MS International PLC – Half-year Report
We anticipated that the first half year, ended 31st October 2019, would be a challenging period and advised in September that, in the short term, we expected a substantial weakening in the Company’s results. The half year shows a loss of £0.49m before taxation (2018 – £3.19m profit), on reduced revenue of £33.32m (2018 – £37.74m). Loss per share amounted to 2.5p (2018 profit per share – 15.2p). Notwithstanding, the balance sheet remained strong with net cash at £19.37m compared to £22.89m at the last year end.
Clearly, although not unforeseen, the performance has been disappointing in some areas of the group but elsewhere what is being achieved is quite pleasing, albeit the benefits are yet to be demonstrated in our results. Opportunities are undoubtedly there, while fresh ones continue to arise, so we are seriously endeavouring to ensure that we are in a positive and capable position to maximise prospects as and when presented.
Currently, many markets that we serve have tightened considerably owing, inter alia, to the well-chronicled effects of global political and economic instability that prevail. Moreover, such widespread tough conditions have been exacerbated by some sector specific issues impacting across the Company.
The ‘Defence Divisions’ domestic sector of the global market remains subdued reflecting the continuing financial restraints on Government spending. Many of the ‘Forgings Divisions’ international customers, engaged in the production of material handling capital equipment, are overstocked owing to their own sales languishing in the doldrums and this inevitably flows through to restrained demand from their respective spares parts departments. Both the ‘Petrol Station Superstructures’ and the ‘Corporate Branding’ Divisions Europe-wide customers are going through a period of business restructuring and the changes to ownership have inevitably resulted in pauses to once planned major investment programmes.
In order to confront these various issues, we have already made some very positive moves and, although costly to implement, we are beginning to see the benefits emerge. ‘Defence’, as a highly reputable and innovative SME, is firmly committed to defending our position for the long term in this important strategic market. Accordingly, we took great pride in launching at the recent London International Defence Equipment Exhibition a number of new and exciting products, emanating from our ambitious privately funded product development programmes. A relatively new and capable international business development team is already assembled and in place. Pleasingly, the response from both our existing loyal and potential new customers is most encouraging. Though there is a short term cost to implement these programmes, we are furthermore upgrading, refurbishing and re-equipping major parts of our substantial defence business facilities in anticipation of their ultimate success.
The ‘Forgings Division’ is undergoing a major restructuring. The new manufacturing facility in the United States is performing to plan and therefore the extensive product support programme provided to date by our UK facility is nearly complete. This will now afford us the opportunity to re-organise and optimise our UK based steel forging manufacturing operations, to meet both current and anticipated market demands.
The ‘Petrol Station Superstructures Division’ is well structured to contend with the major changes in station ownership across Europe. Whilst this market is undergoing change, a cool head is required but we are well equipped and organised to face the future with confidence.
The ‘Corporate Branding Division’ is contemporaneously being restructured and expanded to take full advantage of the changes referred to above. To that end, we have acquired two specialist corporate branding businesses in the Netherlands, Armada Janse bv and Reklaspits bv. Both businesses participate in the design; manufacture; installation and service of corporate branding that includes inter-alia illuminated advertising; media facades; way-finding signage in airports; public illumination and creative lighting solutions. We believe that both businesses will bring considerable additional high quality established resources to our existing branding operations and create opportunities for adding new retail customers and markets to our established customer base.
‘Corporate Life’ as such, certainly remains in ‘Interesting Times’. We believe, and are quietly confident, that we are doing all the right things for the Company, assisted by our attention to detail; a strong balance sheet; a firm commitment to do the job exceedingly well and to the very best of our ability; thereby protecting the interests and valuable assets of our shareholders at all times and delivering the benefit of long term, durable corporate ownership.
After some 50 years of service with the Company, David Pyle has retired his directorship. We thank him particularly for his loyal commitment and service and to the Company and fondly wish him well for the future.
All such matters considered, the Board has declared a maintained interim dividend per share of 1.7p (2018-1.7p) payable to shareholders on the 10th January 2020.