Final Results

Shareholders will recall that I introduced my April 2023 Chairman's Statement by stating that the year had been one of considerable progress for the Company, even if this was not immediately apparent from the results.

Accordingly, it now gives me immense pleasure to confirm that said progress can now be clearly demonstrated in the results for the year ended April 2024.

A record pre-tax profit of £15.71m (2023 - £5.08m) was achieved on increased revenue of £109.58m (2023 - £83.96m), breaking through the £100m revenue level for the first time in the Company's history. Basic earnings per share amounted to 71.0p (2023 - 25.6p)

The Group's order book has, once again, risen substantially to a record value of £162m (2023 - £115m) at the year-end; an impressive 40% increase. The balance sheet has also further strengthened, with cash and cash equivalents standing at an all-time high of £42.68m (2023 - £15.25m).

'Defence and Security'

Another year of considerable progress and growth has been achieved by this division. Our long-held commitment to investing in people, enhanced production facilities, product development and extensive international marketing, is clearly propelling the business to a new and higher level of financial performance.

International interest in both our naval and new land-based weapon systems remains most encouraging with an order intake during the year in excess of £100 million.

Pleasingly, included in that figure, were new orders for six MSI-DS30mm naval weapon systems to be fitted to the first three Royal Navy fleet support vessels. When delivered, this will bring the latest upgraded version of the MSI-DS-30mm weapon system into the Royal Navy's inventory which will significantly improve their 30mm weapon system capability.

These developments auger well for the Company's future as 'Defence and Security' rapidly establishes itself as the dominant division of growth potential.

'Forgings'

This division, which has operations in the UK, USA and Brazil, performed well, although not to the exceptional levels achieved in the previous year. Market conditions tightened in the global mobile material handling industry that we serve and many of our customers reacted quickly to reduce their purchasing requirements. Accordingly, we, in turn, reduced our purchases of raw materials and components to match changing conditions; thus preserving cash.

'Petrol Station Superstructures'

This division based in the UK and Poland, continues to hold a leading, and highly regarded, position in the UK and East European petrol station forecourt construction and maintenance markets.

The UK business performed strongly, notably completing several prestigious large 'new to industry' complex forecourt projects. The repairs and maintenance element of the business in particular, operated at a high level of activity, as station operators sought to preserve their forecourt structures and enhance site appearance.

Access to our own, highly valuable database of historical construction records for stations throughout the UK and Europe, spanning several decades, continues to underpin our important repairs and maintenance business. This source of detailed knowledge enables us to achieve the efficient repair, re-modelling and refurbishment of these structures in a most timely and economic manner.

Our Poland operations were adversely impacted in the second half of the year by the ongoing war in eastern Europe. Some of our major oil company customers cancelled or postponed, for the time being, projects that we had hoped to construct during the period. Despite those difficulties the business managed to break even for the year.

'Corporate Branding'

Another year of strong performance for our UK operations where the business, which is focused primarily on the petrol station branding market, continued to grow and prosper.

Following weaker than anticipated performances from operations in the Netherlands and Germany, we restructured them both to focus their activities on the enhanced demands of our growing number of automotive and airport 'way-finding' customers.

Outlook

'Defence and Security'

We live in an increasingly dangerous world and Governments are escalating defence budgets as a consequence. With this background and a strong and growing order book, we look forward with a good degree of confidence to a commendable outcome for the current year.

Deliveries to the US Navy of the first production order contracts of our 30mm naval weapon systems commence in the first half of 2024/25. We will also be delivering additional 30mm naval weapon systems to shipbuilders in the USA for their US 'Foreign Military Supply' contracts.

Of particular note will be our first supply of 30mm naval weapon systems to the German Navy. These, together with our 30mm naval weapon systems in service with the Royal Navy and those going to the US Navy, will make MSI the current primary supplier of small calibre naval weapon systems to three of the major 'NATO' navies.

We await the tender documents from the US Navy with regard to their proposed five-year procurement programme of our MSI-DS 30mm naval weapon systems. We believe we are well placed to secure this 'follow on' order but do not expect it to be placed until after the end of our current financial year.

A number of countries around the world continue to show considerable interest in our land-based mobile counter-drone weapon system, 'Paladin', previously known as V-SHORAD. The Company has further developed this product, successfully demonstrating its capability to protect against the ever-increasing aerial threat from incoming drones. These developments will continue.

Significant investment continues into both our product range and the Norwich production facility to increase capacity in line with the expanded order book.

All told, we perceive that the excellent prospects for the division bode well for the current year.

'Forgings'

This is a long-established, high quality, market leading international business. Prospects for the current year, as always, will depend on activity levels in the global mobile material handling industry.

'Petrol Station Superstructures'

This is now a strong mature business that we have successfully developed, garnering a leading reputation for quality service and support, both in our domestic petrol station forecourt market and that of eastern and northern Europe.

Looking forward, the outlook for the petrol station forecourt industry in the UK looks promising. In eastern Europe much depends on what happens in reaction to the ongoing war in Ukraine.

'Corporate Branding'

We are confident that the UK based operation will continue to flourish as we invest further to grow its capability.

The restructuring programme, to re-align the Netherlands and Germany based businesses to a more sustainable level, is progressing to plan.

Summary

This has been a year of outstanding trading performance and growth for the Company, reflecting the total commitment of the Board, over many years, to strengthen and develop each of our diverse businesses.

Clearly, the progress we have achieved in growing the 'Defence and Security' division has been outstanding and we must continue to exploit the many opportunities we have as we drive the future growth of MSI.

Following this positive significant change in our earnings profile we continue to review and evolve the future strategic priorities for MSI and the profile of the next generation of management.

All matters considered the Board recommends the payment of a final dividend of 16.5p per share (2023 - 13p) making a total for the year of 19.5p per share (2023 - 15p).

The dividend is expected to be paid on the 23rd August 2024 to those shareholders on the register at the close of business on the 12th July 2024.

Michael Bell

25th June 2024

MS INTERNATIONAL plc

Copies of this announcement are available from the Company's registered office at MS INTERNATIONAL plc, Balby Carr Bank, Doncaster, DN4 8DH, England. The Notice of AGM will be posted to shareholders on or before 3rd July 2024. The full Annual Report and Accounts will be posted to shareholders no later than 19th July 2024. They will be made available on the Company's website at www.msiplc.com and will be delivered to the Registrar of Companies after it has been laid before the Company's members at the Annual General Meeting to be held on 25th July 2024 at The Holiday Inn, Warmsworth, Doncaster.

Consolidated income statement

For the year ended 30th April 2024

Adjustments to reconcile profit/(loss) before taxation to cash generated from operating activities:

The financial information set out above does not constitute the Company's statutory accounts for the periods ended 30th April 2024 or 30th April 2023 but is derived from those accounts. Statutory accounts for 2023 have been delivered to the Registrar of Companies and those for 2024 will be delivered following the Company's Annual General Meeting. The auditors have reported on those accounts; their reports were unqualified and did not contain a statement under section 498 (2) or (3) of the Companies Act 2006.

Segment information

For management and reporting purposes, the Group operated through four trading divisions during the years ended 30th April 2024 and 30th April 2023. This includes 'Defence and Security', 'Forgings', 'Petrol Station Superstructures', and 'Corporate Brandings' divisions. These divisions are the basis on which the Group reports its primary business segment information. The Board, which includes the chief operating decision maker, considers each trading division as a separate operating segment and monitors the operating results of its business units separately for the purpose of making decisions about resource allocation and performance assessment. Group financing (including finance costs and finance revenue) and income taxes are managed on a group basis and are therefore not allocated to operating segments.

* Unallocated assets include certain fixed assets (including all UK properties), current assets and deferred income tax assets. Unallocated liabilities include the defined pension benefit scheme liability, the deferred income tax liability, and certain current liabilities.

Geographical analysis

The following table presents revenue and expenditure and certain assets and liabilities information by geographical segment for the years ended 30th April 2024 and 30th April 2023. The Group's geographical segments are based on the location of the Group's assets.

The Group's largest customer, which is reported in the 'Defence and Security' division, contributed 27.4% to the Group's revenue (2023 - 12.6% from the same customer). The Group's second largest customer, also reported in the 'Defence and Security' division, was the only other customer that contributed more than 10% to the Group's revenue with a total of 21.6% (2023 - nil).

Derivative financial instruments

During the year the Group and Company entered into a number of forward currency contracts in respect of USD denominated cash inflows in the 'Defence and Security' division. In total $99,000,000 was hedged in the year at an average exchange rate of 1.2330. By the 30th April 2024 a total of $25,000,000 of contracts had matured at an average rate of 1.2381, leaving a balance of $74,000,000 at an average rate of 1.2312.

The Group and Company has chosen not to adopt hedge accounting with respect to forward exchange contracts and as a result a gain of £1,207,000 arising from the change in the fair value of the contracts has been included within operating profit.

Employee information

The average number of employees, including executive directors, during the year was as follows:

In October 2023 two directors exercised LTIP share options totalling 100,000 (2023 - 250,000) at an exercise price of £0 (2023 - £0) per share. The gain on these options is the difference between the market price at the date of exercise, which ranged from £7.20 per share to £7.30 per share (2023 - £4.17), and the exercise price of £0 (2023 - £0) per share.

Between June 2023 and October 2023 four directors exercised CSOP share options totalling 63,335 (2023 - nil) at an exercise price of £1.41 per share. The gain on these options is the difference between the market price at the date of exercise, which ranged from £5.88 per share to £7.15 per share, and the exercise price of £1.41 per share.

• Taxation
• Tax expense

The charge for taxation comprises:

Factors affecting the tax charge for the year

The tax charge assessed for the year is higher than (2023: lower than) the standard rate of corporation tax in the UK of 25% (2023 - 19.5%). The differences are explained below:

Factors affecting future tax charge

At the reporting date, there are no factors that would affect the future tax charge and therefore deferred income taxation has been provided at the rate at the reporting date of 25%.

Earnings per share

The calculation of basic earnings per share of 71.0p (2023 - 25.6p) is based on the profit for the year attributable to equity holders of the parent of £11,500,000 (2023 - £4,115,000) and on a weighted average number of ordinary shares in issue of 16,186,103 (2023 - 16,045,581). At 30th April 2024 there were 1,068,693 (2023 - 1,270,000) dilutive shares on option with a weighted average effect of 845,288 (2023 - 980,875) giving a diluted earnings per share of 67.5p (2023 - 24.2p).

(*) Included in Other receivables in the Group is £5,661,000 (2023 - £23,000) of costs in relation to obtaining a contract. There are no costs in relation to obtaining a contract within the Company (2023 - nil).

Trade receivables

Trade receivables are denominated in the following currencies:

Trade receivables are non-interest bearing, generally have 30 day terms, and are shown net of provision for expected credit losses. The aged analysis of trade receivables after provision for expected credit losses is as follows:

In the Group, trade receivables with a nominal value of £15,000 (2023 - £36,000) were impaired and fully provided as at 30th April 2024. During the year, expected credit losses of £21,000 (2023 - £42,000) were recovered and expected credit losses of £nil (2023 - £26,000) were incurred.

In the Company, trade receivables with a nominal value of £5,000 (2023 - £16,000) were impaired and fully provided as at 30th April 2024. During the year, expected credit losses of £11,000 (2023 - £30,000) were recovered and expected credit losses of £nil (2023 - £13,000) were incurred.

Amounts owed by subsidiary undertakings

All amounts due from Group companies are repayable on demand and are not charged interest. The majority of intercompany balances are to group entities with liquid assets and are capable of being repaid on demand. An impairment charge of £1,686,000 relating to 'MSI-Sign Group B.V.' and 'MSI-Sign Group GmbH' has been recognised on intercompany receivables in the company during the year to give a cumulative impairment charge of £3,113,000 (2023 - £1,470,000).

There are loans to 'MS INTERNATIONAL Estates Limited' and 'MS INTERNATIONAL Estates LLC', which although repayable on demand, are supported by properties, which will not be immediately realisable. The directors have assessed the likelihood of default and the loss in the event of default as well as the balance at the reporting date and conclude that there is no material impairment of the receivable.

The amounts receivable at the reporting date can be categorised as:

Company

The 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.

The Company is party to a cross guarantee between 'MS INTERNATIONAL plc' and 'MSI-Defence Systems Ltd' which has been put in place to ensure compliance with banking operations.

• Net funds
• Analysis of net funds

Reserves

Capital redemption reserve

The balance classified as capital redemption reserve represents the nominal value of issued share capital of the Company, repurchased.

Other reserves

Following the transfer of assets held at valuation by the Company to a subsidiary company, a reserve has been created which is non-distributable. This is equal to the revaluation reserve previously arising.

Additionally, it includes the non-distributable retained reserve for the revaluation reserve previously showing in the Company for properties now transferred to other members of the Group.

Revaluation reserve

The asset revaluation reserve is used to record increases in the fair value of land and buildings and decreases to the extent that such decrease relates to an increase on the same assets previously recognised in equity.

Special reserve

The special reserve is a distributable reserve created following the cancellation of a share premium account by way of court order in March 1993.

Currency translation reserve

The foreign currency translation reserve is used to record exchange differences arising from the translation of the financial statements of foreign subsidiaries. It is also used to record the effect of hedging net investments in foreign operations.

Treasury shares

The treasury share reserve is detailed as follows:

The Employee Share Ownership Trust

The Employee Share Ownership Trust ("ESOT") provides for the issue of options over ordinary shares in the Company to Group employees, including executive directors, at the discretion of the Remuneration Committee. The trustee of the ESOT is Ocorian Ltd, an independent company registered in Jersey.

At 30th April 2024 the ESOT held 91,048 shares (2023 - 245,048), which represents 0.56% (2023 - 1.49%) of the issued share capital of the Company excluding treasury shares. The market value of these shares was £829,000 (2023 - £1,250,000) at 30th April 2024.

A reconciliation of the movement in the number of shares held by the ESOT is as follows:

During the year, 324,007 (2023 - 250,000) share options were exercised by Group employees, of which 154,000 (2023 - nil) were satisfied by the transfer of shares from the ESOT. These shares have been valued at a weighted average cost of £0.41 per share.

The assets, liabilities, income, and costs of the ESOT have been incorporated into the Company's financial statements. Total ESOT costs charged to the income statement in the year amounts to £29,000 (2023 - £8,000). The Company has not made any payments (2023 - nil) into the ESOT bank accounts during the year. Details of the outstanding share options for directors are included in the Directors' remuneration report.

Shares in treasury

A reconciliation of the movement in the Company's own 10p ordinary shares held in treasury is shown below:

On 7th July 2023 the Company purchased 290,000 (2023 - nil) shares from the Group's pension scheme at a price of £5.78 per share, totalling £1,676,000. During the year, 324,007 (2023 - 250,000) share options were exercised, of which 170,007 (2023 - 250,000) were satisfied by the transfer of shares held in treasury by the Company. The share options issued from treasury have been valued at a weighted average cost of £1.72 (2022 - £1.63) per share totalling £293,000.

Contracts with customers

The Group and Company have recognised the following assets and liabilities relating to contracts with customers:

At 30th April 2024 there was no provision for expected credit losses relating to contract assets (2023 - nil).

A reconciliation of the movements in contract liabilities during the year is shown below:

Included in the contract liabilities balance at 30th April 2024 is £6,987,000 relating to unpaid invoices.

Of the existing contracts that were unsatisfied or partially unsatisfied at 30th April 2024, revenue is expected to be recognised as follows: