Last checked at 24 Jun 2008 07:00
Chairman's Statement
Results and review
It is a pleasure to report on another year of successful high quality development and profitable growth for the Group. Once again, revenue, pre-tax profit, earnings per share, cash at bank, order intake and the forward order book all closed at a higher level than the previous year.
For the year ended 3 May 2008, the Group profit before taxation amounted to £5.29m (2007-£4.40m) on revenue of £53.86m (2007-£47.88m). Earnings per share were 22.0p (2006-18.2p).
Net cash and short term deposits at the year-end reached a record level of £10.07m (2007-£7.61m), which is equivalent to 55p per share.
These results are clear evidence of the credibility of our strategy to operate a balanced portfolio of businesses, products and customers.
MSI continues to build upon its strong brand reputation in the markets in which it operates, reflecting our high value added design and manufacturing status focused on technology and productivity developments.
The three operating divisions - defence, forgings and petrol station forecourt superstructures - produced highly commendable performances with each contributing its share of growth within the overall result. As highlighted at the interim stage, contract delivery requirements provided the defence division with a substantial second half bias. The forgings division, building on its investment in processes and productivity continues to enhance its strategic market positions. The petrol station forecourt superstructures joint venture division took full advantage of a buoyant situation in its construction market and as a result lifted both revenue and profit suitably above the previous year's result.
During the period, the Company purchased 260,000 MS INTERNATIONAL plc shares for cancellation at a total cost of £477,000.
Outlook
The growing presence of overseas naval end-users and shipbuilders in the defence division's phased order book - which stands at a record level - underlines the growing international awareness and appreciation of the excellent reputation of this business and its products. This is a particularly salient feature occurring at a time when the release of new projects by the UK Ministry of Defence, is inhibited by financial constraints.
Whilst sensitive to the global economic environment, our short to medium term order books for the forgings and forecourt superstructures businesses are holding up very well and we continue to win new business. Providing this trend is not seriously undermined by macro economic conditions, we look forward to developing these businesses and their effectiveness throughout the current year.
Overall, the Group is in excellent shape. The balance sheet, cash flow and forward order book have never been better. Around the Group, there is a good level of confidence in the belief that we can achieve our objectives in what may well be challenging times ahead.
Accordingly, the Board recommends the payment of a final dividend of 3.80p (2007 - 3.00p) making a total for the year of 4.50p (2007 - 3.60p).
Michael Bell23 June 2008
| Group income statement | |||||||
| For the 53 weeks ended 3rd May, 2008 |
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| 2008 | 2007 | ||||||
| Total | Total | ||||||
| £000 | £000 | ||||||
| Revenue | 53,861 | 47,878 | |||||
| Cost of sales | (40,393) | (35,795) | |||||
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| Gross profit | 13,468 | 12,083 | |||||
| Distribution costs | (1,781) |
| (1,970) | ||||
| Administrative expenses |
| (7,184) | (6,243) | ||||
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| (8,965) | (8,213) | ||||||
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| Group trading profit | 4,503 | 3,870 | |||||
| Finance revenue | 308 |
| 102 | ||||
| Finance costs |
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| (7) | |||
| Other finance revenue - pensions | 485 |
| 435 | ||||
| 785 | 530 | ||||||
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| Profit before taxation | 5,288 | 4,400 | |||||
| Taxation | (1,355) | (1,384) | |||||
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| Profit for the period attributable to equity holders of the parent | 3,933 | 3,016 | |||||
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| Earnings per share: basic | 22.0p | 18.2p | |||||
| diluted | 21.5p | 17.5p | |||||
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Group statement of recognised income and expense
| For the 53 weeks ended 3rd May, 2008 | Group | Company | |||||
| 2008 | 2007 | 2008 | 2007 | ||||
| Total | Total | Total | Total | ||||
| £000 | £000 | £000 | £000 | ||||
| Actuarial gains on defined benefit pension scheme | 548 | 1,550 | 548 | 1,550 | |||
| Deferred taxation on actuarial gains on defined benefit pension scheme | (127) | (465) | (127) | (465) | |||
| Exchange differences on retranslation of foreign operations | 120 | (58) | 106 | (55) | |||
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| Net income recognised directly in equity | 541 | 1,027 | 527 | 1,030 | |||
| Profit attributable to equity holders of the parent | 3,933 | 3,016 | 3,663 | 2,687 | |||
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| Total recognised income and expense for the period attributable to equity holders of the parent | 4,474 | 4,043 | 4,190 | 3,717 | |||
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| The financial information set out above does not constitute the Company's statutory accounts for the periods ended 3rd May, 2008 or 28th April, 2007 but is derived from those accounts. Statutory accounts for 2007 have been delivered to the Registrar of Companies, and those for 2008 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 237 (2) or (3) of the Companies Act 1985. |
| The earnings per share is calculated by dividing the profit after taxation of £3,993,000 (2007 - £3,016,000) by the weighted average of 17,845,762 (2007 - 16,557,004) shares in issue in the year. |
| 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 29th August, 2008 to members on the books of the Company at 1st August, 2008. |
| Balance sheets | ||||||||
| At 3rd May, 2008 | ||||||||
| Group | Company | |||||||
| 2008 | 2007 | 2008 | 2007 | |||||
| £'000 | £'000 | £'000 | £'000 | |||||
| ASSETS | ||||||||
| Non-current assets | ||||||||
| Property, plant and equipment | 16,101 | 14,676 | 15,269 | 13,837 | ||||
| Intangible assets | 138 | 253 | 138 | 253 | ||||
| Investments in subsidiaries | - | - | 6,869 | 6,869 | ||||
| Investment in joint venture | - | - | 50 | 50 | ||||
| Defined benefit pension asset | 1,856 | 894 | 1,856 | 894 | ||||
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| 18,095 | 15,823 | 24,182 | 21,903 | |||||
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| Current assets | ||||||||
| Inventories | 5,104 | 4,327 | 3,779 | 3,141 | ||||
| Trade and other receivables | 7,574 | 7,288 | 6,970 | 6,874 | ||||
| Prepayments | 2,925 | 2,109 | 2,846 | 2,025 | ||||
| Cash and short-term deposits | 10,071 | 7,608 | 9,209 | 6,884 | ||||
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| 25,674 | 21,332 | 22,804 | 18,924 | |||||
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| TOTAL ASSETS | 43,769 | 37,155 | 46,986 | 40,827 | ||||
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| EQUITY AND LIABILITIES | ||||||||
| Equity | ||||||||
| Equity share capital | 1,845 | 1,871 | 1,845 | 1,871 | ||||
| Capital redemption reserve | 896 | 870 | 896 | 870 | ||||
| Other reserves | 1,565 | 1,544 | 1,565 | 1,544 | ||||
| Revaluation reserve | 2,969 | 2,942 | 2,969 | 2,942 | ||||
| Special reserve | 1,629 | 1,629 | 1,629 | 1,629 | ||||
| Currency translation reserve | (31) | (151) | (5) | (111) | ||||
| Treasury shares | (391) | (738) | (391) | (738) | ||||
| Retained earnings | 12,131 | 8,719 | 10,252 | 7,110 | ||||
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| 20,613 | 16,686 | 18,760 | 15,117 | |||||
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| Non-current liabilities | ||||||||
| Finance leases | - | 4 | - | - | ||||
| Provisions | - | 48 | - | 48 | ||||
| Government grants | 16 | 28 | 16 | 28 | ||||
| Deferred income tax liability | 1,941 | 1,779 | 1,920 | 1,759 | ||||
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| 1,957 | 1,859 | 1,936 | 1,835 | |||||
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| Current liabilities | ||||||||
| Trade and other payables | 20,606 | 18,060 | 25,754 | 23,423 | ||||
| Finance leases | 4 | 7 | - | - | ||||
| Provisions | - | 65 | - | 65 | ||||
| Government grants | 13 | 13 | 13 | 13 | ||||
| Income tax payable | 576 | 465 | 523 | 374 | ||||
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| 21,199 | 18,610 | 26,290 | 23,875 | |||||
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| TOTAL EQUITY AND LIABILITIES | 43,769 | 37,155 | 46,986 | 40,827 | ||||
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| Cash flow statements | ||||||||
| For the 53 weeks ended 3rd May, 2008 | Group | Company | ||||||
| 2008 | 2007 | 2008 | 2007 | |||||
| £000 | £000 | £000 | £000 | |||||
| Trading profit | 4,503 | 3,870 | 3,442 | 3,420 | ||||
| Adjustments to reconcile trading profit to net cash in flow from operating activities | ||||||||
| Depreciation charge | 1,412 | 1,127 | 1,169 | 924 | ||||
| Amortisation charge | 115 | 128 | 115 | 128 | ||||
| Diminution in value of subsidiaries | - | - | 2 | - | ||||
| Foreign exchange gains/(losses) | 37 | (58) | 106 | (55) | ||||
| RSA grant release | (12) | (13) | (12) | (13) | ||||
| Pension charge | 685 | 528 | 685 | 528 | ||||
| Share based payments | 205 | - | 205 | - | ||||
| (Increase)/decrease in inventories | (555) | 576 | (57) | 296 | ||||
| (Increase)/decrease in receivables | (286) | 683 | (96) | 1,561 | ||||
| Increase in prepayments | (816) | (246) | (821) | (244) | ||||
| Increase in payables | 771 | 1,061 | 600 | 572 | ||||
| Increase/(decrease) in progress payments | 1,553 | (68) | 1,150 | (198) | ||||
| Provisions utilised | (113) | (66) | (113) | (66) | ||||
| Pension fund payments | (614) | (608) | (614) | (608) | ||||
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| Cash generated from operating activities | 6,885 | 6,914 | 5,761 | 6,245 | ||||
| Interest received | 300 | 95 | 277 | 78 | ||||
| Taxation paid | (1,165) | (1,329) | (812) | (1,155) | ||||
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| Net cash flow from operating activities | 6,020 | 5,680 | 5,226 | 5,168 | ||||
| Investing activities | ||||||||
| Purchase of property , plant and equipment | (2,838) | (3,613) | (2,687) | (3,053) | ||||
| Purchase of intangible assets | - | (85) | - | (85) | ||||
| Sale of property, plant and equipment | 88 |
| 178 |
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| Dividends received from joint venture | - |
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| 500 |
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| Net cash from investing activities | (2,750) | (3,520) | (2,101) | (3,032) | ||||
| Financing activities | ||||||||
| Purchase of own shares | (308) | - | (308) | - | ||||
| Repurchase of shares | (477) | - | (477) | - | ||||
| Share options exercised | 655 |
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| 655 | - | ||
| Dividends paid | (670) |
| (464) |
| (670) | (464) | ||
| New finance leases | - |
| 12 |
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| Repayments of capital element of finance leases | (7) | (7) | - |
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| Net cash flow from financing activities | (807) | (459) | (800) | (464) | ||||
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| Increase in cash and cash equivalents | 2,463 | 1,701 | 2,325 | 1,672 | ||||
| Opening cash and cash equivalents | 7,608 | 5,907 | 6,884 | 5,212 | ||||
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| Closing cash and cash equivalents | 10,071 | 7,608 | 9,209 | 6,884 | ||||
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Reconciliation of movement in equity
| Capital | Currency | |||||||||||||||||
| Issued | redemption | Other | Revaluation | Special | translation | Treasury | Retained | |||||||||||
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| £000 | £000 | £000 | £000 | £000 | £000 | £000 | £000 | £000 | ||||||||||
| (a) Group | ||||||||||||||||||
| At 29th April, 2006 | 1,871 | 870 | 1,544 | 2,942 | 1,629 | (93) | (738) | 5,082 | 13,107 | |||||||||
| Total recognised income and expense for the year | - | - | - | - | - | (58) | - | 4,101 | 4,043 | |||||||||
| Dividends paid | - | - | - | - | - | - | - | (464) | (464) | |||||||||
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| At 28th April, 2007 | 1,871 | 870 | 1,544 | 2,942 | 1,629 | (151) | (738) | 8,719 | 16,686 | |||||||||
| Total recognised income and expense for the year | - | - | - | - | - | 120 | - | 4,354 | 4,474 | |||||||||
| Dividends paid | - | - | - | - | - | - | - | (670) | (670) | |||||||||
| Repurchase of shares | (26) | 26 | - | - | - | - | - | (477) | (477) | |||||||||
| Change in taxation rate | - | - | 21 | 27 | - | - | - | - | 48 | |||||||||
| Share options | - | - | - | - | - | - | - | 205 | 205 | |||||||||
| Exercise of share options | - | - | - | - | - | - | 655 | - | 655 | |||||||||
| Purchase of own shares | - | - | - | - | - | - | (308) | - | (308) | |||||||||
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| At 3rd May, 2008 | 1,845 | 896 | 1,565 | 2,969 | 1,629 | (31) | (391) | 12,131 | 20,613 | |||||||||
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| (b) Company | ||||||||||||||||||
| At 29th April, 2006 | 1,871 | 870 | 1,544 | 2,942 | 1,629 | (56) | (738) | 3,802 |
11,864 | |||||||||
| Total recognised income and expense for the year | - | - | - | - | - | (55) | - | 3,772 | 3,717 | |||||||||
| Dividends paid | - | - | - | - | - | - | - | (464) | (464) | |||||||||
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| At 28th April, 2007 | 1,871 | 870 | 1,544 | 2,942 | 1,629 | (111) | (738) | 7,110 |
15,117 | |||||||||
| Total recognised income and expense for the year | - | - | - | - | - | 106 | - | 4,084 | 4,190 | |||||||||
| Dividends paid | - | - | - | - | - | - | - | (670) | (670) | |||||||||
| Repurchase of shares | (26) | 26 | - | - | - | - | - | (477) | (477) | |||||||||
| Change in taxation rate | - | - | 21 | 27 | - | - | - | - | 48 | |||||||||
| Share options | - | - | - | - | - | - | - | 205 | 205 | |||||||||
| Exercise of share options | - | - | - | - | - | - | 655 | - | 655 | |||||||||
| Purchase of own shares | - | - | - | - | - | - | (308) | - | (308) | |||||||||
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| At 3rd May, 2008 | 1,845 | 896 | 1,565 | 2,969 | 1,629 | (5) | (391) | 10,252 | 18,760 | |||||||||
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(1) Share capital
The balance classified as share capital includes the nominal value on issue of the Company's equity share capital, comprising 10p Ordinary shares.
(2) Capital redemption reserve
The balance classified as capital redemption reserve represents the nominal value of issued share capital of the Company, repurchased.
(3) Other reserves
This is the revaluation reserve previously arising under UK GAAP which is now part of non-distributable retained reserves. This also includes the impact of the change in related deferred tax due to the change in corporation tax (30% to 28%).
(4) Revaluation reserve
The asset revaluation reserve is used to record increases in the fair value of land and buildings and decreases to the extent that such decrease relates to an increase on the same assets previously recognised in equity. This also includes the impact of the change in related deferred tax due to the change in corporation tax (30% to 28%).
(5) Special reserve
The balance classified as special reserve represents the share premium on the issue of the Company's equity share capital.
(6) Currency translation reserve
The foreign currency translation reserve is used to record exchange differences arising from the translation of the financial statements of foreign subsidiaries. It is also used to record the effect of hedging net investments in foreign operations.
(7) Treasury Shares
During 1991 the Company established an Employee Share Ownership Trust ("ESOT"). The trustee of the ESOT is Appleby Trust (Jersey) Ltd, an independent company registered in Jersey. The ESOT provides for the issue of options over Ordinary shares in the Company to Group employees, including executive directors, at the discretion of the Remuneration Committee.
The trust has purchased an aggregate 395,048 Ordinary shares, which represents 2.1% of the issued share capital of the Company at an aggregate cost of £391,000. The market value of the shares at 3rd May, 2008 was £757,000. The Company has made payments of £Nil (2007 - £Nil) into the ESOT bank accounts during the period. Options over 374,000 shares (2007 - Nil) have been granted during the period. Details of the outstanding share options are included in the Directors' Remuneration Report.
The assets, liabilities, income and costs of the ESOT have been incorporated into the Company's financial statements. Total ESOT costs charged to the profit and loss account in the period amounts to £9,000 (2007 - £5,000). During the period 1,912,521 options were exercised (2007 - £Nil) and 153,500 shares were purchased (2007 - Nil).