Managed Support Services to sue former auditor

MANAGED Support Services, the AIM-listed construction support services business today revealed plan to sue its former auditor.

The action, announced by MSS chief executive Simon Beart, relates to a number of acquisitions made by the company under its former name, Worthington Nicholls, and could be worth many millions of pounds if successful.

A statement said: “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.”

Mr Beart, who has led a major turnaround of the company since mounting a boardroom coup at the company in 2007 said: “This could take years, but it is something we felt we had to do given what we felt has taken place.”

The company has previously advised the City that the Serious Fraud Office was investigating the company’s accounts prior to its flotation in June 2006.

Turning to the trading performance, Surrey-based Mr Beart said today that MSS had had to take tough action to weather the recession. He said two thirds of the workforce had been made redundant in the last two years and a number of loss-making businesses had been closed.

“We have shrunk the business back to a profitable core and reduced activities in certain areas and we’ve made less money this year because the markets have been so tough.”

MSS employs around 25 people at its former HQ in Wilmslow, a quarter of its workforce. Its services inlcude construction fit out, maintenance, and installing and maintaining air conditioning units.  

In the year to March 31 MSS reported a turnover of £26.3m and and an adjusted profit before tax of £1.65m.Due to a change of year end, no comparable figures were available.

It said a successful placing raising had raised £5.6m in February and it now has cash balances of £12m. Exceptional costs of £865,000 were declared relating to redundancies and other restructuring.

Mr Beart added: “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.”