Interim Results - Pre-tax Profit Up 11%
MS International PLC
2 December 1999
Michael Bell, MS INTERNATIONAL plc
Tel: 01302 322 133
Terry Garrett, Ludgate Communications
Tel: 0171 253 2252
MS INTERNATIONAL plc
HALF YEAR RESULTS TO OCTOBER 30th 1999
FINANCIAL HIGHLIGHTS
* Pre - tax profits increased by 11% to £0.55m (1998: £0.50m)
* Earnings per share rose by 33% to 1.6p (1998: 1.2p)
* Almost 4m shares bought in at a cost of £1.03m
* Strong cash generation with net cash of £1.08m (1998: debt of
£0.94m)
* Interim dividend of 0.30p (1998: 0.25p), a 20% increase
Michael Bell, Chairman, commented:
'The Group has made a promising start to the year with a
further gain in the level of profitability and cash
generation. We have adapted well to living with the
persistent strengthening of Sterling.'
'Partly as a result of the currency exchange rates, volumes
were not as strong as we might otherwise have wished, but we
remain resolute in our commitment to margin enhancement by
reducing costs and being highly selective in the business we
undertake.'
'Pleasingly, profits doubled at the operating level - before
taking into account our share of the profit of the joint
venture business.'
Chairman's Statement
Results
The Group has made a promising start to the year with a
further gain in the level of profitability and cash
generation. We have adapted well to living with the
persistent strengthening of Sterling, the effect of which
though has been most damaging in many of our markets. Partly
as a result of the currency exchange rates, volumes were not
as strong as we might otherwise have wished, but we remain
resolute in our commitment to margin enhancement by reducing
costs and being highly selective in the business we
undertake.
Despite the subsequent 11% reduction in turnover to £16.54m
in the six months to 30 October (1998 - £18.56m), we still
increased the comparable level of pre-tax profit by 11 % to
£0.55m (1998-£0.50m restated). Earnings per share rose by
one third to 1.6p (1998-1.2p). At the end of October net
cash amounted to £1.08m (1998 - £0.94m of debt), even though
the Company bought-in 3,975,000 of its own shares at a cost
of £1.03m within the period.
Pleasingly, profits doubled at the operating level - before
taking into account our share of the profit of the joint
venture business. Within the three divisions, the defence
and forgings divisions both performed well, with the
forgings division in particular making a much improved
contribution. The specialist steel fabrications division's
result however was disappointing, with sales considerably
lower than the corresponding period last year. I explained
in my June statement, that the major restructuring within
the oil industry was having a temporary detrimental effect
on the order intake at Global-MSI plc. Those depressed
circumstances continued throughout the first half of the
current year and reduced activity levels significantly in
our prime European market.
Outlook
We have recently seen signs of some positive movements in
the conditions of the markets that are served by our
specialist steel fabrications division. Although the market
could have bottomed, it may be too presumptuous to
anticipate a speedy return to the previous levels of
trading. Clearly, further advancement in this sector would
aid the Group's overall performance, and complement the
considerable substance of the defence business and an
improving forgings division.
The Group order book is currently at a similar level to that
reported in June, at £23m and the balance sheet remains
strong.
The Board, whilst seeking a balance between a measured
confidence and an element of caution, is recommending the
payment of an increased interim dividend of 0.30p (1998 -
0.25p)
Michael Bell
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 1999 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 May 1st, 1999 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.
26 weeks 26 weeks 52 weeks
ended Oct 30th ended Oct 31st ended May 1st
1999 1998 1999
as restated
£'000 £'000 £'000
Turnover: Group and
share of joint venture 16,543 18,560 35,825
Less: Share of joint
venture turnover (1,784) (2,707) (5,109)
------------------------------------------------------------
Group turnover 14,759 15,853 30,716
------------------------------------------------------------
Operating profit 515 258 813
Share of operating profit
of joint venture 42 267 374
Exceptional items:
Group - 3 3
Joint venture 3 2 7
------------------------------------------------------------
Profit on ordinary
activities before interest 560 530 1,197
Interest receivable:
Group 44 - 32
Joint venture 6 12 19
Interest payable:
Group (57) (38) (131)
------------------------------------------------------------
Profit on ordinary
activities before taxation 553 504 1,117
Taxation on profit on
ordinary activities (184) (206) (392)
------------------------------------------------------------
Profit for the
financial period 369 298 725
Dividends: Interim payable (70) (69) (69)
Final payable - - (205)
Receivable by ESOT 8 7 27
(62) (62) (247)
------------------------------------------------------------
Profit for the period 307 236 478
------------------------------------------------------------
Earnings per share 1.6 1.2 2.9
------------------------------------------------------------
The comparative profit on ordinary activities before
taxation has been amended for UITF13 as amended by FRS14,
requiring ESOT dividends to be deducted from dividends paid.
MS INTERNATIONAL plc
Group Statement of Recognised Gains and Losses
£'000
Profit for the financial period 369
Translation differences on foreign currency
net investments (4)
---------
Total gains recognised in the period 365
---------
Notes
1.Exceptional items comprise: £'000 £'000 £'000
Profit on sale of tangible
fixed assets 3 5 10
---------------------------
2. Tax on profit on ordinary activities has been calculated
at 30% (1998 - 31%) on the group profit for the period as
adjusted for taxation purposes, and includes a charge of
£12,000 in respect of the joint venture.
3. Dividend warrants will be posted on February 4th, 2000 to
members registered on the books of the Company at January 6th,
2000.
4. A group-wide policy to address the Year 2000 computer issues
is now complete. Given the complexity of the matter, it is not
possible to guarantee that at least some level of disruption
may not occur. The Board believes it has achieved an acceptable
state of readiness and is capable of dealing with any related
challenges should they arise.
MS INTERNATIONAL plc
Group Balance Sheet
At At At
Oct 30th, Oct 31st, May 1st,
1999 1998 1999
as restated
£'000 £'000 £'000
Assets employed
Fixed assets 6,289 6,486 6,428
Investment in joint venture:
Share of gross assets 1,484 1,529 1,383
Share of gross liabilities (1,077) (1,054) (1,015)
Investment in own shares 598 598 598
------------------------------------------------------------
7,294 7,559 7,394
------------------------------------------------------------
Current assets
Stocks 3,807 5,001 4,530
Debtors 6,580 7,243 6,402
Group pension scheme prepayment
-due after more than one year 6,990 6,990 6,990
Cash at bank and in hand 1,927 236 2,447
------------------------------------------------------------
19,304 19,470 20,369
Creditors - amounts falling due
within one year
Bank loans and overdrafts 845 901 918
Other 9,134 9,275 9,314
------------------------------------------------------------
Net current assets 9,325 9,294 10,137
------------------------------------------------------------
Total assets less current
liabilities 16,619 16,853 17,531
Creditors - amounts falling due after more than one year
Bank loans - 278 111
Other 67 67 139
Provisions for liabilities
and charges 2,665 2,143 2,665
------------------------------------------------------------
Total assets less liabilities 13,887 14,365 14,616
------------------------------------------------------------
Capital and Reserves
Called up share capital 2,343 2,741 2,741
Capital redemption reserve 398 - -
Revaluation reserve 2,368 2,368 2,368
Other reserve 4,711 4,688 4,715
Special reserve 1,487 1,487 1,487
Profit and loss account 2,580 3,081 3,305
------------------------------------------------------------
Equity shareholders' funds 13,887 14,365 14,616
------------------------------------------------------------
MS INTERNATIONAL plc
Notes: £'000
(1) Movement in profit and loss account is as follows:
At October 31st, 1998 3,081
Profit attributable to members 26 weeks
ended May 1st, 1999 409
Dividends (185)
------------
At May 1st, 1999 3,305
Purchase of own shares (1,032)
Profit attributable to members 26 weeks
ended October 30th, 1999 369
Dividends (62)
------------
At October 30th, 1999 2,580
------------
(2)During the period the company redeemed 1,425,000 ordinary
shares at a market price of 24.5p and 2,550,000 ordinary
shares at a market price of 26.775p
MS INTERNATIONAL plc
Group Cash Flow Statement
26 weeks 26 weeks 52 weeks
ended ended ended
Oct 30th, Oct 31st, May 1st,
1999 1998 1999
as restated
£'000 £'000 £'000
Operating profit 515 258 813
Depreciation charge 272 290 545
Foreign exchange (losses)
/gains (4) (1) 26
RSA grant release (19) (19) (37)
Decrease/(increase) in
stocks 1,659 (682) (1,131)
(Increase)/decrease in
debtors (178) (366) 511
(Decrease) in creditors (1,490) (277) (465)
Increase in progress
payments 315 269 1,815
Increase in provisions - - 275
Provisions utilised - - (209)
------------------------------------------------------------
Cash flow from operating
activities 1,070 (528) 2,143
Dividends received from
joint venture - 30 100
Interest paid (13) (71) (80)
Taxation (45) - (148)
Purchase of tangible
fixed assets (133) (178) (391)
Sale of tangible
fixed assets - 5 21
Loans repaid by joint
venture - 150 209
Capital expenditure and
financial investment (133) (23) (161)
Dividends paid (197) (154) (220)
------------------------------------------------------------
Cash flow before financing 682 (746) 1,634
------------------------------------------------------------
Cash flow before financing 682 (746) 1,634
Financing
Purchase of own shares (1,032) - -
Long term bank loans repaid (166) (139) (364)
New finance leases undertaken 62 - -
Repayments of capital element
of finance loans and hire
purchase contracts (48) (44) (63)
------------------------------------------------------------
(1,184) (183) (427)
------------------------------------------------------------
(Decrease)/increase in cash (502) (929) 1,207
------------------------------------------------------------
Reconciliation of Net Cash Flow to Movement in Net Funds
£'000 £'000 £'000
(Decrease)/increase in cash (502) (929) 1,207
Cash outflow from decrease
in loans 166 139 364
Repayments of capital element
of finance loans and hire
purchase contracts 48 44 63
------------------------------------------------------------
Changes in net funds
resulting from cash flow (288) (746) 1,634
New finance loans and hire
purchase contracts (62) - -
------------------------------------------------------------
Movement in net funds (350) (746) 1,634
Net funds at
May 1st, 1999 1,328 (306) (306)
------------------------------------------------------------
Net funds at
October 30th, 1999 978 (1,052) 1,328
------------------------------------------------------------
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