MCS Services Limited has reported a significantly reduced half-year loss and announced plans to sell its Highways Traffic subsidiary, aiming to strengthen its financial position amid ongoing challenges.
- Half-year net loss narrows to $215,101 from $786,835
- EBITDA improves to $63,711 from prior loss
- Conditional sale agreement for Highways Traffic to Altus Traffic
- Sale includes vehicle fleet, intellectual property, and client contracts
- Going concern uncertainty remains pending sale completion
Financial Performance Highlights
MCS Services Limited (ASX: MSG), a Western Australia-based traffic management company, has reported a marked improvement in its financial results for the half-year ended 31 December 2025. The company narrowed its net loss after tax to $215,101, a significant reduction from the $786,835 loss recorded in the previous corresponding period. EBITDA swung to a positive $63,711, reversing the prior period's negative $499,825.
Despite the improved profitability metrics, the company remains in a loss position, reflecting ongoing operational and market challenges within the traffic management sector.
Operational and Corporate Developments
During the period, MCS Services expanded its traffic management contracts, albeit primarily through smaller engagements, and undertook a phased replacement of its vehicle fleet to maintain operational effectiveness. However, the company’s subsidiary, Highways Traffic Pty Ltd, continues to weigh heavily on overall performance.
In response, the Board initiated a strategic review of Highways Traffic’s future, culminating in a conditional asset sale agreement with Altus Traffic Pty Ltd. The proposed transaction, subject to shareholder approval and other standard conditions, includes the sale of Highways Traffic’s core business assets, vehicle fleet, intellectual property, and key client contracts. The deal also contemplates employment offers for Highways Traffic staff by the buyer, aiming to ensure business continuity.
Financial Position and Going Concern Considerations
At 31 December 2025, MCS Services held cash and cash equivalents of approximately $1.14 million and net assets of $919,779. The company reported a net cash outflow of $616,094 from operating and investing activities during the half-year. While the sale of Highways Traffic is expected to bolster the company’s financial position, the Board has acknowledged material uncertainty regarding the Group’s ability to continue as a going concern should the sale not proceed.
The auditor’s review report confirmed no material misstatements but highlighted this going concern uncertainty, underscoring the critical nature of the pending transaction for the company’s future.
Capital Structure and Shareholder Matters
No new shares or options were issued during the period, and 12 million unlisted options granted in 2022 expired unexercised. The company maintains a stable share capital base of approximately 198 million ordinary shares. Shareholders will be called upon to approve the Highways Traffic sale at an Extraordinary General Meeting, a pivotal event for MCS Services’ strategic direction.
Looking ahead, the company’s ability to navigate the sale process and stabilize its operations will be closely watched by investors and market participants alike.
Bottom Line?
MCS Services’ next chapter hinges on the Highways Traffic sale, with shareholder approval set to shape its financial and operational trajectory.
Questions in the middle?
- Will the shareholder vote approve the sale of Highways Traffic to Altus Traffic?
- What are the implications for MCS Services’ operational focus post-sale?
- How will the company address potential funding needs if the sale does not complete?