


(4,163)

Increase in share based payments reserve


334


432

Transfer to retained earnings


-


55,332

Increase in special reserve


-


4,647

Decrease in share premium account


-


(50,917)






AT END OF PERIOD


11,538


13,330






Equity comprises share capital, share premium, merger reserve, share based payments reserve, special reserve and retained profit.

 

 

 

 

 

 

 

 

 

 

 

 

 

Consolidated Balance Sheet





as at 31 March 2010







Year ended


Year ended


Note

31 March 2010


31 March

2009



£'000


£'000

NON CURRENT ASSETS





Goodwill


4,000


2,000

Other intangible assets


2,165


                   -

Property, plant and equipment


495


84



6,660


2,084

CURRENT ASSETS





Work in progress


205


444

Trade and other receivables

3

3,885


3,270

Cash and cash equivalents


4,135


12,000

Assets held for sale


180


                   -



8,405


15,714






TOTAL ASSETS


15,065


17,798






CURRENT LIABILITIES





Trade and other payables

4

(6,847)


(4,474)

Short term borrowings


(177)


                   -

Current tax liability


 (117)


                   -

Obligations under finance leases


(68)


                   -

Provisions for liabilities

5

(190)


(448)



(7,399)


(4,922)






NET CURRENT ASSETS


1,006


10,792






NON CURRENT LIABILITIES





Trade and other payables


                   -


(492)

Obligations under finance leases


(22)


                   -

Provisions for liabilities

5

(76)


(324)



(98)


(816)






TOTAL LIABILITIES


(7,497)


(5,738)






NET ASSETS


7,568


12,060






EQUITY





Share capital

6

1,652


1,652

Share premium account


4,899


4,899

Special reserve


4,647


4,647

Share based payments reserve


1,220


886

Retained earnings


(4,875)


(24)






Equity attributable to owners of the Company


7,543


12,060

Minority interest in subsidiary


25


                   -

TOTAL EQUITY


7,568


12,060






 

 

 

 

 

 

 

 

Company Balance Sheet





as at 31 March 2010







Year ended


Year ended


Note

31 March 2010


31 March

2009



£'000


£'000

NON CURRENT ASSETS





Investments in subsidiaries


475


3,015



475


3,015






CURRENT ASSETS





Trade and other receivables


8,612


1,260

Cash and cash equivalents


3,494


10,998



12,106


12,258






TOTAL ASSETS


12,581


15,273






CURRENT LIABILITIES





Trade and other payables


(903)


(931)

Provisions for liabilities


(140)


(339)



(1,043)


(1,270)






NET CURRENT ASSETS


11,063


10,988











NON CURRENT LIABILITIES





Trade and other payables


-


(490)

Provisions for liabilities


-


(183)



-


(673)






TOTAL LIABILITIES


(1,043)


(1,943)






NET ASSETS


11,538


13,330






EQUITY





Share capital

6

1,652


1,652

Share premium account


4,899


4,899

Special reserve


4,647


4,647

Share based payments reserve


1,220


886

Retained earnings


(880)


1,246

TOTAL EQUITY


11,538


13,330






 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consolidated Cash Flow Statement





for the year ended 31 March 2010







Year ended


Year ended


Note

31 March 2010


31 March

2009



£'000


£'000






NET CASH (USED IN) / FROM OPERATING ACTIVITIES





BEFORE PAYMENT OF RESTRUCTURING COSTS

7

(1,774)


1,113






Restructuring and closure cash costs


(2,137)


(1,699)






NET CASH USED IN OPERATING ACTIVITIES


(3,911)


(586)






INVESTING ACTIVITIES










Interest received


54


226

Proceeds from sale of assets held for sale


-


1,301

Proceeds on disposal of property, plant and equipment


9


5

Purchases of property, plant and equipment


(270)


(54)

Acquisition of businesses





     Cash paid (including acquisition costs)


(4,216)


-

     Cash acquired


710


-

     Deferred consideration payments


(234)


(1,571)

NET CASH USED IN INVESTING ACTIVITIES


(3,947)


(93)






FINANCING ACTIVITIES





Repayment of borrowings


(11)


-

Repayment of obligations under finance leases


(21)


(34)

Net proceeds of share issue in subsidiary


25


-

Net proceeds of share issue


-


5,649

NET CASH (USED IN) / FROM FINANCING ACTIVITIES


(7)


5,615





NET (DECREASE) / INCREASE IN CASH


(7,865)


4,936






CASH AT THE BEGINNING OF PERIOD


12,000


7,064






CASH AT THE END OF THE PERIOD


4,135


12,000






 

 



 

1.     (LOSS) / PROFIT PER SHARE

 









The calculation of basic and diluted (loss)/profit per share is based on the following data:
















2010


2009






£'000


£'000

(Loss) / profit








(Loss) / profit for the purposes and basic and diluted earnings per share

(4,851)


121









Number of shares








Weighted average number of shares for the purposes




of basic earnings per share

165,203,976


96,453,976

Potentially dilutive ordinary shares





n/a


6,511,800









Weighted average number of shares for the purposes




of diluted earnings per share

165,203,976


102,965,776









(Loss) / profit per share
















Basic (loss) / profit per share (pence)





(2.94)


0.13

Diluted (loss) / profit per share (pence)





(2.94)


0.12









ADJUSTED (LOSS) / PROFIT PER SHARE
















(Loss) / profit as above





(4,851)


121









  Restructuring of activities





573


865

  Amortisation of intangible assets





136


812

  Increase in share based payment reserve





334


432

  Closure costs of MSS Projects





1,229


-

  Impairment of goodwill





1,000


-

  Gain on sale of asset held for sale





-


               (292)

  Tax effect of items above at 28% (2009: 30%)





-


(545)









(Loss) / profit for the purposes of adjusted basic and




diluted earnings per share

(1,579)


1,393









Adjusted basic (loss) / profit per share (pence)





(0.96)


1.44

Adjusted diluted (loss) / profit per share (pence)





(0.96)


1.35









 

 

 

 



 

 

2.     TAX




Year ended


Year ended




31 March


31 March




2010


2009




£'000


£'000

Analysis of tax credit in the year:












Current taxation






United Kingdom credit



50


292




50


292







The standard rate of corporation tax for the year was 28% (2009: 28%).  The actual tax credit for the year differs from the standard rate for the reasons set out  in the following reconciliation:    

 




Year ended


Year ended




31 March


31 March




2010


2009




£'000


£'000







Loss on ordinary activities before tax



(4,901)


(171)







Loss on ordinary activities multiplied by the standard rate of corporation tax



(1,372)


(48)

Effects of:






Share based payments charge not deductible



94


-

Expenses not deductible for tax purposes



296


445

Timing differences between capital allowances

and depreciation



(4)


(88)

Short term timing differences



(38)


103

Brought forward losses utilised



-


(331)

Capital loss



-


(81)

Losses carried forward



1,024


-

Adjustment in respect of prior period



50


292

Tax credit based on loss for the year



50


292







Deferred Tax

 

No deferred tax asset is recognised in respect of losses carried forward at a tax written down value of £5.1m (2009: £4.1m).  The asset is not recognised as there is insufficient certainty that sufficient taxable profits will arise within the next 12 months against which to utilise the losses.

 

An asset would be recognised once it was reasonably certain that sufficient taxable profits would arise within the Group above the level of Group relief available in the year.

 

There are no significant deferred tax assets or liabilities relating to either capital allowances or short term timing differences in either the current year or prior year. 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3.     TRADE AND OTHER RECEIVABLES

 



Group


Company



2010


2009


2010


2009



£'000


£'000


£'000


£'000










Amounts receivable for the sale of goods


3,612


3,087


 -


 -

Allowance for doubtful debts


(296)


(338)


-


-



3,316


2,749


-


-










Amounts due from Group undertakings


-


-


8,591


1,181

Other debtors


113


156


6


6

Prepayments


454


286


15


73

Corporation tax


2


79


-


-



3,885


3,270


8,612


1,260










The average credit period taken on sale of goods is 48 days (2009: 42 days). The provision for estimated irrecoverable amounts from the sale of goods was £296,000 (2009: £338,000).  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.











 






Group






2010


2009

Movement in the allowance for doubtful debts





£'000


£'000









Balance at the beginning of the period





338


1,162

Acquired provision





57


-

Amount provided for in period





89


184

Amounts written off as uncollectable





(188)


(1,008)

Balance at the period end





296


338









The Directors consider that the carrying value of trade and other receivables approximates to their fair value.  The Group has £484,000 (2009: £338,000) of trade debtors that have exceeded their allowed credit period but no been provided for, all of which is 0 - 90 days overdue. 

 


 

 

 

 



 

4.     TRADE AND OTHER PAYABLES



Group


Company



2010


2009


2010


2009



£'000


£'000


£'000


£'000










Trade creditors


2,967


2,514


116


160

Amounts owed to group undertakings


       -


       -


-


270

Social security and other taxes


215


95


          -


          -

Deferred consideration


1,266


700


466


700

Other creditors


597


638


16


141

Deferred income


522


-


-


-

Accruals


1,280


1,019


305


150



6,847


4,966


903


1,421










Split as:









Non current liabilities


-


492


-


490

Current liabilities


6,847


4,474


903


931



6,847


4,966


903


1,421










Trade creditors and accruals principally comprise amounts outstanding for trade purchases and ongoing costs. The average credit period taken for trade purchases is 71 days (2009: 52 days)

 


5.     PROVISIONS FOR LIABILITIES










Onerous


Legal





leases


costs


Total



£'000


£'000


£'000

Group







Balance at 1 April 2008


        987


700


2,337

Additional provision in the period


250


           -


250

Transfer of provision


-


-


-

Utilisation of provision


(686)


(479)


(1,815)

Balance at 31 March 2009


551


221


772








Utilisation of provision


(272)


(159)


(431)

Additional provision in the period


75


           -


75

Release of provision


(150)


-


(150)

Balance at 31 March 2010


204


62


266








 

Included in current liabilities






190

Included in non current liabilities






76














266










 

 

5.     PROVISIONS FOR LIABILITIES (continued)

 










Onerous


Legal





leases


costs


Total



£'000


£'000


£'000

Company







Balance at 1 April 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








Utilisation of provision


(148)


 (159)


(307)

Additional provision in the period


75


-


75

Release of provision


(150)


-


(150)

Balance at 31 March 2010


78


62


140








 

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 three years.

 

The legal costs provision relates to work commenced in respect of proceedings against certain parties relating to accounting irregularities in prior periods.  These costs are expected to be incurred in the next six months

 

6.     SHARE CAPITAL








31 March


31 March








2010


2009








£'000


£'000

Authorised










250,000,000 ordinary shares of 1p each (2009: 250,000,000 ordinary shares of 1p each)



2,500


2,500











Issued and fully paid










165,203,976 ordinary shares of 1p each (2009: 165,203,976)





1,652


1,652











 

 



 

 

7.     NOTES TO THE CASH FLOW STATEMENT




Group


Company




2010


2009


2010


2009




£'000


£'000


£'000


£'000











Operating loss from continuing activities



(4,952)


(374)


(2,239)


(2,235)

Adjustments for:










   Depreciation of property, plant and equipment



101


4


          -


          -

   Amortisation of intangible assets



136


812


          -


          -

   Impairment of goodwill



1,000


-


          -


          -

   Impairment of investments



        -


 -


  2,000


          -

   Share based payments



334


432


334


432

   Profit on disposal of investments



-


-


(1,463)


-

   Loss / (profit) on disposal of property, plant

   and equipment



11


(267)


-


(291)











Operating cash flows before movement

in working capital



(3,370)


607


(1,368)


(2,094)











Decrease / (increase) in work in progress



267


(10)


          -


-

Decrease / (increase)  in receivables



1,908


2,123


(7,352)


925

(Decrease) / increase in payables



(2,323)


(2,268)


(306)


1,311

Decrease in provisions



(506)


 (1,565)


(457)


(906)

Decrease in net intercompany



        -


         -


-


(323)

Cash utilised by operations



(4,024)


(1,113)


(9,483)


(1,087)

Income taxes received



116


550


          -


             -

Interest paid



(3)


(23)


          -


-











Net cash flow from operating activities



(3,911)


(586)


(9,483)


(1,087)

Restructuring and closure costs paid in period



2,137


1,699


          -


              -











Net cash flow from operating activities

before payment of restructuring costs



(1,774)


1,113


(9,483)


(1,087)











Restructuring and closure costs paid during the year comprised MSS Projects Ltd closure costs £1.4m (2009: £nil); onerous lease payments and lease settlements £0.2m (2009: £0.7m); redundancy costs £0.2m (2009: £0.6m); legal and professional fees £0.1m (2009: £0.4m); and other £0.2m (2009: £nil)

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. 

 

8.     POST BALANCE SHEET EVENT

 

On 15 April 2010, the Group acquired 100% of the issued share capital of Data Sound Limited for cash consideration of £2.8m.

 

9.      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 year ended 31 March 2010. 

The financial information set out above does not constitute the company's statutory accounts for the years ended 31 March 2010 or 2009, but is derived from those accounts. Statutory accounts for 2009 have been delivered to the Registrar of Companies and those for 2010 will be delivered following the company's Annual General Meeting. The auditors have reported on those accounts; their reports were unqualified, did not draw attention to any matters by way of emphasis without qualifying their report and did not contain statements under s498(2) or (3) Companies Act 2006.

It is intended to post the Annual Report to shareholders in early July 2010, 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 30 June 2010.


This information is provided by RNS
The company news service from the London Stock Exchange
 
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