Interim Results

MS International PLC 28 November 2002 Date: Under embargo until 7.00am - Thursday November 28th, 2002 Contacts: Michael Bell, Executive Chairman, MS lNTERNATIONAL plc Tel: 01302 322133 Terry Garrett, Weber Shandwick Square Mile Tel: 0207 950 2800 MS INTERNATIONAL plc Interim Results to November 2nd, 2002 HIGHLIGHTS * Turnover of £16.7m (2001: £18.54m) * Pre-tax profits amount to £0.84m (2001: £1.23m) * Earnings per share are 3p (2001: 4p) * Interim dividend increased to 0.4p (2001: 0.38p) per share * Net cash remains positive * Defence division has been awarded a contract to supply 'state of the art' 30mm naval gun system to Royal Navy's Type 45 Destroyer programme Michael Bell, Executive Chairman, commented: 'As I indicated in my last report, the Group could not remain immune to the deepening global recession and, faced with these conditions, I consider the performance to be satisfactory. The level of turnover within the defence division reverted to more normal levels, following the exceptional output of the previous year, whilst sales elsewhere were lower solely due to deteriorating economic circumstances.' 'The defence division's order book should ensure that it achieves its sales target this year, while investment within the forging division is yielding efficiency gains and there is some modest improvement in orders at Global-MSI. Nevertheless, in the current environment, it is difficult to predict the full year with certainty but we remain committed to our policy of continual improvement within the operations and building upon our success in good niche markets.' Chairman's Statement Introduction In my last year-end statement, I expressed my concerns that given the unfavourable economic background it seemed prudent and realistic to temper our expectations for the current year. The perception was that, despite the exemplary performance of the previous year it would be unrealistic to perceive that our business could remain immune to the impact of a deepening global recession. In the face of this persistent weakness, the Group earned a profit before tax of £0.84m (2001-£1.23m), on sales reduced to £16.70m (2001-£18.54m) for the period ending 2 November 2002. Earnings per share amounted to 3p (2001-4p). Turnover in the defence division reverted to more normal levels, following the bumper output requirements of last year. Elsewhere, the fall in sales revenue was solely attributable to the deteriorating economic conditions, which, in the forgings division, were partly countered by some pleasing advances in market share, resulting from manufacturing capability gains achieved from the recent investment in plant and equipment. In all the circumstances, I consider the performance of the Group to be satisfactory. The Group's consolidated net cash position remains positive at £0.02m. The unravelling of progress payments of £2.43m, as contracts have been completed, is the main reason for the reduction in net cash since the beginning of the year. Further capital investment on plant, equipment, product development and the upgrading of our manufacturing properties, totalled £0.65m. In addition the Company purchased for cancellation MS INTERNATIONAL plc shares, which resulted in a cash outflow of £0.29m. Operating divisions The defence division produced a good result, and it is pleasing to report that we have been awarded a contract to supply our upgraded and state of the art 30mm naval gun system for the first batch of the Royal Navy's Type 45 Destroyer programme. This order, which was won against strong international competition, will contribute to the underpinning of turnover for a number of years and create a strong platform from which to explore further sales prospects. The forgings division was adversely affected by the reduced demand for fork-arms from truck builders that operate in the three major centres of world production, Europe, the United States and Japan, who themselves are experiencing very difficult trading conditions. Unfavourable foreign exchange rates only added to the intense competition for the available business particularly from our competitors enjoying more favourable rates. Nevertheless our global status in this specialist market remains robust. Global-MSI had a disappointingly slow start to the year, emanating from a larger than anticipated reduction in European petrol station forecourt construction and maintenance. Whilst there are suggestions from informed sources that there may be an upturn in the second half, matching last year's sales figure looks increasingly unlikely, despite our strong market position and response capabilities. Outlook The defence division's order book provides support that should ensure that it achieves this year's sales output target. The rolling investment programme in plant and equipment within the forging division, is expanding our capability, yielding efficiency gains and enhancing product quality. Such tangible gains will strengthen our position in the market during these challenging times. Although Global-MSI has experienced recently, a modest improvement in the inflow of orders for canopies, it is too early to suggest that demand within that market is poised for recovery in the foreseeable future. Clearly any upward trend in business activity would be welcome to the Group, at a time when so many imponderables and continuing economic weakness remain such a salient feature of global markets. Predicting the outcome for this year becomes an increasingly precarious task, particularly when the order books for the forgings division and Global-MSI have by tradition, been of a short term nature. In the meantime however, we remain committed to our policy of continual improvement within the operations and building upon our good niche market businesses. All matters considered the Board has declared an increase in the interim dividend to 0.40p per share (2001-0.38p). Michael Bell Chairman 28th November 2002 MS INTERNATIONAL plc Group Profit and Loss Account These interim financial statements which have been prepared on the basis of the accounting policies set out in the Company's 2002 statutory accounts do not constitute statutory accounts within the meaning of section 254 of the Companies Act 1985 and are unaudited. The abridged accounts for the year ended April 27th, 2002 are an extract from the accounts for that period on which the auditors gave an unqualified report and which have been filed with the Registrar of Companies. 27 weeks 26 weeks 52 weeks ended Nov. ended Oct. ended April 2nd, 2002 27th, 2001 27th, 2002 £'000 £'000 £'000 Turnover: Group and share of joint venture 16,707 18,540 35,687 Less: Share of joint venture turnover (2,141) (2,609) (5,250) ------------------------------ ---------- ---------- ----------- Group turnover 14,566 15,931 30,437 ------------------------------ ---------- ---------- ----------- Operating profit 777 1,010 2,106 Share of operating profit of joint venture 80 209 405 ------------------------------ ---------- ---------- ----------- Profit on ordinary activities before interest 857 1,219 2,511 Interest receivable: Group 53 56 108 Joint venture 4 2 6 Interest payable: Group (71) (47) (114) ------------------------------ ---------- ---------- ----------- Profit on ordinary activities before taxation 843 1,230 2,511 Taxation on profit on ordinary activities (252) (369) (818) ------------------------------ ---------- ---------- ----------- Profit for the financial period 591 861 1,693 ---------- ---------- ----------- Dividends: Interim payable (88) (88) (88) Final payable - - (259) Received by ESOT - 14 - Receivable by ESOT 8 9 49 ---------- ---------- ----------- (80) (65) (298) ------------------------------ ---------- ---------- ----------- Profit for the period 511 796 1,395 ------------------------------ ---------- ---------- ----------- Earnings per share 3.0p 4.0p 8.1p ------------------------------ ---------- ---------- ----------- Group Statement of Recognised Gains and Losses £'000 Profit for the financial period 591 Translation differences on foreign currency net investments (1) --------------------------------- -------- Total gains recognised in the period 590 --------------------------------- -------- Notes 1. Tax on profit on ordinary activities has been calculated at 30% (2001 - 30%) on the group profit for the period as adjusted for taxation purposes, and includes a charge of £22,000 in respect of the joint venture. 2. Dividend warrants will be posted on January 31st, 2003 to members registered on the books of the Company at January 6th, 2003. MS INTERNATIONAL plc Group Balance Sheet At Nov. At Oct. At April 2nd, 2002 27th, 2001 27th, 2002 £'000 £'000 £'000 Assets employed Fixed assets 8,013 6,671 7,671 Investment in joint venture: Share of gross assets 1,682 2,079 1,712 Share of gross liabilities (1,127) (1,595) (1,196) Investment in own shares 731 784 759 -------------------------------- ---------- ----------- ----------- 9,299 7,939 8,946 -------------------------------- ---------- ----------- ----------- Current assets Stocks 4,114 2,922 2,745 Debtors 5,024 6,260 4,233 Group pension scheme prepayment - due after more than one year 6,813 6,938 6,888 Cash at bank and in hand 1,817 2,424 4,763 -------------------------------- ---------- ----------- ----------- 17,768 18,544 18,629 Creditors - amounts falling due within one year Bank loans and overdrafts 1,132 509 1,286 Other 7,950 8,824 9,261 -------------------------------- ---------- ----------- ----------- Net current assets 8,686 9,211 8,082 -------------------------------- ---------- ----------- ----------- Total assets less current liabilities 17,985 17,150 17,028 Creditors - amounts falling due after more than one year Bank loans and overdrafts 667 - - Other 104 309 209 Provisions for liabilities and charges 3,076 3,107 3,076 -------------------------------- ---------- ----------- ----------- Total assets less liabilities 14,138 13,734 13,743 -------------------------------- ---------- ----------- ----------- Capital and Reserves Called up share capital 2,195 2,328 2,217 Capital redemption reserve 546 413 524 Revaluation reserve 1,853 1,853 1,853 Other reserves 4,650 4,655 4,654 Special reserve 1,487 1,487 1,487 Profit and loss account 3,407 2,998 3,008 -------------------------------- ---------- ----------- ----------- Equity shareholders' funds 14,138 13,734 13,743 -------------------------------- ---------- ----------- ----------- Notes: 1. Movement in profit and loss £'000 account is as follows : At October 27th, 2001 2,998 Purchase of own shares (589) Profit attributable to members 26 weeks ended April 27th, 2002 832 Dividends (233) ------------------------------------------------------ --------- At April 27th, 2002 3,008 Purchase of own shares (112) Profit attributable to members 27 weeks ended November 2nd, 2002 591 Dividends (80) ------------------------------------------------------ --------- At November 2nd, 2002 3,407 ------------------------------------------------------ --------- 2. During the period the Company redeemed 220,000 of its own Ordinary shares at market prices as follows: Number of Price paid Date shares purchased per share July 12th, 2002 125,000 47p September 17th, 2002 95,000 56p MS INTERNATIONAL plc Group Cash Flow Statement 27 weeks 26 weeks 52 weeks ended Nov. ended Oct. ended April 2nd, 2002 27th, 2001 27th, 2002 £'000 £'000 £'000 Operating profit 777 1,010 2,106 Depreciation charge 304 294 619 Foreign exchange losses (1) - - RSA grant release (10) (19) (38) Decrease/(increase) in stocks 487 (198) (614) (Increase)/decrease in debtors (711) 675 2,780 (Decrease)/increase in creditors (708) 10 379 (Decrease) in progress payments (2,432) (1,339) (1,367) Increase in provisions 33 - 65 Provisions utilised (33) - (180) ------------------------------------ --------- ---------- ----------- Cash flow from operating activities (2,294) 433 3,750 ------------------------------------ --------- ---------- ----------- Dividends received from joint venture 20 17 155 Interest paid (24) (6) (11) Taxation - - 31 --------- ---------- ----------- Purchase of tangible fixed assets (653) (743) (2,077) Sale of tangible fixed assets 7 - 9 Shares purchased by ESOT - (518) (518) --------- ---------- ----------- Capital expenditure and financial investment (646) (1,261) (2,586) Dividends paid (259) (211) (289) ------------------------------------ --------- ---------- ----------- Cash flow before financing (3,203) (1,028) 1,050 Financing Purchase of own shares (291) (56) (467) Grants received 100 - - (Decrease)/increase in short term bank loans (154) - 1,286 New long term bank loans 667 - - New leases - 295 296 Repayments of capital element of finance leases and hire purchase contracts (93) (85) (216) Share options exercised 28 - 25 ------------------------------------ --------- ---------- ----------- 257 154 924 ------------------------------------ --------- ---------- ----------- (Decrease)/increase in cash (2,946) (874) 1,974 ------------------------------------ --------- ---------- ----------- Reconciliation of net cash flow to movement in net (borrowings)/funds £'000 £'000 £'000 (Decrease)/increase in cash (2,946) (874) 1,974 Cash outflow/(inflow) from decrease/(increase) in loans 154 - (1,286) Cash (inflow) from increase in long term loans (667) - - Repayments of capital element of finance leases and hire purchase contract 93 85 216 ------------------------------------------- --------- -------- -------- Changes in net funds resulting from cash flow (3,366) (789) 904 New finance leases and hire purchase contracts - (295) (296) ------------------------------------------- --------- -------- -------- Movement in net (borrowings)/funds (3,366) (1,084) 608 Net funds at April 27th, 2002 3,049 2,441 2,441 ------------------------------------------- --------- -------- -------- Net funds at November 2nd, 2002 (317) 1,357 3,049 ------------------------------------------- --------- -------- -------- Analysis of net (borrowings)/funds Nov.2nd, April 27th, 2002 Cash flows 2002 £'000 £'000 £'000 Cash at bank and in hand 1,817 (2,946) 4,763 Bank loans and overdrafts (1,799) (513) (1,286) -------------------------------------------- ------- ------- ------- 18 (3,459) 3,477 Finance leases and hire purchase contracts (335) 93 (428) -------------------------------------------- ------- ------- ------- Net (borrowings)/funds at November 2nd, 2002 (317) (3,366) 3,049 -------------------------------------------- ------- ------- ------- This information is provided by RNS The company news service from the London Stock Exchange

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