Final Results

RNS Number : 6001N

MS International PLC

15 June 2010

 



 

 

 

 

Chairman's Statement

 

Results and review

I am pleased to report that the Group has performed well overall, albeit with mixed results from our diverse businesses, when taking into account the recessionary global economic conditions that prevailed throughout the year. Inevitably, revenue was down compared to last year, primarily as a result of lower European demand, though there is no evidence to suggest that we have lost market share in any of the world markets that we serve.

Within that overall performance, the Group achieved a much improved result in the second half of the year to 1st May, 2010, after the substantial down turn in the first half of the year. For the year as a whole, profit before taxation amounted to £3.34m (2009-£4.92m) on revenue of £41.04m (2009-£51.56m). Earnings per share were 13.3p (2009-19.5p) covering the maintained dividend almost three times.

Net cash and short term deposits at the year-end amounted to £8.91m (2009-£8.23m).

'Defence' produced another record set of results reflecting growth in revenue, profitability, cash and orders on hand. The growth came primarily from strong export sales and manufacturing efficiencies, resulting from our ongoing capital investment in that business. This division accounted for some 60% of Group revenue and has orders on hand some 40% higher than at this time last year.  

'Forgings' by comparison was buffeted by extremely tough trading conditions and  revenue was down 50% on last year as the principal world-wide markets that we serve in the fork-lift truck, construction, agricultural equipment and general engineering sectors came under immense pressure of their own. As a result the division disappointingly slid into a full year loss. 

'Petrol Station Forecourt Structures' endured a weak European-wide construction programme for new petrol filling stations. Revenue was almost 40% lower than that reported last year. The implementation of tighter controls on costs, working capital, stricter operational systems and project management made it possible for the business to remain marginally profitable.

The Group's financial strength allowed us to continue investing in the development of new products and efficient manufacturing processes, whilst re-aligning those parts of the business adversely impacted by the persistent recession. The confidence that a strong debt free balance sheet engenders assisted the Group's global marketing. This was also a positive factor in our ability to recruit some high quality personnel seeking a more stable environment and in particular, it gives us a platform from which to take advantage of commercial opportunities.

One such opportunity arose shortly after the year end, when we acquired the 50% shareholding in Global-MSI, the petrol station forecourt structures business, until then held by our then joint venture partner of 17 years. Global-MSI is now a wholly owned subsidiary of MSI. 

Outlook

'Defence'; our strategy of intensifying the marketing of our naval gun systems to overseas navies and shipbuilders is proving most fruitful and fortuitously permits the business to become even less dependent for revenue on our valued customer, the UK Ministry of Defence with which we have a number of long term contracts. The changing nature of naval requirements and conflict definition is opening up a global market to meet our expansive ambitions. Supported by a substantial level of orders on hand and numerous prospects emerging, the outlook for this design and manufacturing business looks very promising.

The forgings businesses are at last seeing some positive signs of an incremental, though as yet pedestrian, recovery in order intake. Although where appropriate, restructuring and re-organisation of the individual businesses within the division has facilitated the re-alignment of operations to a lower and more effective cost base, the forging facilities are operating well below the available capacity and pre-recession levels. We are of the opinion that demand in the markets that this division services could remain subdued in the short to medium term. The outcome for the current year will depend upon a successful and sustainable global economic recovery, but recent increases in commodity prices may stifle any significant upturn in trading that would otherwise create the opportunity to restore the appropriate level of financial contribution that this division has made previously to the Group results.

Global-MSI, with operations based in both the UK and Poland, encompasses the design, manufacture and construction of petrol station forecourt structures across Europe for a number of the major oil companies, supermarkets and petrol retailers. Although, understandably, many clients are generally cautious about committing to new projects there has been a marked uplift in project tendering activity recently, which is an encouraging sign. Also, having acquired the whole of the Global-MSI business, there are a number of initiatives that we are implementing to enhance performance and create greater opportunities for the business.

From an overall Group perspective, 'Defence' has a very clear and positive outlook for the current year, whilst the prospects of the other two division which both operate on short lead time order books are more opaque and highly dependent and influenced by the vagaries and uncertainty of the global economy and currency fluctuations.

Although the world has already endured some twenty months of recessionary conditions, it would be unrealistic to anticipate a widespread recovery in the short term as market uncertainty prevails. Accordingly the Group, which remains debt free, will continue to maintain a tight control of cash and working capital and at the same time keep firmly focused on making positive and constructive decisions to sharpen our operations.

In my 2009 chairman's statement, I concluded that future results would depend upon the degree and duration of this recession and though hopeful of an upturn we did not anticipate that it would happen in the short term.  Frankly, I see no good reason to change that view and consequently we will maintain our prudent position of basing our future business strategy upon continuing difficult market conditions in the current year.

On the 3rd March, 2010, the Board announced that it had declared a second interim dividend of 3.80p per share, in respect of the year ending 1^st May, 2010, which was subsequently paid on 31^st March, 2010 to those members registered on the books of the Company on 12^th March, 2010. Accordingly the Board recommends that this early payment should now be considered as the final payment for the year and represents a maintained total dividend paid per share of 4.50p (2009-4.50p)

 Michael Bell

14th June, 2010

The financial information set out above does not constitute the Company's statutory accounts for the periods ended 1st May, 2010 or 2nd May, 2009 but is derived from those accounts.  Statutory accounts for 2009 have been delivered to the Registrar of Companies, and those for 2010 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 £2,389,000 (2009 - £3,518,000) by the weighted average of 18,001,025 (2009 - 18,020,015) 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 14 June 2010 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.

Group income statement
For the 52 weeks ended 1st May, 2010
																						2010				2009
																						Total				Total
																						£000				£000
Revenue																						41,039				51,559
Cost of sales																						(30,077)				(39,139)
Gross profit																						10,962				12,420
Distribution costs																						(1,524)				(1,665)
Administrative expenses																						(6,026)				(6,442)
																						(7,550)				(8,107)
Group trading profit																						3,412				4,313
Finance revenue																						10				142
Finance costs																						(19)				(6)
Other finance (costs)/ revenue - pensions																						(62)				470
																						(71)				606
Profit before taxation																						3,341				4,919
Taxation																						(952)				(1,401)
Profit for the period attributable to equity holders of the parent																						2,389				3,518
Earnings per share:  basic and diluted																						13.3p				19.5p
Group and company statement of comprehensive income
For the 52 weeks ended 1st May, 2010
													Group									Company
													2010					2009				2010				2009
													Total					Total				Total				Total
													£000					£000				£000				£000
Actuarial losses on defined benefit pension scheme													(2,081)					(5,511)				(2,081)				(5,511)
Current taxation on actuarial losses on defined benefit pension scheme													112					106				112				106
Deferred taxation on actuarial losses on defined benefit pension scheme													471					1,437				471				1,437
Exchange differences on retranslation of foreign operations													54					158				-				-
Net (expense) recognised directly in equity													(1,444)					(3,810)				(1,498)				(3,968)
Profit attributable to equity holders of the parent													2,389					3,518				2,872				3,453
Total recognised income and expense for the period attributable to equity holders of the parent													945					(292)				1,374				(515)
	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
	At 3rd May, 2008				1,845		896		1,565		2,969			1,629			(31)			(391)				12,131				20,613
	Profit for the period				-		-		-		-			-						-				3,518				3,518
	Other comprehensive profit/(loss)				-		-		-		-			-			158			-				(3,968)				(3,810)
	Total comprehensive income				1,845		896		1,565		2,969			1,629			127			(391)				11,681				20,321
	Dividends paid				-		-		-		-			-			-			-				(812)				(812)
	Repurchase of shares				(5)		5		-		-			-			-			-				(99)				(99)
	Share based payments				-		-		-		-			-			-			-				90				90
	At 2nd May, 2009				1,840		901		1,565		2,969			1,629			127			(391)				10,860				19,500
	(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 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
	At 3rd May, 2008				1,845		896		1,565		2,969			1,629			-			(391)				10,247				18,760
	Profit for the period				-		-		-		-			-						-				3,453				3,453
	Other comprehensive profit/(loss)				-		-		-		-			-			-			-				(3,968)				(3,968)
	Total comprehensive income				1,845		896		1,565		2,969			1,629			-			(391)				9,732				18,245
	Dividends paid				-		-		-		-			-			-			-				(812)				(812)
	Repurchase of shares				(5)		5		-		-			-			-			-				(99)				(99)
	Share based payments				-		-		-		-			-			-			-				90				90
	At 2nd May, 2009				1,840		901		1,565		2,969			1,629			-			(391)				8,911				17,424

Balance sheets
At 1st May, 2010
		Group				Company
		2010		2009		2010		2009
		£'000		£'000		£'000		£'000
ASSETS
Non-current assets
Property, plant and equipment		14,634		15,810		13,943		15,103
Intangible assets		172		106		172		106
Investments in subsidiaries		-		-		6,869		6,869
Investment in joint venture		-		-		50		50
Deferred income tax asset		118		-		90		-
		14,924		15,916		21,124		22,128
Current assets
Inventories		3,947		3,989		3,512		3,242
Trade and other receivables		10,134		5,712		10,055		5,594
Prepayments		1,675		1,600		1,608		1,528
Cash and short-term deposits		8,911		8,234		7,821		7,027
		24,667		19,535		22,996		17,391
TOTAL ASSETS		39,591		35,451		44,120		39,519
EQUITY AND LIABILITIES
Equity
Equity share capital		1,840		1,840		1,840		1,840
Capital redemption reserve		901		901		901		901
Other reserve		1,565		1,565		1,565		1,565
Revaluation reserve		2,969		2,969		2,969		2,969
Special reserve		1,629		1,629		1,629		1,629
Currency translation reserve		181		127		-		-
Treasury shares		(391)		(391)		(391)		(391)
Retained earnings		10,279		10,860		8,813		8,911
		18,973		19,500		17,326		17,424
Non-current liabilities
Defined benefit pension liability		4,548		2,805		4,548		2,805
Government grants		-		3		-		3
Deferred income tax liability		-		610		-		617
		4,548		3,418		4,548		3,425
Current liabilities
Trade and other payables		15,408		11,977		21,438		17,951
Government grants		3		13		3		13
Income tax payable		659		543		805		706
		16,070		12,533		22,246		18,670
TOTAL EQUITY AND LIABILITIES		39,591		35,451		44,120		39,519

Cash flow statements
For the 52 weeks ended 1st May, 2010		Group				Company
		2010		2009		2010		2009
		£000		£000		£000		£000
Profit before taxation		3,341		4,919		3,203		4,446
Adjustments to reconcile  profit before taxation to net cash in flow from operating activities
Depreciation charge		1,650		1,704		1,441		1,463
Amortisation charge		34		79		34		79
Finance costs/(revenue)		71		(606)		79		(596)
Diminution in value of subsidiaries		-		-		-		(1)
Foreign exchange gains		5		146		108		95
RSA grant release		(13)		(13)		(13)		(13)
Share based payments		22		90		22		90
(Increase)/decrease in inventories		(1,271)		1,342		(1,627)		556
(Increase)/decrease in receivables		(4,422)		1,862		(4,461)		1,376
(Increase)/decrease in prepayments		(75)		1,325		(80)		1,318
Increase/(decrease) in payables		712		(3,332)		716		(2,719)
Increase/(decrease) in progress payments		4,032		(5,524)		4,128		(5,103)
Pension fund		(400)		(380)		(400)		(380)
Cash generated from operating activities		3,686		1,612		3,150		611
Interest/(paid) received		(9)		136		(17)		126
Taxation paid		(981)		(1,219)		(964)		(914)
Net cash inflow/(outflow) from operating activities		2,696		529		2,169		(177)
Investing activities
Purchase of property , plant and equipment		(431)		(1,506)		(282)		(1,397)
Purchase of intangible assets		(100)		(47)		(100)		(47)
Sale of property, plant and equipment		6		102		1		100
Dividends received from joint venture		-		-		500		250
Net cash from investing activities		(525)		(1,451)		119		(1,094)
Financing activities
Repurchase of shares		-		(99)		-		(99)
Dividends paid		(1,494)		(812)		(1,494)		(812)
Repayments of capital element of finance leases		-		(4)		-		-
Net cash flow from financing activities		(1,494)		(915)		(1,494)		(911)
Increase/(decrease) in cash and cash equivalents		677		(1,837)		794		(2,182)
Opening cash and cash equivalents		8,234		10,071		7,027		9,209
Closing cash and cash equivalents		8,911		8,234		7,821		7,027

 

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