Final Results

RNS Number : 1184I

MS International PLC

09 June 2011

 



Chairman's Statement

 

Results and review

It is a pleasure to report on the continuing prosperity of the Group, with a doubling of pre-tax profit on revenue thirty-two per cent higher than the previous year, despite the lacklustre economic background.

Profit before taxation for the 12 months ended 30 April 2011 amounted to £6.68m (2010 - £3.34m) on revenue of £54.20m (2010 - £41.04m). Earnings per share were 30.6p (2010 - 13.3p).

Net cash and short term deposits at the year-end increased to £9.88m (2010 - £8.91m) even after the £3.53m net cash outlay in May 2010 to purchase the half share in Global-MSI not previously owned. Cash generated from operating activities amounted to £6.27m (2010 - £3.69m).

These results represent a Group record, comfortably surpassing the previous peak performance achieved in the year to 3 May 2008. This outcome is a significant positive step in restoring the Group's record of delivering a year-on-year upward trajectory in trading performance, which was the norm prior to the global economic downturn.

Pleasingly, results from all three divisions, 'Defence', 'Forgings' and 'Petrol Station Forecourt Structures' exceeded the figures reported last year.  'Defence', unaffected by the recession, continued to make excellent progress and both 'Forgings' and 'Petrol Station Forecourt Structures' benefited from an upturn in their respective markets towards the latter part of the year.

'Defence' - the Group's largest division, again performed admirably. We started the year with a substantial order book, a major part of which was customer programmed for delivery within the financial year. This was, in fact, an important challenge for the business as it immediately tested the fortitude of our much enhanced manufacturing facilities and systems, designed to facilitate this planned increase in activity. The upshot was an 18% growth in the division's revenue reflecting a significant expansion in direct export sales, over and above our established contract business with the UK Ministry of Defence. 

'Forgings' - global markets for forged fork-arms, fitted to fork-lift trucks and other industrial vehicles, demonstrated a welcome upward trend in the second half of the year from what had been an extraordinarily low level of demand in the preceding twenty four months. This recovery coincided with the successful completion of a host of efficiency improvement and capital investment programmesinitiated in our plants during the downturn. As markets improved month on month, so the positive benefits of our actions quickly percolated through in the results of the division.

 'Petrol Station Forecourt Structures' - markets for new site developments in the UK and mainland Europe had been weak for some time prior to the full integration of Global-MSI into the Group. This weakness was further exasperated by the long period of severe winter weather which had an unhelpful impact on site construction works.  Unwelcome though it was, this hiatus presented the ideal opportunity to consolidate our two UK facilities into one, combining the design, project management and manufacturing operations onto our prime site in Doncaster, with limited disruption to operations. The subsequent reduction in costs, improved efficiency and a closer working relationship with our facility in Poland, made for a much improved set of results, despite some anticipated site development projects not coming through to construction within the year. 

On the 26 April 2011 we announced to the Stock Exchange that I had exercised an option to purchase 150,000 ordinary shares in the Company at 194p per share. It is my intention to hold these shares, along with my other holdings in MS INTERNATIONALplc,as a long term investment.

Outlook

Clearly, the world economic climate remains uncertain and although there has been some recovery, it still remains a long way short of the pre-recession heights. Maintaining general economic momentum in the coming months of the summer holiday period will be critical if the revival is to continue without interruption. As a business, we must remain vigilant and be prepared for the possibility of some unsettled times ahead.

Reviewing prospects for 'Defence' a year ago, I commented 'that the outlook for this business looked very promising'. Today, that optimism endures undeterred, supported in the knowledge that orders on hand for delivery within the current financial year are at a high level. Included will be the first direct sales of our 30mm naval gun systems to the United States Naval Sea System Command. Looking further ahead, there are some interesting prospects on the horizon for products from not only our existing range but those in the course of development. 

Chairman's Statement     

 

Continued

'Forgings', we perceive, may be moving into a period of more sustainable recovery and currently the value of orders on hand is twice that of a year ago. Productivity improvements achieved within the plants and an increased flow of orders, week by week, are indicating a firmer basis for a prospective upturn in results this year.

Having implemented numerous initiatives to enhance the performance of 'Petrol Station Forecourt Structures' since the consolidation, the division has settled down to become a highly productive and competitive business and has already been appointed as the nominated supplier for a number of new developments to be built this year.

Overall, much has been accomplished in a difficult time. The Group is in good shape and the Board is optimistic. Nevertheless we will remain very sensitive to market changes and respond quickly to both favourable and adverse situations. We will continue with the ubiquitous cost reduction exercises and the tight control of cash, whilst enhancing our ability to perform through investment in upgrading our manufacturing facilities and systems and furthering our research and development programmes. Such commitments, supported by our strong financial resources and good marketing should contribute to our global competitiveness. 

Accordingly the Board recommends the payment of an increased final dividend of 5.5p per share (2010 - 3.8p) making a total for the year of 6.5p per share (2010 - 4.5p).

Michael Bell

8 June 2011

Group income statement
For the 52 weeks ended 30th April, 2011
						2011		2010
						Total		Total
						£000		£000
Revenue						54,202		41,039
Cost of sales						(37,840)		(30,077)
Gross profit						16,362		10,962
Distribution costs						(2,226)		(1,524)
Administrative expenses						(8,157)		(6,026)
						(10,383)		(7,550)
Group operating profit						5,979		3,412
Finance revenue						390		10
Finance costs						(57)		(19)
Other finance costs- pensions						(50)		(62)
						283		(71)
Profit before taxation and exceptional items						6,262		3,341
Exceptional gain						1,250		-
Exceptional write off						(828)		-
						422		-
Profit before taxation						6,684		3,341
Taxation						(1,179)		(952)
Profit for the period attributable to equity holders of the parent						5,505		2,389
Earnings per share:  basic and diluted						30.6p		13.3p

Group and company statement of comprehensive income
For the 52 weeks ended 30th April, 2011
		Group				Company
		2011		2010		2011		2010
		Total		Total		Total		Total
		£000		£000		£000		£000
Actuarial profits/(losses) on defined benefit pension scheme		2,379		(2,081)		2,379		(2,081)
Current taxation on actuarial losses on defined benefit pension scheme		-		112		-		112
Deferred taxation on actuarial profits/losses on defined benefit pension scheme		(703)		471		(703)		471
Revaluation deficit on land and buildings		(334)		-		(334)		-
Deferred taxation of revaluation deficit on land and buildings		(193)		-		(193)		-
Exchange differences on retranslation of foreign operations		3		54		-		-
Net income/(expense) recognised directly in equity		1,152		(1,444)		1,149		(1,498)
Profit attributable to equity holders of the parent		5,505		2,389		5,187		2,872
Total recognised income and expense for the period attributable to equity holders of the parent		6,657		945		6,336		1,374

Group and company statement of changes in equity
			Issued capital		Capital redemption reserve		Other reserves		Revaluation reserve		Special reserve		Foreign exchange reserve		Treasury shares		Retained earnings		Total
			£'000		£'000		£'000		£'000		£'000		£'000		£'000		£'000		£'000
(a) Group
At 2nd May, 2009			1,840		901		1,565		2,969		1,629		127		(391)		10,860		19,500
Profit for the period			-		-		-		-		-		-		-		2,389		2,389
Other comprehensive profit/(loss)			-		-		-		-		-		54		-		(1,498)		(1,444)
Total comprehensive income			1,840		901		1,565		2,969		1,629		181		(391)		11,751		20,445
Dividends paid			-		-		-		-		-		-		-		(1,494)		(1,494)
Share based payments			-		-		-		-		-		-		-		22		22
At 1st May, 2010			1,840		901		1,565		2,969		1,629		181		(391)		10,279		18,973
Profit for the period			-		-		-		-		-		-		-		5,505		5,505
Other comprehensive profit			-		-		-		(527)		-		3		-		1,676		1,152
Total comprehensive income			1,840		901		1,565		2,442		1,629		184		(391)		17,460		25,630
Dividends paid			-		-		-		-		-		-		-		(180)		(180)
Transfer			-		-		1,250		-		-		-		-		(1,250)		-
Change in taxation rates			-		-		-		27		-		-		-		-		27
Exercise of share options			-		-		-		-		-		-		291		-		291
Share based payments			-		-		-		-		-		-		-		6		6
At 30th April, 2011			1,840		901		2,815		2,469		1,629		184		(100)		16,036		25,774
(b) Company
At 2nd May, 2009			1,840		901		1,565		2,969		1,629		-		(391)		8,911		17,424
Profit for the period			-		-		-		-		-				-		2,872		2,872
Other comprehensive profit/(loss)			-		-		-		-		-		-		-		(1,498)		(1,498)
Total comprehensive income			1,840		901		1,565		2,969		1,629		-		(391)		10,285		18,798
Dividends paid			-		-		-		-		-		-		-		(1,494)		(1,494)
Share based payments			-		-		-		-		-		-		-		22		22
At 1st May, 2010			1,840		901		1,565		2,969		1,629		-		(391)		8,813		17,326
Profit for the period			-		-		-		-		-		-		-		5,187		5,187
Other comprehensive profit			-		-		-		(527)		-		-		-		1,676		1,149
Total comprehensive income			1,840		901		1,565		2,442		1,629		-		(391)		15,676		23,662
Dividends paid			-		-		-		-		-		-		-		(180)		(180)
Change in taxation rates			-		-		-		27		-		-		-		-		27
Exercise of share options			-		-		-		-		-		-		291		-		291
Share based payments			-		-		-		-		-		-		-		6		6
At 30th April, 2011			1,840		901		1,565		2,469		1,629		-		(100)		15,502		23,806

Balance sheets
At 30th April, 2011
		Group				Company
		2011		2010		2011		2010
		£'000		£'000		£'000		£'000
ASSETS
Non-current assets
Property, plant and equipment		12,514		14,634		12,187		13,943
Intangible assets		5,160		172		114		172
Investments in subsidiaries		-		-		11,451		6,869
Investment in joint venture		-		-		-		50
Deferred income tax asset		-		118		-		90
		17,674		14,924		23,752		21,124
Current assets
Inventories		3,556		3,947		2,865		3,512
Trade and other receivables		12,482		10,134		12,951		10,055
Financial assets		377		-		377		-
Prepayments		1,510		1,675		1,422		1,608
Cash and short-term deposits		9,877		8,911		9,137		7,821
		27,802		24,667		26,752		22,996
TOTAL ASSETS		45,476		39,591		50,504		44,120
EQUITY AND LIABILITIES
Equity
Equity share capital		1,840		1,840		1,840		1,840
Capital redemption reserve		901		901		901		901
Other reserve		2,815		1,565		1,565		1,565
Revaluation reserve		2,469		2,969		2,469		2,969
Special reserve		1,629		1,629		1,629		1,629
Currency translation reserve		184		181		-		-
Treasury shares		(100)		(391)		(100)		(391)
Retained earnings		16,036		10,279		15,502		8,813
		25,774		18,973		23,806		17,326
Non-current liabilities
Defined benefit pension liability		1,819		4,548		1,819		4,548
Deferred income tax liability		1,207		-		444		-
		3,026		4,548		2,263		4,548
Current liabilities
Trade and other payables		15,862		15,408		23,501		21,438
Government grants		-		3		-		3
Income tax payable		814		659		934		805
		16,676		16,070		24,435		22,246
TOTAL EQUITY AND LIABILITIES		45,476		39,591		50,504		44,120

Cash flow statements
For the 52 weeks ended 30th April, 2011				Group				Company
				2011		2010		2011		2010
				£000		£000		£000		£000
Profit before taxation and exceptional items				6,262		3,341		6,266		3,203
Adjustments to reconcile profit before taxation to net cash in flow from operating activities
Depreciation charge				1,571		1,650		1,257		1,441
Amortisation charge				442		34		58		34
Finance (revenue)/costs				(283)		71		(283)		79
Foreign exchange gains				16		5		-		108
RSA grant release				(3)		(13)		(3)		(13)
Share based payments				6		22		6		22
Increase in inventories				(1,514)		(1,271)		(1,238)		(1,627)
Increase in receivables				(1,679)		(4,422)		(1,917)		(4,461)
Decrease/(increase) in prepayments				203		(75)		210		(80)
(Decrease)/increase in payables				(151)		712		208		716
Increase in progress payments				1,798		4,032		1,832		4,128
Pension fund payments				(400)		(400)		(400)		(400)
Cash generated from operating activities				6,268		3,686		5,996		3,150
Interest paid				(44)		(9)		(44)		(17)
Taxation paid				(1,557)		(981)		(1,431)		(964)
Net cash inflow/(outflow) from operating activities				4,667		2,696		4,521		2,169
Investing activities
Purchase of property , plant and equipment				(379)		(431)		(202)		(282)
Purchase of intangible assets				-		(100)		-		(100)
Sale of property, plant and equipment				99		6		34		1
Purchase of shares in Global-MSI plc net of cash acquired				(3,532)		-		(4,148)		-
Dividends received from Global-MSI plc				-		-		1,000		500
Net cash from investing activities				(3,812)		(525)		(3,316)		119
Financing activities
Share options exercised				291		-		291		-
Dividends paid				(180)		(1,494)		(180)		(1,494)
Net cash flow from financing activities				111		(1,494)		111		(1,494)
Increase in cash and cash equivalents				966		677		1,316		794
Opening cash and cash equivalents				8,911		8,234		7,821		7,027
Closing cash and cash equivalents				9,877		8,911		9,137		7,821

Exceptional gain

On 28th May, 2010 the Group acquired for a consideration of £4,500,000 a further 50% of the shares of Global-MSI plc (GMSI), not previously owned by the Group, to give a total shareholding of 100% of the shares of GMSI.

GMSI is involved in the design, manufacture and construction of petrol station superstructures and associated infrastructure products.  Until the 28th May, 2010, GMSI was included in the Group accounts as a joint venture using proportionate consolidation.

As a result of this acquisition, the Group's previously held investment under proportionate consolidation has been remeasured, in accordance with IFRS3 "Business Combinations" (revised), to represent 100% of it's fair value on the date of acquisition resulting in a gain of £1,250,000 recognised in the Group income statement.

Exceptional write off

A review of plant and equipment in the forgings division resulted in an impairment write off of unused assets of £828,000 (cost £2,418,000 less depreciation to date £1,590,000).

The financial information set out above does not constitute the Company's statutory accounts for the periods ended 30th April, 2011 or 1st May, 2010 but is derived from those accounts.  Statutory accounts for 2010 have been delivered to the Registrar of Companies, and those for 2011 will be delivered following the Company's Annual General Meeting.  The auditors have reported on those accounts; their reports were unqualified and did not contain a statement under section 498 (2) or (3) of the Companies Act 2006.

The earnings per share is calculated by dividing the profit after taxation of £5,505,000 (2010 - £2,389,000) by the weighted average of 18,003,085 (2010 - 18,001,025) shares in issue in the year.

The preliminary announcement is prepared on the same basis as set out in the previous year's accounts. The Directors confirm to the best of their knowledge that: (a) the financial statements, prepared in accordance with International Financial Reporting Standards, give a true and fair view of the assets, liabilities, financial position and profit or loss of the group and the undertakings included in the consolidation taken as a whole; and (b) the management report includes a fair review of the development and performance of the business and the position of the Group and the undertakings included in the consolidation taken as a whole, together with a description of the principal risks and uncertainties that they face. The preliminary announcement was approved by the Board on 8th June, 2011 and the above responsibility statement was signed on its behalf by Michael Bell, Chairman and Michael O'Connell, Group Finance Director.

Copies of this announcement are available from the Company's registered office at MS INTERNATIONAL plc, Balby Carr Bank, Doncaster, DN4 8DH, England.  The full Annual Report and Accounts will be posted to shareholders shortly and will be delivered to the Registrar of Companies after it has been laid before the Company in general meeting.

Dividend warrants will be posted on 29th July, 2011 to those members registered on the books of the Company on 1st July, 2011.

 

END

 

 

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