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Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
---|---|---|---|---|---|
Manroy | LSE:MAN | London | Ordinary Share | GB00B4L12X65 | ORD 5P |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 85.00 | 0.00 | 01:00:00 |
Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
---|---|---|---|---|---|
0 | 0 | N/A | 0 |
TIDMMAN
RNS Number : 0801E
Manroy PLC
25 May 2012
25 May 2012
Manroy Plc
Announcement of half year results for six months ended 31 March 2012
Manroy Plc ("Manroy" or the "Group") (AIM: MAN), the AIM quoted UK defence contractor, announces its half year results for the six months ended 31 March 2012.
Operational highlights
Manroy
-- Expansion of product range and increased sales into export market -- First export orders secured for GPMG -- New orders for HMG, Blank Firing Systems, tow bars and mounts
Manroy USA ("MUSA")
-- GBP6.6m in novated contracts awarded to MUSA taking MUSA order book to GBP9.0m -- New 125,000 sq ft manufacturing facility in Spindale, North Carolina
-- Diverse product range including Electronic Boresight System, M2 & M3 aircraft barrels and rifle components for the US Department of Defense
Financial highlights
-- Revenue of GBP3.4m compared to GBP3.0m for the previous post acquisition period to 31 March 2011
-- Pre-tax loss of GBP1.1m against pre-tax profit of GBP1.1m in comparable period -- Diluted loss per share of 4.7p compared to earnings of 12.1p for comparable period -- Losses of GBP0.7m attributable to MUSA during period of start-up and relocation
Andrew Blurton, Chairman of Manroy, commented: "The future looks encouraging as demand for Manroy's increasingly diverse product range grows both at home and abroad. Results for the period have been adversely affected by the delay in receipt of a major contract and, as we announced in April 2012, the out-turn for the full year will be below original expectations because of this delay. However, as a result, we anticipate that the 2012-13 financial year will be enhanced as the Group begins to fulfil these delayed orders. I therefore view the future with optimism as we continue to demonstrate the Group's potential."
For further information please contact:
Manroy Plc Glyn Bottomley, Chief Executive Tel: 01252 874 177 Paul Carter, Finance Director Canaccord Genuity Limited Tel: 020 7523 8000 Robert Finlay Peter Stewart Tavistock Communications Tel: 020 7920 3150 Baron Phillips Simon Compton
Chairman's statement
Over the past six months, Manroy has been awarded a number of new contracts in the United Kingdom and the United States. The period under review also saw the integration of acquisitions completed since listing on AIM in December 2010.
Expansion of the product range and sales into the export market have been the clear strategic objective for the Group and this has resulted in new orders for both the Heavy Machine Gun ("HMG") and General Purpose Machine Gun ("GPMG") as well as ammunition, Blank Firing Systems ("BFS"), tow bars and mounts. There are significant opportunities within the export market and the Board expects this to be the Group's key growth area, especially in the United States, which accounts for close to half of the world's defence spending. As a result, the Board is continuing to diversify the Group's customer base away from its historical reliance on the UK Ministry of Defence ("MoD"), although this continues to be a highly valued Manroy customer. During the period under review, the MoD accounted for 79% of our total revenue against 82% for the same period last year.
As announced on 23 April 2012, results for the six months to 31 March 2012 have been impacted by the delay to the Group receiving a large order of HMGs from an existing customer. As a result, revenue in the first half of the year is less than expected, although the Board anticipates that production and delivery fulfilment of this order will occur during the 2012-13 financial year. Similarly, our 49% owned associated company Manroy USA's ("MUSA") long anticipated GBP6.6m of novated orders from the US Department of Defense ("DoD") materialised in April 2012 and the full impact will also be felt in the 2012-13 financial year.
Whilst the delays in the award of these contracts and the resultant delay in timing of revenue is obviously frustrating, this does not detract from the inherent quality and importance of the underlying contracts and the positive impact that their eventual fulfilment will have on Manroy.
Results
In the six months to 31 March 2012, Manroy generated total revenues of GBP3.4m, compared to GBP3.0m for the previous post acquisition period to 31 March 2011. As already indicated, revenue in the first half has been adversely affected by the delay in securing a major overseas order as well as the extended period for successful novation of MUSA's DoD orders. This has resulted in a pre-tax loss for the period of GBP1.1m, compared to a pre-tax profit in the first half of 2011 of GBP1.1m, and a fully diluted loss per share of 4.7p against earnings per share of 12.1p. These results include start-up losses attributable to MUSA of GBP0.7m and intangible asset amortisation of GBP0.5m, indicating that the UK trading business produced a positive result for the period under review.
We have also included a summary of MUSA's financial results for the period. These reflect the costs of relocating the business to larger and greatly enhanced manufacturing facilities in Spindale, North Carolina, following last year's acquisition of the Sabre Industries business, thus enabling the manufacture and delivery of the novated orders referred to above. MUSA's revenue for the period was GBP0.6m, almost double the comparable period, while start-up and relocation losses this year were GBP1.3m against GBP0.2m in the five weeks from acquisition to September 2011. However, these results should be seen in the context of MUSA's current order book, which stands at US$14.0m (GBP9.0m), reflecting MUSA's success in gaining contracts in other market sectors. These are expected to be completed over the course of the 2012-13 financial year and deliver positive returns to the Group.
HMG
Production of the HMG, along with support and spares, remains the Group's core area of operation. Manroy continues to supply the MoD with the new and unique HMG BFS and ammunition products as well as fulfilling orders for spare parts.
The export market continues to improve, with HMG contracts currently being fulfilled in a number of new countries, including Asia and Australia, two potentially key markets for the Group. Whilst the approval process may take longer than in the UK, particularly with foreign governments, diversification of the Group's customer base into new markets and territories remains a key part of the Company's strategy.
As mentioned above, the delayed order for HMGs from an existing customer has impacted the financial performance of the business for the six months under review. However, once the order is received, the mandatory UK Government export licence approval process will begin and, once granted, consequential revenues are expected to be realised during the 2012-13 financial year. This order also has a more wide reaching importance as a result of the time and effort that has been invested with this customer to achieve preferred supplier status, placing Manroy in an excellent position to benefit from the variety of HMG and GPMG orders that are expected from this customer over the next two to three years.
GPMG
Production of the GPMG for both the MoD and the export market remains a key focus for the business as part of our strategic aim to diversify Manroy's revenue profile. Investment in the design, marketing and production capability for this weapon during 2011 resulted in a number of tenders being submitted and in April 2012 orders worth GBP0.4m were announced for the supply of GPMGs to two new overseas customers. In addition, Manroy has lodged an expression of interest for an MoD GPMG receiver programme, thus providing further evidence of our desire to grow this product in both the domestic and export markets.
A number of additional small orders from new customers have been signed over the past six months. Manroy is now finalising production of a technical data pack which will enable significantly increased production of the GPMG to satisfy demand.
Other Revenue
In February 2012, Manroy signed a contract to supply the MoD with BFS, tow bars and tripods. Excellent progress has been made with these contracts along with the on-going supply to the MoD of blank ammunition as part of a contract signed in May 2011. The first batch of blank ammunition was delivered to the MoD in March 2012 and further requirements are expected over the next four years. Manroy owns the intellectual property rights for the 0.50" calibre HMG BFS and corresponding ammunition which gives added stability to the Group's revenue stream.
The precision engineering design capability of AEI, acquired by Manroy in April 2011, has been important in helping deliver these bespoke weapon support systems. This product area is beginning to gain momentum and currently 30% of the order book comprises these products.
MUSA
As highlighted above, in April 2012 Manroy announced that the US DoD had novated GBP6.6m of contracts to MUSA, in which Manroy owns a 49% interest. These novations are in relation to unfulfilled contracts that formed part of a larger GBP21.5m order placed by the DoD with Sabre Industries, whose assets were acquired by MUSA in March 2011.
The contract awards include GBP4.9m of HMG barrels and bolts as well as a further GBP1.6m of M16 weapons, along with orders for M10 Chargers. These orders are currently undergoing a standard acceptance process with the DoD at MUSA's new 125,000 sq ft manufacturing facility in Spindale, North Carolina before full production which is expected to get underway in October 2012.
The successful completion of the novation process is of particular importance to MUSA due to the variety of approval processes undertaken by the DoD, meaning that the Spindale facility is now fully qualified to accept DoD contracts for weapons and ammunition.
In March 2012, shortly before the novation, Manroy also announced MUSA's entry into a GBP1.1m contract to supply its Mk43 Electronic Boresight System ("EBS") in support of a US Air Force weapons programme along with HMG barrel and rifle components. Successful delivery of these initial contracts will further strengthen MUSA's relationship with the DoD and put MUSA an ideal position to win further contracts and provide greater revenue visibility to the Group.
Conclusion
The past six months have demonstrated the commitment of the management team to growing the business in terms of both products and geographic reach. Since Manroy's admission to AIM in December 2010, management has overseen the on-going integration of three key strategic acquisitions, the novation of the DoD contracts and MUSA's move to North Carolina, as well as winning new contracts for a number of Manroy's products in both the UK and export markets.
Focus for the remaining six months of the 2012 financial year is on the provision of an increased product range to a global spread of approved countries in order to ensure the Group is not operationally or financially focused on too small a number of customers.
Novation of contracts by the US DoD to MUSA marks an important milestone for the period under review and for the history of Manroy generally. It has laid the foundations for the Group's growth in the world's largest defence market and offers the opportunity to generate significant returns.
While results for the period have been adversely affected by the delay in receipt of confirmation of a major contract, the future looks encouraging as demand for Manroy's increasingly diverse product range grows both at home and abroad. As we announced in April 2012, the out-turn for the full year will be below original expectations because of this delay but, as a result, we anticipate that the 2012-13 financial year will be enhanced as the Group begins to fulfil these delayed orders. I therefore view the future with optimism as we continue to demonstrate the Group's potential.
A. F. Blurton
Chairman
25 May 2012
Financial Review
Introduction
The Chairman's Statement provides a summary of the Group's principal operations for the first six months of this financial year, together with the Board's expectations for the future. This Financial Review covers the more significant features of the results for the six months ended 31 March 2012.
In the Group's financial statements for the year ended 30 September 2011, the Board advised shareholders that several large orders had been unavoidably delayed and were expected to be received during the second half of this financial year. One of those, the novation of US$10.4m (GBP6.6m) US Department of Defense orders to Manroy USA ("MUSA") was secured and announced in April 2012, but a substantial HMG export order from an existing customer, a large part of which was forecast to be fulfilled during the current financial year, has not yet been confirmed. The Board is still confident that the Group will receive confirmation of this key HMG export order, which is expected to generate approximately GBP8m in revenue for the following financial year. The delay in timing of awarding the contract, and taking into account the time required to secure the necessary UK Government export licence, which can only be applied for after the contract has been received, means it is now unlikely that deliveries and therefore revenue from this export order will be realised in the current financial year ending 30 September 2012.
The impact of this contract delay is that results for the year ending 30 September 2012 will be adversely affected as communicated by the Company to the market in its trading update on 23 April 2012. As a result, revenue for the year is expected to be GBP7.5m, which is lower than previous expectations. It should be noted that, as a result of this delay, revenues for the 12 months ending 30 September 2013 are expected to reflect the full benefit of the fulfilment and delivery of this contract in that year.
The Board emphasises that the successful fulfilment of this HMG order is expected to lead to further similar sized orders in the future which will be in addition to other contracts forecast to be secured by the Group.
Revenue and market share
For the six months ended 31 March 2012, the Group recorded trade revenue of GBP3.1m (31 March 2011: GBP3.0m). The Board's strategy is to increase the Group's market share in the export market through an increased customer and product base. The challenges posed in increasing export revenue include variations in tender procedures, the complexity of export regulations, the timing of receipt of export orders and cultural factors across varied regions. These opportunities are therefore challenging but the Board considers that the benefit for the Group when these orders are secured far outweighs the complexity involved in securing them.
Manroy has been successful with competitive export tenders and the Board continues to manage revenue performance with vigilance. While certain areas have been affected by delays in receipt of orders as referred to above, new regions continue to be developed as part of the Board's on-going plan to increase revenue generation for the Group and mitigate the risk of larger contracts dominating predictability of the Group's revenue stream.
Analysis of trade revenue during the six months ended 31 March 2012
Region Six months % Six months % Year % ended ended ended 31 March 31 March 30 September 2012 2011 2011 GBP'000 GBP'000 GBP'000 United Kingdom 2,499 79 2,463 82 4,368 57 Europe 535 17 486 16 1,405 18 North America 43 1 49 2 43 1 South America 49 2 - - - - Asia and Australasia 18 1 2 - 1,865 24 3,144 100 3,000 100 7,681 100 ====================== =========== ==== =========== ==== ============== ====
Manroy has maintained strength in the UK market, with 79% of revenue generated from the UK MoD (31 March 2011: 82%). Over the last three years, Manroy has increased marketing and business development activities in expanding its customer base for the export market. The six months ended 31 March 2012 provides further indication that this strategy has influenced our geographical spread of sales with an increase in the percentage of business in South America. In addition, we also announced a GBP0.4 million GPMG order on 11 April 2012 for new customers in new regions.
During the six months ended 31 March 2012 the Group delivered the first instalment of its GBP4.1m blank ammunition order to the UK MoD. The first delivery generated GBP1.2m in UK revenue for the period and completes the final qualification process for the ammunition provision to this customer, with the balance expected to be delivered through 2014 to 2016.
Results for the six months ended 31 March 2012
Six months Six months Year ended ended March ended March September 2012 2011 2011 GBP'000 GBP'000 GBP'000 Trade revenues 3,144 3,000 7,681 Royalties and other income 255 - 289 --------------------------------------- ------------- ------------- ----------- Total revenue 3,399 3,000 7,970 --------------------------------------- ------------- ------------- ----------- Gross margin 1,259 1,069 2,971 Administrative expenses (1,139) (928) (1,188) --------------------------------------- ------------- ------------- ----------- Profit before costs associated with acquisitions, finance and Associated Company 120 141 1,783 Finance costs (25) (1) (16) Corporate acquisition costs - (348) (1,097) Negative goodwill - 1,351 2,460 Amortisation of intangible assets (529) - (794) --------------------------------------- ------------- ------------- ----------- Profit / (loss) before tax and losses from Associated Company (434) 1,143 2,336 Losses after tax from Associated Company (653) - (115) Profit / (loss) before tax (1,087) 1,143 2,221 ======================================= ============= ============= ===========
The UK trading business of the Group was acquired in December 2010 and accordingly the six month comparatives to 31 March 2011 include three months of trading results for that business.
Manroy USA
The period following acquisition by the Group of its 49% interest in MUSA in August 2011 has been one of investment into the infrastructure and capability of MUSA to comply with the requirements of the contract novation process referred to below, which has proved to be very successful.
In April 2012, the US DoD novated a total of US$10.4m (GBP6.6m) of contracts to Manroy USA. The novations were in relation to unfulfilled contracts that formed part of a larger US$34m (GBP21.5m) order placed by the DoD with Sabre Industries, whose assets were acquired by MUSA in March 2011. These contracts are of significant importance and are considered by the Board to be the catalyst for anticipated growth in Manroy USA. Securing these contracts took over a year from acquisition of the related Sabre Industries business, underlining the level of work undertaken to achieve this valuable success following several stringent but wholly successful audits conducted by US Government agencies. MUSA is now progressing through the FAA stage of these contracts which is expected to be completed by August 2012, enabling deliveries of completed products to commence thereafter.
This process also involved a move to a more beneficial and capable operating facility in Spindale North Carolina and a significant investment in management time. As a result, MUSA is now well placed in terms of manufacturing and delivering for these contracts and for bidding for further contracts from the DoD.
The results of MUSA are summarised as follows:
Six months ended Two months 31 March 2012 from acquisition to 30 September 2011 GBP'000 GBP'000 Revenue 628 323 Cost of operations (392) (180) Gross profit 236 143 Administrative expenses (942) (274) Depreciation (165) (49) Amortisation of intangibles (161) (53) Costs associated with relocation (268) - Results from operating activities (1,300) (233) Net finance expense (32) (2) Loss before taxation (1,332) (235) Taxation - - --------------------------------------- ----------------- ------------------ Loss after taxation for the period (1,332) (235) ======================================= ================= ================== Loss of Associate Company recognised in Statement of Comprehensive Income - 49% Group share (653) (115) ======================================= ================= ==================
At the date of this report MUSA holds orders to the value of US$14.0m (GBP9.0m) which are expected to be completed during the 2012-13 financial year.
In March 2012, MUSA sold its previous operating facility in Scottsboro, Alabama, and intends to move the remaining production activities from the previous Sabre facility in Nashville, Tennessee, to Spindale in September 2012.
Earnings / (loss) per share
The earnings / (loss) per share figures have been calculated as follows:-
Six months Six months Year ended ended ended 30 September 31 March 31 March 2011 2012 2011 Basic earnings / (loss) per share Profit/(loss) per Consolidated Statement of Comprehensive Income GBP'000 (876) 1,042 2,049 Weighted average number of shares in issue during the period '000 18,194 8,334 11,389 Earnings / (loss) per share Pence (4.8) 12.5 18.0 ================================ ========== =========== =========== ============== Diluted earnings / (loss) per share Profit/(loss) per Consolidated Statement of Comprehensive Income GBP'000 (876) 1,042 2,049 Diluted weighted average number of shares in issue during year '000 18,735 8,611 11,711 Diluted earnings / (loss) per share Pence (4.7) 12.1 17.5 ================================ ========== =========== =========== ==============
Dividends
A final dividend of 1p per share in addition to the interim dividend of 1p per share already paid was approved at the Annual General Meeting on 4 April 2012 and paid to shareholders ranking for the dividend on 11 April 2012. An interim dividend in respect of the six months ended 31 March 2012 is not being paid.
Cash flow
The consolidated statement of show the funds used and generated by the Group, those raised from external sources, the investments made and the effect thereof on the Group's cash and cash equivalents. This is summarised as follows:-
Six months Six months Year ended ended 31 ended 31 30 September March 2012 March 2011 2011 GBP'000 GBP'000 GBP'000 Net cash from / (used in) operating activities 239 2,056 (1,191) Net cash (used in) / from investing activities (305) 272 (2,679) Net cash (used in) / from financing activities (189) 658 3,294 ------------------------------------- ------------ ------------ -------------- Net (decrease)/increase in cash and cash equivalents (255) 2,986 (576) Opening cash and cash equivalents 847 1,423 1,423 ------------------------------------- ------------ ------------ -------------- Closing cash and cash equivalents 592 4,409 847 ------------------------------------- ------------ ------------ --------------
During the six months ended 31 March 2012, cash and cash equivalents reduced from GBP0.8 million to GBP0.6 million, although cash balances were increased by GBP0.6 million in April 2012 on collection of receivables from sales of blank ammunition shortly before the period end. The Group invested GBP182,000 into Manroy USA during the period, part of which was generated in March 2012 from the sale of the Scottsboro property referred to above. The Group's working capital is also enhanced by the availability of a GBP0.5m overdraft facility from Barclays Bank Plc, which was unused at the end of March 2012
Summary
In late April 2012, the Company announced that the delay of a major contract had meant that revenue expected to arise in the year ending 30 September 2012 would now likely arise during the year ending 30 September 2013. The Board expects the successful fulfilment of this order to lead to further similar sized orders in the future. These will be in addition to any further contracts secured by the Group. Notwithstanding this timing delay, the Group has sufficient cash to maintain its present position as well as to undertake fulfilment of these orders as they are confirmed.
Securing large contracts in a period of political upheaval and economic austerity will always be difficult in the defence industry, but the Board is confident that the Group is well placed to be successful in these situations as evidenced by the recent Manroy USA contract novations.
During the first six months of this financial year, the Board has continued to lay the foundations for a strong and growing business across the Group. It has been frustrating that the major contract the Group expected to receive in this period has not yet been secured, but the Board confidently expects this to be achieved before the 30 September 2012 year end. The Group continues to deliver in an unpredictable business environment and the Board remains confident of the Group's medium and long term growth strategy.
P. J. Carter
Finance Director
25 May 2012
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Six months Six months Year ended Notes ended 31 ended 31 30 September March 2012 March 2011 2011 GBP'000 GBP'000 GBP'000 Revenue Trade revenues 2 3,144 3,000 7,681 Royalties and other income 255 - 289 ----------------------------------- ------- ------------ ------------ -------------- Total revenue 3,399 3,000 7,970 Cost of operations (2,140) (1,931) (4,999) Gross profit 1,259 1,069 2,971 Administrative expenses (1,139) (928) (1,188) Corporate acquisition costs - (348) (1,097) Negative goodwill - 1,351 2,460 Amortisation of intangible assets 6 (529) - (794) Results from operating activities (409) 1,144 2,352 Finance income 1 5 15 Finance expenses (26) (6) (31) Profit / (loss) before results from Associated Company (434) 1,143 2,336 Share of results of Associated Company 8 (653) - (115) Profit / (loss) before tax (1,087) 1,143 2,221 Tax 3 211 (101) (172) Profit / (loss) after tax (876) 1,042 2,049 Exchange movement on translation of investment in Associated Company (92) - 158 ----------------------------------- ------- ------------ ------------ -------------- Total comprehensive income / (loss) for the period (968) 1,042 2,207 =================================== ======= ============ ============ ==============
Earnings / (loss) per share
Basic 5 (4.8p) 12.5p 18.0p Diluted 5 (4.7p) 12.1p 17.5p ========= ======= ====== ====== CONSOLIDATED STATEMENT OF FINANCIAL POSITION REGISTERED NUMBER: 2451413 31 March 30 September Notes 2012 2011 GBP'000 GBP'000 ------------------------------------- ------ --------- ------------- Non-current assets Goodwill 303 303 Intangible assets 6 8,172 8,499 Property, plant and equipment 7 337 401 Interest in Associated Company 9 3,885 4,630 ------------------------------------- ------ --------- ------------- 12,697 13,833 ------------------------------------- ------ --------- ------------- Current assets Inventories 2,796 2,097 Trade and other receivables 10 4,149 5,133 Asset held for sale - 144 Cash and cash equivalents 592 847 ------------------------------------- ------ --------- ------------- 7,537 8,221 ------------------------------------- Total assets 20,234 22,054 ------------------------------------- ------ --------- ------------- Current liabilities Borrowings 11 (700) (700) Obligations under finance leases (17) (24) Current tax liability (280) (172) Trade and other payables 12 (2,076) (2,541) (3,073) (3,437) ------------------------------------- ------ --------- ------------- Non-current liabilities Borrowings 11 (524) (699) Obligations under finance leases (11) (18) Deferred tax 13 (1,963) (2,283) ------------------------------------- ------ --------- ------------- (2,498) (3,000) ------------------------------------- ------ --------- ------------- Total liabilities (5,571) (6,437) ------------------------------------- ------ --------- ------------- Net assets 14,663 15,617 ===================================== ====== ========= ============= Equity Share capital 910 910 Share premium account 295 295 Other reserves 1,582 1,674 Retained earnings 11,876 12,738 Total equity 14,663 15,617 ===================================== ====== ========= =============
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Share Share Capital Merger Special Exchange Retained Total capital premium redemption reserve reserve movement earnings equity account account reserve reserve GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 ---------------------------------- -------- -------- ----------- -------- -------- --------- --------- ------- At 30 September 2010 2,179 331 - - - - (1,026) 1,484 Capital reconstruction (2,034) - 2,034 - - - - - Issue of new ordinary shares 504 7,057 - - - - - 7,561 Share issue costs - (447) - - - - - (447) Total recognised income for the period - - - - - - 1,042 1,042 ---------------------------------- -------- -------- ----------- -------- -------- --------- --------- ------- At 31 March 2011 649 6,941 2,034 - - - 16 9,640 Issue of new ordinary shares 261 3,377 - 1,457 - - - 5,095 Share issue costs - (153) - - - - - (153) Cancellation of share premium account and capital redemption reserve - (9,870) (2,034) - 59 - 11,845 - Exchange movement on translation of foreign operations - - - - - 158 - 158 Profit after tax for the period - - - - - - 1,007 1,007 Dividends paid in the period - - - - - - (130) (130) ---------------------------------- -------- -------- ----------- -------- -------- --------- --------- ------- At 30 September 2011 910 295 - 1,457 59 158 12,738 15,617 Exchange movement on translation of foreign operations - - - - - (92) - (92) Share based payments - - - - - - 14 14 Loss after tax for the period - - - - - - (876) (876) At 31 March 2012 910 295 - 1,457* 59* 66* 11,876 14,663 ================================== ======== ======== =========== ======== ======== ========= ========= =======
* = Disclosed as Other reserves totalling GBP1,582,000 in the consolidated statement of financial position at 31 March 2012
CONSOLIDATED STATEMENT OF CASH FLOWS
Six months Six months Year ended ended 31 ended 31 30 September March 2012 March 2011 2011 Note GBP'000 GBP'000 GBP'000 ------------------------------------- ------ ------------ ------------ -------------- Profit / (loss) for the period (876) 1,042 2,049 Adjustments: Finance expense 26 23 65 Finance income (1) (5) (15) Tax expense (211) 101 172 Negative goodwill - (1,351) (2,460) Amortisation of intangible assets 529 - 794 Share of results of Associated Company 653 - 115 Exchange movements on consolidation - - (2) Movement in fair value of interest rate swaps - (17) (34) Loss on sale of assets held 35 - - for resale Depreciation of property, plant and equipment 94 25 113 --------------------------------------------- ------------ ------------ -------------- Cash flows generated from/(used in)operations before changes in working capital 249 (182) 797 (Increase) / Decrease in inventory (700) 387 (441) Decrease / (increase) in trade and other receivables 1,166 2,631 (411) Decrease in trade and other payables (451) (590) (750) --------------------------------------------- ------------ ------------ -------------- Cash generated from/(used in) operations 264 2,246 (805) Interest received 1 5 15 Interest paid (26) (23) (65) Tax paid - (172) (336) --------------------------------------------- ------------ ------------ -------------- Net cash from / (used) in operating activities 239 2,056 (1,191) --------------------------------------------- ------------ ------------ -------------- Cashflows from investing activities Investment in product development (202) - (190) Acquisition of Manroy Systems Limited - (1,500) (1,500) Acquisition of business and assets of AEI - - (250) Acquisition of 49% interest in Manroy USA - - (1,670) Loans made to Manroy USA (182) - (816) Cash acquired on purchase of Manroy Systems and AEI - 1,874 1,971 Proceeds from sale of assets 109 - - held for sale Purchase of property, plant and equipment (30) (102) (224) --------------------------------------------- ------------ ------------ -------------- Net cash (used) / generated in investing activities (305) 272 (2,679) --------------------------------------------- ------------ ------------ -------------- Cashflows from financing activities Issue of new ordinary shares - 6,000 9,000 Costs incurred on issue of shares - (447) (602) Purchase of own shares - - - Repayment of finance leases (14) (12) (35) Dividends paid - - (130) Repayments of bank loans (175) (167) (223) Repayment of shareholder and other loans - (4,716) (4,716) Net cash generated (used in) / from financing activities (189) 658 3,294 --------------------------------------------- ------------ ------------ -------------- Net cash and cash equivalents (used) / generated in period (255) 2,986 (576) Opening cash and cash equivalents 847 1,423 1,423 Closing cash and cash equivalents 592 4,409 847 --------------------------------------------- ------------ ------------ --------------
Notes to the consolidated financial statements
1. Statement of accounting policies
Basis of preparation
Manroy Plc is a company incorporated and domiciled in the United Kingdom. The address of the Company's registered office is 6 Lakeside Business Park, Swan Lane, Sandhurst, Berkshire GU47 9DN. The consolidated half yearly financial report of the Company for the six months ended 31 March 2012 comprises the Company and the subsidiaries (together referred to as the "Group"). The half yearly financial report has been prepared in accordance with International Financial Reporting Standards as adopted by the EU ("Adopted IFRS").
The results have been prepared on the basis of the accounting policies adopted in the financial statements of Manroy Plc for the year ended 30 September 2011.These policies have been applied consistently in all material respects in the preparation of these results unless otherwise stated. The half yearly financial report has been prepared on a going concern basis and on a historical cost basis as modified by the valuation of certain assets and liabilities. This half yearly financial report is presented in UK Sterling, which is the Company's functional currency. All financial information has been rounded to the nearest thousand pounds.
2. Segmental information
The information used by the Board for the purpose of resource allocation and assessment of segment performance undertaken by the Group relates to the Group's core activity of the supply of guns and spares. There is only one asset based overseas, being the Group's net interest in its Associated Company, Manroy USA. The Group's revenue for the six months ended 31 March 2012 is summarised below:
Region Six months Six months Year ended ended ended 30 31 March 31 March September 2012 2011 2011 GBP'000 % GBP'000 % GBP'000 % United Kingdom 2,499 79 2,463 82 4,368 57 Europe 535 17 486 16 1,405 18 North America 43 1 49 2 43 1 South America 49 2 - - - - Asia and Australasia 18 1 2 - 1,865 24 3,144 100 3,000 100 7,681 100 ====================== =========== ==== =========== ==== =========== ====
3. Tax credit / (expense)
Six months Six months Year ended ended ended 30 September 31 March 31 March 2011 2012 2011 GBP'000 GBP'000 GBP'000 Current tax charge (109) (101) (383) Deferred tax credit (note 13) 320 - 211 --------------------------- ----------- ----------- -------------- Tax credit / (expense) for the period 211 (101) (172) =========================== =========== =========== ==============
4. Dividends
A final dividend of 1p per share in addition to the interim dividend of 1p per share already paid was approved at the Annual General Meeting on 4 April 2012 and paid to shareholders ranking for the dividend on 11 April 2012. An interim dividend in respect of the six months ended 31 March 2012 is not being paid.
5. Earnings per share
The earnings per share figures have been calculated as follows
Six months Six months Year ended ended ended 30 September 31 March 31 March 2011 2012 2011 Basic earnings per share Profit/(loss) per Consolidated Income Statement GBP'000 (876) 1,042 2,049 Weighted average number of shares in issue during the year '000 18,194 8,334 11,389 Earnings/(loss) per share Pence (4.8) 12.5 18.0 ========================== ========= =========== =========== ============== Diluted earnings per share Profit/(loss) per Consolidated Income Statement GBP'000 (876) 1,042 2,049 Diluted weighted average number of shares in issue during year '000 18,735 8,611 11,711 Diluted earnings/(loss) per share Pence (4.7) 12.1 17.5 ========================== ========= =========== =========== ==============
6. Intangible assets
Customer Developed Product Total Trademarks relationships technology development GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 Cost or valuation At 30 September - - - - - 2010 Manroy Systems acquisition 548 6,871 1,684 - 9,103 Additions in the year - - - 190 190 -------------------------- ------------ --------------- ------------ ------------- -------- At 30 September 2011 548 6,871 1,684 190 9,293 Additions in the period - - - 202 202 -------------------------- ------------ --------------- ------------ ------------- -------- At 31 March 2012 548 6,871 1,684 392 9,495 -------------------------- ------------ --------------- ------------ ------------- -------- Accumulated amortisation At 30 September - - - - - 2010 Charge for the year 68 515 211 - 794 -------------------------- ------------ --------------- ------------ ------------- -------- At 30 September 2011 68 515 211 - 794 Charge for the period 46 343 140 - 529 -------------------------- ------------ --------------- ------------ ------------- -------- At 31 March 2012 114 858 351 - 1,323 -------------------------- ------------ --------------- ------------ ------------- -------- Net book value at 31 March 2012 434 6,013 1,333 392 8,172 ========================== ============ =============== ============ ============= ======== Net book value at 30 September 2011 480 6,356 1,473 190 8,499 ========================== ============ =============== ============ ============= ========
7. Property, plant and equipment
Leasehold improvements Plant and equipment Motor vehicles Total GBP'000 GBP'000 GBP'000 GBP'000 Cost At 30 September 2011 123 370 21 514 Additions at cost 2 28 - 30 At 31 March 2012 125 398 21 544 Accumulated depreciation At 30 September 2011 10 99 4 113 Charge for the period 12 81 1 94 ------------------------------------- ----------------------- -------------------- --------------- -------- At 31 March 2012 22 180 5 207 ------------------------------------- ----------------------- -------------------- --------------- -------- Net book value at 31 March 2012 103 218 16 337 ===================================== ======================= ==================== =============== ======== Net book value at 30 September 2011 113 271 17 401 ===================================== ======================= ==================== =============== ========
8. Summary Income Statement of Associated Company, Manroy USA
Six months ended *Two months from 31 March 2012 acquisition to 30 September 2011 GBP'000 GBP'000 Revenue 628 323 Cost of operations (392) (180) Gross profit 236 143 Administrative expenses (942) (274) Depreciation (165) (49) Amortisation of intangibles (161) (53) Costs associated with relocation (268) - Results from operating activities (1,300) (233) Net finance expense (32) (2) Loss before taxation (1,332) (235) Taxation - - -------------------------------------- ----------------- ----------------- Loss after taxation for the period (1,332) (235) ====================================== ================= ================= Loss of Associate Company recognised in Statement of Comprehensive Income - 49% Group share (653) (115) ====================================== ================= =================
*MUSA was acquired by the Group on 17 August 2011.
9. Investment in Associated Company
Six months *Two months ended from acquisition 31 March 2012 to 30 September 2011 GBP'000 GBP'000 Investment at start of period 4,630 - Share of assets at acquisition on 17 August 2011 - 4,586 Share of loss for the period (note 8) (653) (115) Exchange movements on translation at period end (note 14) (92) 159 3,885 4,630 ==================================== =============== ==================
*MUSA was acquired by the Group on 17 August 2011.
10. Trade and other receivables
31 March 2012 30 September 2011 GBP'000 GBP'000 Trade receivables 2,280 3,441 Loan to Associated Company 998 816 Other receivables 176 204 Prepayments and accrued income 695 672 -------------------------------- -------------- ------------- 4,149 5,133 ================================ ============== =============
11. Bank loan
31 March 2012 30 September 2011 GBP'000 GBP'000 Current Due within one year or on demand (Secured) 700 700 Non-current Repayable within two to five years (Secured) 524 699 1,224 1,399 ==================================== ============== =============
A two year bank loan of GBP1.4 million was drawn down on 30 September 2011, with repayments of GBP58,000 per month and an interest rate of 2.5 per cent per annum above LIBOR. The loan is secured by a debenture supported by fixed and floating charges over the assets of Manroy Engineering Limited and an unsecured guarantee from Manroy Plc.
12. Trade and other payables
31 March 2012 30 September 2011 GBP'000 GBP'000 Trade payables 1,162 1,624 Other tax and social security 344 72 Derivative financial instruments - - Accruals and deferred income 570 845 ---------------------------------- -------------- ------------- 2,076 2,541 ================================== ============== =============
Within accruals is GBP247,000 (GBP291,000: 30 September 2011 provided for deferred payments onthe acquisition of AEI, provided at the higher of 7 per cent. of AEI related forecast revenue and 50 per cent. of profit after tax forecast to be generated from the acquired assets of the AEI business. The earn-out provided is based on forecast levels of AEI-related revenue, is only payable until April 2013, and is funded from the profits of the AEI business acquired.
13. Deferred tax
The movement on the deferred tax liability arose as follows:
Six months ended Year ended 31 March 2012 30 September 2011 GBP'000 GBP'000 At beginning of the period 2,283 - Arising on intangible assets acquired in Manroy Systems - 2,375 Arising on intangible assets acquired in Manroy USA - 119 2,283 2,494 Credited to tax charge in Statement of Comprehensive Income (note 3) (320) (211) 1,963 2,283 ======================================= ================= ==============
Deferred tax was provided on acquisition of the Group's interests in Manroy Systems and Manroy USA because amortisation of intangible assets is non-deductible for corporation tax purposes. The deferred tax of GBP2,494,000 recorded at acquisition is re-assessed at prevailing rates of tax at each period end and amortised against the Group's corporation tax charge in parallel to the amortisation of the intangible assets acquired.
14. Exchange reserve
Six months ended Year ended 31 March 2012 30 September 2011 GBP'000 GBP'000 Balance at beginning of period 158 - Exchange movement on translation of investment in Associated Company (92) 158 66 158 ========================================= ================= ==============
15. Related party transactions
On 3 December 2010, the Company entered into the Relationship Agreement with Glyn Bottomley, Caledonian Heritable Limited and Surinder Rajput (the "Concert Party Members"). Under this agreement, the Concert Party Members undertook to the Company to use their reasonable endeavours to ensure that the Group is able at all times to carry on its business independently and that any transactions between any of them with the Group are on an arm's length basis and on normal commercial terms. The Relationship Agreement will continue in force for so long as the Ordinary Shares are admitted to trading on AIM and the Concert Party Members are deemed to control the Group under the terms of the City Code or the Articles of Association of the Company.
On 3 December 2010, the Company entered into Lock-In and Orderly Market Agreements with the Concert Party Members. Under these agreements, the Concert Party Members each agreed not to offer, dispose of, or agree to offer or otherwise dispose of directly or indirectly, conditionally or unconditionally, whether for consideration or not, any of the Company's Shares in which they are legally or beneficially entitled to until 23 December 2011 (the "Restricted Period") which period has now expired. Each of the Concert Party Members also agreed under the Lock-In and Orderly Market Agreements that for a period of one year following expiry of the Restricted Period, they will not dispose of more than half of their respective shareholdings in the Company. Any dealing in this subsequent period is subject to the Company's code of dealing, the consent of the Company and the consent of the Company's Nominated Adviser, and any disposals can only be only made through the Company's brokers. No such dealings have been undertaken by any Concert Party Member between the date of the agreements and the date of this half yearly financial report.
On 1 April 2011, the Company acquired the business and assets of AEI, a company owned equally by Glyn Bottomley and Caledonian Heritable Limited for GBP250,000, payable in cash, together with an earn out at the lower of 7 per cent. of AEI related revenue and 50 per cent. of profit after tax generated from the acquired assets of the AEI business, payable for two years from the date of acquisition. If actual revenue generated matches forecast revenue then the full deferred consideration payable will be covered by the provisions already made. If revenues fall below expected revenues then the residual balance of deferred consideration would be credited the Statement of Comprehensive Income at the end of the two year period. If the revenues exceed expected revenues, then higher profit levels would have been generated and the additional deferred consideration in excess of the deferred consideration provided would be charged to the Statement of Comprehensive Income against the higher profit levels as they arise. During the six months ended 31 March 2012 the Group paid GBP44,000 (31 March 2010 GBPNil; year ended 30 September 2011 GBPNil) in total to Glyn Bottomley and Caledonian Heritable Limited as vendors of AEI under the terms of this agreement and the deferred consideration accrued was correspondingly reduced by this amount. During the six months ended 31 March 2012 the Group incurred costs of sale of GBPNil (31 March 2010 GBPNil; year ended 30 September 2011 GBP38,000) and earned management fee income of GBPNil (31 March 2010 GBP24,000; year ended 30 September 2011 GBP24,000 (shown within royalties and other income) from AEI, arising from a management services agreement between Manroy and AEI which was cancelled at no cost to the Group on the acquisition of the business and assets of AEI by the Company.
During the six months ended 31 March 2012, the Group accrued revenues consultancy fees of GBPNil and paid marketing, in country customer trials, testing and development fees of GBP284,000 (31 March 2011 GBPNil; year ended 30 September 2011 GBP279,000) to Surinder Rajput a Concert Party Member, relating to export revenues generated and development of GPMG and customer export opportunities during the period.
Apart from these contracts and the service contracts and letters of engagement between the Directors and the Company, no contract existed during the six months ended 31 March 2012 in relation to the Group's business in which any Director was interested.
16. Financial statements and half-yearly financial report
The financial information set out in this half-yearly financial report in relation to Manroy Plc includes information for the six months ended 31 March 2012, with comparative information for the six months ended 31 March 2011 and the year ended 30 September 2011. The financial information contained within this half-yearly financial report is unaudited and has not been reviewed by the Company's auditors. Statutory financial statements for the year ended 30 September 2011 for the companies forming the Manroy Plc group have been delivered to the Registrar of Companies. The auditors have reported on those financial statements; their reports were unqualified and they did not contain statements under Section 498(2) or (3) of the Companies Act 2006.
An electronic copy of this half-yearly financial report is available on the Company's website at http://www.manroyplc.com. The audited financial statements for the year ended 30 September 2011, further copies of this half-yearly financial report and the half-yearly financial report for the six months ended 31 March 2011, are available from the Finance Director at the registered office of the Company, 6 Lakeside Business Park, Swan Lane, Sandhurst, Berkshire GU47 9DN.
GLOSSARY OF TERMS AND DEFINITIONS
In these financial statements, unless the context otherwise requires or provides, the expressions set out below bear the following meanings:
"AEI" AEI Land Systems Limited, a company controlled by Glyn Bottomley and Caledonian Heritable Limited and whose business and assets were acquired by the Company in 2011.
"Board" or "Directors" the directors of Manroy Plc, all of whose names are available at www.manroy.com
"BFS" Blank Firing System for the HMG
"Companies Act" the Companies Act 2006, as amended from time to time
"Company" or "Manroy" Manroy Plc
"Concert Party" Glyn Bottomley, Caledonian Heritable Limited, Paul Carter, and Surinder Rajput (each of them being "a member of the Concert Party"), all of whom are regarded for the purposes of the City Code as acting in concert (as defined in the City Code)
"EBS" Electronic Boresight System
"FAA" First Article Acceptance is to give objective evidence that all engineering, design and specification requirements are correctly understood, accounted for, verified, and recorded. The purpose of this standard is to provide a consistent documentation requirement for components.
"Group" the Company and its subsidiaries at the date of this document
"GPMG General Purpose Machine Gun
"LIBOR" The rate at which each bank submits must be formed from that bank's perception of its cost of funds in the interbank market
"HMG" 12.7mm M2 Heavy Machine Gun, Manroy's principal revenue generating product
"Manroy USA" or "MUSA" Manroy USA LLC, a partnership incorporated in the United States of America, with 510 units of membership owned by John Buckner and 490 units of membership owned by the Group
"MoD" the UK Ministry of Defence
"Novation" the act of either replacing an obligation to perform with a new obligation, or replacing a party to an agreement with a new party.
"Ordinary Shares" or "Shares" ordinary shares of 5 pence each in the capital of the Company
"Sabre" Sabre Defense Industries LLC and Sabre Defense Holdings LLC, the business and assets of which were acquired by MUSA in 2011
"Shareholders" persons who are registered holders of Ordinary Shares from time to time
"US DoD" United States Department of Defense
This information is provided by RNS
The company news service from the London Stock Exchange
END
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