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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