Preliminary Results

MS International PLC 29 June 2000 Contacts: Michael Bell, Chairman, MS International plc Tel: 01302 322 133 Terry Garrett, Square Mile Communications Ltd Tel 020 7601 1000 MS International plc Full Year Results to April 29th, 2000 * Pre-tax profits increased to £1.21m after £115,000 of acquisition reorganisation costs (1999: £1.12m) * Earnings per share up by 31% to 3.8p (1999: 2.9p) * Net cash over £1m higher at £2.47m, after £1.03m spent on share buy-backs * Final dividend of 0.90p per share (1999: 0.75p) for a 20% increase for the full year at 1.20p (1999: 1.00p) * Order book improved to £26.57m (1999: £23.71m) Michael Bell, Chairman, commented: 'The Group has achieved improved profits, a significant increase in earnings per share and excellent cash generation in the face of a tough trading environment. We have a strong order book, a balance sheet which is in good shape and there are opportunities to be taken. There is a solid platform in place to build for the future and continue to enhance earnings.' Chairman's Statement Results I am pleased to report that MS International plc has achieved higher profits, a significant increase in earnings per share and excellent cash generation, despite a trading environment which can only be described as tough. Pre-tax profits increased to £1.21m (1999: £1.12m), after reorganisation costs associated with an acquisition during the year, even though turnover was lower at £32.24m (1999: £35.82m). Earnings per share increased by 31% to 3.8p (1999: 2.9p). These results confirm that the Group has established a much improved earnings base for the future, while our commitment to enhancing margins and reducing the working capital requirements of the business, has been successfully translated into very positive cash generation. At the year-end, net cash had risen to £2.47m (1999: £1.42m), after the purchase of 3,975,000 of the Company's own shares at a cost of £1.03m, reported at the interim stage. The Defence and Forgings divisions together demonstrated considerable margin improvement although combined sales were marginally lower than the previous year. However, extreme fluctuations in demand in the Specialist Steel Fabrications division resulted in a year when the famine in orders was longer, and more damaging, than the late feast was able to redeem. In addition, this division's profits were dented by a one-off reorganisation charge of £115,000 relating to an acquisition of a leading competitor to our joint venture business - Global-MSI plc. I believe the overall achievement is a commendable performance, despite the relentless pressures that resulted from the many negative effects of the gradual, but incessant weakening of the 'Euroland' currencies. Disadvantaged by the weakness, the Group conceded some sales volume in our world- wide markets to competitors from that region. The Defence division remained a consistent contributor to both turnover and profit. After some delays in receiving orders the order book was reinvigorated in the latter part of the year but such delays inevitably make forecasting and budgeting a challenging task, notwithstanding the difficulties they bring in achieving planned operational activity and efficiencies. The Forgings division made excellent progress. The fork arm business intensified its determination to overcome the currency mismatch with a notable good all round performance throughout the operation. Added to that the open-die forgings business had another good year emanating from better utilisation of facilities that formed part of last year's capital investment programme. It is satisfying to see that our results compare more than just favourably with those of our competitors in the industry. It was however, a very difficult and unsatisfactory year for the Specialist Steel Fabrications division, a trend very much in common with results already reported by others in this depressed sector. Following competitive tendering successes, contract award dates became protracted, and start date delays on a number of contracts compounded the frustrations. These conditions made it difficult to maintain the momentum in volume without conceding some margin. Global-MSI plc - our joint venture company - had, with a certain astuteness, predicted a continuing depressed level of new building for petrol station outlets across Europe. Action was taken and as a consequence, the full detrimental effects on the business were minimised, while we awaited the restructured petrol retailers to initiate a new building programme cycle. The weak market for forecourt canopies did create a positive opportunity for us. Global-MSI plc acquired the business and assets of Conder Ltd. Though loss making, Conder was a formidable and long time competitor. That business has now been rationalised and the core quality of the remainder integrated into Global-MSI plc. Outlook We have welcomed the recent recovery of the 'Euroland' currencies, which should assist in restoring a measure of our competitiveness. It would be too presumptuous to assume that we can recover, in the short term, the business from those customers who, although perhaps reluctant to change, had little alternative but to seek supplies from countries operating with a more favourable exchange rate. We will, however, take every opportunity to maximise the potential that a more positive exchange rate would offer us. The Defence and Forgings divisions are both well placed to maintain their positive positions. The Specialist Steel Fabrications division is forecasting an improvement in trading conditions, with an enlarged Global-MSI plc in particular, looking to return to a much better level of activity. The Group order book is strong at £26.57m (1999: £23.71m), the balance sheet is in good shape and there are some opportunities to be taken. These factors should provide a good platform to build for the future, and strengthen the trading position of the Group's existing businesses and enhance earnings, although markets will undoubtedly remain fiercely competitive. The Board recommends the payment of an increased final dividend of 0.90p per share (1999: 0.75p), making a total for the year of 1.20p (1999: 1.00p), payable to shareholders on September 11th, 2000. Michael Bell June 29th, 2000 Group Profit and Loss Account For the 52 weeks ended April 29th, 2000 2000 1999 £000 £000 Turnover: Group and share of joint venture 32,235 35,825 Less: Share of joint venture turnover (3,797) (5,109) -------- -------- Group turnover 28,438 30,716 -------- -------- Operating profit 1,212 813 Share of operating profit of joint venture 10 374 -------- -------- 1,222 1,187 Exceptional items Profit on sale of tangible fixed assets: Group 5 3 Joint venture 3 7 -------- -------- Profit on ordinary activities before interest 1,230 1,197 Interest receivable: Group 126 32 Joint venture 9 19 Interest payable: Group (151) (131) -------- -------- Profit on ordinary activities before taxation 1,214 1,117 Tax on profit on ordinary activities (371) (392) -------- -------- Profit on ordinary activities after taxation 843 725 Dividends (249) (247) -------- -------- Retained profit for the Group and its share of joint venture 594 478 -------- -------- Earnings per share 3.8p 2.9p -------- -------- Group Statement of Recognised Gains and Losses 2000 1999 £000 £000 Profit for the financial period 843 725 Translation differences on foreign currency net investments 4 26 -------- -------- Total gains recognised since last annual report 847 751 -------- -------- Historical cost profits and losses There is no material difference between the result as disclosed in the profit and loss account and the result which would have been reported had the Group prepared the accounts on an unmodified historical cost basis. Notes The above profit and loss account for the 52 week period ended April 29th, 2000, is an abridged version of the Company's full Group accounts which have not yet been filed with the Registrar of Companies and which have not yet been reported on by the Company's auditors. The above profit and loss account for the 52 week period ended May 1st, 1999 is an abridged version of the Company's full audited Group accounts which have been filed with the Registrar of Companies and on which the Company's auditors gave an unqualified report. Dividend warrants will be posted on September 8th, 2000 to members registered on the books of the Company at August 11th, 2000. Balance Sheet At April 29th, 2000 2000 1999 Assets employed £000 £000 Fixed assets Tangible assets 6,358 6,428 Joint venture: Share of gross assets 1,587 1,383 Share of gross liabilities (1,184) (1,015) Investment in own shares 598 598 -------- -------- 7,359 7,394 -------- -------- Current assets Stocks 3,870 4,530 Debtors 5,717 6,402 Group pension scheme prepayment - due after more than one year 6,990 6,990 Cash at bank and in hand 3,165 2,447 -------- -------- 19,742 20,369 Creditors - amounts falling due within one year 10,229 10,232 -------- -------- Net current assets 9,513 10,137 -------- -------- Total assets less current liabilities 16,872 17,531 Creditors - amounts falling due after more than one year 78 250 Provisions for liabilities and charges 2,612 2,665 -------- -------- Total assets less liabilities 14,182 14,616 -------- -------- Capital and reserves Called up share capital 2,343 2,741 Capital redemption reserve 398 - Revaluation reserve 2,368 2,368 Other reserves 4,719 4,715 Special reserve 1,487 1,487 Profit and loss account 2,867 3,305 -------- -------- Equity shareholders' funds 14,182 14,616 -------- -------- Group Cash Flow Statement For the 52 weeks ended April 29th, 2000 2000 2000 1999 1999 £000 £000 £000 £000 Operating profit 1,212 813 Depreciation charge 533 545 Foreign exchange losses 4 26 RSA grant release (38) (37) Decrease/(increase) in stocks 2,212 (1,131) Decrease in debtors 674 511 (Increase) in creditors (1,081) (465) (Decrease)/increase in progress payments (274) 1,815 Increase in provisions 119 275 Provisions utilised (151) (209) -------- -------- Cash flow from operating activities 3,210 2,143 Dividends received from joint venture 51 100 Interest received/(paid) 26 (80) Taxation paid (417) (148) Purchase of tangible fixed assets (469) (391) Sale of tangible fixed assets 11 21 Loan (paid)/repaid (to)/from joint venture (75) 209 -------- -------- Capital expenditure and financial investment (533) (161) Dividends paid (268) (220) ------------------------------------------------------------------------- Cash inflow before financing 2,069 1,634 ------------------------------------------------------------------------- Cash inflow before financing 2,069 1,634 Financing Purchase of own shares (1,032) - Long term bank loans repaid (111) (364) Repayments of capital element of finance loans and hire purchase contracts (75) (63) New leases 94 - -------- -------- (1,124) (427) ------------------------------------------------------------------------- Increase in cash 945 1,207 ------------------------------------------------------------------------- Reconciliation of net cash flow to movement in net funds 2000 1999 £000 £000 Increase in cash 945 1,207 Cash flow from decrease in bank loans 111 364 Repayments of capital element of finance loans and hire purchase contracts 75 63 -------- -------- Changes in net funds resulting from cash flow 1,131 1,634 New leases (94) - -------- -------- Movement in net funds 1,037 1,634 Net funds/(debt) at May 1st, 1999 1,328 (306) -------- -------- Net funds at April 29th, 2000 2,365 1,328 -------- -------- Analysis of net funds Cash 2000 flows 1999 £000 £000 £000 Cash at bank and in hand 3,165 718 2,447 Bank overdraft (691) 227 (918) ------ ------ ------ 2,474 945 1,529 Bank loan - 111 (111) Finance leases and hire purchase contracts (109) (19) (90) ------ ------ ------ 2,365 1,037 1,328 ------ ------ ------

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