Managed Support Services

Managed Support Services (MSS), the acquisitive building and environmental compliance services provider, has clinched a major contract with The Co-operative Group.

The five-year deal will see MSS provide building services to 'The Co-op', with revenues from core maintenance services alone expected to top £1m per annum. MSS, focused on the commercial property, hotels and retail markets, also cheered with news of an encouraging pipeline of opportunities with other potential large corporates.

Less upbeat was an accompanying trading update, in which MSS conceded forthcoming half-year results will reflect ‘competitive conditions’ in its markets. Nevertheless, the AIM-quoted company said it was pleased by ‘progress on sales gains’ as well as the smooth integration of competitor Environmental Control Services (ECS), a profitable technical building services provider, operating mainly within the M25 region, recently purchased for £3.2m in cash and shares.

Despite the impact of the recession on its markets, MSS continues to emerge slowly from the ashes of the disaster that was Worthington Nicholls under a new management team, led by proven turnaround expert and CEO Simon Beart. Though MSS reported a widening in pre-tax losses from £171,000 to £4.9m for the year to March, on reduced turnover of £15.3m (2009: £26.3m), this reflected necessary restructuring costs and the company has now resolved legacy issues and is thought to be trading profitably.

With recent acquisitions, including the £3.7m purchase of Status Building Services, having increased its capabilities and boosted its scale, we would expect further lucrative contract wins from MSS over the coming months.

First recommended by Growth Company Investor at 10.25p in July 2009, we think the shares are well worth holding onto ahead of wider economic and share price recovery.