Ms Intl. Regulatory News (MSI)

MS INTERNATIONAL plc

Unaudited Interim Condensed

Group Financial Statements

30th October, 2010

MS INTERNATIONAL plc

EXECUTIVE DIRECTORS

Michael Bell

Michael O'Connell

David Pyle

NON EXECUTIVE

Roger Lane-Smith

SECRETARY

David Pyle

REGISTERED OFFICE

Balby Carr Bank

Doncaster

DN4 8DH

England

PRINCIPAL OPERATING DIVISIONS

Defence

Forgings

Petrol Station Superstructures

Chairman's Statement

I am delighted to report that the Group has made a most encouraging recovery, more than doubling the profit before exceptional gain and taxation, on revenue some 40% higher than that reported at the corresponding time last year.

For the half year ended 30th October 2010, a £2.56m (2009-£1.23m) profit before exceptional gain and taxation was realised on revenue of £25.34m (2009-£18.10m). Earnings per share excluding the exceptional gain more than doubled to 10.0p (2009- 4.7p).

This outcome is a positive step in restoring the Group's record of delivering the steady year-on-year upward trajectory in trading performance which was achieved before the economic downturn. Moreover, the latest performance surpasses the previous peak interim result, reported in November 2008.

The balance sheet remains robust with net cash and short term deposits of £4.02m (2009-£7.46m). The reduction primarily reflects the £4.50m cost in May of the acquisition of the half share in Global-MSI not previously owned as well as continued investment in other Group businesses.

Significantly, there has been an improving level of activity across the whole Group. 'Defence', with markets unhindered by the recession and the added benefit of a well-balanced order book, is leading the way with a performance that is relatively surging ahead. 'Forgings' markets are showing signs of a modest revival for the first time in two years although, coming from a very low level, the momentum to date has been insufficient to enable the division to achieve a break-even trading position. The markets of 'Petrol Station Structures' also remain comparatively subdued. Since becoming wholly owned by the Group, this division has been reorganised and the ensuing one-off costs have adversely affected these results. A more proficient 'Global-MSI' is emerging and as a consequence, has gained market share.

The Group order book at the end of October had escalated to another new record level entirely owing to 'Defence', enhanced by the award of a US$28.63m contract to provide 30mm naval weapon systems to the United States Naval Sea Systems Command in support of their own Foreign Military Sales requirements. Deliveries on that contract are phased to commence next May and extend through to December 2011.

'Defence' has a considerable production output scheduled for delivery and installation within the current financial year for domestic and overseas shipbuilders and navies. Subject to our customers maintaining these schedules, it would not be unrealistic to expect that a strong second half out-turn for 'Defence' should be possible. Moreover, should markets for 'Forgings' and 'Petrol Station Structures' continue their partial recovery and our market share similarly improve, this could bring added impetus to the Group's prospective trading performance. Thus, the Board is reasonably confident about the full year outlook but, notwithstanding the upsides, we remain sensitive to the fragility of the general economic situation and cautious of the many challenges that may still lie ahead.

Accordingly, the Board has declared an increase in the interim dividend per share to 1.0p (2009-0.7p)

Michael Bell 25th November, 2010

Independent Review Report to MS INTERNATIONAL plc

Introduction

We have been engaged by the Company to review the condensed set of financial statements in the half-yearly financial report for the 26 weeks ended 30 October, 2010 which comprises the Interim Consolidated Income Statement, the Interim Statement of Comprehensive Income, the Interim Balance Sheet, the Interim Cash Flow Statement and the related explanatory notes. We have read the other information contained in the half-yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.

This report is made solely to the Company in accordance with guidance contained in ISRE 2410 (UK and Ireland) "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing Practices Board. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company, for our work, for this report, or for the conclusions we have formed.

Directors' Responsibilities

The half-yearly financial report is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the half-yearly financial report in accordance with the Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority.

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

Our Responsibility

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

Scope of Review

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making enquiries, 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 Ireland) 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.

Conclusion

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 26 weeks ended 30 October, 2010 is not prepared, in all material respects, in accordance with International Accounting Standard 34 as adopted by the European Union and the Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority.

Ernst & Young LLP

Leeds

25th November, 2010

Interim Group income statement

26 weeks ended 30th Oct., 2010

26 weeks ended 31st Oct., 2009

Unaudited

Unaudited

Notes

£000

£000

Products

16,311

7,344

Contracts

9,024

10,753

Revenue

5

25,335

18,097

Cost of sales

(17,546)

(13,222)

Gross profit

7,789

4,875

 Distribution costs

(847)

(798)

Administrative expenses

(4,339)

(2,813)

Group trading profit

5

2,603

1,264

Finance revenue

9

4

Finance costs

(28)

(11)

Other finance costs- pension

(25)

(31)

Profit before taxation and exceptional gain

2,559

1,226

Exceptional gain

11

1,250

-

Profit before taxation

3,809

1,226

Taxation

6

(754)

(389)

Profit for the period attributable to equity holders of the parent

3,055

837

Earnings per share: basic and diluted

7

17.0p

4.7p

Adjusted earnings per share : basic and diluted

7

10.0p

4.7p

Interim Group statement of comprehensive income

26 weeks ended 30th Oct., 2010

26 weeks ended 31st Oct., 2009

Unaudited

Unaudited

£000

£000

Actuarial losses on defined benefit pension scheme

(255)

(2,546)

Deferred taxation on actuarial losses on defined benefit pension scheme

72

713

Exchange differences on retranslation of foreign operations

(19)

(18)

Net losses recognised directly in equity

(202)

(1,851)

Profit attributable to equity holders of the parent

3,055

837

Total comprehensive income and (expense) for the period attributable to equity holders of the parent

2,853

(1,014)

Interim Group balance sheet

Notes

30th Oct., 2010

1st May, 2010

Unaudited

Audited

ASSETS

£000

£000

Non-current assets

Property, plant and equipment

9

14,177

14,634

Intangible assets

5,042

172

Deferred income tax asset

-

118

19,219

14,924

Current assets

Inventories

5,637

3,947

Trade and other receivables

13,269

10,134

Prepayments

1,948

1,675

Cash and short-term deposits

10

4,017

8,911

24,871

24,667

TOTAL ASSETS

44,090

39,591

EQUITY AND LIABILITIES

Equity

Issued capital

1,840

1,840

Capital redemption reserve

901

901

Other reserves

2,815

1,565

Revaluation reserve

2,969

2,969

Special reserve

1,629

1,629

Currency translation reserve

162

181

Treasury shares

(391)

(391)

Retained earnings

11,907

10,279

Total Equity

21,832

18,973

Non-current liabilities

Deferred income tax liability

321

-

Defined benefit pension liability

12

4,628

4,548

4,949

4,548

Current liabilities

Trade and other payables

16,433

15,408

Government grants

-

3

Income tax payable

876

659

17,309

16,070

TOTAL EQUITY AND LIABILITIES

44,090

39,591

Interim Group statement of changes in equity

Issued capital

Capital redemption reserve

Other reserves

Revaluation reserve

Special reserve

Foreign exchange reserve

Treasury shares

Retained earnings

Total Unaudited

£'000

£'000

£'000

£'000

£'000

£'000

£'000

 £'000

 £'000

At 1st May, 2010

1,840

901

1,565

2,969

1,629

181

(391)

10,279

18,973

Profit for the period

-

-

-

-

-

-

-

3,055

3,055

Transfer

1,250

(1,250)

-

Other comprehensive loss

-

-

-

-

-

(19)

-

(183)

(202)

1,840

901

2,815

2,969

1,629

162

(391)

11,901

21,826

Share based payments

-

-

-

-

-

-

-

6

6

At 30th October, 2010

1,840

901

2,815

2,969

1,629

162

(391)

11,907

21,832

Issued capital

Capital redemption reserve

Other reserves

Revaluation reserve

Special reserve

Foreign exchange reserve

Treasury shares

Retained earnings

Total Unaudited

£'000

£'000

£'000

£'000

£'000

£'000

£'000

 £'000

 £'000

At 2nd May, 2009

1,840

901

1,565

2,969

1,629

127

(391)

10,860

19,500

Profit for the period

-

-

-

-

-

-

837

837

Other comprehensive loss

-

-

-

-

-

(18)

-

(1,833)

(1,851)

1,840

901

1,565

2,969

1,629

109

(391)

9,864

18,486

Dividend paid

-

-

-

-

-

-

-

(684)

(684)

Share based payments

-

-

-

-

-

-

-

11

11

At 31st October, 2009

1,840

901

1,565

2,969

1,629

109

(391)

9,191

17,813

Interim Group cash flow statement

26 weeks ended 30th Oct., 2010

26 weeks ended

31st Oct., 2009

Unaudited

Unaudited

£'000

£'000

Profit before Taxation

2,559

1,226

Adjustments to reconcile profit before taxation to net cash in flows from operating activities

Depreciation of property plant and equipment

823

809

Amortisation of intangible fixed assets

204

19

Finance Costs

44

38

Foreign exchange gains/(losses)

4

(35)

Government grant release

(3)

(6)

Share based payments

6

11

Increase in inventories

(2,626)

(311)

Increase in receivables

(2,466)

(3,923)

(Increase)/decrease in prepayments

(235)

71

Increase/(decrease) in payables

1,321

(2,049)

(Decrease)/increase in progress payments

(72)

4,975

Pension fund payments

(200)

(200)

Cash generated from operating activities

(641)

625

Interest paid

(19)

(7)

Taxation paid

(669)

(553)

Net cash flow from operating activities

(1,329)

65

Cash flows from investing activities

Purchase of shares in Global-MSI plc net of cash acquired

(3,532)

-

Purchase of property, plant and equipment

(174)

(159)

Sale of property, plant and equipment

141

2

Net cash used in investing activities

(3,565)

(157)

Cash flows from financing activities

Dividend paid

-

(684)

Net cash flows used in financing activities

-

(684)

Movement in cash and cash equivalents

(4,894)

(776)

Opening cash and cash equivalents

8,911

8,234

Closing cash and cash equivalents

4,017

7,458

Notes to the interim Group financial statements

1

Corporate information

MS INTERNATIONAL plc is a public limited company incorporated in England and Wales. The Company's ordinary shares are traded on the London Stock Exchange. The principal activities of the Company and its subsidiaries ("the Group") are described in Note 5.

The interim condensed consolidated financial statement of the Group for the twenty six weeks ended 30th October, 2010 were authorised for issue in accordance with a resolution of the directors on 25th November, 2010.

2

Basis of preparation and accounting policies

The annual financial statements of the Group are prepared in accordance with IFRS as adopted by the European Union. The condensed set of financial statements included in this half-yearly financial report which has not been audited has been prepared in accordance with International Accounting Standard 34, "Interim Financial Reporting," as adopted by the European Union.

The interim financial information has been reviewed by the Group's auditors, Ernst & Young LLP, their report is included on page 3. These interim financial statements do not constitute statutory financial statements within the meaning of section 435 of the Companies Act 2006. The interim condensed consolidated financial statements do not include all the information and disclosures required in the annual financial statements and should be read in conjunction with the Group's annual financial statements as at 1st May, 2010.

The accounting policies adopted in the preparation of the interim condensed consolidated financial statements are consistent with those followed in the preparation of the Group's annual financial statements for the year ended 1st May, 2010. The following standards, amendments and interpretations will be applied for the first time in the Group's statutory accounts for the year ended 30th April, 2011.

IFRS 2 Amendment - Group Cash Settled Share Based Payment Transactions

IFRS 3 Business Combinations (Revised January 2008)

IAS 27 Consolidated and Separate Financial Statements (Revised January 2008)

IAS 23 Borrowing Costs (Revised)

IAS 39 Amendment Financial Instruments: Recognition and Management - Eligible Hedge Items

The figures for the year ended 1st May, 2010 do not constitute the Group's statutory accounts for the period but have been extracted from the statutory accounts. The auditor's report on those accounts, which have been filed with the Registrar of Companies, was unqualified and did not contain any statement under section 498(2) or (3) of the Companies Act 2006.

3

Principal risks and uncertainties

The principal risk and uncertainties facing the Group relate to levels of customer demand for the Group's products and services. Customer demand is driven mainly by general economic conditions but also by pricing, product quality and delivery performance of MS INTERNATIONAL plc and in comparison with our competitors. Sterling exchange rates against other currencies can influence pricing.

The Group has considerable financial resources together with long term contracts with a number of customers. As a consequence, the Directors believe that the Group is well placed to manage its business risk successfully despite the current uncertain economic outlook.

After making enquiries the Directors have a reasonable expectation that the Company and the Group have adequate resources to continue in operational existence for the foreseeable future. Accordingly, they continue to adopt the going concern basis in preparing the annual report and accounts.

4

Statement of directors' responsibilities

The directors as listed on page 1 confirm that this condensed set of financial statements has been prepared in accordance with IAS 34 as adopted by the European Union, and that the interim report herein includes a fair review of the information required by DTR 4.2.7 and DTR 4.2.8, which includes information required on material transactions with related parties and changes since the last annual report.

5

Segment information

(a)

Primary reporting format - Divisional segments

The following table presents revenue and profit and certain assets and liability information regarding the Group's divisions for the periods ended 30th October, 2010 and 31st October, 2009. The reporting format is determined by the differences in manufacture and services provided by the Group. The Defence division is engaged in the design, manufacture and service of defence equipment. The Forgings division is engaged in the manufacture of forgings. The Petrol Station Forecourt Structures division is engaged in the design and construction of petrol station forecourt structures. The Directors are of the opinion that seasonality does not significantly affect these results.

Defence

Forgings

Petrol Station

Total

Forecourt Structures

2010

2009

2010

2009

2010

2009

2010

2009

Unaudited

Unaudited

£000

£000

£000

£000

£000

£000

£000

£000

Revenue

External

15,610

11,639

5,966

4,325

3,759

2,133

25,335

18,097

Total revenue

15,610

11,639

5,966

4,325