Half Yearly Report

RNS Number : 7296R

MS International PLC

22 November 2012

 



MS INTERNATIONAL plc

Unaudited Interim Condensed

Group Financial Statements

27th October, 2012

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

I am pleased to report that the Group is trading in line with the Board's expectations. As flagged in my two most recent statements, a distinct second half revenue bias will occur this year owing to the phasing of customer dictated delivery schedules at our largest subsidiary 'Defence'.  At this juncture, that view still prevails.

Accordingly, for the half year ended 27^th October 2012, the results have come in lower than the record figures achieved for the comparable period with a £2.64m (2011 - £4.09m) profit before taxation on revenue of £26.28m (2011 - £27.86m). Earnings per share amounted to 11.1p (2011 - 16.6p).

The balance sheet remains very strong with net cash and short term deposits totalling £10.77m. At the 28th April 2012, the figure was £10.04m.

'Defence' delivery phasing was clearly the major factor shaping the interim outcome.  A relatively slow market in the prior period was aggravated by a reduction of 'regular' orders coinciding with delays in the receipt of anticipated major contracts as cuts in defence procurement budgets were imposed by a number of governments. Nevertheless, there was a reasonable level of production activity in the period and product development programmes continued uninterrupted.

'Forgings' markets around the globe have been somewhat mixed, although the majority were less buoyant than before, influenced by regional variations in economic activity and exchange rate fluctuations. In contrast, 'Petrol station superstructures' more than held its own in the European markets it serves, increasing market share and pleasingly lifting both revenue and profitability.

Most crucially, the Group order intake in the period was some 80% higher at the end of October, compared to that received in the corresponding period last year and currently the value of orders on hand is some 25% higher than at last year end.

'Defence' is now looking forward with confidence to a much stronger second half year. The majority of orders are already in hand to achieve the expected full year revenue and there are a number of very interesting new business prospects emerging from around the world. We recognise however that everything just seems to take a little longer on the 'prospect to order timeline' than previously. It may be frustrating but we are confident in our abilities to maximise the opportunities in due course. Meantime, the momentum to drive forward in the 'Forgings' and 'Petrol station superstructures' divisions will be maintained, particularly as both operate with short lead time order books with all the vagaries that poses.

All matters considered, the Board has a good measure of confidence as to the full year outlook for the Group, subject to there being no further deterioration in the global economy that could adversely affect our two industrial engineering divisions. Accordingly, the Board has declared a maintained interim dividend per share of 1.5p (2011 - 1.5p), payable on 21st December 2012.

Michael Bell                                                                                                                              22^nd November 2012

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 27 October 2012 which comprises the Interim Group income statement, Interim Group statement of comprehensive income, 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 27 October 2012 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

21 November 2012

Interim Group income statement
				26 weeks ended 27th Oct., 2012		26 weeks ended 29th Oct., 2011
				unaudited		unaudited
		Notes		£000		£000
Products				16,576		20,855
Contracts				9,703		7,008
Revenue		5		26,279		27,863
Cost of sales				(18,846)		(18,629)
Gross profit				7,433		9,234
Distribution costs				(1,174)		(1,120)
Administrative expenses				(3,566)		(3,887)
Group trading profit		5		2,693		4,227
Finance revenue				35		11
Financial instrument fair value				-		(237)
Finance costs				(64)		(3)
Other finance (costs)/revenue - pension				(23)		94
Profit before taxation				2,641		4,092
Taxation		6		(621)		(1,070)
Profit for the period attributable to equity holders of the parent				2,020		3,022
Earnings per share: basic and diluted		7		11.1p		16.6p
Interim Group statement of comprehensive income
				26 weeks ended 27th Oct., 2012		26 weeks ended 29th Oct., 2011
				unaudited		unaudited
				£000		£000
Actuarial losses on defined benefit pension scheme				(3,255)		(1,929)
Deferred taxation on actuarial losses on defined benefit pension scheme				709		467
Exchange  differences on retranslation of foreign operations				(29)		(87)
Net losses recognised directly in equity				(2,575)		(1,549)
Profit attributable to equity holders of the parent				2,020		3,022
Total comprehensive(expense)/income for the period attributable to equity holders of the parent				(555)		1,473

Interim Group balance sheet
				27th Oct., 2012		28th April, 2012
				unaudited		Audited
ASSETS		Notes		£000		£000
Non-current assets
Property, plant and equipment		9		13,826		13,818
Intangible assets				4,623		4,798
Deferred income tax asset				320		-
				18,769		18,616
Current assets
Inventories				6,955		7,824
Trade and other receivables				12,721		12,208
Prepayments				795		604
Cash and short-term deposits		10		10,767		10,037
				31,238		30,673
TOTAL ASSETS				50,007		49,289
EQUITY AND LIABILITIES
Equity
Issued capital				1,840		1,840
Capital redemption reserve				901		901
Other reserves				2,815		2,815
Revaluation reserve				2,532		2,511
Special reserve				1,629		1,629
Currency translation reserve				(39)		(10)
Treasury shares				(100)		(100)
Retained earnings				17,113		18,819
Total Equity				26,691		28,405
Non-current liabilities
Defined benefit pension liability		11		7,245		4,167
Deferred income tax liability				-		505
				7,245		4,672
Current liabilities
Trade and other payables				15,151		14,995
Income tax payable				920		1,217
				16,071		16,212
TOTAL EQUITY AND LIABILITIES				50,007		49,289

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 28th April, 2012			1,840		901		2,815		2,511		1,629		(10)		(100)		18,819		28,405
Profit for the period			-		-		-		-		-		-		-		2,020		2,020
Other comprehensive loss			-		-		-		-		-		(29)		-		(2,546)		(2,575)
			1,840		901		2,815		2,511		1,629		(39)		(100)		18,293		27,850
Change in taxation rates			-		-		-		21		-		-		-		-		21
Dividend paid			-		-		-		-		-		-		-		(1,180)		(1,180)
At 27th October, 2012			1,840		901		2,815		2,532		1,629		(39)		(100)		17,113		26,691
			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

Interim Group cash flow statement
			26 weeks ended 27th Oct., 2012		26 weeks ended 29th Oct., 2011
			unaudited		unaudited
			£'000		£'000
Profit before taxation			2,641		4,092
Adjustments to reconcile profit before taxation to net cash in flows from operating activities
Depreciation charge			700		634
Amortisation charge			175		188
Profit on disposal of fixed assets			(48)		(25)
Finance costs			52		135
Foreign exchange movements			(8)		(70)
Decrease/(increase) in inventories			869		(2,760)
Increase in receivables			(513)		(1,791)
(Increase)/decrease in prepayments			(191)		219
Increase in payables			1,100		1,105
Decrease in progress payments			(944)		(1,651)
Pension fund payments			(200)		(200)
Cash generated from operating activities			3,633		(124)
Interest (paid)/received			(29)		8
Taxation paid			(1,012)		(535)
Net cash flow from operating activities			2,592		(651)
Investing activities
Purchase of property,  plant and equipment			(730)		(602)
Sale of property, plant and equipment			48		44
Net cash used in investing activities			(682)		(558)
Financing activities
Dividend paid			(1,180)		(998)
Net cash flows used in financing activities			(1,180)		(998)
Movement in cash and cash equivalents			730		(2,207)
Opening cash and cash equivalents			10,037		9,877
Closing cash and cash equivalents			10,767		7,670

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 27th October, 2012 were authorised for issue in accordance with a resolution of the directors on 21st November, 2012.
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 28th April, 2012.
	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 28th April, 2012. 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, 2013.
	International Accounting Standards (IAS/IFRSs)
	IFRS 7 Financial Instruments: (Disclosures Amendments)
	IAS 12 Income Taxes (Amendments) - Deferred Taxes: Recovery of Underlying Assets
	The figures for the year ended 28th April, 2012 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 27th October, 2012 and 29th October, 2011.  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
																	Superstructures
			2012				2011			2012					2011			2012				2011					2012		2011
																											unaudited		unaudited
			£000				£000			£000					£000			£000				£000					£000		£000
	Revenue
	External		12,336				14,454			7,234					7,875			6,709				5,534					26,279		27,863
	Total revenue		12,336				14,454			7,234					7,875			6,709				5,534					26,279		27,863
	Segment result		1,477				2,886			255					501			961				840					2,693		4,227
	Net finance expense																										(52)		(135)
	Profit before taxation																										2,641		4,092
	Taxation																										(621)		(1,070)
	Profit for the period																										2,020		3,022
	Segmental assets		25,995				28,741			5,323					5,617			5,323				3,914					36,641		38,272
	Unallocated assets																										13,366		7,830
	Total assets																										50,007		46,102
	Segmental liabilities		9,072				9,574			1,437					2,066			3,310				2,664					13,819		14,304
	Unallocated liabilities																										9,497		5,528
	Total liabilities																										23,316		19,832
	Capital expenditure		-				97			209					341			521				132
	Depreciation		158				171			232					212			168				135

(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 27th October, 2012 and 29th October, 2011.  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
			2012		2011		2012		2011		2012		2011		2012		2011
															unaudited		unaudited
			£000		£000		£000		£000		£000		£000		£000		£000
	Revenue
	External		17,162		13,215		4,069		9,150		5,048		5,498		26,279		27,863
	Assets		48,661		45,454		922		580		424		68		50,007		46,102
	Liabilities		23,104		19,647		200		155		12		30		23,316		19,832
	Capital expenditure		710		347		6		182		14		73		730		602

6	Income tax
	The major components of income tax expense in the consolidated income statement are:
				26 weeks ended 27th Oct., 2012		26 weeks ended 29th Oct., 2011
				unaudited		unaudited
				£'000		£'000
	Current income tax charge			764		1,155
	Current tax			764		1,155
	Relating to origination and reversal of temporary differences			(106)		(44)
	Impact of reduction in deferred tax rate ( 24% to 23%)			(37)		(41)
	Deferred tax			(143)		(85)
	Total income tax expense reported in the consolidated income statement			621		1,070
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 £2,020,000 (2011 - £3,022,000);
	(b)	18,151,025 (2011 - 18,151,025) Ordinary shares, being the weighted average number of Ordinary shares in issue.
	This represents 18,396,073 being the weighted average number of Ordinary shares in issue less 245,048 being the diluted weighted average number of shares held within the ESOT.

8	Dividends paid and proposed
				26 weeks ended 27th Oct., 2012		26 weeks ended 29th Oct., 2011
				unaudited		unaudited
				£'000		£'000
	Declared and paid during the six month period
	Dividend on ordinary shares
	Final dividend for 2012 - 6.50p			1,180		998
	Proposed for approval
	Interim dividend for 2012 - 1.50p (2011 - 1.50p)			270		270
	Dividends warrants will be posted on 20th December, 2012 to those members registered on the books of the Company on 30th November, 2012.
9	Property, plant and equipment
	Acquisitions and disposals:
	During the twenty six weeks ended 27th October, 2012, the Group acquired assets with a cost of £730,000 (2011 - £602,000).
	Assets with a net book value of £Nil (2011 - £19,000) were disposed of by the Group for proceeds of £48,000 (2011 - £44,000) during the 26 weeks ended 27th October, 2012, resulting in a gain on disposal of £48,000 (2011 -  £25,000).

10	Cash and cash equivalents
	For the purpose of the interim consolidated cash flow statement, cash and cash equivalents are comprised of the following:
				27th Oct., 2012		28th April, 2012
				unaudited		Audited
				£'000		£'000
	Cash at bank and in hand			1,607		10,032
	Short term deposits			9,160		5
				10,767		10,037
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 £7,471,042 at 27th October, 2012 (2011 - £9,209,747).
	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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