Half-year Report

RNS Number : 9844P
MS International PLC
24 November 2016
 

 

 

 

 

MS INTERNATIONAL plc



 

 

Unaudited Interim Condensed

 

Group Financial Statements

 

29th October, 2016

 

 



 


 

 

EXECUTIVE DIRECTORS

Michael Bell

Michael O'Connell

Nicholas Bell

 

 

 

 

NON EXECUTIVE

Roger Lane-Smith

David Pyle

David Hansell

 

 

 

SECRETARY

David Kirkup

 

 

 

 

REGISTERED OFFICE

Balby Carr Bank

Doncaster

DN4 8DH

England

 

 

 

 

PRINCIPAL OPERATING DIVISIONS

Defence

Forgings

Petrol Station Superstructures

Petrol Station Branding

 

 



 

Chairman's Statement

 

It is again pleasing to report that we continue to make good overall progress across our diverse businesses, despite the persistent political and economic uncertainty prevailing around the world and in the varied markets we serve.

 

For the first half year ended 29th October 2016, profit before taxation increased to £0.61m (2015 - £0.40m) on an uplift in revenue to £25.00m (2015 - £23.98m). Earnings per share amounted to 3.3p (2015 - 2.4p)

 

The balance sheet remains robust with net cash and short term deposits amounting to £9.76m. This strong position has been maintained notwithstanding the cash impact of costs relating to the strategically important construction, together with first phase equipping, of our new substantial fork-arm manufacturing plant in the United States. Cash at the last year end was £12.76m.

 

The upward trajectory in revenue at 'Defence' continues, despite the relentless and inevitable frustrations of new programme order delays arising primarily from current financial budget constraints for many customers. 'Forgings' markets generally remained subdued and consequently highly competitive but despite adverse conditions revenue was maintained. 'Petrol Station Superstructures' operations in the UK and Poland, by contrast, achieved an outstandingly high level of activity on new station developments complemented by extensive station upgrades and repair and maintenance programmes. However, a short term delay against the proposed initiation date for a major rebranding programme in mainland Europe by one of our customers, caused a disappointing downturn in revenue at Petrol Sign bv. Pleasingly, instructions to proceed have since been given and so we anticipate a busy period for some months ahead, subject to the caveat of there not being excessively inclement weather conditions to slow down the installation work.

 

As previously reported, following the acquisition of Petrol Sign bv last year, we initiated 'Petrol Sign' brand start-up operations in the UK and Germany. It is most encouraging that both have made a very positive start and have won business in their markets.  Following these successful initial developments and recognising the growth potential for all three of our 'Petrol Sign' businesses, we formed a new Group division 'Petrol Station Branding'. There has, of course, been and remains considerable work and related start-up costs to develop the perceived potential of these growth initiatives. Our clear object is to establish well managed operations and attain the correct balance between revenue and costs, which is so essential if we are to perform successfully and admirably meet our own high expectations.   

 

Naval weapon system development programmes continue at 'Defence' and as many of the new products come to fruition, the emphasis is now progressing to enhanced international marketing activity with shipbuilders and end-users. This is creating a much broader base of market opportunities, greater brand recognition and by working more closely with international naval shipbuilders we can become part of the early ship design phase with our products supportively specified that will enrich growth prospects for the business.

 

'Forgings' principal international markets are focused on the manufacturers of fork-lift trucks and those supplying equipment for the construction, agricultural and quarrying industries. These generally have been depressed for some considerable time and so naturally have become highly competitive. To combat these pressures, management attention continues to focus on process and other efficiency improvements to ensure we unlock the positive benefits that we can identify for our businesses in the global fork-arm supply market. Added to that, our new fork-arm manufacturing facility, presently under construction in the United States, is at an advanced stage and our commitment to having an enhanced and strong presence in that market is being progressively well supported.

 

We perceive further growth in our two closely related petrol station construction and branding divisions and we will continue to invest to take advantage of the perceived business opportunities for both our products and services.

 

Overall we believe the Group has come a long way in the past year, making good progress and undertaking the right steps for all the individual businesses to ensure that we can maximise the Group's potential in challenging times and markets.  Orders in hand are some 7% higher than six months ago, the balance sheet is in excellent shape and there is a first-class positive and constructive attitude prevailing throughout the business.

 

All matters considered the Board has declared a maintained interim dividend per share of 1.5p (2015 - 1.5p) payable to shareholders on 23rd December 2016.

 

 

Michael Bell                                                                                                                                        

23rd November 2016

 

For any further information please contact:

 

MS INTERNATIONAL plc 


Michael Bell

Tel: 01 302 322133



Shore Capital

Nomad and Broker


Bidhi Bhoma/Patrick Castle

Tel: (0) 20 7408 4090

 

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 29th October 2016 which comprises the Interim condensed consolidated income statement, Interim condensed consolidated statement of comprehensive income, Interim condensed consolidated statement of financial position, 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 Conduct 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 and the AIM rules issued by the London Stock Exchange.


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 29th October 2016 is not prepared, in all material respects, in accordance with International Accounting Standard 34 as adopted by the European Union and the AIM rules issued by the London Stock Exchange.



Ernst & Young LLP

Leeds

23rd November, 2016

 



 

                                                                                                                                                                               

Interim condensed consolidated income statement











26 weeks ended 29th Oct., 2016


26 weeks ended 31st Oct., 2015





unaudited


unaudited





£000


£000








Products




18,070


18,217

Contracts




6,925


5,764














Revenue




24,995


23,981








Cost of sales




(18,002)


(18,169)















Gross profit




6,993


5,812








Distribution costs




(1,613)


(1,582)

Administrative expenses




(4,657)


(3,744)














Operating profit




723


486








Finance Income




11


17

Other finance costs - pension




(124)


(108)















Profit before taxation




610


395








Taxation




(70)


(6)















Profit for the period attributable to equity holders of the parent




540


389





















Earnings per share: basic and diluted




3.3p


2.4p






















Interim condensed consolidated statement of comprehensive income







26 weeks ended 29th Oct., 2016


26 weeks ended 31st Oct., 2015





unaudited


unaudited





£000


£000

Profit for the period attributable to equity holders of the parent




540


389















Exchange  differences on retranslation of foreign operations




1,391


(234)















Other comprehensive income/( loss)




1,391


(234)















Remeasurement (losses)/gains on defined benefit pension scheme




(871)


889

Deferred taxation on remeasurement gains/losses on defined benefit pension scheme




73


(297)















 Other comprehensive (loss)/income




(798)


592















Total comprehensive income for the period attributable to equity holders of the parent

1,133


747















 

                                                                                                                                                               

 

                                                                                                                                               



 

Interim condensed consolidated statement of financial position












29th Oct., 2016


30th April, 2016





unaudited


audited

ASSETS




£000


£000

Non-current assets







Property, plant and equipment




18,778


15,955

Intangible assets




5,697


5,671

Deferred income tax asset




1,442


1,376



















25,917


23,002






















Current assets







Inventories




9,168


7,043

Trade and other receivables




13,883


8,996

Income tax receivable




229


118

Prepayments




950


784

Cash and short-term deposits




9,763


12,758



















33,993


29,699















TOTAL ASSETS




59,910


52,701





























EQUITY AND LIABILITIES







Equity 







Issued capital




1,840


1,840

Capital redemption reserve




901


901

Other reserves




2,815


2,815

Revaluation reserve




4,263


4,222

Special reserve




1,629


1,629

Currency translation reserve




1,330


(61)

Treasury shares




(3,059)


(3,059)

Retained earnings




18,442


19,773















Total Equity




28,161


28,060






















Non-current liabilities







Defined benefit pension liability




8,485


7,644

Deferred income tax liability




1,537


1,590



















10,022


9,234






















Current liabilities







Trade and other payables




21,436


15,253

Income tax payable




291


154



















21,727


15,407















TOTAL EQUITY AND LIABILITIES




59,910


52,701















 



 

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 1st May, 2016


1,840


901


2,815


4,222


1,629


(61)


(3,059)


19,773


28,060

Profit for the period









540


540

Other comprehensive income/(loss)






1,391



(798)


593










































1,840


901


2,815


4,222


1,629


1,330


(3,059)


19,515


29,193

Change in taxation rates





41






41

Dividend paid









(1,073)


(1,073)









































At 29th October, 2016


1,840


901


2,815


4,263


1,629


1,330


(3,059)


18,442


28,161























 


















 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 




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 2nd May, 2015


1,840


901


2,815


4,146


1,629


(289)


(3,059)


20,316


28,299

Profit for the period









389


389

Other comprehensive (loss)/income






(234)



592


358










































1,840


901


2,815


4,146


1,629


(523)


(3,059)


21,297


29,046

Change in taxation rate





83






83

Dividend paid









(1,073)


(1,073)









































At 31st October, 2015


1,840


901


2,815


4,229


1,629


(523)


(3,059)


20,224


28,056























 


















 



 

Interim Group cash flow statement







26 weeks ended 29th Oct., 2016


26 weeks ended 31st Oct., 2015



unaudited


unaudited



£'000


£'000






Profit before taxation


610


396

Adjustments to reconcile profit before taxation to net cash in flows from operating activities




Depreciation charge


549


525

Amortisation charge


286


154

Profit on disposal of fixed assets


(19)


(42)

Finance costs


113


91

Foreign exchange movements


396


(78)

(Increase)/decrease in inventories


(2,125)


544

Increase in receivables


(4,887)


(1,243)

Increase in prepayments


(166)


(329)

Increase/(decrease) in payables


3,027


(196)

Increase/(decrease) in progress payments


3,156


(461)

Pension fund deficit reduction payments


(154)


(143)











Cash flows from operations


786


(782)






Interest received


11


17

Taxation paid


(73)


(86)











Net cash flow from operating activities


724


(851)






Investing activities





Acquisition of Petrol Sign BV



(2,608)

Purchase of property,  plant and equipment


(2,684)


(1,210)

Sale of property, plant and equipment


38


43

Net cash flows used in investing activities


(2,646)


(3,775)






Financing activities





Dividend paid


(1,073)


(1,073)

Net cash flows used in financing activities


(1,073)


(1,073)











Movement in cash and cash equivalents


(2,995)


(5,699)

Opening cash and cash equivalents


12,758


17,148











Closing cash and cash equivalents


9,763


11,449











 



 

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 AIM market of the London Stock Exchange.  The principal activities of the Company and its subsidiaries ("the Group") are described in Note 4.




The interim condensed consolidated financial statement of the Group for the twenty six weeks ended 29th October, 2016 were authorised for issue in accordance with a resolution of the directors on 23rd November, 2016.



2

Basis of preparation and accounting policies




The annual consolidated financial statements of the Group are prepared in accordance with IFRS as adopted by the European Union. The consolidated 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 accounting policies are consistent with those applied in the Group Annual financial statements for the 52 weeks ended 30th April, 2016.




The interim financial information has been reviewed by the Group's auditors, Ernst & Young LLP, their report is included on page 4. 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, 2016.




There are no accounting standards or interpretations that have become effective in the current reporting period which have had a material effect on the net assets, results and disclosures of the Group. The Group has not early adopted any other 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. 








The figures for the year ended 30th April, 2016 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

Segment information











































(a)

Primary reporting format - divisional segments






































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 Superstructures division is engaged in the design and construction of petrol station Superstructures.  The Petrol Station Branding division is engaged in the design and installation of the complete appearance of petrol stations. The Directors are of the opinion that seasonality does not significantly affect these results.






















The following table presents revenue and profit information about the Group's divisions for the periods ended 29th October, 2016 and 31st October, 2015.


























  Defence


   Forgings


 Petrol Station


   Petrol Station


Total











 Superstructures


   Branding








2016


2015


2016


2015


2016


2015


2016


2015


2016


2015




















unaudited


unaudited




£000


£000


£000


£000


£000


£000


£000


£000


£000


£000
























Revenue






















External


10,180


9,228


5,936


6,062


6,956


5,679


1,923


3,012


24,995


23,981














































Total revenue


10,180


9,228


5,936


6,062


6,956


5,679


1,923


3,012


24,995


23,981














































Segment result


784


(104)


(347)


(283)


752


355


(466)


518


723


486


Net finance expense


















(113)


(91)














































Profit before taxation


















610


395


Taxation


















(70)


(6)














































Profit for the period


















540


389














































Capital expenditure


159


145


2,221


807


159


173


145


61






Depreciation


109


116


159


177


156


126


50


20






































































The following table presents segment assets and liabilities of the Group's divisions for the periods ended 29th October, 2016 and 31st October, 2015.






















Segmental assets


28,629


26,500


6,308


5,305


7,276


5,020


1,718


1,929


43,931


38,754


Unallocated assets


















15,979


14,362














































Total assets


















59,910


53,116














































Segmental liabilities


13,966


13,592


2,444


1,205


3,320


2,335


901


969


20,631


18,101


Unallocated liabilities


















11,118


6,959














































Total liabilities


















31,749


25,060




































































Unallocated assets includes certain fixed assets, intangible assets, current assets and deferred tax assets. Unallocated liabilities includes the defined benefit pension scheme liability and certain current liabilities.
























Following the establishment of the Petrol Station Branding division, management have revised the allocation of certain incomes and costs which have led to a restatement of the prior period segment result for the divisions. The total segment result for the Group for the prior period remains unchanged.























 

5

Income tax













The major components of income tax expense in the consolidated income statement are:







26 weeks ended 29th Oct., 2016


26 weeks ended 31st Oct., 2015





unaudited


unaudited





£'000


£'000









Current income tax charge


123


128
















Current tax


123


128
















Relating to origination and reversal of temporary differences


(39)


(98)


Impact of reduction in deferred tax rate ( 18% to 17%)


(14)


(24)
















Deferred tax


(53)


(122)
















Total income expense reported in the consolidated income statement


70


6
















Deferred taxation has been provided at the applicable tax rate depending on when the underlying deferred tax is expected to unwind.









The Finance Bill 2016 provides that the rate of UK corporation tax will be reduced from 18%  to 17% on 1st April, 2020.









The Bill was substantively enacted at the balance sheet date.












6

Earnings per share













The calculation of basic earnings per share is based on:













(a)

Profit for the period attributable to equity holders of the parent of £540,000 (2015 - £389,000);









(b)

16,504,691 (2015 - 16,504,691) Ordinary shares, being the number of Ordinary shares in issue.









This represents 18,396,073 (2015 - 18,396,073) being the number of Ordinary shares in issue less 245,048 (2015 - 245,048) being the number of shares held within the ESOT and less 1,646,334 (2015 - 1,646,334) being the number of shares purchased by the Company.








7

Dividends paid and proposed









26 weeks ended 29th Oct., 2016


26 weeks ended 31st Oct., 2015





unaudited


unaudited





£'000


£'000


Declared and paid during the six month period






Dividend on ordinary shares






Final dividend for 2016 - 6.50p (2015 - 6.50p)


1,073


1,073
















Proposed for approval






Interim dividend for 2016 - 1.50p (2015 - 1.50p)


248


248
















Dividend warrants will be posted on 22nd December, 2016 to those members registered on the books of the Company on 2nd December, 2016.








8

Property, plant and equipment













Acquisitions and disposals:








During the 26 weeks ended 29th October, 2016, the Group acquired assets with a cost of £2,684,000 (2015 - £1,210,000).









Retranslation of overseas subsidiaries property, plant and equipment cost and depreciation into pounds sterling at the balance sheet date resulted in exchange difference increases of £1,021,000 to costs and £313,000 to depreciation. These exchange differences were taken directly to currency translation reserve in Equity.









Assets with a net book value of £19,000 (2015 - £1,000) were disposed of by the Group for proceeds of £38,000 (2015 - £43,000) during the 26 weeks ended 29th October, 2016, resulting in a gain on disposal of £19,000 (2015 - £42,000).








 

9

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., 2016


30th April, 2016






unaudited


audited






£'000


£'000


Cash at bank and in hand


4,445


7,420


Short term deposits


5,318


5,338






















9,763


12,758

























10

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  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, 2014 by a professionally qualified actuary.

 








 

-


The Company has paid  contributions into  the Scheme for  life assurance premiums and other Scheme expenses. In addition, from April 2013, the Company has paid £229,000 per annum  of deficit reduction payments into the defined benefit section of the scheme.   With effect from April 2015, the deficit reduction payments paid into the scheme by the Company have been increased to £300,000 per annum, increasing thereafter at 3% per annum.

 








 

-


From 1st June, 2007 the Company has operated a defined contributions 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 £841,000. A re-measurement loss of £871,000 has been recognised through other comprehensive income and comprises  of  a £2,301,000 return on plan assets in excess of net interest and a £3,172,000 actuarial loss due to changes in financial assumptions. The actuarial loss reflects the lower discount rate and higher inflation expectations in the period. The interest cost on the net defined benefit liability of £124,000 has been recognised through the income statement. The liability is reduced by pension fund deficit payments in the period of £154,000.









11

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 £5,504,107 at 29th October, 2016 (2015 - 7,013,513).

 

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.

 


This information is provided by RNS
The company news service from the London Stock Exchange
 
END
 
 
IR BLBDBXDDBGLX
UK 100

Latest directors dealings