Ms Intl. Regulatory News (MSI)

MS INTERNATIONAL plc

Unaudited Interim Condensed

Group Financial Statements

31st October, 2022

EXECUTIVE DIRECTORS

Michael Bell

Michael O'Connell

Nicholas Bell

NON-EXECUTIVE DIRECTORS

Roger Lane-Smith

David Hansell

COMPANY SECRETARY

Shelley Ashcroft

REGISTERED OFFICE

Balby Carr Bank

Doncaster

DN4 8DH

England

PRINCIPAL OPERATING DIVISIONS

 'Defence'

 'Forgings'

 'Petrol Station Superstructures'

 'Corporate Branding'

Chairman's Statement

Results

It is pleasing to report that the Group has continued to perform strongly, growing our international businesses profitably in the face of these extremely challenging times.

For the half year ended 31st October 2022, profit before tax increased to £3.46m (2021 -£0.77m) on revenue of £42.03m (2021 - £33.16m).

Basic earnings per share were 17.4p (2021 - 3.4p).

The balance sheet is also significantly stronger with cash at £23.88m (2021 - £15.54m).

Orders received in the period, when added to those already in hand, maintains the Group in a strong position for the future.

Prospects

'Defence'

We continue to market our expanding product portfolio around the world to what can only be described as a somewhat 'more attentive audience'. There must be little doubt this reflects the uneasy political state of the world, notwithstanding the fact that many countries' defence budgets remain under severe fiscal pressure.

Our continued investment to support the development and long-term growth of the defence business including relocating our production operations into our upgraded facilities in Norwich, did however, mean that we carried substantial costs in the period.

Pleasingly, our participation in the United States Navy's multi- phased programme of 'weapon approval procedures' with respect to our 30mm Naval Gun System, continues to progress through their comprehensive testing procedures. We are encouraged with their observations to date. A great prize, still for us to win! Our existing land and building facilities in South Carolina can be further developed, to meet any resulting defence opportunities.

We continue to develop new military products and during the period launched our first land based mobile gun system incorporating our unique 'counter-drone' capability. I am very encouraged to report that this new gun system has already attracted considerable attention in the international market.

'Forgings'

All three of our superb manufacturing facilities in the UK, the United States and Brazil continue to operate at a high level of activity, servicing their national and international customers. Managing the negative effects of rising energy costs for these steel forging businesses is an undoubted challenge, but one that that is being successfully managed, in step with local availability of supply.

'Petrol Station Superstructures'

This division has experienced a high level of quality activity in the period, resulting in a strong business recovery from the pandemic disruption. Both our UK and Poland based operations remain well placed and committed to serve our highly respected UK and European customer base.

'Corporate Branding'

We are making good progress with our Netherlands and German operations as the businesses recover from the depressed level of activity within the sign installation and maintenance sector by the many cross-border restrictions imposed on mainland travel during Covid. Meantime, our fledgeling UK sign operation is benefitting from our commitment and investment in personnel, contemporary manufacturing equipment and other facilities.

Outlook

We believe that we have progressed strongly and created considerable opportunities through our commitment to being bold whilst building a substantial war chest to support our continuing investment, particularly in defence. Notwithstanding, we remain vigilant, in order to react to any changing circumstances.

I look forward with some confidence despite the difficult economic background.

All such matters considered, the Board has declared an increased interim dividend per share of 2p (2021 1.75p), payable to shareholders on 13th January 2023.

MS INTERNATIONAL plc 

Michael Bell

Tel: 01302 322133

Shore Capital (Nominated Adviser and Broker)

Patrick Castle

Tel: 020 7408 4090

Daniel Bush

Independent auditor's review report on Interim Financial Information to MS INTERNATIONAL Plc

Conclusion

We have reviewed the condensed set of financial statements in the half-yearly financial report of MS INTERNATIONAL Plc (the 'company') for the six months ended 31 October 2022 which comprises of Interim condensed consolidated income statement, Interim condensed consolidated statement of comprehensive income statement, Interim condensed consolidated statement of financial position, Interim consolidated statement of changes in equity, Interim consolidated cash flow statement and notes to the interim consolidated financial statements.

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 31 October 2022 is not prepared, in all material respects, in accordance with UK adopted International Accounting Standard 34, 'Interim Financial Reporting'.

Basis for conclusion

We conducted our review in accordance with International Standard on Review Engagements (UK) (ISRE (UK)) 2410, "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" (ISRE (UK) 2410). A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

As disclosed in note 2, the annual financial statements of the company are prepared in accordance with UK adopted IFRSs. The condensed set of financial statements included in this half yearly financial report has been prepared in accordance with UK adopted International Accounting Standard 34, "Interim Financial Reporting".

We have read the other information contained in the half-yearly financial report which comprises only the Chairman's statement and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.

Conclusions relating to going concern

Based on our review procedures, which are less extensive than those performed in an audit as described in the Basis of conclusion section of this report, nothing has come to our attention to suggest that management have inappropriately adopted the going concern basis of accounting or that management have identified material uncertainties relating to going concern that are not appropriately disclosed.

This conclusion is based on the review procedures performed in accordance with this ISRE UK, however future events or conditions may cause the entity to cease to continue as a going concern.

In our evaluation of the directors' conclusions, we considered the inherent risks associated with the group's business model including effects arising from macro-economic uncertainties, we assessed and challenged the reasonableness of estimates made by the directors and the related disclosures and analysed how those risks might affect the group's financial resources or ability to continue operations over the going concern period.

Directors' responsibilities

The half-yearly financial report is the responsibility of, and has been approved by, the directors. In preparing the half-yearly financial report, the directors are responsible for assessing the company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so.

Auditor's Responsibilities for the review of the financial information

Our responsibility is to express a conclusion to the company on the condensed set of financial statements in the half-yearly financial report based on our review.

Our conclusion, including our Conclusions relating to going concern, are based on procedures that are less extensive than audit procedures, as described in the Basis for conclusion paragraph of this report.

Use of our report

This report is made solely to the company, as a body, in accordance with ISRE (UK) 2410. Our review work has been undertaken so that we might state to the company those matters we are required to state to it in an independent review report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company as a body, for our review work, for this report, or for the conclusion we have formed.

Grant Thornton UK LLP

Statutory Auditor, Chartered Accountants

Sheffield

6th December 2022

Interim condensed consolidated income statement

Half-year to 31st October, 2022

Half-year to 31st October, 2021

unaudited

unaudited

Notes

£'000

£'000

Revenue

5/6

42,025

33,155

Cost of sales

(30,095)

(24,646)

Gross profit

11,930

8,509

Distribution costs

(1,815)

(1,768)

Administrative expenses

(6,522)

(5,865)

Operating profit

6

3,593

876

Finance costs

(70)

(40)

Other finance costs - pension

(63)

(63)

Profit before taxation

3,460

773

Tax expense

7

(689)

(236)

Profit for the period attributable to equity holders of the parent

2,771

537

Basic earnings per share

8

17.4p

3.4p

Diluted earnings per share

8

16.8p

3.3p

Interim condensed consolidated statement of comprehensive income

Half-year to 31st October, 2022

Half-year to 31st October, 2021

unaudited

unaudited

£'000

£'000

Profit for the period attributable to equity holders of the parent

2,771

537

Exchange differences on retranslation of foreign operations

57

(242)

Net other comprehensive income/(loss) to be reclassified to profit or loss in subsequent periods

57

(242)

Remeasurement (losses)/gains on defined benefit pension scheme

13

(8)

217

Deferred taxation on remeasurement of defined benefit pension scheme

2

258

Deferred taxation on revaluation surplus on land and buildings

-

(331)

Net other comprehensive (loss)/income not being reclassified to profit or loss in subsequent periods

(6)

144

Total comprehensive income for the period attributable to equity holders of the parent

2,822

439

Interim condensed consolidated statement of financial position

Notes

31st October, 2022

31st October, 2021

30th April, 2022

unaudited

unaudited

audited

ASSETS

£'000

£'000

£'000

Non-current assets

Property, plant and equipment

10

25,076

20,015

24,537

Right-of-use assets

11

1,328

1,235

1,479

Intangible assets

2,896

3,122

3,002

Investment in joint venture

35

34

34

Deferred income tax asset

1,373

1,861

1,435

30,708

26,267

30,487

Current assets

Inventories

17,003

17,446

16,327

Trade and other receivables

9,422

11,075

11,396

Contract assets

1,450

1,747

1,773

Income tax receivable

-

52

6

Prepayments

1,673

2,127

1,352

Cash and cash equivalents

12

23,363

14,067

18,092

Restricted cash held in Escrow

12

519

1,470

1,158

53,430

47,984

50,104

TOTAL ASSETS

84,138

74,251

80,591

EQUITY AND LIABILITIES

Equity

Share capital

1,784

1,784

1,784

Capital redemption reserve

957

957

957

Other reserve

2,815

2,815

2,815

Revaluation reserve

9,923

6,055

9,923

Special reserve

1,629

1,629

1,629

Currency translation reserve

(360)

(56)

(417)

Treasury shares

(2,789)

(2,789)

(2,789)

Retained earnings

26,242

20,044

24,673

TOTAL EQUITY SHAREHOLDERS' FUNDS

40,201

30,439

38,575

Non-current liabilities

Defined benefit pension liability

13

4,341

6,491

4,720

Deferred income tax liability

2,547

1,938

2,578

Lease liabilities

1,003

975

1,158

7,891

9,404

8,456

Current liabilities

Trade and other payables

13,798

12,623

14,176

Contract liabilities

20,610

20,928

18,329

Income tax payable

1,272

574

702

Lease liabilities

366

283

353

36,046

34,408

33,560

TOTAL EQUITY AND LIABILITIES

84,138

74,251

80,591

The interim condensed consolidated financial statements of the Group for the six months ended 31st October, 2022 were authorised for issue in accordance with a resolution of the directors on 6th December, 2022 and signed on their behalf by:

Michael O'Connell

Finance Director

Interim consolidated statement of changes in equity

Share capital

Capital redemption reserve

Other reserve

Revaluation reserve

Special reserve

Currency translation reserve

Treasury shares

Retained earnings

Total unaudited/ audited

£'000

£'000

£'000

£'000

£'000

£'000

£'000

£'000

£'000

At 30th April, 2021

1,784

957

2,815

6,055

1,629

186

(2,789)

20,399

31,036

Profit for the period

- 

- 

- 

- 

- 

- 

- 

537

537

Other comprehensive (loss)/income

- 

- 

- 

- 

- 

(242)

- 

144

(98)

Dividend paid

- 

- 

- 

- 

- 

- 

- 

(1,036)

(1,036)

At 31st October, 2021

1,784

957

2,815

6,055

1,629

(56)

(2,789)

20,044

30,439

Profit for the period

- 

- 

- 

- 

- 

- 

- 

4,395

4,395

Other comprehensive income/(loss)

- 

- 

- 

3,868

- 

(361)

- 

514

4,021

Dividend paid

- 

- 

- 

- 

- 

- 

- 

(280)

(280)

At 30th April, 2022

1,784

957

2,815

9,923

1,629

(417)

(2,789)

24,673

38,575

Profit for the period

- 

- 

- 

- 

- 

- 

- 

2,771

2,771

Other comprehensive income/(loss)

- 

- 

- 

- 

- 

57

- 

(6)

51

Dividend paid (note 9)

- 

- 

- 

- 

- 

- 

- 

(1,196)

(1,196)

At 31st October, 2022

1,784

957

2,815

9,923

1,629

(360)

(2,789)

26,242

40,201

Interim consolidated cash flow statement

Half-year to 31st October, 2022

Half-year to 31st October, 2021

unaudited

unaudited

£'000

£'000

Profit before taxation

3,460

773

Adjustments to reconcile profit before taxation to cash generated from/(invested in) operating activates:

Depreciation charge of owned and right-of-use assets

968

868

Amortisation charge

119

111

Impairment of goodwill

- 

349

Profit on disposal of property, plant and equipment

(37)

(59)

Net finance costs

133

103

Foreign exchange losses

(111)

(44)

Increase in inventories

(491)

(5,119)

Decrease/(increase) in receivables

2,521

(1,433)

Increase in prepayments

(302)

(119)

(Decrease)/increase in payables

(606)

246

Increase/(decrease) in contract liabilities

1,543

(310)

Pension fund deficit reduction payments

(450)

(450)

Cash generated from/(invested in) operating activities

6,747

(5,084)

Net interest paid

(43)

(15)

Taxation paid

(78)

(20)

Net cash inflow/(outflow) from operating activities

6,626

(5,119)

Investing activities

Purchase of property, plant and equipment

(879)

(1,618)

Purchase of intangible assets

- 

(54)

Proceeds on disposal of property, plant and equipment

91

79

Decrease in restricted cash held in Escrow maturing in more than 90 days

639

4,695

Net cash (outflow)/inflow from investing activities

(149)

3,102

Financing activities

Lease payments

(207)

(204)

Dividend paid

(1,196)

(1,036)

Net cash outflow from financing activities

(1,403)

(1,240)

Increase/(decrease) in cash and cash equivalents

5,074

(3,257)

Opening cash and cash equivalents

18,092

17,390

Exchange differences on cash and cash equivalents

197

(66)

Closing cash and cash equivalents

23,363

14,067

Notes to the interim consolidated financial statements

1. Corporate information

MS INTERNATIONAL plc is a public limited company incorporated and domiciled in England and Wales. The Company's ordinary shares are traded on the Alternative Investment Market (AIM) market of the London Stock Exchange. The principal activities of the Company and its subsidiaries ("the Group") are the design, manufacture, construction, and servicing of a range of engineering products and structures. These activities are grouped into the following divisions:

'Defence' - design, manufacture, and service of defence equipment.

'Forging' - manufacture of fork-arms and open die forgings.

'Petrol Station Superstructures' - design, manufacture, construction, and maintenance of petrol station superstructures.

'Corporate Branding' - design, manufacture, installation, and service of corporate brandings, including media facades, way-

finding signage, public illumination, creative lighting solutions, and the complete appearance of petrol station superstructures

and forecourts.

2. Basis of preparation and accounting policies

The consolidated condensed interim financial statements included in this half-yearly financial report have been prepared in accordance with International Accounting Standard 34, "Interim Financial Reporting" in conformity with the requirements of the Companies Act 2006. They do not include all the information and disclosures required in annual financial statements in accordance with UK adopted International Accounting Standards, and should therefore be read in conjunction with the Group's Annual Report for the year ended 30th April, 2022 and any public announcements made by MS INTERNATIONAL plc during the interim reporting period.

The interim financial information has been reviewed but not audited by the Group's auditor, Grant Thornton UK LLP. Their report is included on page 4.

The accounting policies are consistent with those applied in the financial statements of the Annual Report for year ended 30th April, 2022. The Group has not early adopted any standard, interpretation, or amendment that has been issued but is not yet effective.

The assets and liabilities of the overseas subsidiaries are translated into the presentational currency of the Group at the rate of exchange ruling at the statement of financial position date and their income statements are translated at the weighted average exchange rates for the year. The exchange differences arising on the translation are taken directly to a separate component of equity.

3. Principal risks and uncertainties

The principal risks and uncertainties facing the Group for the remaining six months of the financial year are discussed below. Further details of the Group's risks and uncertainties can be found on page 8 of the Annual Report for the year ended 30th April, 2022, which is available from MS INTERNATIONAL plc's website: www.msiplc.com.

One of the Group's principal risks and uncertainties continues to be the impact of inflationary pressures upon both trading and profitability. Rising raw material and energy prices have increased the cost base of all divisions. Where possible cost increases are passed to the customer, however, in doing so there is uncertainty with regards to any potential impact on the level of customer demand.

In addition, despite the successful role out of global vaccination programmes, there remains uncertainty around the potential emergence of Covid-19 variants that could lead to the imposition of further lockdowns and/or travel restrictions. Given that the Group has plans in place to manage foreseeable challenges of the Covid crisis, healthy financial resources, and a number of long-term contracts with certain customers, the directors believe the Group is well placed to manage its business risk successfully despite these challenges. Accordingly, the directors continue to conclude that the adoption of the going concern basis of accounting remains appropriate when preparing these interim financial statements.

4. Going concern

The condensed interim financial statements included in this report have been prepared on a going concern basis. Forecasts have been made for the 18 months following the reporting date, which the Directors believe to be a reasonable expectation based on the information available at the time of signing these accounts. The forecasts have been assessed for the impact of potential sensitivities, including a 10% fall in the forecasted Group revenue and a 10% increase in materials prices. In all scenarios, the Group has sufficient headroom to meet its liabilities as they fall due.

As a result, in making the going concern assessment the Directors believe there to be no material uncertainties that could cast significant doubt on the Group's ability to continue operating as a going concern. The Group has sufficient financial resources with a healthy orderbook to continue operating for the foreseeable future, being at least 18 months from the reporting date. As a result, the Directors continue to adopt the going concern basis of accounting in preparation of this report.

5. Revenue

The Group's revenue disaggregated by pattern of revenue recognition is as follows:

 6. Segment information

The following table presents segmental revenue and operating profit/(loss) as well as segmental assets and liabilities of the Group's divisions for the half-year periods ended 31st October, 2022 and 31st October, 2021. The reporting format is determined by the differences in manufacture and services provided by the divisional segments within the Group.

'Defence'

'Forgings'

'Petrol Station Superstructures'

'Corporate Branding'

Total

2022

2021

2022

2021

2022

2021

2022

2021

2022

2021

unaudited

unaudited

£'000

£'000

£'000

£'000

£'000

£'000

£'000

£'000

£'000

£'000

Segmental revenue

From external customers

13,956

10,947

12,516

7,418

8,782

7,942

6,771

6,848

42,025

33,155

From other segments

- 

- 

- 

- 

275

140

64

50

339

190

Segment revenue

13,956

10,947

12,516

7,418

9,057

8,082

6,835

6,898

42,364

33,345

Segment result

Operating (loss)/profit

(188)

(155)

2,759

784

1,339

725

(317)

(478)

3,593

876

Net finance expense

(133)

(103)

Profit before taxation

3,460

773

Tax expense

(689)

(236)

Profit for the period

2,771

537

Segmental assets

Assets attributable to segments

33,088

33,622

8,186

5,732

11,226

10,195

7,941

8,124

60,441

57,673

Unallocated assets*

23,697

16,578

Total assets

84,138

74,251

Segmental liabilities

Liabilities attributable to segments

24,913

23,888

2,762

2,704

4,313

4,227

3,510

3,684

35,498

34,503

Unallocated assets*

8,439

9,309

Total assets

43,937

43,812

Other segmental information

Capital expenditure

452

1,198

116

172

109

131

202

117

879

1,618

Depreciation

141

101

319

276

368

358

140

133

968

868

Amortisation

9

- 

- 

- 

22

23

88

88

119

111

Impairment of goodwill

- 

- 

- 

- 

- 

- 

- 

349

- 

349