Member Info for RogerMellie50

Evening John,

Can't help you with these zero-trades.

MSi getting a bit of social media/online attention last few days from Ukraine, I think as a result of a Ukranian army unit releasing recent footage of a palladin system in action and associated commnetary. My understanding is that this is just some recent footage from the previous 2023 aid-package, not any further deliveries. Anyway, decent PR along with recent coverage from Jordan for the same system.

In more important matters - are you setting your alarm clock for the first Test tomorrow?

Thanks very much indeed for the tip, but I'll decline in this instance.

Morning gents,

I'm with you on that Pharmall - the line on yesterday's RNS is banal and as you say, H/Y not even audited. I'm hoping the sale of non defence divisions is coming to a conclusion.

There's been some press in Poland recently about MSI's first VSHORAD systems being illustrated on Jordanian state TV during millitary exercises. They were in conjunction with Polish firm APS. My understanding was MSi had moved on from working with them, as APS had signed MOUs with bigger players, but there was also mention of orders placed by another Gulf state - I don't know if that was just from APS's side, or for the joint system.

I'd think twice about buying a used car off Karl Marx...

Sold 50k when it rose to 9.5 the other week, and sold the remaining 150k this morning. Had to peddle hard, took me 30 mins from the bell, 8p down to 7.1, averaging 7.4. Was just a punt for me, so decided to cash in for a decent profit still.

Would be fatuous to make any predictions, but I hope things stabilise. The junta have been negotiating with JNIM for a while now, maybe they can reach a settlement. Good luck to eveyone (not least the people of Mali).

85K just gone through at 16 quid a share. Nice.

Hi Pharmall,

Ha, hadn't heard that moniker before. To be honest, I don't/wouldn't have had a clue where 'the curve' was anyway!

For rank amateur DIY investors like me, there's always the question of where to look for objective suggestions or advice. Present company excluded, forums are 99.9% filth, and there's so much paid-research marketing about.

I have a digital subscription, not sure if FT subscribers get a certain amount of access too. I've had the IC for 15 years now. They re-hash a lot of stuff for leader articles, but I think it's genuinely an educational magazine and I've learnt plenty of things from it. Also, I have no professional investment/finance background, and very few 'contacts' or acquaintances who do, so there's the question of where to get tips and suggestions from as an outsider? I'd guess 2/3rds of my investment decisions have come from the IC, which have worked out well overall in the long term.

I'm hoping we'll get some news of land-based sales in the interims, but not banking on it. For me, MSi getting some firm orders for land-based systems is the 'game changer' (excuse the cliché), as it reduces the speculative nature of that part of the business and should be a catalyst for further sales. My (amateur) impression is that countries are at the stage now of having to commit to procurement of anti-drone systems, rather than treading water and watching developments from the sidelines. Fingers crossed.

Hi Atr,

Yes, I've noticed security stickers on 500g packs of beef mince, which is both bizarre and depressing in equal measure!

The cost of feed has certainly gone up, something I've noticed.

Just had a £1800 quote to get my car fixed. Time for a new one, I think, not worth it. I hate dealing with car salesman, worse than estate agents (naturally I exclude any MSi share-holding estate agents or car salesman from my disaproval).

I've got two (live ones) John, one's already promised, but you're welcome to collect the other one from Cumbria! She'd feed an Irish Catholic family twice over! We're breaking with tradition and having a rib of beef this year.

Where did you get that £135 figure from, out of interest?

Was just briefly quoted 9.5 to buy 75k and 9.6 to sell the same amount!

Knew it anyway, but nice to see a bit of positive publicity from official confirmation, and mentioning it had been effective.

https://www.janes.com/osint-insights/defence-news/c4isr/jordan-confirms-terrahawk-acquisition

Hi Pharmall,

Yes just saw that. Good news. I sold a third for 333 on Friday, having bought for 250 only a few weeks prior, but have left the rest in. Copper prcies look set to be supported for the mid-term as well.

...the options. His ‘additional services’ for the group paid him £105,000 in 2024 and £180,000 in 2025. Later, he too received a share option for 100,000 shares – more a poison pill, it seems, in case the group is taken over. He became a non-exec in January 1983. He is 79.

Those options conflict with the normal definitions of ‘non-executive’, as does their quasi-pay. The length of time they’ve been in their roles, and also their previous employment in the group, hardly qualifies them as independent. Despite this, the annual report says: “The board has considered their length of service as directors and employees and has determined that in terms of interest, experience, and judgment they all remain independent.”

The group is decentralised, which means that the day-to-day operations of the individual businesses are delegated to divisional managing directors. What sort of issues should directors be looking out for? That’s where truly independent non-execs could add value. Are there hidden risks? Or inadvertent breaches of compliance? Is the cyber security as safe as is assumed? What about investor relations? History is littered with well-performing companies thrown off course by unexpected mishaps. A non-executive with relevant experience and a different perspective might help tighten practices to prevent them from occurring.

The pressure to bring in fresh non-execs is likely to grow – and the directors are on the case. Once MSI becomes worth over £250mn, small-cap fund managers will start to take an interest. So might brokers.

..these days, with software systems that stabilise, detect, track multiple targets and feed controls to make ultrafast responses, while being able to do this remotely as part of a highly secure network. That long-awaited ‘significant contract’ was for an anti-drone weapon.

The sea change that supercharged MSI’s fortunes was the first sales of the group’s flexible and relatively cheap ‘VSHORAD’ (very short range – meaning 2.5/3km – air defence) counter drone land-based weapon system. The group was already selling earlier naval versions to the Royal Navy, US Navy and German navy. Now they’d developed land-based ones as well. MSI had found a niche, but with the UK underfunding defence, growth has had to come from selling abroad. These anti-drone systems aren’t as high-performance as highly expensive missile ones. However, they hit targets with ammunition and are significantly more effective than cheaper alternatives. Networked together, they can down swarms of drones.

The group ramped up its production capability, but competitors are racing to catch up. Spending on research and development in the MSI defence business last year increased, but only to £2.44mn – are the resources there to keep it ahead? More recently, it has agreed to work “collaboratively” with an Australian company that “specialises in technology for weapons systems optimisation and integration”.

A group, then, that’s truly defence – that saves lives, rather than takes them. The directors want to focus on defence and security, which now produces over 70 per cent of group revenues. They’d like to shed the fork-lift forgings, prefabricated petrol station superstructure and corporate branding signage businesses. The offers they’ve received so far haven’t been high enough, but at the AGM in August, Bell said that one had recently been increased. He was hopeful that higher ones might emerge.

The small tightly-knit board knows its business inside-out. Bell and Michael O’Connell, the managing director, have been developing those defence systems for 40 years. Most directors have been working together through good times and bad. Their skin-in-the-game is significant – between them, they own over two-fifths of the shares.

Succession to a younger team is under way. The finance director, who’s also the company secretary, was appointed in December 2024. More recently, John Meldrun joined the board after being supported in running the UK defence and security division by David Hansell, the former managing director of MSI Defence Systems. Hansell had become a non-executive director in June 2014. His ‘additional services’ earned him £138,700 in each of the past two years. He was also granted share options. Before retiring, he’d been in the business for over 50 years. He is 80.

The other non-exec, Roger Lane-Smith, is designated the senior independent director. The remuneration committee consisted of just him when it approved the

He talked about it being a year of “considerable progress” but that the results had been “negatively impacted” by a customer delaying the delivery of a “significant contract”. He was “confident this will be fully resolved shortly”.

He was right. In the year to April 2024, deliveries increased as orders duly arrived. The profits took off. Bonuses were about 125 per cent of salaries. Bell’s bonus alone was more than his total pay for the year before: £831,980. The same thing happened the next year, and his options began to vest too, which pushed up the total he received in the year to 30 April 2025 to £2.0mn (2024: £1.887mn). Collectively, the directors received £5.12mn.

That might seem out of proportion for a company that made a pre-tax profit of £20mn (and £14.5mn after tax), but shareholders can’t really complain. The directors have put their own money on the line. Shareholders could have bought MSI shares in early 2021 for about 160p each. Bell did. He bought more in 2022 for double that. In all, he invested almost £300,000 and recently gave them to a trust for his grandchildren. The share price has doggedly gone up to almost £15. Those shares are now worth over £2.3mn.

Besides, the true cost to MSI shareholders of its executive pay is less than it appears. The published option gains are the nominal taxable amounts received by the executives, not the cost to shareholders. When options are exercised, companies often have to create new shares. Not MSI. The board, in effect, allocated ones that it had already set aside. Some shares were in an employee benefit trust, which the group had funded years earlier. Those had cost 41p each. The rest came from Treasury – bought for 172p. The true cost to shareholders was less than a quarter of the published ‘share option gain’ for Bell of £550,436 (2024: £391,268).

Buybacks have since restored those shares to Treasury. They, too, are now worth much more than was paid for them, and over the past five years, the number of MSI shares in issue has reduced by about 0.5mn.

State of the art

What is it that’s driven the share price so high? The clues started appearing three years ago. MSI was renowned for its lack of communications. The group’s financial reports are concise. Management just seemed to get on with the business. Not for them the distraction of making company presentations (but that’s now changing). It used to be said that the best way to interact with the company was to attend its AGM, but towards the end of 2022, it began making announcements – about large, long-term contracts that were expected to boost defence revenues.

These were for electro-optical sights and mounts for guns. That might sound mundane, but they must be sophisticated...

I have a subscription, but it appears to be available without one through google, so no harm posting:

Time to stop overlooking this British success story

Published on October 15, 2025

To be quoted on the London Stock Exchange, companies need to have a broker. When results are announced, these house brokers are normally among the first to review the company’s performance, often with a positive spin. In some cases, they may be the only broker to report on a company. But some businesses have no broker coverage, and MS International (MSI) is one.

Dating back to 1960, the company was originally known as Mining Supplies Limited, and supplied coal mining equipment. In 1964, it began forging forks for loaders (heavy-duty versions of forklift trucks) and in 1965 went public.

Over the years, it expanded – partly through acquisitions. It became known for designing and constructing petrol station forecourt structures. Those have been modestly successful, but management saw more potential in another division that designed, manufactured and serviced defence equipment. They knew they were on to something when their minnow of a company pitched for a US defence contract – against giant competitors including British Aerospace, now BAE Systems (BA.), and won.

Good progress was made, but then came the Covid-19 lockdowns, when Michael Bell, the executive chair, expressed bitter disappointment about the group’s losses, which sent the share price back to where it had been in 2005. He thanked employees and both the UK and other governments for their financial support. With a market value of £23mn, MS had shrunk to the size of a microcap, below most people’s radars.

The board cut the dividend and scrapped that year’s executive bonuses, offset by a one-off grant of share options, conditional on the share price recovering. These came in two forms. One of Bell’s was more than 100,000 shares, of which 20,000 were tax-free and 80,000 taxable. He’d be able to buy these for 141p per share in three equal tranches after three, four and five years. His other grant was for 300,000 shares. They’d cost him nothing and could be exercised in two equal tranches after two and three years, provided that the share price more than doubled and stayed above 300p for 90 consecutive days.

Over the next couple of years, revenues began to tick up – but profitability, which determined the executives’ annual bonuses through a formula, was still muted. Bonuses for May 2022 to April 2023 were 23.8 per cent of annual salaries – down from 38 per cent the previous year. MSI’s management had already gained a reputation, considering the size of the company, for being paid generously, and that year Bell received £828,217.

Interesting comments about bringing in 'fresh' non-execs:

https://www.investorschronicle.co.uk/content/ba9104c6-be6c-4c1f-bca8-a9cfd5d1f581

Beat me to it Smudge!