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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 1st 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 17th January 2025 to
those shareholders on the register at the close of business on
20th December 2024.
Michael
Bell
5th
December 2024
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