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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 : 8450F
Manroy PLC
30 May 2013
Manroy Plc
Announcement of results for the six months ended 31 March 2013
Manroy Plc ("Manroy" or the "Group") (AIM: MAN), the AIM quoted UK defence contractor, announces its unaudited half yearly financial report for the six months ended 31 March 2013.
Operational Highlights
Manroy
-- Record order book for UK operations at GBP15.8m (31 March 2012: GBP6.9m), after further sales during March 2013. Order book to be fulfilled in remainder of this financial year and 2013/2014, in accordance with normal regulatory approvals
-- Over 300 GPMGs on order -- Acquisition of trade and assets of Base Enamellers for GBP800,000
Manroy USA (MUSA)
-- Order book stands at US$13.2m (GBP8.7m) -- First Article Acceptance progressing with completion of M16 stage -- Completion of relocation
Financial
-- Revenue of GBP4.1m (six months to 31 March 2012: GBP3.4m) with revenues for whole year weighted towards second half.
-- Restructured bank facilities
-- Adjusted diluted loss per share of 0.2p compared with loss per share of 0.7p in comparable period in 2012
Andrew Blurton, Chairman of Manroy, commented: "As a result of the implementation of our business development plan over the last two years, Manroy is gaining momentum with a record order book, achievement of cost savings, a larger product range and a more diversified customer base. The Board considers that the Group is in a good position to achieve its long term strategic objectives".
For further information please contact:
Manroy Plc Tel 01252 874177
Glyn Bottomley, Chief Executive
Paul Carter, Finance Director
Allenby Capital Tel: 020 3328 5656
Mark Connelly
Alex Price
Bankside Consultants Tel: 020 7367 8888
Richard Pearson
Simon Rothschild
Notes to Editors:
1. Manroy is a UK based defence contractor specialising in the supply of weapon systems for land, air and maritime applications.
2. A key Ministry of Defence supplier for 26 years, Manroy designs, manufactures, supplies and supports:
-- the 12.7mm M2 Heavy Machine Gun ("HMG"), also known as the 0.50" calibre HMG; -- the 7.62mm General Purpose Machine Gun ("GPMG"); -- HMG Quick Change Barrel kits; -- a range of turret products for armoured fighting vehicles; -- weapon tripods and weapon mounting systems
3. Production of the HMG, along with support and spares is Manroy's core area of operation. In recent years Manroy has increasingly focused on the export market and diversification of its customer base into new territories.
4. Manroy owns 49% of North Carolina based Manroy USA ("MUSA"), a defence supplier to both military and civilian agencies.
5. MUSA manufactures a range of weapons systems and ancillary products, including: -- The M2 HMG -- M2 HMG Quick Change Barrel kits -- Barrel manufacturing for both the military and commercial markets -- M16 and M4 military rifles -- Electronic boresights -- Mounting systems -- Commercial rifles and parts
6. MUSA's acquisition of the business and assets of Sabre Industries in March 2011 enhanced its penetration of the US market.
7. In April 2012, $10.4m (GBP6.6m) of Sabre's contracts with the US Department of Defense were successfully novated to MUSA.
The Group adheres strictly to UK legislation concerning the sale of weapons to foreign countries. Manroy's overseas sales are undertaken in adherence to UK Government regulations and approvals. Such sales are only undertaken after all appropriate UK Government licenses have been granted.
Chairman's Statement
Introduction
During the six months ended 31 March 2013, Manroy was awarded several major new contracts for our operations in the United Kingdom and to our associated company in the United States. These orders took the value of the Group's order book to GBP24.5 million, a record level, and significant progress was made in breaking into new export markets. In addition, the acquisition of the business and assets of Base Enamellers Ltd and RJL Engineering ("Base") at the end of February 2013 is already beginning to feed through to the Group's business, resulting in cost savings as well as providing additional revenue from new customers to the Group.
Results
In the six months ended 31 March 2013, Manroy generated total revenues of GBP4.1 million compared with GBP3.4 million in the same period last year, an increase of 21 per cent. After amortisation of intangible assets of GBP529,000 and the Group's share of losses at Manroy USA LLC ("MUSA") of GBP468,000, the six month period resulted in a loss after tax of GBP723,000 (March 2012: loss of GBP876,000) and a fully diluted adjusted loss per share of 0.2p compared with a fully diluted adjusted loss per share of 0.7p in March 2012.
In March 2013, we announced receipt of new orders totalling GBP8.7 million from existing customers within Asia, Europe and the UK which are expected to be manufactured and delivered during the second half of this year and the first half of 2013/2014. The Group's UK order book now stands at GBP15.8 million after sales made during March 2013, which is well ahead of the GBP6.9 million order book this time last year. We anticipate that fulfilment of these orders, in accordance with normal regulatory approvals, will have a positive impact on the second half of the financial year.
Operations
As we have indicated previously, we believe that 2013 is a transitional year for Manroy because of some key changes and targets to the business that have been achieved.
Following the acquisition of Base in February 2013 the Group now has a high-end manufacturing capability which is being integrated into the business. This is a change in capability and culture for Manroy and therefore at the same time as managing this change we are also working on developing the additional business lines that the Base business has brought. We are also focusing on cost saving opportunities within our existing product and manufacturing lines.
For Manroy's UK operations, increasing our export business has been a prime objective and we are now starting to see the results of over two years' of overseas business development work. In the last six months we have added a further six new export customers to the 17 won in the previous financial year, over half of which have been won from competitors.
Our current UK order book of GBP15.8 million consists of 79% export orders and 21% UK. This swing in geographical spread of income compares with 90% of revenue from the UK MoD in 2010. Whilst hugely encouraging for the business, this change also brings with it the added complications associated with exporting products overseas, such as the complexity of receipt of payments and timing of export license approvals, financing and overseas product support. The level and origin of present enquiries provides good evidence that this trend is set to increase both this year and in the coming years, specifically within Asia and Far East regions and this is very encouraging for our future growth and value.
Two new products have been added to the Group portfolio. We are about to commence significant production levels of the General Purpose Machine Gun ("GPMG") with confirmed orders for approximately 300 units. We have also received many enquiries for the new GPMG and the Board expects this to be a valuable area of growth for the business. Our Scorpio turret is currently being put through the next stages of development and testing and is expected to undergo customer trials later this calendar year. The opportunities for the turret are more longer term, with orders not expected until at least the 2015 financial year, but this is an example of the value being created from the acquisition of AEI Land Systems Ltd in April 2011. In addition, we have also begun to see the benefits of introducing MUSA products into our UK export sales, with recent order wins.
As a result of the above activities, we have enhanced the organisation of the business structure, including the external appointment of a new Operations Director in February 2013. We have also organised the sales team to be region orientated to address the increase in export customers and we have redefined management responsibilities as part of the integration of Base into the enlarged Group.
The first half of this financial year been successful and the Board is encouraged that we are on course with our long term strategy to establish Manroy as a substantial and key European defence contractor and the 'best of breed' in our sector.
Acquisition of Base
At the end of February 2013, the Group acquired the business and assets of Base, a strategic supplier to the Group's GPMG manufacturing programme, for a cash consideration of GBP0.8 million. This has increased the Group's operational and manufacturing capability and has already resulted in synergistic savings and a lower cost of manufacture under the leadership of Damon Batstone who joined as Base's Managing Director at the time of its acquisition.
As well as supplying significant manufacturing elements of the GPMG production programme, Base has also supplied the Group with smaller production requirements, such as lightweight tow bars, lightweight tripods for the UK MoD and other weapon mounting solution products provided by the Group.
As important as the manufacturing elements, the acquisition also enhances our team of experienced engineers and people within the Group.
At the time of the acquisition, we also renegotiated the Group's banking facilities. The enhanced facilities provided the Group with a GBP2.1 million loan, repayable over three years and an increase in the Group's overdraft facility to GBP1.0 million.
The Board is pleased with the performance of Base in the short time in which it has been part of the Group.
MUSA
The Group's 49% owned associated company, MUSA, had an order book of US$13.2 million (GBP8.7 million) at the end of March 2013 and operates in what continues to be the largest defence market in the world. Manufacture and delivery is planned to commence during the second half of this current year and throughout the next financial year, although it's financial performance in 2012/2013 has been lower than planned due to certain operational restrictions.
Since the end of March 2013, the order book for MUSA has increased by a further US$7.5 million (GBP5.0 million) to $20.7 million (GBP13.7 million) which can be commenced once our UK operations complete the contractual and regulatory requirements for new orders announced in March 2013.
MUSA completed the final stages of its relocation in December 2012 which will reduce costs associated with relocation and travel between the historical sites of Scottsboro, AL and Nashville, TN.
Conclusion
As a result of the implementation of our business development plan over the last two years, Manroy is gaining momentum with record order books, achievements of cost savings, a larger product range and a more diversified customer base. The Board considers the Group is in a good position to achieve its long term strategic objectives.
Andrew Blurton
Chairman
30 May 2013
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 2013.
Revenue and market share
Analysis of trade revenue during six months ended 31 March 2013
Region Six months Six months Year ended ended ended 30 31 March 31 March September 2013 2012 2012 GBP'000 % GBP'000 % GBP'000 % United Kingdom 730 18 2,499 79 5,002 72 Europe 786 20 535 17 1,726 25 North America 43 1 43 1 136 2 South America - - 49 2 49 1 Africa 117 3 - - - - Asia and Australasia 2,347 58 18 1 19 - ---------------------- ----------- ---- ----------- ---- ----------- ---- Total trade revenue 4,023 100 3,144 100 6,932 100 Royalty income 109 255 460 ---------------------- ----------- ---- ----------- ---- ----------- ---- Total revenue 4,132 3,399 7,392 ====================== =========== ==== =========== ==== =========== ====
In March 2013, Manroy announced receipt of new orders totalling GBP8.7 million from existing customers within Asia, Europe and the UK which, subject to license approval, are expected to be manufactured and delivered during the second half of the year and the first half of 2013/2014. Included within these orders was the award of a major order for GBP7.6 million from an existing customer in Asia. This GBP7.6 million contract, which is subject to normal license approval, also involves the placing of an intra-group order to Manroy USA for approximately GBP5.0 million. Once delivered, the Group will therefore also benefit from its share of the result from this GBP5.0 million order for MUSA through its share of the results of our associated company. These new contracts contributed to the UK Group's order book standing at GBP15.8 million at the end of March 2013 (GBP6.9 million at 31 March 2012).
In addition, following the completion of our acquisition of Base in February 2013, the Group will also benefit from key elements of these new orders being manufactured in-house.
The above table confirms our geographical spread of revenue away from the historical concentration on the UK market. The recent orders have enhanced this spread of geographical income delivering on one of the Board's key strategies for growth.
Regulation of licences for the export of weapons continues to be a complicated and controlling item in the delivery of revenue. This is actively managed by the Executive Directors to ensure that the financial effect of changing requirements, regulations and timeframes are minimised where they are within the Group's control but their timing does have a delaying factor on the timing of some of our revenue into subsequent periods.
Adjusted loss before non-recurring costs and amortisation of intangible assets
Six months Six months Year ended ended March ended March September 2013 2012 2012 Notes GBP'000 GBP'000 GBP'000 Trade revenues 2 4,023 3,144 6,932 Royalties and other income 109 255 460 -------------------------------------- -------- ------------- ------------- ----------- Total revenue 4,132 3,399 7,392 -------------------------------------- -------- ------------- ------------- ----------- Gross margin 1,246 1,259 2,440 -------------------------------------- -------- ------------- ------------- ----------- 30% 37% 33% Loss after tax (723) (876) (1,497) Adjustments to determine normalised UK earnings Negative goodwill on acquisition 7.1 (6) - - Amortisation of UK intangible assets 6 529 529 1,059 Group share of amortisation of US Intangible assets 78 79 157 Corporate acquisition costs 66 - - Group share of non-recurring costs associated with US relocation 19 131 280 Adjusted loss (37) (137) (1)
Acquisition of business and assets of Base
On 28 February 2013 the Group acquired the trade and assets of Base, a strategic supplier to the Group, for a total cash consideration of GBP750,000. The key attributes of this transaction included the addition of enhanced manufacturing capabilities to the Group and synergistic cost savings through the internal manufacture of the Group's mounts, tow-bars, tripods and a majority of key GPMG components. This was financed from restructured bank facilities which also provided the Group with additional working capital.
After an assessment by the Directors of the material assets acquired, the value of net assets was marginally in excess of the consideration paid and negative goodwill of GBP6,000 was credited to the income statement on acquisition.
Base is an established high precision engineering company located in Erith, Kent, where it offers a complete CNC milling and turning facility, complemented by highly capable and sophisticated paint spraying centres.
For the past two years, Base has been working with Manroy as a strategic supplier on significant manufacturing elements of the GPMG production programme. This partnership followed good manufacturing sub-contract support provided by Base on smaller production requirements, such as lightweight tow bars, lightweight tripods for the MoD and other weapon mounting solution products sold by the Group. Base brought with it key employees who possess expertise in both large scale production engineering and experience to complement GPMG production.
This acquisition has resulted in all manufacturing for the Group's mounts, tow-bars, tripods and a majority of key GPMG components now being manufactured within the Group, improving manufacturing controls and efficiencies and producing cost savings for the Group. In addition, Base has brought additional revenue and customers in the defence sector into the enlarged Group
Manroy USA
The results of MUSA for the six months ended 31 March 2013 are summarised as follows:
Six months Six months Year ended ended ended September 31 March 31 March 2012 2013 2012 GBP'000 GBP'000 GBP'000 Revenue 1,182 628 1,375 Cost of operations (786) (392) (1,028) Gross profit 396 236 347 Administrative expenses (806) (942) (881) Depreciation (177) (165) (327) Amortisation of intangibles (160) (161) (321) Costs associated with relocation (38) (268) (572) Loss from operating activities (785) (1,300) (1,754) Net finance expense (171) (32) (128) Loss before taxation (956) (1,332) (1,882) Taxation - - - -------------------------------------- ----------- ----------- ----------- Loss after taxation for the period (956) (1,332) (1,882) ====================================== =========== =========== =========== Loss of Associate Company recognised in Statement of Comprehensive Income - 49% Group share (468) (653) (922) ====================================== =========== =========== ===========
MUSA has improved upon its performance against March 2012 and held a $13.2 million (GBP8.7 million) order book at 31 March 2013, $9.5 million (GBP6.3 million) of which originates from the contracts novated from previous ownership. These contracts will be ready for production on completion of the FAA process and whilst this continues to take a significant period of time, the initial approvals have now been received.
Loss per share
The loss per share figures have been calculated as follows:-
Six months Six months Year ended ended ended 30 September 31 March 31 March 2012 2013 2012 Basic loss per share Loss per Consolidated Income Statement GBP'000 (723) (876) (1,497) Weighted average number of shares in issue during the period '000 19,044 18,194 18,222 Loss per share Pence (3.8) (4.8) (8.2) ============================ ========= =========== =========== ============== Diluted loss per share Loss per Consolidated Income Statement GBP'000 (723) (876) (1,497) Diluted weighted average number of shares in issue during period '000 19,579 18,735 18,762 Diluted loss per share Pence (3.7) (4.7) (8.0) ============================ ========= =========== =========== ============== Adjusted diluted loss per share Adjusted loss (note 3) GBP'000 (37) (137) (1) Diluted weighted average number of shares in issue during the period '000 19,579 18,735 18,762 Adjusted diluted loss per share Pence (0.2) (0.7) - ============================ ========= =========== =========== ==============
Cash flow
The consolidated statement of cashflows shows 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 ended 30 September 31 March 31 March 2012 2013 2012 GBP'000 GBP'000 GBP'000 Net cash (used) / from operating activities (1,480) 239 42 Net cash used in investing activities (915) (305) (368) Net cash from / (used in) financing activities 1,226 (189) (235) ----------------------------------- ----------- ----------- -------------- Net decrease in net cash and cash equivalents (1,169) (255) (561) Opening cash and cash equivalents 286 847 847 ----------------------------------- ----------- ----------- -------------- Closing net cash and cash equivalents (883) 592 286 =================================== =========== =========== ==============
During the six months to 31 March 2013, cash and cash equivalents reduced to an overdrawn position. This position was supported through the use of our improved bank facility. In April 2013, cash balances increased by GBP2.3 million following the collection of export sales made during the six months ended 31 March 2013.
Bank loan, facilities and cash
31 March 31 March 30 September 2013 2012 2012 GBP'000 GBP'000 GBP'000 Current Overdraft facilities (910) - - Bank loans (700) (700) (700) Finance leases (15) (17) (23) --------------------------- --------- --------- ------------- (1,625) (717) (723) --------------------------- --------- --------- ------------- Non - current Bank loans (1,417) (524) (180) Finance leases (72) (11) (26) (1,489) (535) (206) --------------------------- --------- --------- ------------- Total debt (3,114) (1,252) (929) --------------------------- --------- --------- ------------- Cash 27 592 286 Net debt (3,087) (660) (643) --------------------------- --------- --------- ------------- Gearing (Net debt divided by total equity) 22% 5% 4% =========================== ========= ========= =============
New bank facilities were completed as part of the acquisition of trade and assets of Base in February 2013. The new arrangements were for a GBP2.1 million term loan with quarterly repayments of GBP175,000 over three years, at an interest rate of 3.1% above LIBOR.
Summary
The first half of the year reflects a period of work in progress for the full year and we anticipate that revenue will increase in the second half of the year supported by our GBP24.5 million order book.
P. J. Carter
Finance Director
30 May 2012
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Six months Six months Year ended Notes ended ended 30 September 31 March 31 March 2012 2013 2012 GBP'000 GBP'000 GBP'000 Revenue Trade revenues 2 4,023 3,144 6,932 Royalties and other income 2 109 255 460 ------------------------------------- -------- ----------- ----------- -------------- Total revenue 4,132 3,399 7,392 Cost of operations (2,886) (2,140) (4,952) Gross profit 1,246 1,259 2,440 Administrative expenses (1,051) (1,139) (2,488) Corporate acquisition costs (66) - - Negative goodwill 7.1 6 - - Amortisation of intangible assets 6 (529) (529) (1,059) Results from operating activities (394) (409) (1,107) Finance income 54 1 2 Finance expense (8) (26) (51) Loss before results from Associated Company (348) (434) (1,156) Share of results of Associated Company 10 (468) (653) (922) Loss before tax (816) (1,087) (2,078) Tax credit 4 93 211 581 Loss after tax (723) (876) (1,497) Exchange movement on translation of investment in Associated Company 14 39 (92) (49) ------------------------------------- -------- ----------- ----------- -------------- Total comprehensive loss for the period (684) (968) (1,546) ===================================== ======== =========== =========== ==============
Loss per share
Basic 5 (3.8p) (4.8p) (8.2p) Diluted 5 (3.7p) (4.7p) (8.0p) Adjusted diluted 5 (0.2p) (0.7p) -p ================== ======= ======= ======= CONSOLIDATED STATEMENT OF FINANCIAL POSITION REGISTERED NUMBER: 2451413 31 March 31 March 30 September Notes 2013 2012 2012 GBP'000 GBP'000 GBP'000 -------------------------------- ------ --------- --------- ------------- Non-current assets Goodwill 303 303 303 Intangible assets 6 7,408 8,172 7,797 Property, plant and equipment 8 791 337 374 Interest in Associated Company 9 3,321 3,885 3,580 -------------------------------- ------ --------- --------- ------------- 11,823 12,697 12,054 -------------------------------- ------ --------- --------- ------------- Current assets Inventories 3,506 2,796 3,102 Trade and other receivables 11 5,792 4,149 4,203 Corporation tax receivable 56 - 56 Cash and cash equivalents 27 592 286 -------------------------------- ------ --------- --------- ------------- 9,381 7,537 7,647 -------------------------------- Total assets 21,204 20,234 19,701 -------------------------------- ------ --------- --------- ------------- Current liabilities Borrowings 12 (1,610) (700) (700) Obligations under finance leases 12 (15) (17) (23) Current tax liability (59) (280) (26) Trade and other payables (2,655) (2,076) (2,567) (4,339) (3,073) (3,316) -------------------------------- ------ --------- --------- ------------- Non-current liabilities Borrowings 12 (1,417) (524) (180) Obligations under finance leases 12 (72) (11) (26) Deferred tax 13 (1,650) (1,963) (1,777) -------------------------------- ------ --------- --------- ------------- (3,139) (2,498) (1,983) -------------------------------- ------ --------- --------- ------------- Total liabilities (7,478) (5,571) (5,299) -------------------------------- ------ --------- --------- ------------- Net assets 13,726 14,663 14,402 ================================ ====== ========= ========= ============= Equity Share capital 952 910 952 Share premium account 704 295 704 Other reserves 1,606 1,582 1,572 Retained earnings 10,464 11,876 11,174 Total equity 13,726 14,663 14,402 ================================ ====== ========= ========= =============
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 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 New share issues in the period 42 442 - - - - - 484 Share issue costs - (33) - - - - - (33) Exchange movement on translation of foreign operations - - - - - 43 - 43 Transfer from special reserve to retained earnings - - - - (53) - 53 - Share based payments - - - - - - 1 1 Loss after tax for the period - - - - - - (621) (621) Dividends paid in the year - - - - - - (135) (135) ---------------------------------- -------- -------- ----------- -------- -------- --------- --------- ------- At 30 September 2012 952 704 - 1,457 6 109 11,174 14,402 Exchange movement on translation of foreign operations (Note 14) - - - - - 39 - 39 Share based payments - - - - - - 8 8 Transfer from special reserve to retained earnings (5) - 5 - Loss after tax for the period - - - - - - (723) (723) ---------------------------------- -------- -------- ----------- -------- -------- --------- --------- ------- At 31 March 2013 952 704 - 1,457* 1* 148* 10,464 13,726 ================================== ======== ======== =========== ======== ======== ========= ========= =======
* = Disclosed as Other reserves totalling GBP1,606,000 in the consolidated statement of financial position at 31 March 2013
CONSOLIDATED STATEMENT OF CASH FLOWS
Six months Six months Year ended ended 31 ended 31 30 September March 2013 March 2012 2012 GBP'000 GBP'000 GBP'000 ------------------------------------- ------------ ------------ -------------- Loss after tax for the period (723) (876) (1,497) Adjustments: Finance expense 8 26 51 Finance income (54) (1) (2) Tax expense (93) (211) (581) Negative goodwill (6) - - Amortisation of intangible assets 529 529 1,059 Share of results of Associated Company 468 653 922 Exchange movements on consolidation (170) - 79 Share option charge 8 - 15 Loss on sale of assets held for resale - 35 32 Loss on disposal of fixed assets - - 6 Depreciation of property, plant and equipment 92 94 184 ------------------------------------- ------------ ------------ -------------- Cash flows generated from operations before changes in working capital 59 249 268 Increase in inventory (83) (700) (1,005) Change in trade and other receivables (1,589) 1,166 930 Change in trade and other payables 88 (451) 26 ------------------------------------- ------------ ------------ -------------- Cash generated from (used in)/ operations (1,525) 264 219 Interest received 54 1 2 Interest paid (8) (26) (51) Tax paid (1) - (128) ------------------------------------- ------------ ------------ -------------- Net cash from / (used in) operating activities (1,480) 239 42 ------------------------------------- ------------ ------------ -------------- Cashflows from investing activities Investment in product development (140) (202) (357) Loans made to Manroy USA - (182) - Proceeds from sale of assets held for sale - 109 112 Acquisition of business (750) - - and assets of Base Proceeds from sale of tangible assets - - 16 Purchase of property, plant and equipment (25) (30) (139) ------------------------------------- ------------ ------------ -------------- Net cash used in investing activities (915) (305) (368) ------------------------------------- ------------ ------------ -------------- Cashflows from financing activities Issue of new ordinary shares - - 484 Costs incurred on issue of shares - - (33) Repayment of finance leases (11) (14) (33) Dividends paid - - (135) Repayments of bank loans (863) (175) (518) New bank loans drawn 2,100 - - Net cash generated from/ (used in) financing activities 1,226 (189) (235) ------------------------------------- ------------ ------------ -------------- Net cash and cash equivalents used in period (1,169) (255) (561) Opening cash and cash equivalents 286 847 847 Closing net cash and cash equivalents (883) 592 286 ------------------------------------- ------------ ------------ -------------- Cash at bank and in hand 27 592 286 Bank overdrafts (910) - - --------------------------- ------ ---- ---- Closing net cash and cash equivalents (883) 592 286 --------------------------- ------ ---- ----
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 2013 comprises the results of the Company and its 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 2012.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 a defence contractor. There is only one asset based overseas, being the Group's net interest in its Associated Company, MUSA. The Group's revenue for the six months ended 31 March 2013 is summarised below:
Region Six months Six months Year ended ended ended 30 31 March 31 March September 2013 2012 2012 GBP'000 % GBP'000 % GBP'000 % United Kingdom 730 18 2,499 79 5,002 72 Europe 786 20 535 17 1,726 25 North America 43 1 43 1 136 2 South America - - 49 2 49 1 Africa 117 3 - - - - Asia and Australasia 2,347 58 18 1 19 - ---------------------- ----------- ---- ----------- ---- ----------- ---- Total trade revenue 4,023 100 3,144 100 6,932 100 Royalty income 109 255 460 ---------------------- ----------- ---- ----------- ---- ----------- ---- Total revenue 4,132 3,399 7,392 ====================== =========== ==== =========== ==== =========== ====
3. Adjusted loss before non-recurring costs and amortisation of intangible assets
Six months Six months Year ended ended March ended March September 2013 2012 2012 GBP'000 GBP'000 GBP'000 Trade revenues 4,023 3,144 6,932 Royalties and other income 109 255 460 ---------------------------------- ------------- ------------- ----------- Total revenue 4,132 3,399 7,392 ---------------------------------- ------------- ------------- ----------- Gross margin 1,246 1,259 2,440 ---------------------------------- ------------- ------------- ----------- 30% 37% 33% Loss after tax (723) (876) (1,497) Adjustments to determine normalised UK earnings Negative goodwill on acquisition (6) - - Amortisation of UK intangible assets 529 529 1,059 Group share of amortisation of US Intangible assets 78 79 157 Corporate acquisition costs 66 - - Group share of non-recurring costs associated with US relocation 19 131 280 Adjusted loss (37) (137) (1) ================================== ============= ============= ===========
4. Tax credit
Six months Six months Year ended ended ended 30 September 31 March 31 March 2012 2013 2012 GBP'000 GBP'000 GBP'000 Corporation tax Current tax charge (34) (109) (26) Prior year adjustment credit: - - 100 (34) (109) 74 Deferred tax credit (note 13) 127 320 507 ------------------------------- ----------- ----------- -------------- Tax credit for the period 93 211 581 =============================== =========== =========== ==============
5. Loss per share
The loss per share figures have been calculated as follows
Six months Six months Year ended ended ended 30 September 31 March 31 March 2012 2013 2012 Basic earnings per share Loss per Consolidated Income Statement GBP'000 (723) (876) (1,497) Weighted average number of shares in issue during the period '000 19,044 18,194 18,222 Loss per share Pence (3.8) (4.8) (8.2) ========================= ========= =========== =========== ============== Diluted loss per share Loss per Consolidated Income Statement GBP'000 (723) (876) (1,497) Diluted weighted average number of shares in issue during the period '000 19,579 18,735 18,762 Diluted loss per share Pence (3.7) (4.7) (8.0) ========================= ========= =========== =========== ============== Adjusted diluted loss per share Adjusted loss (note 3) GBP'000 (37) (137) (1) Diluted weighted average number of shares in issue during the period '000 19,579 18,735 18,762 Adjusted diluted loss per share Pence (0.2) (0.7) -p ========================= ========= =========== =========== ==============
6. Intangible assets
Customer Developed Product Total Trademarks relationships technology development GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 At 31 March 2012 548 6,871 1,684 392 9,495 Additions in the period - - - 155 155 -------------------------- ------------- --------------- ------------ ------------- -------- At 30 September 2012 548 6,871 1,684 547 9,650 Additions in the period - - - 140 140 -------------------------- ------------- --------------- ------------ ------------- -------- At 31 March 2013 548 6,871 1,684 687 9,790 -------------------------- ------------- --------------- ------------ ------------- -------- Accumulated amortisation At 31 March 2012 114 858 351 - 1,323 Charge for the period 45 344 141 - 530 -------------------------- ------------- --------------- ------------ ------------- -------- At 30 September 2012 159 1,202 492 - 1,853 Charge for period 46 343 140 - 529 -------------------------- ------------- --------------- ------------ ------------- -------- At 31 March 2013 205 1,545 632 - 2,382 -------------------------- ------------- --------------- ------------ ------------- -------- Net book value at 31 March 2013 343 5,326 1,052 687 7,408 ========================== ============= =============== ============ ============= ======== Net book value at 30 September 2012 389 5,669 1,192 547 7,797 ========================== ============= =============== ============ ============= ======== Net book value at 31 March 2012 434 6,013 1,333 392 8,172 ========================== ============= =============== ============ ============= ========
The Group writes off product development costs in the period they are incurred, except in circumstances where there is a clearly defined project, expenditure is identifiable, the project is commercially viable and feasible, project income is expected to outweigh cost and there are resources available to complete the project. If these criteria are met, the costs are capitalised and amortised once commercial production has started, or the product comes into use, or the carrying value is less than the expected realisable value. The costs capitalised above relate to the development of the GPMG and the Scorpio turret. Full production of the GPMG is forecast to commence in the second half of the 2012/2013 financial year and amortisation of these costs will be charged alongside the income generated. Similarly, the costs attributable to the Scorpio turret development will also be amortised in a similar manner against the income generated from this product as it comes into full production.
7. Acquisition of business and assets of Base
7.1 Goodwill arising on acquisition of business and assets of Base
The Group completed the acquisition of the business and assets of Base on 28 February 2013. After an assessment by the Directors of the assets and liabilities acquired, the fair value of the net assets slightly exceeded the consideration paid, resulting in negative goodwill of GBP6,000 arising on this acquisition, calculated as follows:
Six months ended 31 March 2013 GBP'000 Fair value of net assets of the business and assets of Base at acquisition (note 7.2) 756 Less cash paid on acquisition (750) Negative goodwill on acquisition 6 ========================================== ===============
The negative goodwill of GBP6,000 was credited to the income statement on acquisition.
7.2 Net assets of the business and assets of Base
At acquisition on 28 February 2013 GBP'000 ---------------------------------- --------------- Non-current assets Property, plant and equipment 484 Current assets Inventories 321 Total assets 805 Current liabilities Obligations under finance leases (49) Net assets at acquisition 756 ================================== ===============
The assets of Base were recorded in the financial statements of the Group at fair value.
7.3 Base (Manroy) Limited income statement
From date of acquisition on 28 February 2013 to 31 March 2013.
GBP'000 Revenue 156 Cost of sales (106) Gross profit 50 Administrative expenses (48) Negative goodwill 6 ----------------------------------- -------- Results from operating activities 8 Taxation - ----------------------------------- -------- Profit for the period 8 =================================== ========
If Base had been trading as a part of the Manroy Group for the six months ended 31 March 2013 revenue of GBP0.5 million and profit before tax of GBP0.1 million would have been included.
8. Property, plant and equipment
Leasehold improvements Plant and equipment Motor vehicles Total GBP'000 GBP'000 GBP'000 GBP'000 Cost At 31 March 2012 125 398 21 544 Additions at cost 4 105 40 149 Disposals - (13) (18) (31) -------------------------- ----------------------- -------------------- --------------- -------- At 30 September 2012 129 490 43 662 Additions at cost 7 18 - 25 Acquisition of Base - 484 - 484 -------------------------- ----------------------- -------------------- --------------- -------- At 31 March 2013 136 992 43 1,181 -------------------------- ----------------------- -------------------- --------------- -------- Accumulated depreciation At 31 March 2012 22 180 5 207 Charge for period 11 74 5 90 Disposals - (1) (8) (9) -------------------------- ----------------------- -------------------- --------------- -------- At 30 September 2012 33 253 2 288 Charge for period 12 75 5 92 At 31 March 2013 45 328 7 459 -------------------------- ----------------------- -------------------- --------------- -------- Net book value at 31 March 2013 91 664 36 791 ========================== ======================= ==================== =============== ======== Net book value at 31 March 2012 103 218 16 337 ========================== ======================= ==================== =============== ======== Net book value at 30 September 2012 96 237 41 374 ========================== ======================= ==================== =============== ========
9. Investment in Associated Company
Six months Six months Year ended ended ended 30 September 31 March 31 March 2012 2013 2012 GBP'000 GBP'000 GBP'000 Investment at start of period 3,580 4,630 4,630 Share of loss for the period (note 10) (468) (653) (922) Exchange gain / (loss) on translation at period end 209 (92) (128) 3,321 3,885 3,580 =============================== =========== =========== ==============
10. Summary Income Statement of Associated Company, Manroy USA
Six months Six months Year ended ended ended 30 September 31 March 31 March 2012 2013 2012 GBP'000 GBP'000 GBP'000 Revenue 1,182 628 1,375 Cost of operations (786) (392) (1,028) Gross profit 396 236 347 Administrative expenses (806) (942) (881) Depreciation (177) (165) (327) Amortisation of intangibles (160) (161) (321) Costs associated with relocation (38) (268) (572) Results from operating activities (785) (1,300) (1,754) Net finance expense (171) (32) (128) Loss before taxation (956) (1,332) (1,882) Taxation - - - ----------------------------------- ----------- ----------- -------------- Loss after taxation for the period (956) (1,332) (1,882) =================================== =========== =========== ============== Loss of Associate Company recognised in Statement of Comprehensive Income - 49% Group share (468) (653) (922) =================================== =========== =========== ==============
11. Trade and other receivables
31 March 31 March 30 September 2013 2012 2012 GBP'000 GBP'000 GBP'000 Trade receivables 3,369 2,280 2,182 Loan to Associated Company 1,511 998 1,327 Other receivables 336 176 200 Prepayments and accrued income 576 695 494 -------------------------------- --------- --------- ------------- 5,792 4,149 4,203 ================================ ========= ========= =============
GBP2.3 million of export trade receivables were collected in April 2013, increasing cash balances by this amount.
12. Bank loans and finance leases
31 March 31 March 30 September 2013 2012 2012 GBP'000 GBP'000 GBP'000 Current Overdraft facility 910 - - Due within one year or on demand (Secured) 700 700 700 Finance leases 15 17 23 ------------------------------ --------- --------- ------------- 1,625 717 723 ------------------------------ --------- --------- ------------- Non-current Repayable within two to five years (Secured) 1,417 524 180 Finance leases 72 11 26 ------------------------------ --------- --------- ------------- 1,489 535 206 ------------------------------ --------- --------- ------------- 3,114 1,252 929 ============================== ========= ========= =============
New bank facilities were completed as part of the acquisition of trade and assets of Base in February 2013. The new arrangements are for a GBP2.1m term loan with repayments of GBP175,000 per quarter over three years, at an interest rate of 3.1% above LIBOR.
13. Deferred tax
The movement on the deferred tax liability arose as follows:
Six months Six months Year ended ended ended 30 September 31 March 31 March 2012 2013 2012 GBP'000 GBP'000 GBP'000 At beginning of the period 1,777 2,283 2,283 Credited to tax charge in Statement of Comprehensive Income (127) (320) (506) 1,650 1,963 1,777 ============================= =========== =========== ==============
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 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 Six months Year ended ended ended 30 September 31 March 31 March 2012 2013 2012 GBP'000 GBP'000 GBP'000 Balance at beginning of period 109 158 158 Exchange gain/(loss) on translation of investment in Associated Company 39 (92) (49) 148 66 109 ===================================== =========== =========== ==============
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"). No changes have been made to this agreement during the six months ended 31 March 2013. 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 AIM and the Concert Party Members are deemed to control the Group under the terms of the City Code or the Articles of the Company.
On 1 April 2011, the Company acquired the business and assets of AEI, a company owned equally between 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 turnover and 50 per cent. of profit after tax generated from the acquired assets of the AEI business for two years from the date of acquisition which has been provided in this half yearly financial report. No changes have been made to this agreement during the six months ended 31 March 2013 and the Group is currently progressing orders achieved from the AEI business acquired during the two year earn out period. If actual revenue generated matches forecast revenue, the full deferred consideration will be covered by the provisions already made. If revenues fall below the expected revenues, the deferred consideration would be over provided and any residual balance would be credited the income statement on conclusion of delivery of the orders received. If the revenues exceed expectations, then higher profit levels would have been generated and the additional deferred consideration in excess of the deferred consideration provided would be less than the increased profit levels generated and would be charged to the income statement as it arose. At 31 March 2013 there were no increases or decreases to the level of accrual made for this contract.
During the six months ended 31 March 2013, the Group paid marketing, overseas customer trials, testing and development fees of GBP7,000 (2012 GBP284,000) to Surinder Rajput a Concert Party Member, relating to export revenues generated and development of GPMG and customer export opportunities during the period.
During the six months ended 31 March 2013, the Group purchased goods from MUSA totaling GBP2,000, sold goods to MUSA for GBP3,000 and increased the working capital loan provided to MUSA by GBP95,000.
Apart from the above 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 2013 in relation to the Group's business in which any Director, Concert Party member, or associated company 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 2013, with comparative information for the six months ended 31 March 2012 and the year ended 30 September 2012. 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 2012 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 www.manroy.com/investor_information/announcements/announcements.htm in accordance with Rule 20 of the AIM rules for companies. The audited financial statements for the year ended 30 September 2012, further copies of this half-yearly financial report and the half-yearly financial report for the six months ended 31 March 2012, 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.
"Base" The trade and assets of Base Engineering ltd and certain assets of RJL Engineering
"Board" or "Directors" the directors of Manroy Plc, all of whose names are available at www.manroy.com
"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)
"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
"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
"Shareholders" persons who are registered holders of Ordinary Shares from time to time
"UK MoD" the UK Ministry of Defence "US DoD" United States Department of Defense
This information is provided by RNS
The company news service from the London Stock Exchange
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