25 May 2012

MSS issues profit warning

10/03/2011 Miles Nolan

Weaker than expected trading has forced Managed Support Services (MSS) to issue a profit warning. The AIM listed counter blames poor trading in December and January (though often poor months) as well as churn within its existing contract bas. Moreover the recent contract wins secured with Thomas Cook and Co-op are taking slower than hoped to ramp up.

The acquisition of Environmental Control Services last year has performed as expected and will now merge with the rest of the MSS operations in the South of England. Though due to complete the integration process will lead to exceptional costs of £350,000 and the managing director has left the group. In an interview with Growth Company Investor chief executive Simon Beart said 'we are driving through operational efficiencies and the business is still growing but recent trading has been disappointing.

House broker Cenkos has shaved its 2011 forecasts following the news. Sales will now be £3 million less than hoped at £26.5 million and pre-tax profit estimates have now halved to £1.1 million. The shares have slumped 25 per cent to 3.875p today which equates to just four times 2012 earnings. Once known as Worthington Nicholls sentiment has clearly taken a hit but Beart is an experienced operator, so at current levels MSS looks oversold.

Tags: AIM market, Cenkos, Penny shares, Profit warning, Simon Beart

Sector: Support Services

Companies: Managed Support Services

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