MCS Security Services Limited reported a 63% revenue decline following the sale of its Security Business, yet improved its net loss and underlying EBITDA in FY25. The Traffic Business showed promising growth, while the company weighs capital management and potential divestments.
- 63% revenue decline to $14.5 million due to Security Business sale
- Net loss narrowed to $0.39 million from $0.81 million prior year
- Underlying EBITDA turned positive at $0.43 million
- Traffic Business revenue grew 36% with improved gross margins
- Company considering capital management and potential Traffic Business sale
Financial Overview and Impact of Divestment
MCS Security Services Limited’s latest preliminary final report for the year ended 30 June 2025 reveals a significant transformation in the company’s financial profile, largely shaped by the sale of its Security Business in June 2024. Revenue from ordinary activities fell sharply by 63% to $14.5 million, reflecting the divestment of a major segment. Despite this, the company managed to reduce its net loss to $0.39 million, an improvement from the $0.81 million loss recorded in the previous year.
Underlying earnings before interest, tax, depreciation, and amortisation (EBITDA) swung into positive territory with a surplus of $0.43 million, compared to a deficit of $1.2 million in 2024. This turnaround suggests operational improvements and cost discipline, even as the company navigates a smaller revenue base.
Traffic Business Performance and Growth Prospects
The Traffic Business, acquired in October 2022, emerged as the core driver of MCS’s current operations. It posted a 36% increase in revenue to $14.5 million and improved gross profit margins from 17% to 20%. The company has actively pursued new contracts through tender submissions and identified opportunities to enhance operational efficiencies and profitability.
This segment’s growth is a bright spot for MCS, offsetting the loss of the Security Business and providing a platform for future expansion or potential sale. The Traffic Business is currently classified as ‘Available for Sale’ in the financial statements, reflecting ongoing interest from third parties and the company’s openness to divestment options.
Strategic and Corporate Developments
Corporate overheads were carefully managed, including deferred director fees and the retrenchment of the CFO role in January 2025. The sale of the Security Business generated net proceeds of approximately $1.68 million, part of which was used to repay corporate debt, strengthening the balance sheet.
Leadership changes also marked the period, with former CEO Paul Simmons resigning after accepting a role with the buyer of the Security Business, though he remains on the board as a non-executive director. The company has not declared any dividends, citing the need to assess capital management strategies and business opportunities.
Financial Position and Outlook
MCS Security’s balance sheet shows net assets of $1.14 million and a slight increase in net tangible asset backing per share to 0.6 cents. Cash flow from operating activities was positive at $0.76 million, supported by proceeds from the Security Business sale and careful cost control.
However, the company’s financial statements carry a material uncertainty relating to going concern, reflecting ongoing risks and the need for strategic clarity. The audit process is underway, and finalization of sale accounts for the Security Business remains pending.
Looking ahead, MCS is at a crossroads, balancing growth in its Traffic Business with potential divestment and capital management decisions. Shareholders and market watchers will be keen to see how these strategic moves unfold and impact the company’s financial health and market position.
Bottom Line?
MCS Security’s FY25 results highlight a company reshaping itself post-divestment, with growth in traffic services offering hope amid financial uncertainties.
Questions in the middle?
- Will MCS proceed with the sale of its Traffic Business, and on what terms?
- How will the company address the going concern uncertainty in its upcoming audited accounts?
- What capital management strategies, including dividends or buybacks, will the board pursue next?