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
END
IR BLGDUDDDBGXC
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