RNS Number : 8150I
MS International PLC
07 December 2022
 













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.

 

 

 

 

Michael Bell                                                                                                                                      6th December 2022

 

 

 

 

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:

 



Half-year to 31st October, 2022


Half-year to 31st October, 2021



unaudited


unaudited



£'000


£'000




 


Revenue recognised at a point in time


40,940

 

33,155

Revenue recognised over time


1,085

 

Total revenue


42,025

 

33,155

 

 

 

 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











































* 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 major components of the tax expense in the consolidated income statement are:






Half-year to 31st October, 2022

 

Half-year to 31st October, 2021




unaudited

 

unaudited




£'000

 

£'000







Current tax expense


660

 

175


29

 

61

Total tax expense reported in the Interim condensed consolidated income statement


689

 

236







Tax relating to items (charged)/credited to other comprehensive income:

 



Half-year to 31st October, 2022


Half-year to 31st October, 2021



unaudited


unaudited



£'000


£'000






Deferred tax on measurement of defined benefit pension scheme


2


258

Deferred tax on revaluation surplus on land and buildings



(331)

Deferred tax in the Interim condensed consolidated statement of comprehensive income


2


(73)

 

Legislation has been enacted to increase the rate of UK corporation tax from 19% to 25% with effect from 1st April, 2023. UK corporation taxation has been provided at 19.5%, which is the effective rate of UK corporation tax for the Group's financial year ending 30th April, 2023. UK deferred tax has been provided at 25% or a blended rate depending on when the underlying temporary timing difference are expected to unwind. Deferred income tax in relation to intangibles recognised on the acquisition of 'MSI-Sign Group B.V.' has been provided at 25.8%, being the main corporation tax rate in The Netherlands.







8.     Earnings per share

 










The calculation of basic earnings per share of 17.4p (2021 - 3.4p) is based on the profit for the period attributable to equity holders of the parent of £2,771,000 (2021 - £537,000) and on a weighted average number of ordinary shares in issue of 15,949,691 (2021 - 15,949,691). At 31st October, 2022 there were 1,055,000 (2021 - 1,055,000) potentially dilutive shares on option with a weighted average effect of 587,217 (2021 - 391,005) giving a diluted earnings per share of 16.8p (2021 - 3.3p).

 









Half-year to 31st October, 2022


Half-year to 31st October, 2021



unaudited


unaudited



£'000


£'000






Weighted average number of shares in issue


17,841,073


17,841,073

Less weighted average number of shared held in the ESOT


(245,048)


(245,048)

Less weighted average number of shares purchased by the Company


(1,646,334)


(1,646,334)

Weighted average number of shares to be used in basic EPS calculation


15,949,691


15,949,691

Weighted average number of the 1,055,000 (2021 - 1,055,000) potentially dilutive shares


587,217


391,005

Weighted average diluted shares


16,536,908


16,340,696






Profit for the period attributable to equity holders to the parent in £


2,771,000


537,000

Basic earnings per share


17.4p


3.4p

Diluted earnings per share


16.8p


3.3p

 

 

9.     Dividends paid and proposed

 







Half-year to 31st October, 2022

 

Half-year to 31st October, 2021




unaudited

 

unaudited




£'000

 

£'000

Declared and paid during the six month period

 




Final dividend on ordinary shares for 2022 - 7.5p (2021 - 6.5p)


1,196

 

1,036

Proposed for approval

 




Interim dividend on ordinary shares for 2023 - 2p (2022 - 1.75p)


319

 

279







The interim dividend will be payable on 13th January, 2023 to those members registered on the books of the Company on 16th December, 2022.

 

10.    Property, plant and equipment

 













At 31st October, 2022

 








Freehold


Plant and





property


equipment


Total

 

 

£'000


£'000


£'000

Cost or valuation

 






At 30th April, 2022


21,368


16,106


37,474

Additions


185


694


879

Disposals


  - 


(182)


(182)

Exchange differences


419


147


566

At 31st October, 2022

 

21,972

 

16,765

 

38,737

 







Accumulated depreciation

 






At 30th April, 2022


  - 


12,937


12,937

Depreciation charge for the period


198


582


780

Disposals


  - 


(128)


(128)

Exchange differences


2


70


72

At 31st October, 2022

 

200

 

13,461

 

13,661

Net book value at 31st October, 2022


21,772

 

3,304

 

25,076

 







Analysis of cost or valuation

 






At professional valuation


21,787


  - 


21,787

At cost


185


16,765


16,950

At 31st October, 2022

 

21,972

 

16,765

 

38,737

 







 

 

At 31st October, 2021

 








Freehold


Plant and





property


equipment


Total

 


£'000


£'000


£'000

Cost or valuation

 






At 30th April, 2021


17,591


15,506


33,097

Additions


1,041


577


1,618

Disposals


  - 


(563)


(563)

Exchange differences


(7)


(67)


(74)

At 31st October, 2021

 

18,625

 

15,453

 

34,078

 







Accumulated depreciation

 






At 30th April, 2021


1,242


12,742


13,984

Depreciation charge for the period


153


527


680

Disposals


  - 


(542)


(542)

Exchange differences


(8)


(51)


(59)

At 31st October, 2021

 

1,387

 

12,676

 

14,063

Net book value at 31st October, 2021


17,238

 

2,777

 

20,015

 







Analysis of cost or valuation

 






At professional valuation


12,300


  - 


12,300

At cost


6,325


15,453


21,778

At 31st October, 2021

 

18,625

 

15,453

 

34,078

 

 







 

At 30th April, 2022

 






 



Freehold


Plant and



 



property


equipment


Total

 

 


£'000


£'000


£'000

 

Cost or valuation

 






 

At 30th April, 2021


17,591


15,506


33,097

 

Additions


1,205


1,498


2,703

 

Disposals


  - 


(978)


(978)

 

Revaluation


2,296


  - 


2,296

 

Exchange differences


276


80


356

 

At 30th April, 2022

 

21,368

 

16,106

 

37,474

 

 







 

Accumulated depreciation

 






 

At 30th April, 2021


1,242


12,742


13,984

 

Depreciation charge for the year


303


1,072


1,375

 

Disposals


  - 


(920)


(920)

 

Revaluation


(1,572)


  - 


(1,572)

 

Exchange differences


27


43


70

 

At 30th April, 2022

 

  - 

 

12,937

 

12,937

 

Net book value at 30th April, 2022


21,368

 

3,169

 

24,537

 

 







 

Analysis of cost or valuation

 






 

At professional valuation


21,368


  - 


21,368

 

At cost


  - 


16,106


16,106

 

At 30th April, 2022

 

21,368

 

16,106

 

37,474

 

 







 

At 30th April, 2022 the Group's land and buildings, which consist of manufacturing and office facilities in the USA, Poland, and UK were valued by Real Estate & Appraisal Services Inc (USA), KonSolid-Nieruchomosci (Poland) and Dove Haigh Phillips (UK). 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 property in Poland was valued based on the income approach, converting anticipated future benefits in the form of rental income into present value. Finally, the property in the US 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, 2022

 





Plant and







Property


equipment


Total

 

 



£'000


£'000


£'000

 









Cost or valuation

 








At 30th April, 2022




2,218


10


2,228

Exchange differences

 

 

 

56


  - 


56

At 31st October, 2022

 

 

 

2,274

 

10

 

2,284

 









Accumulated depreciation

 








At 30th April, 2022




741


8


749

Depreciation charge for the period




186


2


188

Exchange differences

 

 

 

19


  - 


19

At 31st October, 2022

 

 

 

946

 

10

 

956

Net book value at 31st October, 2022

 

 


1,328

 

  - 

 

1,328

 


















At 31st October, 2021

 

 





Plant and







Property


equipment


Total

 

 



£'000


£'000


£'000

 









Cost or valuation

 








At 30th April, 2021




895


21


916

Additions




765


  - 


765

Lease amendment




160


  - 


160

Exchange differences

 

 

 

(46)


  - 


(46)

At 31st October, 2021

 

 

 

1,774

 

21

 

1,795

 









Accumulated depreciation

 








At 30th April, 2021




373


13


386

Depreciation charge for the period




184


4


188

Exchange differences

 

 

 

(14)


  - 


(14)

At 31st October, 2021

 

 

 

543

 

17

 

560

Net book value at 31st October, 2021

 

 


1,231

 

4

 

1,235

 









At 30th April, 2022

 





Plant and







Property


equipment


Total

 

 



£'000


£'000


£'000

 









Cost or valuation

 








At 30th April, 2021




895


21


916

Additions




1,327


  - 


1,327

Disposals




  - 


(11)


(11)

Exchange differences

 

 

 

(4)


  - 


(4)

At 30th April, 2022

 

 

 

2,218

 

10

 

2,228

 









 

 









Accumulated depreciation

 








At 30th April, 2021




373


13


386

Depreciation charge for the year




365


6


371

Disposals




  - 


(11)


(11)

Exchange differences

 

 

 

3


  - 


3

At 30th April, 2022

 

 

 

741

 

8

 

749

Net book value at 30th April, 2022

 

 


1,477

 

2

 

1,479

 


















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, 2022

 

31st October, 2021


30th April, 2022





unaudited

 

unaudited


audited





£'000

 

£'000


£'000





 

 




Cash and cash equivalents




23,363

 

14,067


18,092

Restricted cash held in Escrow - maturing in more than 90 days




519

 

1,470


1,158

Total cash




23,882

 

15,537


19,250










The balance held in Escrow provides security to Lloyds Bank plc in respect of any guarantees, indemnities, and bond guarantees 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.











 

The last formal valuation of the Scheme was performed at 7th May, 2021 by a professionally qualified actuary.











 

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 £137,000 (2021: £105,000).











 

Deficit reduction contributions paid into the Scheme by the Company are £900,000 per annum. The deficit reduction contributions are paid on a quarterly basis with the first having been paid on or after 1st July, 2021 and the last being due for payment on or before 1st April, 2028. The total deficit reduction payments made in the period were £450,000 (2021 - £450,000).


 

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.











 

The IAS 19 scheme deficit has reduced by £1,257,000 from £3,594,000 at 30th April, 2022 to £2,337,000 at 31st October, 2022. A total actuarial gain of £853,000 (2021 - £217,000 gain) has been recognised through other comprehensive income. It comprises of a £3,493,000 remeasurement loss (2021 - £848,000 gain) compared to the interest income on the plan assets and a £4,346,000 actuarial gain (2021 - £631,000 loss) due to changes in financial assumptions. The actuarial gain of £4,346,000 is primarily due to the increase in the discount rate assumptions, as well as the decrease in the RPI inflation and related inflation-linked measures, all of which decreased the Scheme's liabilities at 31st October, 2022. The interest cost on the net defined benefit liability of £63,000 (2021 - £63,000) has been recognised through the income statement. The Scheme's liabilities have been reduced by pension fund deficit payments in the period of £450,000 (2021 - £450,000).











  

The Company is committed to paying deficit reduction contributions to the Scheme of £900,000 per annum until April 2028 under the current Pension Scheme Recovery Plan. According to the Scheme rules, the Company does not have an unconditional right to the economic benefits arising from any surplus of funds paid into the Scheme in excess of its liabilities. Consequently, the provisions of IFRIC 14 apply and the liability recognised in the statement of financial position is the higher of the present value of the future contracted deficit reduction contributions and the deficit estimated under the provisions of IAS 19.

 

At 31st October, 2022 the present value of the future contracted deficit reduction contributions was £4,341,000 and higher than the estimated deficit of £2,337,000 calculated under the provisions of IAS 19. Therefore, in accordance with IFRIC 14 the liability recognised in the statement of financial position at 31st October 2022 is £4,341,000. A loss of £861,000 (2021 - £0) has been recognised through other comprehensive income in relation to IFRIC 14.











 

A £1,198,000 liability for unrecognised past service cost relating to GMP equalisation was recognised in the Consolidated income statement for the 52 weeks ended 27th April, 2019. A further £205,000 of previously unrecognised past service costs were recognised in the Consolidated income statement for the year ended 30th April, 2021. This liability has been remeasured and is included in the Scheme's liabilities at 31st October, 2022.

 

 

















14.    Commitments and contingencies

 















The Company is contingently liable in respect of guarantees, indemnities and performance bonds given in the ordinary course of business amounting to £1,556,000 at 31st October, 2021 (2020 - £6,977,000).










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.










 

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