Final Results

RNS Number : 3010F

MS International PLC

13 June 2012

 



Chairman's Statement

 

Results and review

The Group has continued to prosper, with a twenty-five per cent uplift of pre-tax profit on revenue marginally higher than the prior year.

 

Profit before taxation for the 12 months ended 28th April, 2012 amounted to £8.39m (2011 - £6.68m) on revenue of £55.95m (2011 - £54.20m). Earnings per share were 34.8p (2011 - 30.6p).

Net cash and short term deposits at the year-end were £10.04m (2011 - £9.88m).

These record results are in line with our expectations, displaying a strong trading performance across all three divisions - 'Defence'; 'Forgings' and 'Petrol Station Superstructures' - and maintaining our upward trend in annual results. 'Defence', understandably, was not immune to the unfavourable effects of the well-chronicled budget constraints of national governments. Conversely and most pleasingly, the 'Forgings' and the 'Petrol Station Superstructures' divisions both experienced a progressive upturn in monthly order intake during the course of the year. 

'Defence' - the Group's largest division - produced another sterling performance lifting profitability handsomely on revenue lower than the prior year. Frustratingly, the time-line from customer enquiry to the placing of orders became increasingly protracted. As a consequence, the usual pattern and level of order inflow was uncomfortably interrupted, particularly in the domestic market. A positive highlight however, was that all deliveries to customers including each phase of the delivery critical and now completed US Navy contract for our 30mm naval gun systems, were completed in line with customer requirements.

'Forgings' generated a highly commendable result with a recovery in revenue, profitability and cash generation. This was a welcome and very pleasing upturn, following the recession influenced break-even performance of the prior year. We undertook further development of our manufacturing facilities across the board in the UK, Brazil and the United States. Importantly, the expansion of our non - UK facilities sealed a more emphatic 'local element' to our marketing perspective, which was instrumental in generating additional business.

'Petrol Station Superstructures' operations, based in both the UK and Poland have made laudable progress since becoming a wholly owned entity of the Group in May 2010. A more competitive, robust and proficient business approach, in a recovering market, enabled the division to gain market share, particularly in Eastern Europe. The UK operation provides structures to major international oil companies, dealer groups and supermarket chains in parts of Western Europe and as a recognised all-round high quality provider, is becoming the supplier of choice. The Polish business serves customers in its growing domestic market and that of other east European countries. To better support these markets and harness other business opportunities, we purchased a combined manufacturing and office facility on the outskirts of Krakow, in December 2011, replacing outgrown rented office space in the city.

Outlook

As always, we are looking forward with enthusiasm to the current year despite the escalating, political and macro-economic uncertainty. For the long term, we remain optimistic, in the firm belief that by developing and investing in the individual businesses, we are driving the right strategy to sustain the Group's growth.

'Defence' - we expect very little in the way of growth this year, in what is clearly a financially constrained, revenue flat line, industry-wide defence market. Nevertheless, marketing information confirms that despite the order delays, the many constituents of our mounting prospects list remain in place, with nothing knowingly cancelled or lost to competitors. Inevitably, customer programme delays are leading to a substantial build-up of potential business still to be awarded. Yet, interestingly since the year end, we are comforted by having received the highest level of monthly order intake for some considerable time. Gratifyingly, the expanding fleet of MSI naval gun systems on ships around the world provides an increasing level of regular in-service maintenance and support work for the business. 'In house' research and development programmes continue apace in anticipation of future market requirements. Notably, major orders in hand for delivery within the current financial year will have a distinct customer specified second half year revenue bias, which will be evident in the Group's first half/second half revenue profile. 

'Forgings' - is emerging from the global recession with a new degree of confidence. It is better equipped, more efficient and consequently more competitive. The customary short lead-time nature of the division's order books necessitates a sensitive and perceptive monitoring of regional global market variations. Presently, industrial engineering markets across continents are extremely uneven in activity, unpredictable and clearly susceptible to the prevailing and unsettling European economic conundrum. That said, the evolving new structure of the division's businesses should provide the flexibility to enable a pro-active response to any fluctuations in demand.

'Petrol Station Superstructures' - the development and construction of new large multi-function service station sites and the refurbishment and upgrade of existing facilities continues. The contemporary site typically comprises undercover car and separate HGV multi-pump fuel dispensaries, car valeting facilities and the escalating development of the retail shop/mini-market. Such filling stations can be a stand-alone road-side unit or alternatively the integral part of a supermarket complex. The division has attained a highly creditable reputation in the market for the design, manufacture, erection and refurbishment of all such forecourt structures. We are committed to build on that reputation and as the market leader focus on developing innovative ideas for the efficient and aesthetically pleasing construction of these structures.

Whilst cautious about the current constrained level of defence spending, to be sure, at some stage, it is inevitable that the dam will burst on our 'Defence' prospect-list. An encouraging sign is that a string of current and proposed global naval ship building projects - all fully funded - are, at last, being taken forward after a series of delays. 'Forgings', is in dynamic form, capable of competitively accommodating any further rise in activity and 'Petrol Station Superstructures' stands before a wealth of opportunity.

The prognosis for the world economy and particularly that of Europe is of grave concern. The lack of political resolve affects much that we try to achieve and in common with so many others, we are striving against a persistent and variable headwind. We must and will, maintain our prudent approach to managing and steering the Group for the long term interests of shareholders and not just the immediate future. Corporate focus remains on creating excellence in everything we do for there is no room for complacency in these highly competitive and tight markets that we serve.

Looking to the coming year the balance sheet is strong, the businesses are in very good shape and we expect to demonstrate further progress although as mentioned earlier, we anticipate a pronounced second half bias in revenue.

Accordingly, the Board recommends the payment of an increased final dividend of 6.5p per share (2011 - 5.5p) making a total for the year of 8.0p (2011 - 6.5p).

Michael Bell

13^th June 2012

Group income statement
For the 52 weeks ended 28th April, 2012
						2012		2011
						Total		Total
						£000		£000
Revenue						55,948		54,202
Cost of sales						(36,714)		(37,840)
Gross profit						19,234		16,362
Distribution costs						(2,500)		(2,226)
Administrative expenses						(8,144)		(8,157)
						(10,644)		(10,383)
Group operating profit						8,590		5,979
Finance revenue						28		390
Finance costs						(418)		(57)
Other finance revenue/(costs)- pensions						188		(50)
						(202)		283
Profit before taxation and exceptional items						8,388		6,262
Exceptional gain						-		1,250
Exceptional write off						-		(828)
						-		422
Profit before taxation						8,388		6,684
Taxation						(2,078)		(1,179)
Profit for the period attributable to equity holders of the parent						6,310		5,505
Earnings per share:  basic and diluted						34.8p		30.6p

Group and company statement of comprehensive income
For the 52 weeks ended 28th April, 2012
			Group					Company
			2012			2011		2012				2011
			Total			Total		Total				Total
			£000			£000		£000				£000
Actuarial (losses)/profits on defined benefit pension scheme			(2,936)			2,379		(2,936)				2,379
Deferred taxation on actuarial profits/losses on defined benefit pension scheme			680			(703)		680				(703)
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			(194)			3		-				-
Net (expense)/income recognised directly in equity			(2,450)			1,152		(2,256)				1,149
Profit attributable to equity holders of the parent			6,310			5,505		5,671				5,187
Total recognised income and expense for the period attributable to equity holders of the parent			3,860			6,657		3,415				6,336

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 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/(loss)			-		-		-		(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
Profit for the period			-		-		-		-		-		-		-		6,310		6,310
Other comprehensive profit			-		-		-		-		-		(194)		-		(2,256)		(2,450)
Total comprehensive income			1,840		901		2,815		2,469		1,629		(10)		(100)		20,090		29,634
Dividends paid			-		-		-		-		-		-		-		(1,271)		(1,271)
Change in taxation rates			-		-		-		42		-		-		-		-		42
At 28th April, 2012			1,840		901		2,815		2,511		1,629		(10)		(100)		18,819		28,405
(b) Company
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 loss			-		-		-		(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
Profit for the period			-		-		-		-		-		-		-		5,671		5,671
Other comprehensive profit			-		-		-		-		-		-		-		(2,256)		(2,256)
Total comprehensive income			1,840		901		1,565		2,469		1,629		-		(100)		18,917		27,221
Dividends paid			-		-		-		-		-		-		-		(1,271)		(1,271)
Change in taxation rates			-		-		-		42		-		-		-		-		42
At 28th April, 2012			1,840		901		1,565		2,511		1,629		-		(100)		17,646		25,992

Balance sheets
At 28th April, 2012
			Group					Company
			2012			2011		2012		2011
			£'000			£'000		£'000		£'000
ASSETS
Non-current assets
Property, plant and equipment			13,818			12,514		11,694		12,187
Intangible assets			4,798			5,160		69		114
Investments in subsidiaries			-			-		11,451		11,451
Deferred income tax asset			-			-		151		-
			18,616			17,674		23,365		23,752
Current assets
Inventories			7,824			7,099		6,726		6,351
Trade and other receivables			12,208			12,482		13,757		12,951
Financial assets			-			377		-		377
Prepayments			604			1,510		527		1,422
Cash and short-term deposits			10,037			9,877		9,001		9,137
			30,673			31,345		30,011		30,238
TOTAL ASSETS			49,289			49,019		53,376		53,990
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			2,815		1,565		1,565
Revaluation reserve			2,511			2,469		2,511		2,469
Special reserve			1,629			1,629		1,629		1,629
Currency translation reserve			(10)			184		-		-
Treasury shares			(100)			(100)		(100)		(100)
Retained earnings			18,819			16,036		17,646		15,502
			28,405			25,774		25,992		23,806
Non-current liabilities
Defined benefit pension liability			4,167			1,819		4,167		1,819
Deferred income tax liability			505			1,207		-		444
			4,672			3,026		4,167		2,263
Current liabilities
Trade and other payables			14,995			19,405		21,932		26,987
Income tax payable			1,217			814		1,285		934
			16,212			20,219		23,217		27,921
TOTAL EQUITY AND LIABILITIES			49,289			49,019		53,376		53,990

Cash flow statements
For the 52 weeks ended 28th April, 2012				Group				Company
				2012		2011		2012		2011
				£000		£000		£000		£000
Profit before taxation and exceptional items				8,388		6,262		7,569		6,266
Adjustments to reconcile profit before taxation to net cash inflow from operating activities
Depreciation charge				1,339		1,571		1,219		1,257
Amortisation charge				362		442		45		58
Finance costs/(revenue)				202		(283)		179		(283)
Foreign exchange (losses)/gains				(150)		16		-		-
RSA grant release				-		(3)		-		(3)
Share based payments				-		6		-		6
Increase in inventories				(725)		(1,514)		(375)		(1,238)
Decrease/(increase) in receivables				274		(1,679)		(806)		(1,917)
Decrease in prepayments				906		203		895		210
(Decrease)/increase in payables				(247)		(151)		(674)		208
(Decrease)/increase in progress payments				(4,163)		1,798		(4,381)		1,832
Pension fund payments				(400)		(400)		(400)		(400)
Cash generated from operating activities				5,786		6,268		3,271		5,996
Interest (paid)/received				(13)		(44)		10		(44)
Taxation paid				(1,650)		(1,557)		(1,420)		(1,431)
Net cash inflow from operating activities				4,123		4,667		1,861		4,521
Investing activities
Purchase of property , plant and equipment				(2,711)		(379)		(744)		(202)
Sale of property, plant and equipment				19		99		18		34
Purchase of shares in Global-MSI plc net of cash acquired				-		(3,532)		-		(4,148)
Dividends received from Global-MSI plc				-		-		-		1,000
Net cash flow from investing activities				(2,692)		(3,812)		(726)		(3,316)
Financing activities
Share options exercised				-		291		-		291
Dividends paid				(1,271)		(180)		(1,271)		(180)
Net cash flow from financing activities				(1,271)		111		(1,271)		111
Increase/(decrease) in cash and cash equivalents				160		966		(136)		1,316
Opening cash and cash equivalents				9,877		8,911		9,137		7,821
Closing cash and cash equivalents				10,037		9,877		9,001		9,137

The financial information set out above does not constitute the Company's statutory accounts for the periods ended 28th April, 2012 or 30th April, 2011 but is derived from those accounts.  Statutory accounts for 2011 have been delivered to the Registrar of Companies, and those for 2012 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 £6,310,000 (2011 - £5,505,000) by the weighted average of 18,151,025 (2011 - 18,003,085) 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 13th June, 2012 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 16th August, 2012 to those members registered on the books of the Company on 20th July, 2012.

 

END

 

 

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