REG - MS International PLC - Half-year Report
06/12/2024 07:00
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RNS Number : 0498P MS International PLC 06 December 2024
MS INTERNATIONAL plc
Unaudited Interim Condensed
Group Financial Statements
31st October 2024
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 and Security'
'Forgings'
'Petrol Station Superstructures'
'Corporate Branding'
Chairman's Statement
Introduction
In my recent Chairman's Statements, I have highlighted the considerable
progress we have achieved over the last few years. In the three years to April
2024 revenue increased by over 75 percent from £61.54m to £109.58m and
pre-tax profits expanded almost ten-fold from £1.59m to £15.71m.
Today, I am pleased to report that the good progress continues and I remain
even more optimistic about our ongoing performance and prospects than I was at
this time last year.
The step change in the development of our 'Defence and Security' businesses
has enabled us to engage in substantially larger international contracts,
around the world, that extend over much longer periods and often involve
phased delivery. 'Revenue is recognised as performance obligations are
satisfied, which is when control of goods and services has transferred to the
customer.' (Source: Accounting Policies page 35 MSI Annual Report 2024).
As a result of winning these larger contracts, a substantial amount of ongoing
work in the first half will not be recognised as revenue until either later
this year or in following years, when the goods and services have transferred
to the customer.
Timing of revenue will, therefore, be an increasingly significant feature
going forward and, indeed, it has impacted the results for the first half.
Nevertheless, the Company is making remarkable advances, even if the half year
results do not fully reflect this.
Results
For the half year ended 31st October 2024, profit before tax amounted to
£8.77m (2023 - £7.72m) on revenue of £54.72m (2023 - £57.02m). Basic
earnings per share were 39.8p (2023 - 35.9p).
The balance sheet remains strong with cash and cash equivalents of £32.02m
(2023 - £50.05m).
Review of Divisions
'Defence and Security'
This division enjoyed another period of good progress as our excellent
international reputation as a top-quality designer and producer of naval
weapon systems continues to grow.
The company is now attaining a similar reputation in the much larger
international land-based equipment section of the defence market. Our
truck/trailer-based version of the MSI Paladin VSHORAD gun systems are now
being utilised to protect strategic assets against the threats posed by
Uncrewed Aircraft Systems.
These product developments, together with our significant presence and
exposure at major international defence equipment exhibitions, auger extremely
well for the future performance of the division.
The significant upgrading and development of our production and administrative
facilities at our key Norwich site should be completed within weeks. This
positions us well to support our anticipated future levels of business.
The US operation continues to prosper with deliveries of gun systems from
Norwich for ship fits in the US, for both the US Navy and US Foreign Military
Sales projects. Concurrently we are developing and expanding the management
and service support team, to ensure that we have the structure in place to
support the predicted US ship fits. We are also making provision at our
existing, substantial and contemporary property in Rock Hill, South Carolina,
to accommodate our projected growth.
'Forgings'
Despite reduced global demand for forks, we have not only maintained market
share but believe that we can make significant inroads into the market,
particularly in the United States. We continue to make improvements in
efficiencies and costs to maintain our competitiveness in this mature but
important industry.
'Petrol Station Superstructures'
The strong performance demonstrated by the UK operations in the last financial
year has continued. Activity remains at a high level for both new
construction and ongoing station maintenance, resulting in an impressive order
book.
Customer demand for modern replacement forecourt structures continues for both
existing service stations and new large, multifuel developments on motorways
and major trunk roads. Several high quality projects encompassing multifuel
and catering services were completed in the half year.
As market leader, we are well positioned to benefit from the many exciting
prospects that contemporary forecourt designs present, especially with our
unique database of existing petrol station construction drawings and
specifications.
By comparison, our Poland-based business (which serves Eastern and Northern
European countries) has experienced a challenging time owing to an
understandable serious lack of investment by the oil companies in maintaining
and developing their businesses in that, currently, highly politically
sensitive region. There are, however, positive signs of a revival in the
construction of canopies for electric car charging stations in Western
Mainland Europe.
'Corporate Branding'
The UK operation has very pleasingly continued to prosper, whilst our
Netherlands/Germany business restructures to meet subdued market conditions in
the petroleum business sector. Notwithstanding, it is satisfying to report
that there has been a notable recent upturn in activity for our long, and well
established, international 'way-finding' equipment installation and
maintenance service business at international airports. Furthermore, we are
also seeing some new and positive prospects arising from our offerings in the
automotive sales sector of the branding market.
Outlook
I am most encouraged with the considerable progress that we continue to make
across all the divisions. This is particularly pleasing in a year of
uncertainty, in terms of the political change in many of the countries we
serve and, of course, movements in both interest and exchange rates.
In my June 2024 statement, I also reported that '…we continue to review and
evolve the future strategic priorities for MSI and the profile of the next
generation of management'. I also referenced this in my comments at the AGM in
July.
From 1(st) January 2025 the Board will change as follows. I will continue as
Executive Chairman and Michael O'Connell, who has been with me for over 40
years, will become Managing Director. Shelley Ashcroft, Michael's former
deputy in finance and the Company Secretary, will take over the role as
Finance Director on 1st January 2025 and subject to the satisfactory
completion of customary regulatory checks is expected to join the Board around
the same time.
This management transition isn't complete, but these are the very first steps
towards designing a Board for the future. Our review of the future strategic
priorities of the business is nearly complete and I expect to update
shareholders about this before the end of the financial year.
This is an exciting time for MS INTERNATIONAL and all matters considered, the
Board recommends the payment of an increased interim dividend per share of 5p
(2023 - 3p). The dividend is expected to be paid on 17(th) January 2025 to
those shareholders on the register at the close of business on 20(th) December
2024.
Michael Bell
5(th)
December 2024
MS INTERNATIONAL plc
Michael Bell Tel: 01302 322133
Shore Capital (Nominated Adviser and Broker)
Patrick Castle/Daniel Bush/Lucy Bowden Tel: 020 7408 4090
Independent auditor's review report on Interim Financial Information to MS
INTERNATIONAL Plc
Conclusion
We have been engaged by MS INTERNATIONAL plc (the 'company') to review the
condensed set of financial statements in the half-yearly financial report for
the six months ended 31 October 2024 which comprises the Interim condensed
consolidated income statement, Interim condensed consolidated statement of
comprehensive income, 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. 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.
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 2024 is not prepared, in
all material respects, in accordance with UK-adopted International Accounting
Standard (IAS) 34, 'Interim Financial Reporting' and the AIM rules for
Companies.
Basis for conclusion
We conducted our review in accordance with International Standard on Review
Engagements (UK) 2410, "Review of Interim Financial Information Performed by
the Independent Auditor of the Entity" issued by Financial Reporting Council
for use in the United Kingdom (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 group are
prepared in accordance with UK-adopted international accounting standards. 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 such as high interest and inflation rates,
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. The directors are responsible for preparing the
half-yearly financial report in accordance with UK-adopted International
Accounting Standard (IAS) 34, 'Interim Financial Reporting' and the AIM rules
for Companies.
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
In reviewing the half-yearly report, we are responsible for expressing to the
Company a conclusion on the condensed set of financial statements in the
half-yearly financial report.
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 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, for our
review work, for this report, or for the conclusion we have formed.
Grant Thornton UK LLP
Statutory Auditor, Chartered Accountants
Leeds
5(th) December 2024
Interim condensed consolidated income statement
Half-year to 31st October 2024 Half-year to 31st October 2023
unaudited unaudited
Notes £'000 £'000
Revenue 5/6 54,718 57,023
Cost of sales (36,154) (38,943)
Gross profit 18,564 18,080
Distribution costs (2,102) (2,303)
Administrative expenses (9,226) (7,441)
Derivative gains/(losses) 15 788 (731)
Operating profit 6 8,024 7,605
Finance income 748 204
Other finance costs - pension - (90)
Profit before taxation 8,772 7,719
Tax expense 7 (2,326) (1,917)
Profit for the period attributable to equity holders of the parent 6,446 5,802
Basic earnings per share 8 39.8p 35.9p
Diluted earnings per share 8 38.3p 34.3p
Interim condensed consolidated statement of comprehensive income
Half-year to 31st October 2024 Half-year to 31st October 2023
unaudited unaudited
Notes £'000 £'000
Profit for the period attributable to equity holders of the parent 6,446 5,802
Exchange differences on retranslation of foreign operations 649 (43)
Net other comprehensive income/(loss) to be reclassified to profit or loss in 649 (43)
subsequent periods
Remeasurement gains on defined benefit pension scheme 13 - 54
Deferred taxation on remeasurement of defined benefit pension scheme - (14)
Net other comprehensive income not being reclassified to profit or loss in - 40
subsequent periods
Total comprehensive income for the period attributable to equity holders of 7,095 5,799
the parent
Interim condensed consolidated statement of financial position
Notes 31st October 2024 31st October 2023 30th April 2024
unaudited unaudited audited
ASSETS £'000 £'000 £'000
Non-current assets
Property, plant and equipment 10 28,628 25,415 27,953
Right-of-use assets 11 560 968 760
Intangible assets 2,413 2,365 2,448
Deferred income tax asset 12 1,716 16
Derivative asset 15 293 - 309
31,906 30,464 31,486
Current assets
Inventories 37,506 16,940 25,250
Derivative asset 1,702 - 898
Trade and other receivables 21,785 27,578 28,304
Contract assets 7,211 3,374 100
Cash and cash equivalents 12 27,853 42,627 35,509
Restricted cash held in Escrow 12 4,170 7,426 7,170
100,227 97,945 97,231
TOTAL ASSETS 132,133 128,409 128,717
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 9,923 9,923
Special reserve 1,629 1,629 1,629
Currency translation reserve 42 (363) (607)
Treasury shares (7,683) (3,703) (3,702)
Retained earnings 41,599 30,362 37,998
TOTAL EQUITY SHAREHOLDERS' FUNDS 51,066 43,404 50,797
Non-current liabilities
Defined benefit pension liability 13 - 3,577 -
Deferred income tax liability 3,190 2,941 3,132
Contract liabilities 7,477 19,148 10,019
Derivative liabilities 15 - 218 -
Lease liabilities 219 630 422
10,886 26,514 13,573
Current liabilities
Trade and other payables 17,063 19,291 21,349
Contract liabilities 52,740 38,303 42,616
Derivative liabilities 15 - 513 -
Lease liabilities 378 384 382
70,181 58,491 64,347
TOTAL EQUITY AND LIABILITIES 132,133 128,409 128,717
The interim condensed consolidated financial statements of the Group for the
six months ended 31st October 2024 were authorised for issue in accordance
with a resolution of the directors on 5(th) December 2024 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 2023 1,784 957 2,815 9,923 1,629 (320) (2,381) 26,668 41,075
Profit for the period - - - - - - - 5,802 5,802
Other comprehensive (loss)/income - - - - - (43) - 40 (3)
Equity settled share-based payment expense - - - - - - - 19 19
Purchase of own shares - - - - - - (1,676) - (1,676)
Exercise of share options - - - - - - 354 (44) 310
Dividend paid - - - - - - - (2,123) (2,123)
At 31st October 2023 1,784 957 2,815 9,923 1,629 (363) (3,703) 30,362 43,404
Profit for the period - - - - - - - 5,698 5,698
Other comprehensive (loss)/income - - - - - (244) - 2,413 2,169
Equity settled share-based payment expense - - - - - - - 46 46
Deferred tax on equity settled share-based payment expense - - - - - - - (38) (38)
Exercise of share options - - - - - - 1 4 5
Dividend paid - - - - - - - (487) (487)
At 30th April 2024 1,784 957 2,815 9,923 1,629 (607) (3,702) 37,998 50,797
Profit for the period - - - - - - - 6,446 6,446
Other comprehensive income - - - - - 649 - - 649
Equity settled share-based payment expense - - - - - - - 36 36
Deferred tax on equity settled share-based payment expense - - - - - - - (9) (9)
Purchase of own shares - - - - - - (4,483) - (4,483)
Exercise of share options - - - - - - 502 (169) 333
Dividend paid - - - - - - - (2,703) (2,703)
At 31st October 2024 1,784 957 2,815 9,923 1,629 42 (7,683) 41,599 51,066
Interim consolidated cash flow statement
Half-year to 31st October 2024 Half-year to 31st October 2023
unaudited unaudited
£'000 £'000
Profit before taxation 8,772 7,719
Adjustments to reconcile profit before taxation to cash generated from
operating activates:
Depreciation charge of owned and right-of-use assets 1,232 1,024
Amortisation charge 45 31
Profit on disposal of property, plant and equipment (121) (148)
Net finance income (748) (114)
Equity settled share-based payment expense 36 19
Foreign exchange gains 266 202
(Increase)/decrease in inventories (12,379) 7,853
Decrease/(increase) in receivables 670 (21,598)
(Increase)/decrease in derivatives (788) 731
(Decrease)/increase in payables (3,698) 4,257
Increase in contract liabilities 8,545 42,255
Pension fund deficit reduction payments - (675)
Cash generated from operating activities 1,832 41,556
Net interest received 761 224
Taxation paid (4,301) (2,279)
Net cash (outflow)/inflow from operating activities (1,708) 39,501
Investing activities
Purchase of property, plant and equipment (1,974) (1,168)
Proceeds on disposal of property, plant and equipment 173 149
Decrease/(increase) in restricted cash held in Escrow maturing in more than 90 3,000 (4,509)
days
Net cash inflow/(outflow) from investing activities 1,199 (5,528)
Financing activities
Buy back of own shares (4,483) (1,676)
Proceeds from exercise of employee share options 333 310
Lease payments (198) (206)
Dividend paid (2,703) (2,123)
Net cash outflow from financing activities (7,051) (3,695)
(Decrease)/increase in cash and cash equivalents (7,560) 30,278
Opening cash and cash equivalents 35,509 12,336
Exchange differences on cash and cash equivalents (96) 13
Closing cash and cash equivalents 27,853 42,627
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 and Security' - 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". They do
not include all the information and disclosures required in annual financial
statements, and should therefore be read in conjunction with the Group's
Annual Report for the year ended 30th April 2024 and any public announcements
made by MS INTERNATIONAL plc during the interim reporting period. The
financial statements for the year ended 30th April 2024 have been filed with
the Registrar of Companies. The auditor's report on these financial statements
was unmodified and did not contain statements under sections 498 (2) or (3) of
the Companies Act 2006.
The interim financial information has been reviewed but not audited by the
Group's auditor, Grant Thornton UK LLP. The interim financial information does
not constitute full financial information within the meaning of section 434 of
the Companies Act 2006. The auditor's report is included on pages 4-5.
The accounting policies are consistent with those applied in the financial
statements of the Annual Report for year ended 30th April 2024. 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 2024, which is available from MS INTERNATIONAL
plc's website: www.msiplc.com (http://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.
Given the increasing demand for the Group's products, specifically in the
'Defence and Security' division, increased capacity is required to satisfy
customers' requirements. Significant investment in the Norwich facility has
taken place, and continues to take place, in order to meet these higher levels
of trading. Managing the increase in production capacity comes with both risks
and challenges, both internally within the division and externally within the
wider supply chain.
The risk that foreign exchange fluctuations will impact the Group's
performance has increased significantly over the past year as a number of
international contracts in the 'Defence and Security' division are now
denominated in USD. This created a large unhedged currency exposure within the
Group and as a result, management have taken steps to mitigate this risk by
taking out various forward contracts (note 15).
4. Going concern
The condensed interim financial statements included in this report have been
prepared on a going concern basis. Forecasts have been made up to 30th April
2026, 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.
In addition, management have carried out reverse stress tests to 30th April
2026 under various scenarios, all of which are considered implausible by
management. In all tested scenarios, the Group would continue as a going
concern for at least the next 12 months.
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 order book to continue operating
for the foreseeable future, being at least to 30th April 2026. 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:
Half-year to 31st October 2024 Half-year to 31st October 2023
unaudited unaudited
£'000 £'000
Revenue recognised at a point in time 52,597 55,780
Revenue recognised over time 2,121 1,243
Total revenue 54,718 57,023
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 2024 and 31st October 2023. The reporting
format is determined by the differences in manufacture and services provided
by the divisional segments within the Group.
'Defence and Security' 'Forgings' 'Petrol Station Superstructures' 'Corporate Branding' Total
2024 2023 2024 2023 2024 2023 2024 2023 2024 2023
unaudited unaudited
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Segmental revenue
Segment revenue 35,261 33,508 7,664 9,454 7,382 8,555 4,687 5,584 54,994 57,101
Intercompany revenue from other segments - - - - (99) (8) (177) (70) (276) (78)
External revenue 35,261 33,508 7,664 9,454 7,283 8,547 4,510 5,514 54,718 57,023
Segment result
Operating profit/(loss) 6,664 5,741 344 681 996 1,285 20 (102) 8,024 7,605
Net finance income 748 114
Profit before taxation 8,772 7,719
Tax expense (2,326) (1,917)
Profit for the period 6,446 5,802
Segmental assets
Assets attributable to segments 81,684 79,724 6,314 7,357 12,571 12,586 3,462 5,261 104,031 104,928
Unallocated assets* 28,102 23,481
Total assets 132,133 128,409
Segmental liabilities
Liabilities attributable to segments 67,541 68,203 1,668 2,212 4,903 4,683 1,619 2,167 75,731 77,265
Unallocated liabilities* 5,336 7,740
Total liabilities 81,067 85,005
Other segmental information
Capital expenditure 1,373 780 258 194 304 131 39 63 1,974 1,168
Depreciation 459 210 292 317 357 370 124 127 1,232 1,024
Amortisation 23 9 22 - - 22 - - 45 31
* Unallocated assets include certain fixed assets (including all UK
properties), current assets, and deferred income tax assets. Unallocated
liabilities include the defined benefit pension scheme liability, the deferred
income tax liability, and certain current liabilities.
Assets and liabilities attributable to segments comprise the assets and
liabilities of each segment adjusted to reflect the elimination of the cost of
investment in subsidiaries and the provision of financing loans provided by MS
INTERNATIONAL plc.
Revenue between segments is determined on an arm's length basis. Segment
results, assets, and liabilities include items directly attributable to the
segment as well as those that can be allocated on a reasonable basis.
7. Tax expense
The income tax expense is recognised in each interim period based on the best
estimate of the weighted average annual income tax rate expected for the full
financial year.
The major components of the tax expense in the consolidated income statement
are:
Half-year to 31st October 2024 Half-year to 31st October 2023
unaudited unaudited
£'000 £'000
Current tax expense 2,259 1,979
Deferred tax expense/(income) 67 (62)
Total tax expense reported in the Interim condensed consolidated income 2,326 1,917
statement
Tax relating to items charged to other comprehensive income:
Half-year to 31st October 2024 Half-year to 31st October 2023
unaudited unaudited
£'000 £'000
Deferred tax on measurement of defined benefit pension scheme - 14
Deferred tax in the Interim condensed consolidated statement of comprehensive - 14
income
8. Earnings per share
The calculation of basic earnings per share of 39.8p (2023 - 35.9p) is based
on the profit for the period attributable to equity holders of the parent of
£6,446,000 (2023 - £5,802,000) and on a weighted average number of ordinary
shares in issue of 16,177,305 (2023 - 16,141,981). At 31st October 2024 there
were 820,020 (2023 - 1,072,693) potentially dilutive shares on option with a
weighted average effect of 636,234 (2023 - 789,551) giving a diluted earnings
per share of 38.3p (2023 - 34.3p).
Half-year to 31st October 2024 Half-year to 31st October 2023
unaudited unaudited
Weighted average number of shares in issue 17,841,073 17,841,073
Less weighted average number of shared held in the ESOT (32,093) (231,387)
Less weighted average number of shares purchased by the Company (1,631,675) (1,467,705)
Weighted average number of shares to be used in basic EPS calculation 16,177,305 16,141,981
Weighted average number of the 820,020 (2023 - 1,072,693) potentially dilutive 636,234 789,551
shares
Weighted average diluted shares 16,813,539 16,931,532
Profit for the period attributable to equity holders to the parent in £ 6,446,000 5,802,000
Basic earnings per share 39.8p 35.9p
Diluted earnings per share 38.3p 34.3p
9. Dividends paid and proposed
Half-year to 31st October 2024 Half-year to 31st October 2023
unaudited unaudited
£'000 £'000
Declared and paid during the six month period
Final dividend on ordinary shares for 2024 - 16.5p (2023 - 13p) 2,703 2,123
Proposed for approval
Interim dividend on ordinary shares for 2025 - 5p (2024 - 3p) 804 487
The interim dividend will be payable on 17th January 2025 to those
shareholders on the register at the close of business on 20th December 2024,
with the ex-dividend date being 19th December 2024.
8. Earnings per share
The calculation of basic earnings per share of 39.8p (2023 - 35.9p) is based
on the profit for the period attributable to equity holders of the parent of
£6,446,000 (2023 - £5,802,000) and on a weighted average number of ordinary
shares in issue of 16,177,305 (2023 - 16,141,981). At 31st October 2024 there
were 820,020 (2023 - 1,072,693) potentially dilutive shares on option with a
weighted average effect of 636,234 (2023 - 789,551) giving a diluted earnings
per share of 38.3p (2023 - 34.3p).
Half-year to 31st October 2024 Half-year to 31st October 2023
unaudited unaudited
Weighted average number of shares in issue 17,841,073 17,841,073
Less weighted average number of shared held in the ESOT (32,093) (231,387)
Less weighted average number of shares purchased by the Company (1,631,675) (1,467,705)
Weighted average number of shares to be used in basic EPS calculation 16,177,305 16,141,981
Weighted average number of the 820,020 (2023 - 1,072,693) potentially dilutive 636,234 789,551
shares
Weighted average diluted shares 16,813,539 16,931,532
Profit for the period attributable to equity holders to the parent in £ 6,446,000 5,802,000
Basic earnings per share 39.8p 35.9p
Diluted earnings per share 38.3p 34.3p
9. Dividends paid and proposed
Half-year to 31st October 2024
Half-year to 31st October 2023
unaudited
unaudited
£'000
£'000
Declared and paid during the six month period
Final dividend on ordinary shares for 2024 - 16.5p (2023 - 13p)
2,703
2,123
Proposed for approval
Interim dividend on ordinary shares for 2025 - 5p (2024 - 3p)
804
487
The interim dividend will be payable on 17th January 2025 to those
shareholders on the register at the close of business on 20th December 2024,
with the ex-dividend date being 19th December 2024.
10. Property, plant and equipment
At 31st October 2024 (unaudited)
Freehold Plant and
property equipment Total
£'000 £'000 £'000
Cost or valuation
At 30th April 2024 23,387 20,090 43,477
Additions 808 1,166 1,974
Disposals - (595) (595)
Exchange differences (184) (136) (320)
At 31st October 2024 24,011 20,525 44,536
Accumulated depreciation
At 30th April 2024 805 14,719 15,524
Depreciation charge for the period 217 835 1,052
Disposals - (543) (543)
Exchange differences (11) (114) (125)
At 31st October 2024 1,011 14,897 15,908
Net book value at 31st October 2024 23,000 5,628 28,628
Analysis of cost or valuation
At professional valuation 21,377 - 21,377
At cost 2,634 20,525 23,159
At 31st October 2024 24,011 20,525 44,536
At 31st October 2023 (unaudited)
Freehold Plant and
property equipment Total
£'000 £'000 £'000
Cost or valuation
At 30th April 2023 21,930 17,298 39,228
Additions 517 651 1,168
Disposals - (316) (316)
Exchange differences 194 63 257
At 31st October 2023 22,641 17,696 40,337
Accumulated depreciation
At 30th April 2023 395 13,947 14,342
Depreciation charge for the period 202 636 838
Disposals - (315) (315)
Exchange differences 7 50 57
At 31st October 2023 604 14,318 14,922
Net book value at 31st October 2023 22,037 3,378 25,415
Analysis of cost or valuation
At professional valuation 21,681 - 21,681
At cost 960 17,696 18,656
At 31st October 2023 22,641 17,696 40,337
At 30th April 2024 (audited)
Freehold Plant and
property equipment Total
£'000 £'000 £'000
Cost or valuation
At 30th April 2023 21,930 17,298 39,228
Additions 1,405 3,493 4,898
Disposals - (676) (676)
Exchange differences 52 (25) 27
At 30th April 2024 23,387 20,090 43,477
Accumulated depreciation
At 30th April 2023 395 13,947 14,342
Depreciation charge for the year 408 1,365 1,773
Disposals - (578) (578)
Exchange differences 2 (15) (13)
At 30th April 2024 805 14,719 15,524
Net book value at 30th April 2024 22,582 5,371 27,953
Analysis of cost or valuation
At professional valuation 21,561 - 21,561
At cost 1,826 20,090 21,916
At 30th April 2024 23,387 20,090 43,477
The last formal valuation of the Group's land and buildings, which consists of
manufacturing and office facilities in the UK, the USA and Poland, was carried
out in April 2022 by Dove Haigh Phillips (UK), Real Estate & Appraisal
Services Inc (USA), and KonSolid-Nieruchomosci (Poland). Management determined
that these constitute one class of asset under IFRS 13 (designated as level 3
fair value assets), based on the nature, characteristics and risks of the
properties.
The properties in the UK were valued on the basis of an existing use value in
accordance with the Appraisal and Valuation Standards (5th Edition) published
by the Royal Institution of Chartered Surveyors. The Polish property was
valued based on the income approach, converting anticipated future benefits in
the form of rental income into present value. The US property was valued on an
income and market value basis. For all properties, there is no difference
between current use and highest and best use.
11. Right-of-use assets
At 31st October 2024 (unaudited)
Property Total
£'000 £'000
Cost or valuation
At 30th April 2024 2,243 2,243
Exchange differences (68) (68)
At 31st October 2024 2,175 2,175
Accumulated depreciation
At 30th April 2024 1,483 1,483
Depreciation charge for the period 180 180
Exchange differences (48) (48)
At 31st October 2024 1,615 1,615
Net book value at 31st October 2024 560 560
At 31st October 2023 (unaudited)
Property Total
£'000 £'000
Cost or valuation
At 30th April 2023 2,312 2,312
Exchange differences (12) (12)
At 31st October 2023 2,300 2,300
Accumulated depreciation
At 30th April 2023 1,150 1,150
Depreciation charge for the period 186 186
Exchange differences (4) (4)
At 31st October 2023 1,332 1,332
Net book value at 31st October 2023 968 968
At 30th April 2024 (audited)
Property Total
£'000 £'000
Cost or valuation
At 30th April 2023 2,312 2,312
Exchange differences (69) (69)
At 30th April 2024 2,243 2,243
Accumulated depreciation
At 30th April 2023 1,150 1,150
Depreciation charge for the year 371 371
Exchange differences (38) (38)
At 30th April 2024 1,483 1,483
Net book value at 30th April, 2023 760 760
12. Cash and cash equivalents
For the purpose of the interim consolidated cash flow statement, cash and cash
equivalents are comprised of the following:
31st October 2024 31st October 2023 30th April 2024
unaudited unaudited audited
£'000 £'000 £'000
Cash and cash equivalents 27,853 42,627 35,509
Restricted cash held in Escrow - maturing in more than 90 days 4,170 7,426 7,170
Total cash 32,023 50,053 42,679
The restricted cash balance held in Escrow provides security to both Lloyds
Bank plc and Barclays Bank plc in respect of certain guarantees, indemnities,
and performance bonds given by the Group in the ordinary course of business.
13. Pension liability
The Company operates an employee pension scheme called the MS INTERNATIONAL
plc Retirement and Death Benefits Scheme ("the Scheme"). IAS 19 requires
disclosure of certain information about the Scheme as follows:
· Until 5th April 1997, the Scheme provided defined benefits and
these liabilities remain in respect of service prior to 6th April 1997. From
6th April 1997 until 31st May 2007 the Scheme provided future service benefits
on a defined contribution basis.
· From 1st June 2007 the Company has operated a defined
contribution scheme for its UK employees which is administered by a UK pension
provider. Member contributions are paid in line with this Scheme's
documentation over the accounting period and the Company has no further
obligations once the contributions have been made.
· From 6th April 2016 the Company directly pays the expenses of the
Scheme. The total pension scheme expenses incurred by the Company during the
period were £109,000 (2023 - £221,000).
· The last formal valuation of the Scheme was performed at 5th
April 2023 by a professionally qualified actuary. Due to improved funding of
the Scheme on a Technical Provisions basis, the last quarterly deficit
contribution was made in April 2024. The current Schedule of Contributions
requires no further deficit reduction payments to be made and therefore no
payments have been made during the period (2023 - £675,000).
· At 31st October 2024 the present value of the contracted future
deficit reduction contributions was £nil (2023 - £3,577,000), which was less
than (2023 - more than) the net scheme surplus of £544,000 (2023 - £48,000).
As the Company does not have an unconditional right to the economic benefits
arising from this surplus, a liability of £nil (2023 - £3,625,000) has been
recognised within the financial statements in accordance with IFRIC 14.
.
14. Commitments and contingencies
The Group is contingently liable in respect of guarantees, indemnities and
performance bonds given in the ordinary course of business amounting to
£4,170,000 at 31st October 2024 (2023 - £7,416,000). The cash held in Escrow
of £4,170,000 (2023 - £7,426,000) provides security to both Lloyds Bank plc
and Barclays Bank plc in respect of these guarantees, indemnities and
performance bonds.
In the opinion of the Directors, no material loss will arise in connection
with the above matters.
The Group and certain of its subsidiary undertakings are parties to legal
actions and claims which have arisen in the normal course of business. The
results of actions and claims cannot be forecast with certainty, but the
directors believe that they will be concluded without any material effect on
the net assets of the Group.
15. Derivative financial instruments
The Group has in place a number of forward currency contracts in respect of
USD denominated cash inflows in the 'Defence and Security' division.
The Group has chosen not to adopt hedge accounting with respect to forward
exchange contracts and as a result the profit arising from the change in the
fair value during the period has been included within operating profit.
At 31(st) October 2024 (unaudited) US Dollar Sterling Average forward rate Balance at period end
$'000
£'000 £'000
Non-current derivative asset 10,000 8,052 1.2420 293
Current derivative asset 47,500 38,629 1.2296 1,702
Total 57,500 46,681 1.2318 1,995
At 31(st) October 2023 (unaudited) US Dollar Sterling Average forward rate Balance at period end
$'000
£'000 £'000
Non-current derivative liability 57,500 46,680 1.2318 (218)
Current derivative liability 41,500 33,615 1.2346 (513)
Total 99,000 80,295 1.2330 (731)
At 30th April 2024 (audited) US Dollar Sterling Average forward rate Balance at period end
$'000
£'000 £'000
Non-current derivative asset 20,000 16,134 1.2396 309
Current derivative asset 54,000 43,968 1.2282 898
Total 74,000 60,102 1.2312 1,207
16. Share-based payments
During the period, a total of 12,000 share options have been granted to
employees under the MS INTERNATIONAL plc Company Share Option Plan. These
options are exercisable in three equal amounts at three, four and five years
after the date of grant at an exercise price of £9.90 and are not subject to
any share price performance conditions.
Share options totalling 260,673 have been exercised during the period. This
includes 25,000 options exercised under the MS INTERNATIONAL plc Long Term
Incentive Plan at an exercise price of £0 per share, and a further 235,673
options exercised under the MS INTERNATIONAL Plc Company Share Option Scheme
at an exercise price of £1.41 per share.
175,670 of the options were satisfied by transferring shares from treasury and
the remaining 85,003 options were satisfied by transferring shares from The
Employee Share Ownership Trust ("ESOT").
The following table illustrate the number and weighted average exercise prices
(WAEP) of share options during the year:
Long-term Incentive Plan Company Share Option Plan Total
Number WAEP Number WAEP Number WAEP
Outstanding at 30th April 2023 250,000 - 1,020,000 £1.44 1,270,000 £1.16
Granted in period - - 122,700 £7.16 122,700 £7.16
Exercised in period (100,000) - (220,007) £1.41 (320,007) £0.97
Outstanding at 31st October 2023 150,000 - 922,693 £2.21 1,072,693 £1.90
Granted in period - - - - - -
Exercised in period - - (4,000) £1.41 (4,000) £1.41
Outstanding at 30th April 2024 150,000 - 918,693 £2.21 1,068,693 £1.90
Granted in period - - 12,000 £9.90 12,000 £9.90
Exercised in period (25,000) - (235,673) £1.41 (260,673) £1.27
Outstanding at 31st October 2024 125,000 - 695,020 £2.62 820,020 £2.22
The Group recognised a total charge during the period of £36,000 (2023 -
£19,000) in relation to equity-settled share-based payment transactions. At
31st October 2024 there were 125,000 (2023 - 150,000) and 207,004 (2023 -
113,337) share options exercisable in the LTIP and CSOP share option schemes
respectively.
At 31(st) October 2023 (unaudited) US Dollar Sterling Average forward rate Balance at period end
$'000
£'000 £'000
Non-current derivative liability 57,500 46,680 1.2318 (218)
Current derivative liability 41,500 33,615 1.2346 (513)
Total 99,000 80,295 1.2330 (731)
At 30th April 2024 (audited) US Dollar Sterling Average forward rate Balance at period end
$'000
£'000 £'000
Non-current derivative asset 20,000 16,134 1.2396 309
Current derivative asset 54,000 43,968 1.2282 898
Total 74,000 60,102 1.2312 1,207
16. Share-based payments
During the period, a total of 12,000 share options have been granted to
employees under the MS INTERNATIONAL plc Company Share Option Plan. These
options are exercisable in three equal amounts at three, four and five years
after the date of grant at an exercise price of £9.90 and are not subject to
any share price performance conditions.
Share options totalling 260,673 have been exercised during the period. This
includes 25,000 options exercised under the MS INTERNATIONAL plc Long Term
Incentive Plan at an exercise price of £0 per share, and a further 235,673
options exercised under the MS INTERNATIONAL Plc Company Share Option Scheme
at an exercise price of £1.41 per share.
175,670 of the options were satisfied by transferring shares from treasury and
the remaining 85,003 options were satisfied by transferring shares from The
Employee Share Ownership Trust ("ESOT").
The following table illustrate the number and weighted average exercise prices
(WAEP) of share options during the year:
Long-term Incentive Plan Company Share Option Plan Total
Number WAEP Number WAEP Number WAEP
Outstanding at 30th April 2023 250,000 - 1,020,000 £1.44 1,270,000 £1.16
Granted in period - - 122,700 £7.16 122,700 £7.16
Exercised in period (100,000) - (220,007) £1.41 (320,007) £0.97
Outstanding at 31st October 2023 150,000 - 922,693 £2.21 1,072,693 £1.90
Granted in period - - - - - -
Exercised in period - - (4,000) £1.41 (4,000) £1.41
Outstanding at 30th April 2024 150,000 - 918,693 £2.21 1,068,693 £1.90
Granted in period - - 12,000 £9.90 12,000 £9.90
Exercised in period (25,000) - (235,673) £1.41 (260,673) £1.27
Outstanding at 31st October 2024 125,000 - 695,020 £2.62 820,020 £2.22
The Group recognised a total charge during the period of £36,000 (2023 -
£19,000) in relation to equity-settled share-based payment transactions. At
31st October 2024 there were 125,000 (2023 - 150,000) and 207,004 (2023 -
113,337) share options exercisable in the LTIP and CSOP share option schemes
respectively.
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