Half Yearly Report

RNS Number : 6124S

MS International PLC

23 November 2011

 



MS INTERNATIONAL plc

Unaudited Interim Condensed

Group Financial Statements

29th October, 2011

MS INTERNATIONAL plc

EXECUTIVE DIRECTORS

Michael Bell

Michael O'Connell

David Pyle

NON EXECUTIVE

Roger Lane-Smith

SECRETARY

David Pyle

REGISTERED OFFICE

Balby Carr Bank

Doncaster

DN4 8DH

England

PRINCIPAL OPERATING DIVISIONS

Defence

Forgings

Petrol Station Superstructures

Chairman's Statement

It is once again, a pleasure to report another compelling performance for the Group presenting a 60% uplift in profit before taxation and exceptional gain, on revenue some 10% higher than that reported for the corresponding period.

For the half year ended 29th October 2011, a £4.09m (2010-£2.56m) profit before taxation and exceptional gain was realised on revenue of £27.86m (2010-£25.34m). Earnings per share amounted to 16.6p (2010-10.0p).

The balance sheet remains robust with net cash and short term deposits totalling £7.67m. At the 30th April 2011, the figure was £9.88m.

'Defence' opened the period with a substantial level of orders on hand and a well-balanced programme of output to meet contract obligations throughout the current year. It delivered another strong performance in the half year although overall revenue and profits did not quite match the record figures for the comparable period, essentially owing to the phasing of customer delivery requirements.

'Forgings' has continued to make an encouraging recovery, lifting revenue and profitability, making a welcome contribution to Group profits. This positive progression follows through from the sustained investment and development within the divisions businesses, here in the UK and those of our operations in both North and South America.

Similarly, 'Petrol Station Superstructures' has flourished since becoming a wholly owned subsidiary of the Group last year. Restructured and redirected with a firm focus on operational performance and product development, operations in both the UK and Poland have grown revenue and returned a notable profit contribution to the Group.

The total profit contribution to the Group from the two latter industrial engineering divisions of £1.34m (2010-£0.49m loss) is encouraging particularly in this squally economic environment.

As we enter the second half of the year, overall the Group is in good shape. The balance sheet is strong and the order book is better balanced over the three divisions than has been the case for some considerable time. 'Defence' has a formidable base load of business for the remainder of the year, providing a good measure of certainty. 'Forgings' has a higher value order book than has been the case for many months, despite the visibility remaining characteristically very short term. The two 'Petrol Station Superstructure' businesses should also benefit from a good workload in hand with some further opportunities anticipated.

The Board is confident as to the full year outlook for the Group, but clearly, the prolonged macro-economic turmoil is not helpful in offering any real degree of certainty beyond that time frame. Nevertheless, the Group, as I have outlined, is in robust condition, vigilant and ready to adapt to any shifts in market conditions. Consequently, the Board considers it appropriate to increase the interim dividend per share to 1.5p (2010-1.0p)

Michael Bell                                                                                                                                            23rd November 2011

Interim Group income statement
					26 weeks ended 29th Oct., 2011		26 weeks ended 30th Oct., 2010
					Unaudited		Unaudited
			Notes		£000		£000
Products					20,855		16,311
Contracts					7,008		9,024
Revenue			5		27,863		25,335
Cost of sales					(18,629)		(17,546)
Gross profit					9,234		7,789
Distribution costs					(1,120)		(847)
Administrative expenses					(3,887)		(4,339)
Group trading profit			5		4,227		2,603
Finance revenue					11		9
Financial instrument fair value					(237)		-
Finance costs					(3)		(28)
Other finance revenue/(costs)- pension					94		(25)
Profit before taxation and exceptional gain					4,092		2,559
Exceptional gain					-		1,250
Profit before taxation					4,092		3,809
Taxation			6		(1,070)		(754)
Profit for the period attributable to equity holders of the parent					3,022		3,055
Earnings per share: basic and diluted			7		16.6p		17.0p
Adjusted earnings per share : basic and diluted			7		16.6p		10.0p
Interim Group statement of comprehensive income
					26 weeks ended 29th Oct., 2011		26 weeks ended 30th Oct., 2010
					Unaudited		Unaudited
					£000		£000
Actuarial losses on defined benefit pension scheme					(1,929)		(255)
Deferred taxation on actuarial losses on defined benefit pension scheme					467		72
Exchange  differences on retranslation of foreign operations					(87)		(19)
Net losses recognised directly in equity					(1,549)		(202)
Profit attributable to equity holders of the parent					3,022		3,055
Total comprehensive income for the period attributable to equity holders of the parent					1,473		2,853

Interim Group balance sheet
													Notes			29th Oct., 2011				30th April, 2011
																Unaudited				Audited
ASSETS																£000				£000
Non-current assets
Property, plant and equipment													9			12,447				12,514
Intangible assets																4,972				5,160
																17,419				17,674
Current assets
Inventories																5,309				3,556
Trade and other receivables																14,273				12,482
Financial assets																140				377
Prepayments																1,291				1,510
Cash and short-term deposits													10			7,670				9,877
																28,683				27,802
TOTAL ASSETS																46,102				45,476
EQUITY AND LIABILITIES
Equity
Issued capital																1,840				1,840
Capital redemption reserve																901				901
Other reserves																2,815				2,815
Revaluation reserve																2,490				2,469
Special reserve																1,629				1,629
Currency translation reserve																97				184
Treasury shares																(100)				(100)
Retained earnings																16,598				16,036
Total Equity																26,270				25,774
Non-current liabilities
Deferred income tax liability																686				1,207
Defined benefit pension liability													11			3,454				1,819
																4,140				3,026
Current liabilities
Trade and other payables																14,309				15,862
Income tax payable																1,383				814
																15,692				16,676
TOTAL EQUITY AND LIABILITIES																46,102				45,476
Interim Group statement of  changes in equity
			Issued capital		Capital redemption reserve		Other reserves		Revaluation reserve		Special reserve			Foreign exchange reserve		Treasury shares		Retained earnings				Total Unaudited
			£'000		£'000		£'000		£'000		£'000			£'000		£'000		£'000				£'000
At 30th April, 2011			1,840		901		2,815		2,469		1,629			184		(100)		16,036				25,774
Profit for the period			-		-		-		-		-			-		-		3,022				3,022
Other comprehensive loss			-		-		-		-		-			(87)		-		(1,462)				(1,549)
			1,840		901		2,815		2,469		1,629			97		(100)		17,596				27,247
Change in taxation rates			-		-		-		21		-			-		-		-				21
Dividend paid			-		-		-		-		-			-		-		(998)				(998)
At 29th October, 2011			1,840		901		2,815		2,490		1,629			97		(100)		16,598				26,270
			Issued capital		Capital redemption reserve		Other reserves		Revaluation reserve		Special reserve			Foreign exchange reserve		Treasury shares		Retained earnings				Total Unaudited
			£'000		£'000		£'000		£'000		£'000			£'000		£'000		£'000				£'000
At 1st May, 2010			1,840		901		1,565		2,969		1,629			181		(391)		10,279				18,973
Profit for the period			-		-		-		-		-			-		-		3,055				3,055
Transfer			-		-		1,250		-		-			-		-		(1,250)				-
Other comprehensive loss			-		-		-		-		-			(19)		-		(183)				(202)
			1,840		901		2,815		2,969		1,629			162		(391)		11,901				21,826
Share based payments			-		-		-		-		-			-		-		6				6
At 30th October, 2010			1,840		901		2,815		2,969		1,629			162		(391)		11,907				21,832

Interim Group cash flow statement
		26 weeks ended 29th Oct., 2011		26 weeks ended 30th Oct., 2010
		Unaudited		Unaudited
		£'000		£'000
Profit before taxation and exceptional gain		4,092		2,559
Adjustments to reconcile profit before taxation to net cash in flows from operating activities
Depreciation charge		634		823
Amortisation charge		188		204
Profit on disposal of fixed assets		(25)		-
Finance costs		135		44
Foreign exchange movements		(70)		4
RSA grant release		-		(3)
Share based payments		-		6
Increase in inventories		(2,760)		(2,626)
Increase in receivables		(1,791)		(2,466)
Decrease/(increase) in prepayments		219		(235)
Increase in payables		1,105		1,321
Decrease in progress payments		(1,651)		(72)
Pension fund payments		(200)		(200)
Cash generated from operating activities		(124)		(641)
Interest received/(paid)		8		(19)
Taxation paid		(535)		(669)
Net cash flow from operating activities		(651)		(1,329)
Investing activities
Purchase of shares in Global-MSI plc net of cash acquired		-		(3,532)
Purchase of property,  plant and equipment		(602)		(174)
Sale of property, plant and equipment		44		141
Net cash used in investing activities		(558)		(3,565)
Financing activities
Dividend paid		(998)		-
Net cash flows used in financing activities		(998)		-
Movement in cash and cash equivalents		(2,207)		(4,894)
Opening cash and cash equivalents		9,877		8,911
Closing cash and cash equivalents		7,670		4,017

Notes to the interim Group 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 London Stock Exchange.  The principal activities of the Company and its subsidiaries ("the Group") are described in Note 5.
	The interim condensed consolidated financial statement of the Group for the twenty six weeks ended 29th October, 2011 were authorised for issue in accordance with a resolution of the directors on 23rd November, 2011.
2	Basis of preparation and accounting policies
	The annual financial statements of the Group are prepared in accordance with IFRS as adopted by the European Union. The condensed set of financial statements included in this half-yearly financial report which has not been audited has been prepared in accordance with International Accounting Standard 34, "Interim Financial Reporting," as adopted by the European Union.
	The interim financial information has been reviewed by the Group's auditors, Ernst & Young LLP, their report is included on page 3. These interim financial statements do not constitute statutory financial statements within the meaning of section 435 of the Companies Act 2006. The interim condensed consolidated financial statements do not include all the information and disclosures required in the annual financial statements and should be read in conjunction with the Group's annual financial statements as at 30th April, 2011.
	The accounting policies adopted in the preparation of the interim condensed consolidated financial statements are consistent with those followed in the preparation of the Group's annual financial statements for the year ended 30th April, 2011. The following standards, amendments and interpretations will be applied for the first time in the Group's statutory accounts for the year ended 28th April, 2012.
	International Accounting Standards (IAS/IFRSs)
	IFRS 7 Financial Instruments: (Disclosures Amendments)
	IAS 24 Related Party Disclosures (Revised)
	International Financial Reporting Interpretations Committee (IFRIC)
	IFRIC 14 Prepayments of Minimum Funding Requirements (Amendment)
	The figures for the year ended 30th April, 2011 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.
3	Principal risks and uncertainties
	The principal risk and uncertainties facing the Group relate to levels of customer demand for the Group's products and services.  Customer demand is driven mainly by general economic conditions but also by pricing, product quality and delivery performance of MS INTERNATIONAL plc and in comparison with our competitors.  Sterling exchange rates against other currencies can influence pricing.
	The Group has considerable financial resources together with long term contracts with a number of customers.  As a consequence, the Directors believe that the Group is well placed to manage its business risk successfully despite the current uncertain economic outlook.
	After making enquiries the Directors have a reasonable expectation that the Company and the Group have adequate resources to continue in operational existence for the foreseeable future.  Accordingly, they continue to adopt the going concern basis in preparing the annual report and accounts.
4	Statement of directors' responsibilities
	The directors as listed on page 1 confirm that this condensed set of financial statements has been prepared in accordance with IAS 34 as adopted by the European Union, and that the interim report herein includes a fair review of the information required by DTR 4.2.7 and DTR 4.2.8, which includes information required on material transactions with related parties and changes since the last annual report.

5	Segment information
(a)	Primary reporting format - Divisional segments
	The following table presents revenue and profit and certain assets and liability information regarding the Group's divisions for the periods ended 29th October, 2011 and 30th October, 2010.  The reporting format is determined by the differences in manufacture and services provided by the Group.  The Defence division is engaged in the design, manufacture and service of defence equipment.  The Forgings division is engaged in the manufacture of forgings.  The Petrol Station Forecourt Structures division is engaged in the design and construction of petrol station forecourt structures.  The Directors are of the opinion that seasonality does not significantly affect these results.
			Defence				Forgings				Petrol Station				Total
											Forecourt Structures
			2011		2010		2011		2010		2011		2010		2011		2010
															Unaudited		Unaudited
			£000		£000		£000		£000		£000		£000		£000		£000
	Revenue
	External		14,454		15,610		7,875		5,966		5,534		3,759		27,863		25,335
	Total revenue		14,454		15,610		7,875		5,966		5,534		3,759		27,863		25,335
	Segment result		2,886		3,096		501		(292)		840		(201)		4,227		2,603
	Net finance expense														(135)		(44)
	Profit before exceptional gain														4,092		2,559
	Exceptional gain														-		1,250
	Profit before taxation														4,092		3,809
	Taxation														(1,070)		(754)
	Profit for the period														3,022		3,055
	Segmental assets		28,741		29,617		5,617		6,036		3,914		8,437		38,272		44,090
	Unallocated assets														7,830		-
	Total assets														46,102		44,090
	Segmental liabilities		9,574		12,454		2,066		1,841		2,664		2,650		14,304		16,945
	Unallocated liabilities														5,528		5,313
	Total liabilities														19,832		22,258
	Capital expenditure		97		31		341		31		132		112
	Depreciation		171		152		212		427		135		118

(b)	Secondary reporting format - Geographical segments
	The following table presents revenue and expenditure and certain assets and liabilities information by geographical segment for the periods ended 29th October, 2011 and 30th October, 2010.  The Group's geographical segments are based on the location of the Group's assets.  Revenue from external customers is based on the geographical location of its customers.
			Europe				North America				Rest of the World				Total
			2011		2010		2011		2010		2011		2010		2011		2010
															Unaudited		Unaudited
			£000		£000		£000		£000		£000		£000		£000		£000
	Revenue
	External		13,215		17,317		9,150		4,681		5,498		3,337		27,863		25,335
	Assets		45,454		42,518		580		673		68		899		46,102		44,090
	Liabilities		19,647		22,231		155		14		30		13		19,832		22,258
	Capital expenditure		347		170		182		-		73		4		602		174

6	Income tax
	The major components of income tax expense in the consolidated income statement are:
						26 weeks ended 29th Oct., 2011			26 weeks ended 30th Oct., 2010
						Unaudited			Unaudited
						£'000			£'000
	Current income tax charge					1,155			891
	Current tax					1,155			891
	Relating to origination and reversal of temporary differences					(44)			(137)
	Impact of reduction in deferred tax rate ( 26% to 25%)					(41)			-
	Deferred tax					(85)			(137)
	Total income tax expense reported in the consolidated income statement					1,070			754
7	Earnings per share
	The calculation of basic and diluted earnings per share is based on:
	(a)	Profit for the period attributable to equity holders of the parent of £3,022,000 (2010 - £3,055,000);
	(b)	18,151,025 (2010 - 18,001,025) Ordinary shares, being the weighted average number of Ordinary shares in issue .
	The calculation of basic and diluted adjusted earnings per share is based on:
	(a)	Profit for the period attributable to equity holders of the parent , excluding the exceptional gain, of £3,022,000 (2010 - £1,805,000);
	(b)	18,151,025 (2010 - 18,001,025) Ordinary shares, being the weighted average number of Ordinary shares in issue .

8

Dividends paid and proposed

26 weeks ended 29th Oct., 2011

26 weeks ended 30th Oct., 2010

Unaudited

Unaudited

£'000

£'000

Declared and paid during the six month period

Dividend on ordinary shares

Final dividend for 2011 - 5.50p

998

-

Proposed for approval

Interim dividend for 2011 - 1.50p (2010 - 1.00p)

270

180

Dividends warrants will be posted on 20th January, 2012 to those members registered on the books of the Company on  6th January, 2012.

9

Property, plant and equipment

Acquisitions and disposals:

During the twenty six weeks ended 29th October, 2011, the Group acquired assets with a cost of £602,000 (2010 - £174,000).

Assets with a net book value of £19,000(2010-£141,000) were disposed of by the Group for proceeds of £44,000 (2010-£141,000) during the 26 weeks ended 29th October, 2011, resulting in a gain on disposal of £25,000  (2010 -  £nil).

10

Cash and cash equivalents

For the purpose of the interim consolidated cash flow statement, cash and cash equivalents are comprised of the following:

29th Oct., 2011

30th April., 2011

Unaudited

Audited

£'000

£'000

Cash at bank and in hand

3,165

9,872

Short term deposits

4,505

5

7,670

9,877

11

Pension liability

The Company operates an employee pension scheme called the MS International plc Retirement and Death Benefits Scheme ("the Scheme").   IAS19 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 the Scheme provides future service benefits on a defined contribution basis.

*

The last formal valuation of the Scheme was performed at 5th April, 2011 by a professionally qualified actuary.

*

Members have paid contributions at a rate in line with the Scheme's documentation over the accounting period.

*

The employer has paid members contributions to the defined contributions section of the Scheme, life assurance premiums and other Scheme expenses. In addition, from April 2009, the employer has paid £200,000 per annum to the defined benefit section of the scheme.

The Company's policy for recognising actuarial gains and losses is to recognise them immediately in the Statement of Comprehensive Income.

12

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 £9,209,747 at 29th October, 2011 (2010 - £8,255,640).

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.

Independent Review Report to MS INTERNATIONAL plc

Introduction

We have been engaged by the Company to review the condensed set of financial statements in the half-yearly financial report for the 26 weeks ended 29 October 2011 which comprises the Interim Group income statement, Interim Group balance sheet, Interim Group statement of changes in equity, Interim Group cash flow statement and the related explanatory notes. We have read the other information contained in the half yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.

This report is made solely to the Company in accordance with guidance contained in International Standard on Review Engagements 2410 (UK and Ireland) "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing Practices Board. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company, for our work, for this report, or for the conclusions we have formed.

Directors' Responsibilities

The half-yearly financial report is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the half-yearly financial report in accordance with the Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority.

As disclosed in note 2, the annual financial statements of the Group are prepared in accordance with IFRSs 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 to the Company a conclusion 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" issued by the Auditing Practices Board for use in the United Kingdom. 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 Ireland) 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.

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 26 weeks ended 29 October 2011 is not prepared, in all material respects, in accordance with International Accounting Standard 34 as adopted by the European Union and the Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority.

Ernst & Young LLP

Leeds

22 November 2011

 

END

 

 

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