MS INTERNATIONAL PLC — Earnings Release 2013

Jun 4, 2013

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RNS Number : 2767G

MS International PLC

04 June 2013

Chairman's Statement

Results and review

The Group has sustained its revenues and achieved a robust profit margin despite having endured a most unfavourable backdrop of defence spending cuts and protracted global recession. 

From the outset, we made it clear that in the year to April 2013 the Group could not match the record profit returns of the previous twelve months.  Considering the nature of the three Divisions' businesses and the current weak state of some markets in which they operate, particularly within the defence equipment sector which is renowned for being quite lumpy, we are truly pleased with the Group's overall performance, believing it to be a very healthy result in the current environment.

Profit before taxation for the 12 months ended 27th April, 2013 amounted to £5.01m (2012 - £8.39m) on revenue of £54.49m (2012 - £55.95m). Earnings per share were 24.4p (2012 - 34.8p).

Net cash and short term deposits at the year-end increased by a very impressive 34%, attaining a new record high of £13.45m (2012 - £10.04m).

'Defence', the largest division and accounting for over half of Group revenue, had to contend with the increasing severity and uncertainty of budget constrained customers in both domestic and export markets throughout the year. Delays in the receipt of anticipated orders and shortfalls in the eventual requirements coupled with the deferral of prospective orders were the prime reasons that negated the anticipated improvement in the final quarter. In response we realigned the Division's cost base in the closing months of the year, initiating a series of cost saving measures, which included reducing the head count, to bring the business into line with the prevailing lower levels of activity.

'Forgings' international markets were, in the main, restrained, reflecting customers' low activity and continuing lack of confidence in any real and sustainable upturn in growth. The UK, European and most international markets were at very best flat-lining throughout the period. In the Americas, where we have manufacturing plants in South Carolina and Sao Paulo, our push to boost more local production content and drive for greater efficiencies brought about some encouraging outcomes.

'Petrol Station Superstructures' once again successfully raised both revenue and profit, buoyed by a good mix of new station developments and upgrades to existing forecourts. A very positive, innovative approach to design, the unique utilisation of materials and construction techniques assisted growth in market share for the UK based operation. The Polish operation, with markets throughout central and south eastern Europe, performed well, but experienced some progressive general tightening in activity reflecting a decline in economic conditions across those parts of Europe.

Board

David Pyle, who has been with the Group for over 40 years, stepped down as an executive director on 27th April 2013 and has been appointed a non-executive director.  I am very pleased that we will retain his expertise within the Board.

Outlook

Realistically, we are not anticipating the current year being any easier than last year. That said, we will seek to take advantage of the excellent reputations and market positions that the Group's three Divisions have built over many years across   international markets. Furthermore, our very strong balance sheet and long term orientation and strategy should enable us to face the year ahead with some good measure of assurance and self-reliance.

'Defence' still has a substantial pipeline of new business prospects, most notably from customers where the Division already enjoys a laudable reputation and high degree of product recognition and acceptance.  Although in the short term, there may be little improvement in the freeing up of national and some international defence budgets, it is equally likely that the strategic and capability concerns of governments will in many instances intensify and not diminish. The Division's cost structure has already been reduced to one aligned with a prudently perceived level of future business activity. This situation will be closely monitored and modified as required to meet any changes in expectations. In the meantime, maintaining high standards of marketing, advancing product development programmes, commendable 'in service' support of equipment and general efficiency improvements will be paramount. For the longer term, preserving the on-going co-operation and goodwill of the UK MoD as a constructive and supportive launch customer for new products and export sales will be most important.  

'Forgings' focuses on the manufacture of fork-arms, with lifting capacities ranging from 1 tonne up to 150 tonnes supplied to global original equipment manufacturers for fitting to fork-lift trucks, construction, agricultural and quarrying machines. These markets are under pressure and we anticipate they will remain subdued over the next twelve months as many customers, seeking a competitive advantage, continue to consolidate or relocate parts of their operations closer to end user markets. Conversely, there is a positive and growing trend of 're-shoring' component supply as the international competiveness of local supply is restored. Such dynamics and their outcomes can be most relevant to the success of our own operations. 

'Petrol Station Superstructures' year ahead appears quite promising as the Division builds on recent successes in expanding the customer base and the high quality performance ratings being achieved by 'on time' construction operations. There are numerous changes taking place in the petrol retailing market, notably the growth in market share being taken by supermarket chains with new locations and the expansion of independent retailing groups which are procuring individual sites or parts of estates from some of the leading oil companies. In Poland and eastern Europe, recent major road building programmes have resulted in a paucity of petrol station facilities on these roads to service the redirected traffic volumes. As further approvals become available for the required new developments, the Division is well placed to take advantage of the opportunities.

As I stated earlier, we are not anticipating that the coming year will be any easier for us.  The outlook may be uncertain but our Divisions are in good shape with excellent market positions, manufacturing facilities, committed employees and the Group's balance sheet is particularly strong.

Our strategy is based upon the belief that maintaining reasonable and acceptable levels of profitability across the three Divisions emanates from an unending commitment to invest wisely in support of 'in-house' product development programmes, the upgrading of production equipment to ensure efficiency and striving for the relentless and constant improvement in everything we do. Our commitment to this policy is absolute.

The Board recommends the payment of a maintained final dividend of 6.5p per share (2012 - 6.5p) making a total for the year of 8.0p per share (2012 - 8.0p).

Michael Bell

4th June 2013

Group income statement
For the 52 weeks ended 27th April, 2013
					2013		2012
					Total		Total
					£000		£000
Revenue					54,494		55,948
Cost of sales					(39,310)		(36,714)
Gross profit					15,184		19,234
Distribution costs					(2,547)		(2,500)
Administrative expenses					(7,557)		(8,144)
					(10,104)		(10,644)
Group operating profit					5,080		8,590
Finance revenue					83		28
Finance costs					(112)		(418)
Other finance (costs)/revenue- pensions					(45)		188
					(74)		(202)
Profit before taxation					5,006		8,388
Taxation					(586)		(2,078)
Profit for the period attributable to equity holders of the parent					4,420		6,310
Earnings per share:  basic and diluted					24.4p		34.8p

Group and company statement of comprehensive income
For the 52 weeks ended 27th April, 2013
		Group				Company
		2013		2012		2013		2012
		Total		Total		Total		Total
		£000		£000		£000		£000
Actuarial losses on defined benefit pension scheme		(3,083)		(2,936)		(3,083)		(2,936)
Deferred taxation on actuarial losses on defined benefit pension scheme		672		680		672		680
Exchange differences on retranslation of foreign operations		71		(194)		-		-
Net expense recognised directly in equity		(2,340)		(2,450)		(2,411)		(2,256)
Profit attributable to equity holders of the parent		4,420		6,310		3,887		5,671
Total recognised income and expense for the period attributable to equity holders of the parent		2,080		3,860		1,476		3,415

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 30th April, 2011			1,840		901		2,815		2,469		1,629		184		(100)		16,036		25,774
Profit for the period			-		-		-		-		-		-		-		6,310		6,310
Other comprehensive profit/(loss)			-		-		-		-		-		(194)		-		(2,256)		(2,450)
Total comprehensive income			-		-		-		-		-		(194)		-		4,054		3,860
Dividends paid			-		-		-		-		-		-		-		(1,271)		(1,271)
Change in taxation rates			-		-		-		42		-		-		-		-		42
At 28th April, 2012			1,840		901		2,815		2,511		1,629		(10)		(100)		18,819		28,405
Profit for the period			-		-		-		-		-		-		-		4,420		4,420
Other comprehensive profit			-		-		-		-		-		71		-		(2,411)		(2,340)
Total comprehensive income			-		-		-		-		-		71		-		2,009		2,080
Dividends paid			-		-		-		-		-		-		-		(1,452)		(1,452)
Change in taxation rates			-		-		-		21		-		-		-		-		21
At 27th April, 2013			1,840		901		2,815		2,532		1,629		61		(100)		19,376		29,054
(b) Company
At 30th April, 2011			1,840		901		1,565		2,469		1,629		-		(100)		15,502		23,806
Profit for the period			-		-		-		-		-				-		5,671		5,671
Other comprehensive loss			-		-		-		-		-		-		-		(2,256)		(2,256)
Total comprehensive income			-		-		-		-		-		-		-		3,415		3,415
Dividends paid			-		-		-		-		-		-		-		(1,271)		(1,271)
Change in taxation rates			-		-		-		42		-		-		-		-		42
At 28th April, 2012			1,840		901		1,565		2,511		1,629		-		(100)		17,646		25,992
Profit for the period			-		-		-		-		-		-		-		3,887		3,887
Other comprehensive profit			-		-		-		-		-		-		-		(2,411)		(2,411)
Total comprehensive income			-		-		-		-		-		-		-		1,476		1,476
Dividends paid			-		-		-		-		-		-		-		(1,452)		(1,452)
Change in taxation rates			-		-		-		21		-		-		-		-		21
At 27th April, 2013			1,840		901		1,565		2,532		1,629		-		(100)		17,670		26,037

Balance sheets
At 27th April, 2013
		Group						Company
		2013			2012			2013				2012
		£'000			£'000			£'000				£'000
ASSETS
Non-current assets
Property, plant and equipment		13,755			13,818			11,133				11,694
Intangible assets		4,451			4,798			30				69
Investments in subsidiaries		-			-			11,869				11,451
Deferred income tax asset		280			-			807				151
		18,486			18,616			23,839				23,365
Current assets
Inventories		6,536			7,824			5,656				6,726
Trade and other receivables		13,065			12,208			13,838				13,757
Prepayments		520			604			419				527
Cash and short-term deposits		13,447			10,037			12,515				9,001
		33,568			30,673			32,428				30,011
TOTAL ASSETS		52,054			49,289			56,267				53,376
EQUITY AND LIABILITIES
Equity
Equity share capital		1,840			1,840			1,840				1,840
Capital redemption reserve		901			901			901				901
Other reserve		2,815			2,815			1,565				1,565
Revaluation reserve		2,532			2,511			2,532				2,511
Special reserve		1,629			1,629			1,629				1,629
Currency translation reserve		61			(10)			-				-
Treasury shares		(100)			(100)			(100)				(100)
Retained earnings		19,376			18,819			17,670				17,646
		29,054			28,405			26,037				25,992
Non-current liabilities
Defined benefit pension liability		6,766			4,167			6,766				4,167
Deferred income tax liability		-			505			-				-
		6,766			4,672			6,766				4,167
Current liabilities
Trade and other payables		16,143			14,995			23,302				21,932
Income tax payable		91			1,217			162				1,285
		16,234			16,212			23,464				23,217
TOTAL EQUITY AND LIABILITIES		52,054			49,289			56,267				53,376

Cash flow statements
For the 52 weeks ended 27th April, 2013			Group				Company
			2013		2012		2013		2012
			£000		£000		£000		£000
Profit before taxation and exceptional items			5,006		8,388		4,305		7,569
Adjustments to reconcile profit before taxation to net cash in flow from operating activities
Depreciation charge			1,372		1,339		1,180		1,219
Amortisation charge			347		362		39		45
Finance costs			74		202		13		179
Foreign exchange gains/(losses)			9		(150)		-		-
Decrease/(increase) in inventories			1,288		(725)		1,070		(375)
(Increase)/decrease in receivables			(857)		274		(81)		(806)
Decrease in prepayments			84		906		108		895
Increase/(decrease) in payables			3,266		(247)		3,511		(674)
Decrease in progress payments			(2,118)		(4,163)		(2,140)		(4,381)
Pension fund payments			(529)		(400)		(529)		(400)
Cash generated from operating activities			7,942		5,786		7,476		3,271
Interest (paid)/received			(29)		(13)		32		10
Taxation paid			(1,809)		(1,650)		(1,505)		(1,420)
Net cash inflow from operating activities			6,104		4,123		6,003		1,861
Investing activities
Purchase of property , plant and equipment			(1,252)		(2,711)		(620)		(744)
Sale of property, plant and equipment			10		19		1		18
Net cash outflow from investing activities			(1,242)		(2,692)		(619)		(726)
Financing activities
Dividends paid			(1,452)		(1,271)		(1,452)		(1,271)
Investment in subsidiary			-		-		(418)		-
Net cash outflow from financing activities			(1,452)		(1,271)		(1,870)		(1,271)
Increase/(decrease) in cash and cash equivalents			3,410		160		3,514		(136)
Opening cash and cash equivalents			10,037		9,877		9,001		9,137
Closing cash and cash equivalents			13,447		10,037		12,515		9,001

The financial information set out above does not constitute the Company's statutory accounts for the periods ended 27th April, 2013 or 28th April, 2012 but is derived from those accounts.  Statutory accounts for 2012 have been delivered to the Registrar of Companies, and those for 2013 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 £4,420,000 (2012 - £6,310,000) by the weighted average of 18,151,025 (2012 - 18,151,025) 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 Chairman's Statement 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 4th June, 2013 and the above responsibility statement was signed on its behalf by Michael Bell, Executive 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.
Dividend warrants will be posted on 26th July, 2013 to those members registered on the books of the Company on 5th July, 2013.

This information is provided by RNS

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