Kazera Global Regulatory News (KZG)

FOR IMMEDIATE RELEASE

10 March 2011

Managed Support Services plc

("MSS" or the "Group")

Year End Update

INTEGRATION AND RATIONALISATION

The Board is pleased to confirm that the recent acquisition of Environmental Control Services ("ECS") on 29 September 2010 has performed fully in line with expectations, both in terms of cash generation and profitability.

ECS has for many years enjoyed an enviable reputation for the quality of its engineering services.

Accordingly, the Board has decided to merge all the Group's operations based in the South of England with ECS in order that these combined activities can be managed by the ECS team. The rationalised unit will become the Southern unit of MSS Building Services, comprising a number of previous acquisitions.

The process of integration will be completed by 1 April 2011, including the rationalisation of operations, management structures and consolidation onto the Group's IT platform, Nucleus, which is specifically configured for the specialist Mechanical and Engineering and Building Services market.

The integration of these units will, however, incur exceptional costs of approximately £350,000, largely non cash, primarily relating to provisions to reduce the increased Work in Progress in the units to be integrated and redundancies.. These actions will generate cost savings.

The UK Managing Director operationally responsible for the relevant units is leaving the Group and will not be replaced.

The other acquisition made in the current year, MSS Health & Safety (formerly Data Sound Limited) has also performed well since acquisition, with particularly strong cash conversion in excess of 100 per cent. of operating profit. This relocated unit is now based in central London, has a high level of recurring revenues and will benefit from recently appointed, professional management. The unit is expected to enjoy revenue growth from the forthcoming release of the Compleye software product.

TRADING

In common with other competitors, the Group experienced very weak trading in December and January, notwithstanding that these months traditionally generate low activity. This was exacerbated by some contract losses in the smaller, regional accounts. February has seen some recovery in activity which the Board expects will continue in March. However, it is now clear that the Group's overall result for the year, before exceptional items, will be below market expectations, despite current run rates.

Full year turnover for the current year is expected to be approximately £26-£27 million. The annualised run rate of current monthly sales and the visibility of customer revenues confirm the Board's expectations that turnover for the year shortly to commence on 1 April 2011, will be between £35-£37 million. The majority of the turnover increase reflects the full year consolidation of ECS. The Board currently anticipates that EBITDA for the year to 31 March 2012 will be some 20% below current market forecasts as a result.

The Board expects operating margins to remain broadly stable for the forthcoming year but the Group has relatively high operational gearing and therefore the Board believes that operating profit is more sensitive to sales levels, rather than small margin movements.

To deliver a satisfactory return for the forthcoming year, further cost reductions are being undertaken and management efficiencies improved, following the departure of the UK Managing Director.

BALANCE SHEET

The Group entered the year with low levels of Net Working Capital ("NWC"), defined as the amount by which trade debtors exceed short term trade creditors. This reflected turnover for the prior year of only £15.3 million. Inevitably, given the increased activity levels, the Group's investment in NWC has increased materially and is currently some £3 million, of which approximately only £1.2 million arose from the consolidation of acquisitions.

Debtor days remain stable at approximately 56-60 days, but the Board believes it is prudent to target trade creditor levels at or below 40 days. Historically, creditor days at MSS have been managed to a much higher level with the average creditor period for purchases to 31 March 2010 being 71 days. The Board regards it as essential, in order to maintain margin and service levels to meet supplier payments promptly. This policy will also increase NWC.

The Group continues to enjoy excellent support from its bankers, Lloyds Bank plc with facilities that are capable of expansion as turnover rises, subject to the appropriate limits.

The Board will continue to invest in the supply chain as appropriate. As a result, core year end indebtedness is expected to be in the range of £2.5 - 3 million, reflecting continued creditor reduction during a period of growing turnover.

PROPOSED ISSUE OF CONVERTIBLE LOAN NOTES

The Board is keen to have continued flexibility in respect of working capital and the ability, when appropriate, to consider small acquisitions in order to exploit fully the operational base and enjoy the economies of scale arising from small acquisitions.

As a result, the Board is therefore proposing to issue Convertible Loan Notes with an initial nominal value of up to £500,000 ("Loan Notes"), in respect of which the Board has received investor support. The Directors propose to subscribe for no less than £130,000 of the Loan Notes. The Loan Notes will be issued subject to shareholder approval at a forthcoming General Meeting ("GM") which is expected to be held on 31 March. The resolutions to be proposed at the GM will include the appropriate authorities for the issue of the Loan Notes.

Details of the principal terms of the Loan Notes will be set out in the circular to be published and made available to shareholders shortly.

In summary, it is currently proposed that the Loan Notes will pay interest on the principal amount at 7 per cent. per annum payable half yearly. The appropriate conversion premium for the Loan Notes will be agreed in the near future and full details supplied to shareholders.

It is proposed that Loan Note holders will be entitled to require redemption of half their holding on 1 April 2013 or 1 April 2014.

In the event that the Loan Notes have not been converted or redeemed prior to 31 January 2015, the company will redeem the Loan Notes at par on that date.

The Board has received indicative interest from potential subscribers for the Loan Notes which would indicate a conversion price such that the conversion of the Loan Notes will not require the issue of more than approximately 5 per cent. of the currently issued ordinary share capital of 209,802,191 ordinary shares.

OUTLOOK

Despite poor recent trading and the need to deliver management change and improved internal disciplines, the Board believes that further strengthening of the balance sheet, the rationalisation of the Southern activities and the customer prospects across the Group will deliver improved profitability.

A great deal has been achieved in the current year. The Group should now enjoy the benefits of an effective IT platform, lower fixed costs, and growing customer revenues. The Board believes these attributes will continue to make MSS an attractive trade partner for customers as the Board looks to grow revenues substantially in the future.

FOR FURTHER INFORMATION, PLEASE CONTACT:

Notes to editors

Managed Support Services plc is a leading supplier of Environmental Compliance and technical Building Services. The Group provides a broad range of Environmental Compliance services and HVAC building maintenance services for commercial properties. MSS operates in a range of diverse markets with customers managing or owning commercial property, hotels and retail buildings. Further information is obtainable from www.mssplc.com.