Half-year Report

RNS Number : 7615I

MS International PLC

16 December 2020

 

MS INTERNATIONAL plc

Unaudited Interim Condensed

Group Financial Statements

31st October, 2020

 

EXECUTIVE DIRECTORS

Michael Bell

Michael O'Connell

Nicholas Bell

NON-EXECUTIVE DIRECTORS

Roger Lane-Smith

David Hansell

COMPANY SECRETARY

David Kirkup

REGISTERED OFFICE

Balby Carr Bank

Doncaster

DN4 8DH

England

PRINCIPAL OPERATING DIVISIONS

'Defence'

'Forgings'

'Petrol Station Superstructures'

'Corporate Branding'

 

Chairman's Statement

Results

We entered our 2020/21 financial year confronted by a subdued general economy, growing 'Brexit' uncertainty and a rapidly spreading global pandemic which, collectively, were making for 'a perfect storm' that would inevitably negatively impact all our business activities.

Yet, with a strong balance sheet, a good order book, a growing international market presence across our increasingly diverse range of businesses and recently developed new products and services coming through, we were, at least, in a good starting position to face the rapidly intensifying external pressures.

We tightened our belts and gratefully welcomed the financial assistance generously provided by not only HM Government but also that of other countries where we have business operations.

The unavoidable disruption to our businesses has, nevertheless, been substantial. Of considerable detriment were the restrictions on international travel that prevented both our own staff, and those of our customers, travelling to conduct the many practical elements of our business operations. It certainly proved to be a far more testing and stressful experience for everyone than my earlier prediction, that the Group was approaching 'interesting times'!

Accordingly, Group revenue for the six months to October 2020 amounted to £26.34m (2019 - £33.32m), a reduction which resulted in a loss before tax of £1.08m (2019 - Loss £ 0.49m).

Nevertheless, cash remained very strong at £14.01m, which compares to the £16.12m reported at last year end.

Prospects

The recent announcement that vaccines are becoming available to counter the current global pandemic, will surely assist our businesses to move forward positively once more.

In anticipation of such an outcome, we have already made a number of strategic moves that we believe will assist all our businesses to prosper, in particular at this juncture, our 'Defence' and 'Corporate Branding' operations.

'Defence'

Whilst the domestic market remains disappointingly in the doldrums, our marketing commitment to the global arena is proving to be very rewarding. We are winning defence equipment orders from new customers and overseas sales are now by far the mainstay for this business. Pleasingly, various product trials and demonstrations in the United States have been well received and we are vigorously pursuing these opportunities. Furthermore, the US State Department has officially announced its intention to procure MSI-DS medium calibre gun weapon systems for one of their current Foreign Military Sales Programmes.

'Forgings'

Our forgings businesses, with operations in the UK, USA and Brazil, would undoubtably benefit from an economic upturn and a more stable global commercial environment. Major international customers are generally operating their manufacturing systems on a 'just-in-time' basis and so the ordering of components from us is naturally finely tuned. Our operations are geared accordingly and will comfortably accommodate the requirements of any economic recovery.

'Petrol Station Superstructures'

This division holds a strong market position in constructing fuelling stations, across many parts of Europe operating from bases in both the UK and Poland. We are noting a recent upturn in the number of new station developments around the market and, significantly, a growing number of complex and sophisticated constructions are becoming the norm. In addition to fuel supply, whether it be petroleum, electricity or hydrogen, these new sites incorporate larger shops, sophisticated car valeting services, undercover electric vehicle charging and restaurant and coffee house/snack facilities.  This is all good news for our design and build superstructures business.

 

'Corporate Branding'

When we acquired The Netherlands-based business, Petrol Sign, its prime focus was the branding of petrol stations, predominantly in the Benelux countries. Through some small, but strategic acquisitions, the business now also designs, manufactures and services branding for a much broader customer base that includes specialist airport 'way-finding' systems, plus the substantial hospitality and automotive markets. The division is successfully expanding these service operations into the UK, Germany, Poland and Italy.

Despite the various factors which have combined to undermine first half performance, I am pleased to report that the value of the Group order book has risen over the period.  This highlights the strength of our businesses.

We, therefore, firmly perceive that the Company is in an outstandingly strong position to benefit considerably, not only from the moves that we are making in the business, but also from any economic recovery following global control of the pandemic.

All such matters considered, the Board has declared a maintained interim dividend per share of 1.75p (2019 - 1.75p) payable to shareholders on the 19th January 2021.

Michael Bell     15^th December 2020

MS INTERNATIONAL plc
Michael Bell		Tel: [phone]
Shore Capital (Nominated Adviser and Broker)
Patrick Castle		Tel: [phone]
Daniel Bush

 

Independent review report to MS INTERNATIONAL plc
Introduction
We have reviewed the condensed set of financial statements in the half-yearly financial report of MS INTERNATIONAL plc (the 'company') for the six months ended 31 October 2020 which comprises the Interim condensed consolidated income statement, the Interim condensed consolidated statement of comprehensive income, the Interim condensed consolidated statement of financial position, the Interim consolidated statement of changes in equity, the Interim consolidated cash flow statement and the related notes. We have read the other information contained in the half-yearly financial report which comprises only the Chairman's Statement and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and has been approved by, the directors. As disclosed in note 2, the annual financial statements of the group are prepared in accordance with International Financial Reporting Standards as adopted by the European Union. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with International Accounting Standard 34, 'Interim Financial Reporting', as adopted by the European Union.
Our responsibility
Our responsibility is to express a conclusion to the company on the condensed set of financial statements in the half-yearly financial report based on our review.
Scope of review
We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, 'Review of Interim Financial Information Performed by the Independent Auditor of the Entity'. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
The impact of uncertainties arising from the UK exiting the European Union and COVID-19 on our review
Our review of the condensed set of financial statements in the half-yearly financial report requires us to obtain an understanding of all relevant uncertainties, including those arising as a consequence of the effects of macro-economic uncertainties such as Covid-19 and Brexit. Such reviews assess and challenge the reasonableness of estimates made by the directors and the related disclosures and the appropriateness of the going concern basis of preparation of the financial statements. All of these depend on assessments of the future economic environment and the company's future prospects and performance.
COVID-19 and Brexit are amongst the most significant economic events currently faced by the UK, and at the date of this report their effects are subject to unprecedented levels of uncertainty, with the full range of possible outcomes and their impacts unknown. We applied a standardised firm-wide approach in response to these uncertainties when assessing the company's future prospects and performance. However, no review of interim financial information should be expected to predict the unknowable factors or all possible future implications for a company associated with these particular events.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 31 October 2020 is not prepared, in all material respects, in accordance with International Accounting Standard 34, 'Interim Financial Reporting', as adopted by the European Union.
Use of our report
This report is made solely to the company, as a body, in accordance with International Standard on Review Engagements (UK and Ireland) 2410, 'Review of Interim Financial Information performed by the Independent Auditor of the Entity'. Our review work has been undertaken so that we might state to the company those matters we are required to state to it in an independent review report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company as a body, for our review work, for this report, or for the conclusion we have formed.
Grant Thornton UK LLP
Statutory Auditor, Chartered Accountants
Sheffield
15 December 2020
Interim condensed consolidated income statement
		Half-year to 31st October, 2020		Half-year to 31st October, 2019
		unaudited		unaudited
	Notes	£'000		£'000
Products		19,727		26,067
Contracts		6,615		7,250
Revenue	5	26,342		33,317
Cost of sales		(19,831)		(24,910)
Gross profit		6,511		8,407
Distribution costs		(1,297)		(1,821)
Administrative expenses		(6,204)		(6,988)
Operating loss	5	(990)		(402)
Finance costs		(45)		(2)
Other finance costs - pension		(70)		(82)
Share of net profit of joint venture		25		-
Loss before taxation		(1,080)		(486)
Tax (expense)/income	6	(2)		66
Loss for the period attributable to equity holders of the parent		(1,082)		(420)
Loss per share: basic and diluted	7	(6.6p)		(2.5p)
Interim condensed consolidated statement of comprehensive income
		Half-year to 31st October, 2020		Half-year to 31st October, 2019
		unaudited		unaudited
		£'000		£'000
Loss for the period attributable to equity holders of the parent		(1,082)		(420)
Exchange differences on retranslation of foreign operations		219		44
Net other comprehensive profit to be reclassified to profit or loss in subsequent periods		219		44
Remeasurement losses on defined benefit pension scheme		(642)		(849)
Deferred taxation on remeasurement of defined benefit pension scheme		122		144
Net other comprehensive loss not being reclassified to profit or loss in subsequent periods		(520)		(705)
Total comprehensive loss for the period attributable to equity holders of the parent		(1,383)		(1,081)

Interim condensed consolidated statement of financial position
	Notes	31st October, 2020			31st October, 2019			30th April, 2020
		unaudited			unaudited			audited
ASSETS		£'000			£'000			£'000
Non-current assets
Intangible assets		4,070			4,303			4,140
Property, plant and equipment	9	19,484			20,352			20,111
Right-of-use assets	10	682			1,185			1,214
Investment in joint venture		34			-			-
Deferred income tax asset		2,015			1,264			1,875
		26,285			27,104			27,340
Current assets
Inventories		17,624			14,689			15,857
Trade and other receivables		6,957			9,335			4,589
Income tax receivable		555			3			719
Prepayments		2,397			1,708			1,775
Cash and cash equivalents	11	14,011			19,370			16,125
		41,544			45,105			39,065
TOTAL ASSETS		67,829			72,209			66,405
EQUITY AND LIABILITIES
Equity
Share capital		1,840			1,840			1,840
Capital redemption reserve		901			901			901
Other reserve		2,815			2,815			2,815
Revaluation reserve		6,055			6,055			6,055
Special reserve		1,629			1,629			1,629
Currency translation reserve		443			323			224
Treasury shares		(3,059)			(3,059)			(3,059)
Retained earnings		17,832			23,140			19,723
TOTAL EQUITY SHAREHOLDERS' FUNDS		28,456			33,644			30,128
Non-current liabilities
Defined benefit pension liability	12	9,075			7,434			8,563
Deferred income tax liability		1,600			1,386			1,641
Lease liabilities		465			942			893
		11,140			9,762			11,097
Current liabilities
Trade and other payables		27,983			27,747			24,679
Income tax payable		18			806			165
Lease liabilities		232			250			336
		28,233			28,803			25,180
TOTAL EQUITY AND LIABILITIES		67,829			72,209			66,405
The interim condensed consolidated financial statements of the Group for the six months ended 31st October, 2020 were authorised for issue in accordance with a resolution of the directors on 15th December, 2020 and signed on their behalf.
Michael O'Connell
Finance Director

 

Interim consolidated statement of changes in equity
		Share capital		Capital redemption reserve		Other reserve		Revaluation reserve		Special reserve		Currency translation reserve		Treasury shares		Retained earnings		Total unaudited
		£'000		£'000		£'000		£'000		£'000		£'000		£'000		£'000		£'000
At 30th April, 2020		1,840		901		2,815		6,055		1,629		224		(3,059)		19,723		30,128
Loss for the period		-		-		-		-		-		-		-		(1,082)		(1,082)
Other comprehensive income/(loss)		-		-		-		-		-		219		-		(520)		(301)
Dividend paid (note 8)		-		-		-		-		-		-		-		(289)		(289)
At 31st October, 2020		1,840		901		2,815		6,055		1,629		443		(3,059)		17,832		28,456
		Share capital		Capital redemption reserve		Other reserve		Revaluation reserve		Special reserve		Currency translation reserve		Treasury shares		Retained earnings		Total unaudited
		£'000		£'000		£'000		£'000		£'000		£'000		£'000		£'000		£'000
At 27th April, 2019		1,840		901		2,815		6,055		1,629		279		(3,059)		25,338		35,798
Loss for the period		-		-		-		-		-		-		-		(420)		(420)
Other comprehensive income/(loss)		-		-		-		-		-		44		-		(705)		(661)
Dividend paid		-		-		-		-		-		-		-		(1,073)		(1,073)
At 31st October, 2019		1,840		901		2,815		6,055		1,629		323		(3,059)		23,140		33,644
		Share capital		Capital redemption reserve		Other reserve		Revaluation reserve		Special reserve		Currency translation reserve		Treasury shares		Retained earnings		Total audited
		£'000		£'000		£'000		£'000		£'000		£'000		£'000		£'000		£'000
At 27th April, 2019		1,840		901		2,815		6,055		1,629		279		(3,059)		25,338		35,798
Loss for the period		-		-		-		-		-		-		-		(2,491)		(2,491)
Other comprehensive loss		-		-		-		-		-		(55)		-		(1,762)		(1,817)
Dividends paid		-		-		-		-		-		-		-		(1,362)		(1,362)
At 30th April, 2020		1,840		901		2,815		6,055		1,629		224		(3,059)		19,723		30,128

 

Interim consolidated cash flow statement
		Half-year to 31st October, 2020		Half-year to 31st October, 2019
		unaudited		unaudited
		£'000		£'000
Loss before taxation		(1,080)		(486)
Adjustments to reconcile loss before taxation to net cash outflow from operating activities:
Depreciation charge		866		782
Amortisation charge		125		332
Profit on disposal of fixed assets		(26)		(61)
Share of net profit of joint venture		(25)		-
Net finance costs		115		84
Termination of lease		(7)		-
Foreign exchange gains/(losses)		192		(161)
Increase in inventories		(1,690)		(1,645)
Increase in receivables		(2,315)		(1,849)
(Increase)/decrease in prepayments		(620)		93
Increase/(decrease) in payables		1,306		(334)
Increase in progress payments		1,891		2,105
Pension fund deficit reduction payments		(200)		(300)
Cash invested in operating activities		(1,468)		(1,440)
Net interest (paid)/received		(25)		14
Taxation paid		(39)		(126)
Net cash outflow from operating activities		(1,532)		(1,552)
Investing activities
Purchase of property, plant and equipment		(152)		(351)
Proceeds on disposal of property, plant and equipment		27		72
Payments for acquisitions, net of cash acquired		-		(748)
Net cash outflow from investing activities		(125)		(1,027)
Financing activities
Lease payments		(191)		(100)
Dividend paid		(289)		(1,073)
Net cash outflow from financing activities		(480)		(1,173)
Decrease in cash and cash equivalents		(2,137)		(3,752)
Opening cash and cash equivalents		16,125		22,886
Exchange differences on cash and cash equivalents		23		236
Closing cash and cash equivalents		14,011		19,370

 

Notes to the interim consolidated financial statements
1.  Corporate information
MS INTERNATIONAL plc is a public limited company incorporated in England and Wales. The Company's ordinary shares are traded on the AIM market of the London Stock Exchange. The principal activities of the Company and its subsidiaries ("the Group") are the design, manufacture, construction, and servicing of a range of engineering products and structures. These activities are grouped into the following divisions:
'Defence' - design, manufacture, and service of defence equipment.
'Forging' - manufacture of fork-arms and open die forgings.
'Petrol Station Superstructures' - design, manufacture, construction, and maintenance of petrol station superstructures.
'Corporate Branding' - design, manufacture, installation, and service of corporate brandings.
2.  Basis of preparation and accounting policies
The consolidated condensed interim financial statements included in this half-yearly financial report have been prepared in accordance with International Accounting Standard 34, "Interim Financial Reporting", as adopted by the European Union. They do not include all the information and disclosures required in annual financial statements in accordance with IFRS, and should therefore be read in conjunction with the Group's Annual Report for the year ended 30th April, 2020 and any public announcements made by MS INTERNATIONAL plc during the interim reporting period.
These interim financial statements do not constitute statutory financial statements within the meaning of section 435 of the Companies Act 2006. The figures for the year ended 30th April, 2020 do not constitute the Group's statutory accounts for the period but have been extracted from the statutory accounts. The auditor's report on those accounts, which have been filed with the Registrar of Companies, was unqualified and did not contain any statement under section 498 (2) or (3) of the Companies Act 2006.
The interim financial information has been reviewed but not audited by the Group's auditor, Grant Thornton UK LLP. Their report is included on page 4.
The accounting policies are consistent with those applied in the financial statements of the Annual Report for year ended 30th April, 2020. The Group has not early adopted any standard, interpretation, or amendment that has been issued but is not yet effective.
As at the reporting date, the assets and liabilities of the overseas subsidiaries are translated into the presentation currency of the Group at the rate of exchange ruling at the balance sheet date and their income statements are translated at the weighted average exchange rates for the year. The exchange differences arising on the retranslation are taken directly to a separate component of equity.
3.  Principal risks and uncertainties
The principal risks and uncertainties facing the Group for the remaining six months of the financial year are discussed below. Further details of the Group's risks and uncertainties can be found on page 7 of the Annual Report for the year ended 30th April, 2020 available from MS INTERNATIONAL plc's website: www.msiplc.com.
One of the Group's principal risk and uncertainties continues to be the level of customer demand for the Group's products and services. Customer demand is driven mainly by general economic conditions in addition to pricing, product quality, and delivery performance of the Group in comparison to our competitors.
There continues to be considerable uncertainty in relation to the UK's future trading relationship with the EU. At the time of preparing these interim financial statements, the disclosure given in the Annual Report is still applicable and reflects the best understanding of how the withdrawal from the EU will impact the Group. The Board are monitoring the impact of how changes in the UK's trading relationship with the EU will affect the different parts of the Group and preparations have been made to take appropriate action if, and when, required.
The current environment brought about by Covid-19 creates uncertainty over the phasing of demand from customers, the financial impact of any future lockdowns in the geographical areas in which the Group operates, and other possible difficulties in the general economic environment. Given that the Group has plans in place to manage foreseeable challenges of the Covid crisis, healthy financial resources, and a number of long-term contracts with certain customers, the directors believe the Group is well placed to manage its business risk successfully despite the current economic outlook. Accordingly, the directors continue to conclude that the adoption of the going concern basis of accounting remains appropriate when preparing these interim financial statements.
4.  Going concern
In making the going concern assessment, as well as considering general risks and specifically the risks presented by Covid-19, the directors have considered the period to 12 months from the approval of the financial statements.

5.  Segment information
(a)  Primary reporting format - divisional segments
The following table presents revenue and profit information about the Group's divisions for the half-year periods ended 31st October, 2020 and 31st October, 2019.
		'Defence'				'Forgings'				'Petrol Station  Superstructures'				'Corporate  Branding'				Total
		2020		2019		2020		2019		2020		2019		2020		2019		2020		2019
																		unaudited		unaudited
		£'000		£'000		£'000		£'000		£'000		£'000		£'000		£'000		£'000		£'000
Revenue
From external customers		8,641		12,054		4,577		7,263		6,640		7,277		6,484		6,723		26,342		33,317
From other segments		-		-		-		-		51		145		66		95		117		240
Segment revenue		8,641		12,054		4,577		7,263		6,691		7,422		6,550		6,818		26,459		33,557
Segment result		(1,267)		42		(279)		54		835		291		(279)		(789)		(990)		(402)
Net finance expense																		(115)		(84)
Share of net profit of joint venture																		25		-
Loss before taxation																		(1,080)		(486)
Tax (expense)/income																		(2)		66
Loss for the period																		(1,082)		(420)
Capital expenditure		81		12		-		-		59		171		12		168		152		351
Depreciation		133		112		278		327		178		171		277		172		866		782
The following table presents segment assets and liabilities of the Group's divisions for the half-year periods ended 31st October, 2020 and 31st October, 2019.
Segmental assets		27,984		29,444		3,497		8,627		10,154		10,552		9,919		10,018		51,554		58,641
Unallocated assets																		16,275		13,568
Total assets																		67,829		72,209
Segmental liabilities		18,747		19,402		1,774		2,014		3,349		3,531		4,062		4,024		27,932		28,971
Unallocated liabilities																		11,441		9,594
Total liabilities																		39,373		38,565
Unallocated assets include certain fixed assets (including all UK properties), intangible assets, current assets, and deferred income tax assets. Unallocated liabilities include the defined benefit pension scheme liability, the deferred income tax liability, and certain current liabilities.

6.  Tax expense
The major components of the tax expense/(income) in the consolidated income statement are:
			Half-year to 31st October, 2020		Half-year to 31st October, 2019
			unaudited		unaudited
			£'000		£'000
Current tax expense			67		79
Deferred tax income			(65)		(145)
Total tax expense/(income) reported in the consolidated income statement			2		(66)
A change to the main UK corporation tax rate was enacted in a budget resolution on 17th March, 2020. From 1 April, 2020 the rate remains at 19%, cancelling the previously enacted rate reduction to 17%. Deferred income tax at 30th April, 2020 has therefore been provided at 19%. Deferred income tax in relation to intangibles recognised on the acquisition of 'MSI-Sign Group B.V.' has been provided at 25%, being the main corporation tax rate in The Netherlands.
7.  Earnings per share
The calculation of basic earnings per share is based on:
(a)	Loss for the period attributable to equity holders of the parent of £1,082,000 (2019 - £420,000 loss);
(b)	16,504,691 (2019 - 16,504,691) ordinary shares, being the weighted average number of ordinary shares in issue.
This represents 18,396,073 (2019 - 18,396,073), being the weighted average number of ordinary shares in issue less 245,048 (2019 - 245,048), being the number of shares held within the ESOT and less 1,646,334 (2019 - 1,646,334), being the number of shares purchased by the Company.
There are no dilutive instruments in place.
8.  Dividends paid and proposed
			Half-year to 31st October, 2020		Half-year to 31st October, 2019
			unaudited		unaudited
			£'000		£'000
Declared and paid during the six month period
Final dividend on ordinary shares for 2020 - 1.75p (2019 - 6.50p)			289		1,073
Proposed for approval
Interim dividend on ordinary shares for 2021 - 1.75p (2020 - 1.75p)			289		289
Dividend warrants will be posted on 18th January, 2021 to those members registered on the books of the Company on 29th December, 2020.

9.  Property, plant and equipment
At 31st October, 2020
		Freehold		Plant and
		property		equipment		Total
		£'000		£'000		£'000
Cost or valuation
At 30th April, 2020		17,746		15,858		33,604
Additions		-		152		152
Disposals		-		(364)		(364)
Exchange differences		(98)		1		(97)
At 31st October, 2020		17,648		15,647		33,295
Accumulated depreciation
At 30th April, 2020		970		12,523		13,493
Depreciation charge for the period		158		530		688
Disposals		-		(363)		(363)
Exchange differences		(6)		(1)		(7)
At 31st October, 2020		1,122		12,689		13,811
Net book value at 31st October, 2020		16,526		2,958		19,484
Analysis of cost or valuation
At professional valuation 2018		12,300		-		12,300
At cost		5,348		15,647		20,995
At 31st October, 2020		17,648		15,647		33,295
At 31st October, 2019
		Freehold		Plant and
		property		equipment		Total
		£'000		£'000		£'000
Cost or valuation
At 27th April, 2019		17,706		15,585		33,291
Additions		-		351		351
Disposals		-		(437)		(437)
Acquisition		-		274		274
Exchange differences		3		(10)		(7)
At 31st October, 2019		17,709		15,763		33,472
Accumulated depreciation
At 27th April, 2019		662		12,203		12,865
Depreciation charge for the period		160		531		691
Disposals		-		(426)		(426)
Exchange differences		(1)		(9)		(10)
At 31st October, 2019		821		12,299		13,120
Net book value at 31st October, 2019		16,888		3,464		20,352
Analysis of cost or valuation
At professional valuation 2018		12,300		-		12,300
At cost		5,409		15,763		21,172
At 31st October, 2019		17,709		15,763		33,472

At 30th April, 2020
		Freehold		Plant and
		property		equipment		Total
		£'000		£'000		£'000
Cost or valuation
At 27th April, 2019		17,706		15,585		33,291
Additions		-		721		721
Disposals		-		(736)		(736)
Acquisition		-		351		351
Exchange differences		40		(63)		(23)
At 30th April, 2020		17,746		15,858		33,604
Accumulated depreciation
At 27th April, 2019		662		12,203		12,865
Depreciation charge for the period		316		1,107		1,423
Disposals		-		(712)		(712)
Exchange differences		(8)		(75)		(83)
At 30th April, 2020		970		12,523		13,493
Net book value at 30th April, 2020		16,776		3,335		20,111
Analysis of cost or valuation
At professional valuation 2018		12,300		-		12,300
At cost		5,446		15,858		21,304
At 30th April, 2020		17,746		15,858		33,604
On 11th November, 2017, 26th July, 2017 and 28th March, 2018 the Group's land and buildings, which consist of manufacturing and office facilities in the UK, Poland and USA were valued by Dove Haigh Phillips (UK), KonSolid-Nieruchomosci (Poland) and Real Estate & Appraisal Services Inc (USA). Management determined that these constitute one class of asset under IFRS 13 (designated as level 3 fair value assets), based on the nature, characteristics and risks of the properties.
The properties in the UK were valued on the basis of an existing use value in accordance with the Appraisal and Valuation Standards (5th Edition) published by the Royal Institution of Chartered Surveyors. The Polish property was valued based on the income approach, converting anticipated future benefits in the form of rental income into present value. Finally, the US property was valued on an income and market value basis. For all properties, there is no difference between current use and highest and best use.
The valuation of the properties in the UK has been processed in the financial statements. Both the Polish and the US property valuations were sufficiently close to their carrying value such that the valuations were not processed.

10.  Right-of-use assets
At 31st October, 2020						Plant and
				Property		equipment		Total
				£'000		£'000		£'000
Cost or valuation
At 30th April, 2020				1,403		50		1,453
Additions				-		-		-
Lease amendment				(390)		-		(390)
Exchange differences				38		-		38
At 31st October, 2020				1,051		50		1,101
Accumulated depreciation
At 30th April, 2020				219		20		239
Depreciation charge for the period				168		10		178
Exchange differences				2		-		2
At 31st October, 2020				389		30		419
Net book value at 31st October, 2020				662		20		682
At 31st October, 2019						Plant and
				Property		equipment		Total
				£'000		£'000		£'000
Cost or valuation
At 27th April, 2019				-		-		-
IFRS 16 adjustment				755		26		781
Acquisition of subsidiary				501		-		501
Exchange differences				(8)		-		(8)
At 31st October, 2019				1,248		26		1,274
Accumulated depreciation
At 27th April, 2019				-		-		-
Depreciation charge for the period				84		7		91
Exchange differences				(2)		-		(2)
At 31st October, 2019				82		7		89
Net book value at 31st October, 2019				1,166		19		1,185
At 30th April, 2020						Plant and
				Property		equipment		Total
				£'000		£'000		£'000
Cost or valuation
At 27th April, 2019				-		-		-
IFRS 16 adjustment				755		26		781
Additions				162		24		186
Acquisition of subsidiary				501		-		501
Exchange differences				(15)		-		(15)
At 30th April, 2020				1,403		50		1,453
Accumulated depreciation
At 27th April, 2019				-		-		-
Depreciation charge for the period				228		20		248
Exchange differences				(9)		-		(9)
At 30th April, 2020				219		20		239
Net book value at 30th April, 2020				1,184		30		1,214
11.  Cash and cash equivalents
For the purpose of the interim consolidated cash flow statement, cash and cash equivalents are comprised of the following:
				31st October, 2020		31st October, 2019		20th April, 2020
				unaudited		unaudited		audited
				£'000		£'000		£'000
Cash at bank and in hand				7,457		13,955		16,125
Escrow account				6,554		-		-
Short term deposits				-		5,415		-
				14,011		19,370		16,125
The balance held in Escrow provides security to Lloyds Bank plc in respect of any guarantees, indemnities, and bond guarantees given by the group in the ordinary course of business.

12.  Pension liability
The Company operates an employee pension scheme called the MS INTERNATIONAL plc Retirement and Death Benefits Scheme ("the Scheme"). IAS 19 requires disclosure of certain information about the Scheme as follows:
-		Until 5th April, 1997, the Scheme provided defined benefits and these liabilities remain in respect of service prior to 6th April, 1997. From 6th April, 1997 until 31st May, 2007 the Scheme provided future service benefits on a defined contribution basis.
-		The last formal valuation of the Scheme was performed at 5th April, 2017 by a professionally qualified actuary.
-		From 6th April, 2016 the Company directly pays the expenses of the Scheme. With effect from April, 2018 the deficit reduction payments paid into the Scheme by the Company increased to £600,000 per annum. The deficit reduction contributions are paid on a quarterly basis with the first paid on 3rd April, 2018 and the last due for payment on or before 5th January, 2027. On 23rd April, 2020 it was agreed that contributions be made on a monthly basis from July 2020 to December 2020, after which contributions will revert to a quarterly basis.
-		From 1st June, 2007 the Company has operated a defined contribution scheme for its UK employees which is administered by a UK pension provider. Member contributions are paid in line with this Scheme's documentation over the accounting period and the Company has no further obligations once the contributions have been made.
-		During the period, the Scheme liability has increased by £512,000. A re-measurement loss of £642,000 (2019 - £849,000 loss) has been recognised through other comprehensive income. It comprises of a £484,000 remeasurement gain compared to the interest income on the plan assets and a £1,126,000 actuarial loss due to changes in financial assumptions. The actuarial loss of £1,126,000 is primarily a result of an increase in CPI/RPI inflation as well as a lower discount rate at the period end, both of which increased the Scheme's liabilities at 31st October, 2020. The interest cost on the net defined benefit liability of £70,000 has been recognised through the income statement. The Scheme's liabilities have been reduced by pension fund deficit payments in the period of £200,000 (2019 - £300,000).
-		A £1,198,000 liability for unrecognised past service cost relating to GMP equalisation cost was recognised in the Consolidated income statement for the 52 weeks ended 27th April, 2019. This liability has been remeasured and is included in the Scheme's liabilities at 31st October, 2020.
-		It may be some time before an agreed method for GMP calculations is approved. However, now that the estimated past service cost has been recognised in the Consolidated income statement for the year ended 27th April, 2019, further future changes to the estimate will be recognised in the Consolidated statement of comprehensive income.
13.  Commitments and contingencies
The Company is contingently liable in respect of guarantees, indemnities and performance bonds given in the ordinary course of business amounting to £6,976,530 at 31st October, 2020 (2019 - £4,637,538).
In the opinion of the Directors, no material loss will arise in connection with the above matters.
The Group and certain of its subsidiary undertakings are parties to legal actions and claims which have arisen in the normal course of business. The results of actions and claims cannot be forecast with certainty, but the directors believe that they will be concluded without any material effect on the net assets of the Group.

 

END

 

 

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