TIDMMAN
RNS Number : 3967D
Manroy PLC
28 March 2014
Manroy Plc
Preliminary announcement of audited results for the year ended
30 September 2013
Manroy Plc ("Manroy" or the "Group") (AIM: MAN), the AIM quoted
leading UK defence contractor, announces its audited results for
the year ended 30 September 2013
Financial Results
-- Revenue increased by 20% to GBP8.9 million (2012: GBP7.4 million)
-- Export revenue increased to GBP7.1 million in the year (2012: GBP1.9 million)
-- Provisions for impairment of US Associate of GBP5.1 million
-- Resultant post-tax loss of GBP6.3 million (2012: post-tax loss GBP1.5 million)
-- Adjusted post tax profit of GBP0.2 million (2012: GBP0.1 million)
-- Adjusted earnings per share of 1.0p (2012: 0.7p)
Operational Highlights
-- Acquisition of trade and assets of Base Enamellers Ltd and RJL Engineering Ltd
-- Continued expansion of product range and increased orders into export market
-- First large scale production and delivery for new GPMG product
-- New order for GBP6.1 million relating to new military rifle product to be delivered in 2014
-- Order book increased at 30 September 2013 by 53% to GBP14.7 million (2012: GBP9.6 million)
Post-year end
-- 28 March 2014 - Disposal of US operations reflected as
adjusting post balance sheet event in results to 30 September
2013
-- 28 March 2014 - Announcement by Herstal SA of offer for
Company at 85p per share, valuing Company at GBP16.2 million.
Andrew Blurton, Chairman of Manroy, commented: "The Group has
entered the new financial year with an increased order book and a
continued growth in enquiries from potential customers not
previously supplied by the Group. The Board believes that the
Herstal offer announced today represents good value to Shareholders
and is expected to secure further growth and expansion across all
areas of the retained business".
28 March 2014
For further information please contact:
Manroy Plc Tel: 01252 874 177
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
Chairman's Statement
Offer by Herstal for the Company
Earlier today, Herstal announced the Herstal Offer for the
entire issued share capital of the Company at the Herstal Offer
Price of 85p per share, valuing the Company at GBP16.2 million. The
Board believes that the Herstal Offer represents good value for
Shareholders. The terms of the Herstal Offer and the Board's
recommendation to Shareholders to accept the Herstal Offer is
included in the announcement issued by Herstal today and will be
amplified further in the Herstal Offer Document which is expected
to be posted to Shareholders on 28 March 2014.
Overview of operations
During the year ended 30 September 2013, Manroy continued to
successfully develop its export business increasing its UK order
book at September 2013 by 53% to GBP14.7million (2012:
GBP9.6million). The Group has also focused on expanding its product
range into the export market, and the current order book level
demonstrates the success of this strategy.
Much was achieved during the year, the main operational
highlights being to increase production capacity through the
acquisition of trade and assets of Base Enamellers Ltd and RJL
Engineering Ltd ("Base"), the first successful delivery of our new
General Purpose Machine Gun ("GPMG") product, the continued order
book growth and most recently achieving First Article Acceptance
("FAA") on major products in the US. However, despite these
highlights, the year has been frustrating following delays by the
UK MoD in the timing of contract drawdowns from the Group,
withdrawal of certain export licenses by the UK Government in
Summer 2013 and production delays linked to manufacturing
challenges with our GPMG product.
Results
For the year ended 30 September 2013, Manroy generated revenues
of GBP8.9 million compared with GBP7.4 million in the previous
year. The Group produced an adjusted profit after tax of GBP0.2
million during the year (2012: GBP0.1 million), but also incurred a
significant impairment charge of GBP4.8 million and costs relating
to a strategic review of GBP0.3 million in respect of our US
business. Overall, this produced a loss after tax of GBP6.3 million
compared with a loss after tax in the previous year of GBP1.5
million. The fully diluted loss per share was 33.1p compared with
8.2p in 2012. GBP5.5 million (2012: loss of GBP0.9 million) of this
loss related to Manroy USA ("MUSA"). The Directors are not
proposing the payment of a dividend for the year ended 30 September
2013.
UK
At the end of September 2013, the UK order book was
GBP14.7million (2012: GBP9.6million), of which GBP11.4 million
(2012: GBP6.3million) related to our export business and GBP3.3
million for the UK MoD. Compared to the previous financial year, we
have increased our export order book by 53%. This rapid increase
has put some pressure on production capabilities and we have
endured a difficult process in achieving the first full production
cycle for our GPMG product. We have also had the challenge of
integrating the production capability of Base, a major supplier of
GPMG parts, into the Group and whilst this is still in progress we
have been pleased with progress to date.
The acquisition of Base brought a new commercial revenue line of
Original Equipment Manufacturers ("OEM") which represents a new
growth opportunity for the Group. In March 2013, we announced the
award of GBP7.6 million in new contracts, and whilst originally
GBP6.1 million of this was planned to be manufactured by MUSA, this
portion is now being manufactured by our UK business to facilitate
delivery in 2014.
MUSA
MUSA has continued to be frustrated by the FAA process for the
contracts novated from Sabre in April 2012, though as announced in
December 2013, MUSA achieved FAA approval for Bolts which comprised
34% of the $10.6m of novated contracts.
It was a requirement of Herstal that before it made the Herstal
Offer, which the Board believes represents good value for
Shareholders, the Group should dispose of its 49% interest in MUSA.
Despite entering into negotiations with a number of different
parties over a sale of this interest during the period August 2013
to February 2014, these negotiations did not result in a firm offer
for the Company's interest in MUSA. By late February 2014, in order
to preserve the Herstal Offer for the benefit of Shareholders, it
became necessary to dispose of the Group's interest in MUSA at a
nominal value. This disposal was concluded on 28 March 2014 and
resulted in an adjusting post balance sheet event charge of GBP5.1
million in the results for the year ended 30 September 2013.
However, this write off has secured the Herstal Offer at the
Herstal Offer Price for the benefit of Shareholders.
Employees
I would like to take this opportunity to thank all staff across
the Group for their contribution during a difficult year. We
continue to develop the team to take the business forwards which
puts the Group in a stronger position as we expand its sphere of
operations.
Conclusion
Whilst the 2013 financial year was a frustrating time, the Group
has entered the new financial year with an increased order book and
a continued growth in enquiries from potential and existing
customers. The offer by Herstal announced today is expected to
secure further growth and expansion across all areas of the
retained business.
Andrew Blurton
Chairman
28 March 2014
Chief Executive's Operating Review
Introduction
Our objectives for the year ended 30 September 2013 were to
deliver against our increased sales order book, continue to expand
our product portfolio and increase our export business to reduce
reliance on contracts from the UK. The UK MoD continues to remain a
highly valued customer with whom the group has worked closely for
28 years.
This has been another incredibly difficult year. With the
backdrop of defence budgets tightening and further global economic
pressure, we have nevertheless increased our order book by 53% over
the same period last year.
Review of Operations
The acquisition of the business and assets of Base announced in
February 2013 has had a significant and positive impact on the
Group. This acquisition has been a good strategic move adding
increased revenue streams, production capability and expertise into
the Group, and enhancing our GPMG development programme.
In the financial year ended 30 September 2013, the Group won
GBP13.7million in new orders, including GBP3.0 million of export
orders from new customers which are planned for delivery during the
2014 calendar year. Developing an export business of this nature
has taken time and patience but it is expected by the Board to be
financially rewarding for the Group.
GPMG
In September 2013 the Group exported its first major delivery of
our new GPMG product. The development of this product has taken
much time and investment but we now have a proven product that has
begun to accelerate our order generation.
This is a complicated product to manufacture; requiring many new
processes to be honed and perfected by the Group. The production
process includes hard chroming certain components to improve
longevity and due to unforeseen complications at the Group's
supplier of chromed products, this process had to be brought
in-house in Summer 2013 which has greatly improved and enhanced our
production process.
Military Rifles
In March 2013 the Group won a large order for military rifles to
be exported to Asia which was initially expected to be facilitated
by production of major parts by MUSA. However, MUSA was unable to
obtain US export licenses for this product and so these are now
being produced by Manroy in the UK. In August 2013, we purchased
specific machinery and equipment capable of producing key elements
for this product, enabling us to implement a new development
programme to enable deliveries against this contract to commence in
the second half of 2014.
Centralisation of operations
As part of the Board's operational review, we identified areas
of cost and efficiency savings that could be achieved by
centralising the Group's UK operations at our Slade Green site on
the East side of London. This exercise is due to complete in the
second half of 2014 and is expected to improve production
efficiencies, reduce costs and provide a greater employee resource
as the Group continues to grow.
MUSA
During the year ended 30 September 2013, MUSA continued to make
slow progress in the FAA testing and approvals process on its
novated contracts. Since the year end, initial approvals have been
achieved for some contracts and more recently MUSA has received
approvals for Bolts with a value of $3.2 million covering 34% of
the $10.6 million of novated contracts held by MUSA.
Following our successful qualification process for HMG barrels
sourced from MUSA, the UK Group also commenced purchasing these
from MUSA and we are currently qualifying GPMG barrels.
In the second half of the calendar year ended 31 December 2013
and to February 2014, the Board has been in negotiations with a
number of interested parties over the sale of the Group's 49%
interest in MUSA, but these negotiations have not succeeded for a
variety of different reasons. By late February 2014, and in order
to secure the Herstal Offer, it became necessary to dispose of the
Group's interest in MUSA at a nominal value. This disposal is
referred to in further detail in notes 7 and 22 to the financial
statements and has resulted in a charge relating to the Company's
investment in MUSA of GBP5.1 million in the results for the year
ended 30 September 2013. However, by completing this disposal, the
Board has enabled the announcement today of the Herstal Offer at
the Herstal Offer Price which the Board believes represents good
value for Shareholders.
Outlook
Following two incredibly difficult financial years, I believe
that with our current order book levels and the production
challenges now behind us, 2014 will be more stable and certain for
Manroy. The offer terms announced today provide a positive result
for Shareholders and as part of the larger Herstal group, I believe
Manroy will be well placed to continue its expansion and
growth.
Glyn Bottomley
Chief Executive
28 March 2014
Strategic Report of the Directors
Introduction
The Chairman's Statement and Chief Executive's Operating Review
provide information on the Group's principal activities and the
Board's expectations for the future. This Strategic Report covers
in greater depth the more significant features of the Group's
operations and the financial statements for the year ended 30
September 2013.
The strategy of the Company, led by the Board, is to increase
profits through expansion of the Group's customer and product base,
organic growth and corporate acquisitions.
Principal activities, development and performance of the Group
during the year
The principal activity of Manroy Plc is that of a holding
company. The principal activities of Manroy in the UK and US,
through its subsidiaries and an associated company, have been to
design, manufacture, supply and support (including the provision of
spares and maintenance), the following:
UK
-- 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;
-- Military rifles
-- A range of turret products for armoured fighting vehicles;
-- 20mm Canon
-- Ammunition
-- Weapon tripods and mounting systems; and
-- Fabrication work for large OEM's
US
-- HMG
-- HMG Quick Change Barrel kits
-- Barrel manufacturing for both military and commercial markets
-- M16 and M4 military rifles
-- Electronic boresights
-- Mounting systems
-- Commercial rifles spares
Manroy has a strong UK and worldwide route to market for its
existing and new products. The Directors have continued to position
Manroy to offer a wider range of weapons, mounting systems and
spare parts to UK Government approved customers in overseas
jurisdictions based on the Group's established market for the HMG,
by manufacturing under licence, considering acquiring complementary
businesses and expanding existing capabilities.
During the year, we have added the GPMG to our product line
following a long and difficult development period. At 30 September
2013 the Group held GBP2.2 million in orders for this product,
representing 15% of the current order book.
Compliance
All firearms manufactured in the UK require a licence for
export. The Export Control Organisation ("ECO") is responsible for
assessing and issuing export licences for a wide range of
controlled items, referred to as "strategic" goods, which includes
military and dual-use items.
The ECO conducts annual compliance visits to Manroy's UK
operations at which all licencing procedures are checked for
compliance with the appropriate Government regulations. The Board
is pleased to confirm that Manroy continues to comply with all UK
regulations in this regard.
In addition to the export licence compliance, because of the
nature of Manroy's trade, it must also comply with the Firearms
Act, Section 5 Firearms Licence (Parts 1 & 2); be registered as
a firearms dealer; and hold a certificate for the permitted storage
of explosives. Manroy holds all the requisite licenses and
certificates to enable it to manufacture its existing product range
in the UK; MUSA holds similar licences for their US trading
activities.
In undertaking its business operations, Manroy is guided by the
export policies of the UK Government. Due to the nature of the
Group's business, the Board is very aware of factors that influence
our market with regard to Human Rights issues. The Board has
dedicated internal resources that liaise regularly with the UK
Government so that it is aware of regions that fall outside
permitted markets at an early stage. Accordingly, the Group does
not trade with these areas and it ensures that it manages these
situations both professionally and ethically.
Customers
Manroy has continued to supply the M2 HMG QCB and GPMG to
government agencies and other customers approved by the UK
Government, in approximately 30 countries worldwide and is a key
supplier of the M2 HMG QCB system to the MoD.
The Directors acknowledge the importance of the Group's strong
relationship with the UK MoD and the foundation which this provides
to the business. In addition, the Group is continuing to widen the
customer base and develop new relationships with other blue-chip
customers. This is being augmented by new products, entering into
new markets and undertaking selective, strategic acquisitions.
During the year ended 30 September 2013, this was enhanced by the
addition of the commercial product line in Base.
Sales and marketing
Manroy is a long-term approved supplier to the UK MoD. Export
customers value this approved status as it provides assurance that
the products they are purchasing from the Group have received
pre-qualification by the UK MoD. The Manroy brand name is an
important element of this growth strategy and customers consider it
to be synonymous with a quality supplier of weapons to the UK MoD
and export markets. The Manroy name is a registered trademark in
the UK.
In the global market, the Board considers the most effective way
for Manroy to gain access to governments and other licenced
customers in certain territories is through the use of experienced
and exclusive locally based revenue professionals. These
professionals possess the necessary local business contacts and the
cultural and commercial awareness needed to win such business.
Manroy currently has such professionals located in North and South
America, the Middle East, North Africa, Europe and the Far
East.
Commercial sales
The acquisition of Base has provided the Group with new
commercial opportunities to Original Equipment Manufacturers within
the defence industry, in addition to increased internal capability
for production
Revenue and market share
For the year ended 30 September 2013, the Group generated
revenue of GBP8.9 million (2012: GBP7.4 million), a 20% increase on
the previous year. After removing the impact of sales attributable
to the acquisition of Base (GBP0.7m), revenue grew from GBP7.4
million to GBP8.2 million, an increase of 11%. The Board's strategy
is to increase the Group's market share in the export market
through an enlarged customer and product base.
After several years of intense work in the export market,
increasing new product lines and the addition of commercial revenue
from the acquisition of the trade and assets of Base, the Group has
made significant increases in future revenue generation,
demonstrated by the UK Group's order book which has increased by
53% to GBP14.7million in comparison to this time last year.
In addition, and as demonstrated by the following analysis of
revenue, the Group has significantly reduced its reliance on UK
business, with export revenues growing by GBP5.2 million to GBP7.1
million (2012: GBP1.9million)
Analysis of revenue generation during 2013
Region 2013 % 2012 %
GBP'000 GBP'000
United Kingdom 1,679 19 5,002 72
Europe 1,582 18 1,726 25
North America 287 3 136 2
South America - - 49 1
Asia and Australasia 5,207 60 19
---------------------- -------- ---- -------- ----
Total trade revenue 8,755 100 6,932 100
Royalties received 111 460
---------------------- -------- ---- -------- ----
Total revenue 8,866 7,392
====================== ======== ==== ======== ====
Product review
HMG
HMG revenue increased from GBP3.0 million in 2012 to GBP5.3
million in 2013. This revenue was split relatively evenly between
the main product and HMG spares, with the export market being the
main driver behind this increase.
GPMG
From GBP0.2 million in 2012, revenue for GPMG and associated
spares increased to GBP1.4 million in 2013. The production of this
product has been extremely challenging and the first production
quantity was shipped in September 2013. Since the year end, a
further 170 products have been shipped with more orders in hand for
shipment in 2014.
Ammunition
We currently hold a blank ammunition order for the UK MoD, and
during the year ended 30 September 2013 a scheduled delivery of
approximately GBP1.0 million was planned as part of this order.
However, due to logistical and planning changes within the UK MoD,
this delivery was delayed and we await revised delivery schedules
from the customer. The sale of ammunition is a promising growth
area for the Group and we are currently negotiating new
opportunities for ammunition deliveries in Asia.
Military Rifles
In March 2013, Manroy won a GBP6.1million contract for assault
rifles to be supplied into Asia. Initially this contract was to be
completed through part supply of products by Manroy USA. During
early Summer 2013, the Group received a UK Government export
license; however it was not certain whether Manroy USA would be
granted a US export license. In August 2013, Manroy purchased
machinery to manufacture key elements of the product at the Group's
UK operations at Base. We are currently test firing our first
in-house produced product and intend to commence deliveries in the
second half of this financial year.
Protected Weapon Stations
Development of these products has continued and we expect
revenue to increase in 2014.
20mm Cannon
Demand for this product has grown significantly in the year,
revenue has increased by 54% from that achieved in the 2012
financial year and we currently hold GBP1.8 million in orders for
the 2014 financial year. While this is a lower margin product, it
is a good income generator due to the volume of business, and
provides the Group with another new area of growth.
Base Commercial Revenue
Base produced GBP0.7million in revenue for the seven months from
acquisition to 30 September 2013, introducing an increased number
of customers in the Original Equipment Manufacturer ("OEM") area of
its business.
Design, supply, manufacturing and distribution
Manroy uses only preferred suppliers who are appropriately
qualified through the Manroy ISO 9001 system. Many of them have
been supplying Manroy for over ten years and are trusted and
reliable sources. The UK business has quality accreditation with BS
EN ISO 9001: 2008 and is licenced annually by the Government to
store and produce firearms under Section 5 of the Firearms Act.
MUSA is also quality accredited and holds similar licenses
appropriate to its trade in the USA.
Sales of Manroy's products are strictly controlled by Government
guidelines. In accordance with the Gun Barrel Proof Act, every
Manroy gun sold from the UK is test fired and proof stamped by the
London Proof House. Again, this is similar in the US and MUSA
complies with all Government guidelines.
Research and development
During the year the Group continued its development of two major
products as referred to below.
GPMG
Over the last two years, Manroy has undertaken the significant
task of establishing the GPMG as a Manroy product alongside the
HMG. These plans included establishing the technical team to
produce a product build standard and production method that adhered
to the Group's high standards of production, as well as marketing
to both UK MoD and export customers.
The Directors consider there is a large market for this product
and this has been confirmed by the number of enquiries received
from many potential customers. Substantial time, money and effort
have been invested in this project as part of our commitment to
increasing the Manroy product range and thereby expanding the
capabilities of the Group. The Board sees revenue from the GPMG as
being an area of important revenue growth in future years.
This development programme was completed in September 2013 and
this product is now in full production.
Scorpio turret
In 2010, Manroy received an opportunity from an existing
customer to tender for a single man, low profile armoured turret.
The Group has designed the Scorpio turret which is intended to be a
generic product that can be offered to other manufacturers
throughout the World. Recent developments are being focused towards
a specific and significant customer requirement as a result of
Manroy's proven experience with similar platforms that have been
provided to the UK MoD.
During the year ended 30 September 2013, significant time and
resources were invested in design work to complete a full design
and drawing pack for the turret. This is required to be
lightweight, low profile and simple to operate. The current design
is a modular turret that can be upgraded for different customer
requirements and new technology insertions with relatively low
levels of maintenance costs to ensure cost efficiency.
The turret is currently being prepared for in-country trials by
the Group's customer and current expectations are encouraging.
Business review
During the year ended 30 September 2013, Manroy continued to be
successful in major competitive export tenders, winning GBP13.7
million in orders of which GBP12.7 million were export orders.
While certain areas of the World have been affected by political
and civil unrest, new regions that are acceptable for UK Government
licence awards continue to be developed as part of the Board's plan
to increase revenue generation for the Group.
Manroy has maintained a good presence in the UK market,
specifically with the UK MoD and we expect to enter a new UK MoD
tender for GPMG receivers in Spring/Summer 2014.
Key performance indicators monitored by the Board
The Board uses a number of key performance indicators ('KPIs')
to monitor Group performance against budgets and forecasts as well
as to measure progress against the Board's strategic objectives.
These are summarised below.
KPI Purpose of KPI 2013 2012
---------------------- -------------------------------------- -------- --------
GBP'000 GBP'000
---------------------- -------------------------------------- -------- --------
A principal earnings driver for
Revenue the Group. 8,866 7,392
---------------------- -------------------------------------- -------- --------
To measure the growth in expanding
Revenue outside our revenue over and above existing
the UK UK activity. 7,078 1,930
---------------------- -------------------------------------- -------- --------
Orders held by Measure of future production and
UK Group revenue for the UK Group 14,652 9,628
---------------------- -------------------------------------- -------- --------
Cash invested is an indicator
Cash (used/invested) of the Group's future performance (1,187) (561)
---------------------- -------------------------------------- -------- --------
% %
---------------------- -------------------------------------- -------- --------
To ensure that revenue growth
Gross profit generates increases in bottom
margin line profits. 30.3 33.0
---------------------- -------------------------------------- -------- --------
To maintain and where possible
Normalised profit improve profits available for
after tax Shareholders. 2.2 1.9
---------------------- -------------------------------------- -------- --------
Gross profit margin
Gross profit margin was 30% in the year (2012: 33%). The margin
reduced through increased production costs on the manufacture of
our first production run of GPMGs. With the acquisition of Base,
the Board has been working to increase margins, focusing on 'make'
or 'buy' decisions across our product catalogue.
Normalised profit after non-recurring costs and amortisation of
intangible assets
Year ended Year ended
30 September 30 September
2013 2012
GBP'000 GBP'000
Trade revenues 8,755 6,932
Royalties and other income 111 460
--------------------------------------------------- -------------- --------------
Total revenue 8,866 7,392
--------------------------------------------------- -------------- --------------
Gross margin 2,686 2,440
30% 33%
--------------------------------------------------- -------------- --------------
Loss after tax (6,311) (1,497)
Adjustments to determine normalised UK earnings
Negative goodwill on acquisitions (28) -
Amortisation of UK intangible assets 1,059 1,059
Amortisation of US Intangible assets 157 157
Corporate acquisition costs 111 -
Exchange movements in the year 67 140
Impairment provision for investment in Associated 5,121 -
Company
Non-recurring costs associated with US relocation 19 280
--------------------------------------------------- -------------- --------------
Normalised profit 195 139
=================================================== ============== ==============
2.2% 1.9%
Adjusted fully diluted earnings per share 1.0p 0.7p
--------------------------------------------------- -------------- --------------
The normalised profit is further analysed below between the UK
and US operations as follows:
2013 2012
UK US Total UK US Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Loss after tax (519) (5,792) (6,311) (575) (922) (1,497)
Adjustments to determine normalised
earnings
Negative goodwill on acquisitions (28) - (28) - - 0
Amortisation of UK intangible
assets 1,059 - 1,059 1,059 - 1,059
Amortisation of US Intangible
assets - 157 157 - 157 157
Corporate acquisition costs 111 - 111 - - 0
Exchange movements in the
year - 67 67 - 140 140
Loss on disposal of investment
in Associated Company - 5,121 5,121 - - 0
Non-recurring costs associated
with US relocation - 19 19 - 280 280
------------------------------------- -------- -------- -------- -------- -------- --------
Adjusted profit 623 (428) 195 484 (345) 139
===================================== ======== ======== ======== ======== ======== ========
Adjusted fully diluted earnings
per share 3.2p (2.2)p 1.0p 2.5p (1.8)p 0.7p
------------------------------------- -------- -------- -------- -------- -------- --------
Acquisition of business and assets of Base
In 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. This was financed from restructured
bank facilities which also provided the Group with additional
working capital. After an assessment by the Directors of the fair
value of the net assets acquired, the value of net assets was
marginally in excess of the consideration paid and negative
goodwill of GBP28,000 was credited to the income statement on
acquisition.
This acquisition has resulted in all manufacturing of 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.
Site consolidation plan
The lease for the facilities at Beckley was due to expire in
September 2013 and this has been extended for 5 years with a break
in December 2014. Following the acquisition of Base and the
production challenges faced in 2013, it was decided to consolidate
the operational elements of the business at one location. Premises
within the trading estate of Base's location were available and the
Board decided to re-locate the Beckley operation to Base. Key
factors in making this decision included the improved margin to be
obtained from centralising at one location, the rent payable at
each location and the pool of talent available in the area
immediately surrounding the Base location.
The Board considers this change will improve production, making
the operational core of the business more effective in the
future.
Trading performance of MUSA and provision on subsequent
disposal
The MUSA income statement is set out in note 11.1 to the
financial statements. The results from MUSA contributed a normal
trading loss of GBP0.4 million before impairment for the year ended
30 September 2013. During the year ended 30 September 2013, MUSA
continued to be adversely affected by delays in achieving FAA.
Subsequent to the year end, positive news was confirmed that Bolts
(34% of the $10.6 million of order value) had passed FAA.
Since the year end, negotiations with Herstal as referred to in
note 22 have been undertaken. It was a requirement of Herstal that
before it made the Herstal Offer, which the Board believes
represents good value for Shareholders, the Group should dispose of
its 49% interest in MUSA. In the second half of the calendar year
ended 31 December 2013 and to February 2014, the Board was in
negotiations with a number of interested parties over the sale of
this interest but these negotiations have not succeeded for a
variety of different reasons. By late February 2014, and in order
to secure the Herstal Offer, it became necessary to dispose of the
Group's interest in MUSA at a nominal value. This disposal is
referred to in further detail in notes 7 and 22 to the financial
statements and has resulted in a charge relating to the Group's
investment in MUSA of GBP5.1 million in the results for the year
ended 30 September 2013. However, by completing this disposal, the
Board has enabled the announcement today of the Herstal Offer at a
significant premium to the share price immediately prior to
announcement of talks relating to the potential offer in November
2013.
Position of the Company at financial year end
Export licences
Regulation of licences for the export of weapons is a
complicated and key item in the delivery of revenue for the Group.
This area is managed by the Executive Directors to ensure that the
financial effect of the changing requirements, regulations and
timeframes are mitigated where they are within the Group's control.
During the year ended 30 September 2013, we announced that
previously granted export licenses by the UK Government for a
region in North Africa had been revoked. This is an uncommon
feature and, while we have not lost the order, we cannot continue
production or delivery until licenses to the region are
restored.
Principal risks and uncertainties
There are a number of risks and uncertainties associated with
the Group. The following risks are the material risks of which the
Directors are aware. Additional risks which are not presently known
to the Directors, or that the Directors deem immaterial, may also
have an effect on the Group's business or results of
operations.
The Group faces trade related risks that include continuing
adverse economic conditions, political unrest, uncertainty in
regions of trade and reduction in conflict, timing of contract
receipts, timing of FAA approvals at MUSA, UK Government spending
levels, the granting of export licences and thereafter, export
licence compliance.
The Group experiences operational risks in areas such as
increases in operating costs, technology and systems disruption,
health and safety issues, legal and regulatory developments,
transportation and distribution of firearms, proofing, and product
testing.
The Group experiences management risks in retaining key
personnel within the Group, dependence upon certain key customers
and suppliers, and Section 5 Firearms Act 1968 status.
The Group experiences financial risk in the management of future
growth, adequacy of financial resources, exchange rate
fluctuations, insurance cover, changes in tax legislation, share
price volatility and share liquidity.
The Board manages and mitigates these risks through various
internal reporting systems, its ISO quality accreditation system,
regular Board Meetings and financial reports including forecasts
from both its UK and US Group companies. The Board also works
closely with its external advisors to ensure that risks within the
Board's reasonable control are effectively managed.
Loss per share
The (loss) / earnings per share figures have been calculated as
follows:-
Year ended Year ended
30 September 30 September
2013 2012
Basic loss per share
Loss per Consolidated Income Statement GBP'000 (6,311) (1,497)
Weighted average number of shares
in issue during the year '000 19,044 18,222
Loss per share Pence (33.1) (8.2)
======================================== ========= ============== ==============
Diluted loss per share
The share options are antidilutive due to the loss arising for
the year ended 30 September 2013, and therefore a diluted loss per
share is not appropriate.
Adjusted fully diluted earnings per Year ended Year ended
share 30 September 30 September
2013 2012
Profit per adjusted Consolidated
Income Statement GBP'000 195 139
Fully diluted weighted average number
of shares in issue during year '000 19,568 18,762
Adjusted fully diluted earnings per
share Pence 1.0 0.7
======================================= ========= ============== ==============
Dividends
The Directors do not recommend the payment of a dividend in
respect of the year ended 30 September 2013.
Trade and other receivables
30 September 30 September
2012 2012
GBP'000 GBP'000
Trade receivables 2,257 2,182
Loan to Associated Company - 1,327
Other receivables 151 200
Prepayments and accrued income 604 494
-------------------------------- ------------- -------------
3,012 4,203
================================ ============= =============
Prepayments include pre contract costs, performance bonds and
deposits for large production contracts totalling GBP407,000 (2012:
GBP310,000).
In accordance with negotiations leading to the Herstal Offer
referred to in note 22 to the financial statements, the Company's
interest in MUSA was disposed of on 28 March 2014 and a write off
of the Company's loan to MUSA of GBP1,490,000 was recorded in the
results for the year ended 30 September 2013. This has assisted in
securing the Herstal Offer at the Herstal Offer Price at a
significant premium to the current share price, which the Board
believes represents good value to Shareholders. Further details of
the Herstal Offer are set out in note 22 to the financial
statements.
Cash flow
The consolidated statement of cashflows shows the funds
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:-
Year ended Year ended
30 September 30 September
2013 2012
GBP'000 GBP'000
Net cash from operating activities (623) 42
Net cash used in investing activities (1,347) (368)
Net cash generated / (used in) financing activities 783 (235)
----------------------------------------------------- -------------- --------------
Net decrease in cash and cash equivalents (1,187) (561)
Opening cash and cash equivalents 286 847
----------------------------------------------------- -------------- --------------
Closing cash and cash equivalents (bank overdraft
less cash) (901) 286
----------------------------------------------------- -------------- --------------
During the year ended 30 September 2013, cash and cash
equivalents reduced from GBP286,000 to an overdrawn position of
GBP901,000, a material element of which was the investment of
GBP445,000 into development of the Group's new GPMG product and a
further GBP71,000 for the Scorpio turret development. Receipts from
trade debtors of approximately GBP1.8 million were received shortly
after the year end.
Review of available bank, finance facilities and cash
Current 2013 2012
GBP'000 GBP'000
Overdrafts (914) -
Bank loans (1,760) (700)
Finance leases (2) (23)
---------------- --------- ---------
(2,676) (723)
---------------- --------- ---------
Non - current 2013 2012
GBP'000 GBP'000
Bank loans - (180)
Finance leases - (26)
- (206)
---------------- --------- ---------
Cash 13 286
Net debt (2,663) (643)
================ ========= =========
New bank facilities were completed as part of the acquisition of
trade and assets of Base in February 2013. These were revised in
December 2013 and comprise a GBP2.1 million term loan with
quarterly repayments of GBP175,000 over three years, at an interest
rate of 4.1% above LIBOR and an overdraft facility of GBP1.0
million. As security for this loan, the Group's principal operating
subsidiary, Manroy Engineering Limited, granted a debenture
supported by fixed and floating charges over its assets, and Manroy
Plc provided an unsecured guarantee.
Summary
The year ended 30 September 2013 and the first quarter of 2014
has been an exceptionally challenging period. We continue to
develop new products and customers, and further work is being
undertaken on our operations to bring these to a level that matches
this acceleration.
The acquisition of Base and the planned site consolidation will
improve the operational strength of Manroy, and as with any
business relocation, we have planned this to deliver change without
unnecessary disruption to production.
While we have experienced a challenging period, 2014 and 2015
look positive, with a growing order book which is expected to
result in an improvement in our results during the current
financial year.
Paul Carter
Finance Director
28 March 2014
Report of the Directors
The Directors present their report and the audited financial
statements for the year ended 30 September 2013.
Board of Directors
A. F. Blurton FCA Non-Executive Chairman
G. P. Bottomley Chief Executive
P. J. Carter FCCA Finance Director
D. J. St. C. Low Non-Executive Director
G. Clark Non-Executive Director
B. L. O'Donnell Non-Executive Director
The Articles of Association of the Company require that all
Directors appointed by the Board during the year and prior to the
next Annual General Meeting, as well as one-third of all other
Directors, retire at the next Annual General Meeting. There have
been no appointments of Directors during the year, and accordingly,
Glyn Bottomley and Paul Carter, both Executive Directors,
representing one third of the Directors, have each put themselves
forward for re-election at the 2014 Annual General Meeting. In
addition, the Board's policy is that any Director who has been a
member of the Board for more than nine years and the Board
considers it is in the best interests of the Company for that
Director to continue in office, the Director should also retire at
each Annual General Meeting and offer him or herself for
re-election. Andrew Blurton was appointed to the Board in June 2004
and will therefore retire at the 2014 Annual General Meeting and
has offered himself for re-election. These proposed re-elections
are referred to in resolutions 3 to 5 in the Notice of Annual
General Meeting sent to Shareholders on 7 March 2014. A copy of
that Notice is also available on the Company's website
(www.manroy.com). The Board has concluded that the retiring
Directors are all effective, committed to their roles, and, subject
to shareholder approval, should continue in office. In addition,
the Board considers that Mr Blurton's experience, guidance and
leadership are crucial to the Company and would be difficult to
replace. Details of service contracts between the Company and its
Executive Directors are set out in the Report on Remuneration of
Directors. The Non-Executive Directors do not have service
contracts with the Company; details of their letters of engagement
are set out in the Report on Remuneration of Directors.
Directors' biographies
Andrew Blurton, FCA, Non-Executive Chairman
Andrew Blurton qualified as a Chartered Accountant in 1975 with
Deloitte Haskins & Sells. He was an executive director of six
separate UK listed and quoted companies between 1986 and 2010,
culminating in him being Joint Finance Director of MWB Group
Holdings Plc until his retirement from the Board of that company in
January 2010. He has many years' experience in corporate finance,
equity raisings, restructurings, corporate management, corporate
governance and UKLA and Stock Exchange regulations. He joined the
Board of Manroy Plc in June 2004 (under the Company's previous name
of Hurlingham Plc) and as Chairman of the Company he leads the
activities of the Group. In addition, he provides comprehensive
guidance and assistance on all corporate transactions undertaken by
the Company as well as on circulars and financial statements issued
by the Company to its Shareholders. Mr. Blurton owns 445,526
ordinary shares in Manroy Plc.
Glyn Bottomley, Chief Executive
Glyn Bottomley has over 25 years' experience in the defence
industry since leaving the British Army, where he served in the
Royal Electrical and Mechanical Engineers. In 1986 he joined
Marconi Plc, where he was involved in the design and development of
weapons systems products. In 1992, he started his own business, GP
Systems (Engineering) Limited, which primarily designed weapons
systems, and was acquired by a subsidiary of Avimo Group Limited
trading as Helio ("Helio") in 2000, whereupon he was employed by
Helio as business development manager. Within a year of that
acquisition, Avimo Group Limited was acquired by Thales SA and Glyn
joined a subsidiary of Thales SA, Thales Optronics Limited
("Thales"), as a senior executive, responsible for its turrets and
weapons systems business. In 2006, Glyn left Thales to join AEI
Systems Limited, a company in the defence sector, as co-owner and
chief executive officer, with a remit to grow that company's
operations by establishing a land equipment business. In 2008, he
acquired a 51 per cent. interest in Manroy Systems Limited which
was sold to Manroy as set out in the Admission Document of the
Company dated 3 December 2010. Glyn Bottomley joined the Board in
December 2010 and owns 2,081,632 ordinary shares in Manroy Plc.
Paul Carter, Finance Director
Paul Carter qualified as a chartered certified accountant in
1999. He was finance director for Teksys Limited for three years
following a nine year progression through that company. He joined
AEI Systems Limited as finance director in May 2008, working
closely with Glyn Bottomley and is also finance director of the
Group's UK trading companies. Paul Carter joined the Board of
Manroy Plc in December 2010.
David Low, Non-Executive Director
David Low has been a director of the Company since December 2005
and has over 20 years' experience in fund management and management
consultancy. He is a director of several companies, involved in
venture capital, leisure and property development. He has also been
involved with a number of corporate restructurings. David Low owns
225,000 ordinary shares in Manroy Plc.
Gerry Clark, Non-Executive Director
Gerry Clark has over 20 years' experience in supply chain
management within the speciality materials and machining sectors,
with particular expertise in US Government defence contracts. Gerry
holds the Institute of Directors Diploma in Company Direction and
is a Director of Maher Limited, an international materials supplier
heavily involved in the defence sector. Gerry Clark joined the
Board in February 2011 and owns 101,955 Ordinary Shares in Manroy
Plc.
Brian O'Donnell, Non-Executive Director
Brian O'Donnell has extensive equity and capital markets
experience having spent over 40 years in investment banking. Brian
worked as a senior dealer at the Edinburgh Stock Exchange before
joining Wood McKenzie & Co in the role of sales and sales
trading in 1972. Brian subsequently moved to James Capel & Co
in 1984 to be an institutional UK equity sales director before
joining Schroders Plc in 1997 from which he retired in 2003. Brian
is a fellow of the Chartered Institute for Securities Investment.
Brian O'Donnell joined the Board in February 2011 and owns 231,900
Ordinary Shares in Manroy Plc.
Substantial Shareholders
The Company has been notified of the following interests that
represent 3% or more of the issued share capital of the Company at
28 March 2014:-
Name Number of Shares Percentage of Issued
Share Capital
Caledonian Heritable Limited 4,394,069 23.1
Glyn Bottomley 2,081,632 10.9
Schroders Plc 1,746,474 9.2
Investec Wealth and Investment
Limited 918,305 4.8
Surinder Rajput 666,667 3.5
Downing LLP 659,649 3.5
--------------------------------- --------------------------------------- ---------------------
10,466,796 55.0
--------------------------------- --------------------------------------- ---------------------
The members of the Concert Party and their percentage interest
in the Share Capital of the Company at the date of this report are
as follows:
Name Number of Shares Percentage of Issued
Share Capital
Caledonian Heritable Limited 4,394,069 23.1
Glyn Bottomley 2,081,632 10.9
Surinder Rajput 666,667 3.5
Paul Carter - -
------------------------------ ----------------- ---------------------
7,142,368 37.5
------------------------------ ----------------- ---------------------
On 3 December 2010, the Company entered into the Relationship
Agreement with Caledonian Heritable Limited, Glyn Bottomley 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 AIM and the Concert Party Members are deemed by the
Panel on Take-overs and Mergers to control the Group under the
terms of the City Code.
Glyn Bottomley is Chief Executive of Manroy Plc who, in addition
to his shareholding above, also has an option over 100,000 Ordinary
Shares. Surinder Rajput is an agent of Manroy operating in Saudi
Arabia. Paul Carter is the Finance Director of Manroy Plc who owns
no Ordinary Shares but has an option over 125,000 Ordinary
Shares.
Directors' indemnities and Directors' and Officers' liability
insurance
In accordance with the Company's Articles of Association, the
Directors are granted an indemnity from the Company to the extent
permitted by law in respect of liabilities incurred as a result of
their office as Directors. Liability insurance cover has also been
maintained during the year by the Group in respect of Directors and
Senior Executives of the Group.
Directors' interests and interests of Concert Party Members in
contracts
On 3 December 2010, the Company entered into an agreement for
the acquisition of Manroy Systems Limited, pursuant to which Glyn
Bottomley agreed to sell his entire interest in the issued share
capital of Manroy Systems Limited to the Company for 2,068,633
Ordinary Shares at 75 pence per share. No changes have been made to
this agreement during the year ended 30 September 2013. Under the
agreement, Glyn Bottomley gave warranties to the Company regarding
Manroy Systems Limited and Manroy Engineering Limited relating to
taxation, subject to a maximum liability of GBP1.5 million. Claims
under these warranties must be must be made by 23 December
2017.
On 3 December 2010, the Company entered into the Relationship
Agreement with Glyn Bottomley, Caledonian and Surinder Rajput (the
"Concert Party Members"). No changes have been made to this
agreement during the year ended 30 September 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 3 December 2010, the Company entered into Lock-In and Orderly
Market Agreements with the Concert Party Members. No changes have
been made to this agreement during the year ended 30 September
2013. Under these agreements, any dealings by a Concert Party
Member who is a Director are subject to the Company's code of
dealing, and any disposals by any Concert Party Member 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 report.
Maher Limited, an international materials supplier involved in
the defence sector, provides certain raw materials to the Group on
normal arm's length commercial terms. Maher Limited also provided
upfront working capital to MUSA during the year ended 30 September
2013 to assist in production of products to be purchased by Manroy
for development and sale. Gerry Clark, a Non-Executive Director of
the Company, is a director of Maher Limited.
In January 2014, the Company announced it was expanding
production of military rifles, funded to a maximum of GBP0.75
million by a loan from Caledonian Heritable Limited ("Caledonian"),
a Concert Party Member. This funding and associated interest
totalling GBP0.35m is structured to be repaid by 28 November 2014
from the cashflow receivable by Manroy on sales of the resultant
products. Given Caledonian's shareholding in the Company, entry
into the Loan Agreement by the Company was considered to be a
related party transaction pursuant to Rule 13 of the AIM Rules for
Companies. The Directors, having consulted with the Company's
nominated adviser Allenby Capital Limited, considered that the
terms of the financing were fair and reasonable insofar as the
Company's shareholders were concerned.
Apart from these contracts and the service contracts and letters
of engagement between the Directors and the Company, no contract
existed during the year ended 30 September 2013 in relation to the
Group's business in which any Director was interested.
Significant agreements
New bank facilities were completed as part of the acquisition of
the trade and assets of Base in February 2013 and were revised in
December 2013. The new arrangements are for a GBP2.1 million term
loan with quarterly repayments of GBP175,000 over three years, at
an interest rate of 4.1% above LIBOR and an overdraft facility of
GBP1.0 million. As is customary for financing facilities of this
nature, the continuation of these facilities may be affected in the
event of a change of control of the Company, dependent upon the
identity of the party obtaining control.
The share scheme operated by the Company contains provisions
relating to a change of control (other than a change of a control
arising from an intra-group reorganisation). Under these
provisions, a change of control would be a vesting event,
crystallising exercise of outstanding options and awards, subject
to satisfaction of performance conditions. Further details of the
Company's option scheme are provided later in these financial
statements.
Auditors
A resolution proposing the re-appointment of Baker Tilly Audit
Limited (formerly RSM Tenon Audit Limited) as Auditors of the
Company and authorising the Directors to determine their
remuneration, will be proposed at the 2014 Annual General Meeting.
It is the Board's opinion that the appointment of the Auditors and
the fees payable to the Auditors are inter-related issues and they
are therefore dealt with under one resolution.
Declaration of the Board of Directors
The Directors of the Company who hold office at the date of this
Report confirm that so far as each of them is aware, there is no
relevant audit information of which the Company's Auditors are
unaware and each Director has taken the steps they ought to have
taken as a Director to make himself aware of any relevant audit
information and to establish that the Company's Auditors were aware
of that information.
Annual General Meeting
Notice of the 2014 Annual General Meeting was sent to
Shareholders on 7 March 2014. A copy of the Notice can also be
downloaded from the Company's website at www.manroy.com. The
meeting will be held on 31 March 2014 at the offices of Allenby
Capital Limited, 3 St Helen's Place, London EC3A 6AB commencing at
11.00 a.m.
By order of the Board
City Group P.L.C.
Secretary
28 March 2014
Manroy Plc
Registered No. 2451413
Report on corporate governance
Introduction
The Directors recognise and value the importance of high
standards of corporate governance and observe the requirements of
the QCA Corporate Governance Code for Small and Mid-Size Companies
2013 ("the QCA Code") to the extent that they are considered
reasonably practicable in light of the Company's size, stage of
development and resources. The Board also ensures that proper
procedures are adhered to with regard to the preparation and
approval of the Company's annual and half yearly financial
statements.
The Board consists of six directors, four of whom are
non-executive. All of the non-executive directors are considered by
the Board to be independent for the purposes of the QCA Guidelines
and each of their shareholdings represents less than three per
cent. of the issued share capital of the Company.
The Directors are responsible for formulating, reviewing and
approving the Company's strategy, budget and major items of capital
expenditure. The Directors have established an Audit Committee, a
Remuneration Committee and a Nomination Committee with formally
delegated rules and responsibilities. The Audit Committee meets
three times a year, the Remuneration Committee meets annually and
the Nomination Committee meets as and when required.
The Company has a share dealing code appropriate for a company
whose shares are admitted to trading on AIM and ensures compliance
with this code by the Company, the Directors and applicable
employees.
The policy of Manroy Plc is to adhere to best practice standards
in its business operations. This section of the Report and
Financial Statements, together with the section entitled "Report on
Remuneration of Directors for the year ended 30 September 2013",
describes how the Company has applied the QCA Code.
The Board has adopted core values and Group standards which set
out the behaviours expected of staff in their dealings with
Shareholders, customers, colleagues, suppliers and other
stakeholders of the Group.
Responsibility
The Board's main roles are to define the Group's strategic
objectives, to provide entrepreneurial leadership for the Group, to
create value for Shareholders and to ensure that necessary
financial and other resources are available to enable the Group and
the Board to meet these objectives.
The specific responsibilities reserved to the Board include the
approval of all information supplied to Shareholders in the Annual
Financial Statements, Half-Yearly Financial Reports and Circulars
sent to Shareholders; the setting of Group strategy, approving
annual budgets and medium term projections; reviewing operational
and financial performance; approving major acquisitions,
divestments and capital expenditure; the setting of borrowing
limits; treasury policy; reviewing the Group's systems of financial
control and risk management; ensuring that appropriate management
development and succession plans are in place; approving
appointments to the Board and to the position of the Company
Secretary; approving policies relating to Directors' remuneration
and the severance of Directors' service contracts; and ensuring
that a satisfactory dialogue takes place with Shareholders over the
Group's results and its aspirations for the future.
The Board has delegated certain responsibilities to the
Executive Directors of the following matters within defined
parameters. These include development and recommendation of
strategic plans for consideration by the Board reflecting the
longer term objectives and priorities established by the Board
including the implementation of the strategies and policies of the
Group as determined by the Board; monitoring the operating and
financial results against plans and budgets; monitoring
acquisitions and business operations against objectives;
prioritising the allocation of capital, the management and control
of borrowing limits and treasury policy; technical and human
resources and developing and implementing risk management
systems.
Board attendance
Attendance at formal Board and Committee meetings during the
year ended 30 September 2013 is set out in the table below. The
column entitled "Dealing with matters already approved" relates to
Board meetings held to finalise matters that have previously been
considered and approved at a full Board Meeting. Directors'
attendance shown as "-" denotes that the Director concerned is not
a member of that Committee.
Dealing
with
Full matters
Board already Audit Remuneration Nomination
meetings approved Committee Committee Committee
A. F. Blurton 9 2 2 2 -
G. P. Bottomley 9 2 - - -
P. J. Carter 8 2 - - -
D. St J. Low 9 1 2 2 -
B. L. O'Donnell 9 1 - - -
G. Clark 9 - - - -
-------------------- ---------- ---------- ----------- ------------- -----------
Number of meetings 9 2 2 2 -
-------------------- ---------- ---------- ----------- ------------- -----------
Directors' independence
The names of the Directors, together with their biographical
details, are set out in the Report of the Directors.
The Board believes, as is evident from the Non-Executive
Directors' biographies, that each of them is of integrity and
stature to perform their roles as Independent Non-Executive
Directors. In the opinion of the Board, the Independent
Non-Executive Directors are of sufficient calibre and in sufficient
number in relation to the Executive Directors that their views
carry weight in the Board's decision making.
The Directors are given access to independent professional
advice at the Group's expense, if the Board deems this necessary in
order to enable them to carry out their responsibilities.
The Board considers the four Independent Non-Executive Directors
to be independent in character and judgement. In reaching this
conclusion, the Board took into account that the Non-Executive
Directors:
-- Have never been an employee of the Group;
-- Do not receive remuneration other than a Director's fee,
-- Do not have close family ties with any other Director, Senior
Management or Adviser to the Group;
-- Do not hold cross-directorships or have links with any other
Directors through involvement in other companies or bodies;
-- Do not represent a significant shareholder; or
-- Other than Andrew Blurton who was appointed to the Board in
June 2004, have not served on the Board for more than nine years. A
separate resolution proposing the re-appointment of Mr Blurton is
included in the Notice of the 2014 Annual General Meeting.
Maher Limited, an international materials supplier involved in
the defence sector, provides certain raw materials to the Group on
normal arm's length commercial terms. Maher Limited also provided
upfront working capital to MUSA during the year ended 30 September
2013 to assist in production of products to be purchased by Manroy
for development and sale. Gerry Clark, a Non-Executive Director of
the Company, is a director of Maher Limited. The Board ensured
throughout the year and to the date of this report that Mr Clark's
position at Maher Limited did not affect his ability to act as an
Independent Non-Executive Director of the Company and he was not
involved in any Board decisions relating to the Group's
relationship with Maher Limited.
Board committees
Audit Committee
The Audit Committee of the Company comprises Andrew Blurton FCA,
a qualified Chartered Accountant, and David Low and is chaired by
Andrew Blurton. The Audit Committee, inter alia, determines and
examines matters relating to the financial affairs of the Company
including the terms of engagement of the Company's auditors and, in
consultation with the auditors, the scope for the annual audit. It
receives and reviews reports from management as well as considers
the accounting and the internal control systems in use throughout
the Group.
The Committee has not recommended the use of an internal audit
function as it believes the current external audit process and
internal controls are sufficient for a company the size of Manroy.
The matter is however kept under review.
The Committee has set out the following policy for non-audit
services that may be provided by the Group's external auditors:
-- Advice and assurance on the interpretation and implementation
of accounting standards, financial reporting matters, tax and
governance regulations;
-- Advice and assurance in respect of direct and indirect tax
including tax compliance, routine tax planning advice, tax
consultancy services and employee tax services, including share
plans;
-- Financial due diligence investigations related to potential acquisitions or joint ventures;
-- Internal accounting and risk management control reviews,
including information systems, and reviews of policy procedure
compliance;
-- Attestation reports, control compliance and reasonableness
reports as required by third parties; and
-- Project assurance and advice on business process improvement.
Any new engagement with the Group's external auditors for a fee
in excess of GBP50,000 for an individual service or specific
project in the above categories of service, and any project that is
not covered by the above list, is required to be approved in
advance by the Audit Committee. No such instances arose during the
year ended 30 September 2013. Such proposals are required to be
submitted in writing by the Finance Director for discussion with
the Audit Committee. The Audit Committee has determined that the
following non-audit services may not be provided by the Group's
external auditors:
-- Bookkeeping and other services relating to accounting records
and corporate financial statements;
-- The design, implementation and operation of financial information systems;
-- Internal control functions;
-- Executive management of Company operations and activities,
including acting temporarily or permanently as a Director, officer
or employee of the Group; and
-- Legal, broker, investment adviser or investment banking services.
Details of non-audit services proposed to be provided by the
Group's external auditors are provided to the Audit Committee on a
bi-annual basis. These fees for the year ended 30 September 2013
amounting to GBP69,000 have been disclosed separately in note 6 to
the financial statements. For these matters, Baker Tilly was chosen
following an assessment of their capabilities and experience in
such matters.
Remuneration Committee
The Remuneration Committee of the Company comprises David Low
and Andrew Blurton and is chaired by David Low. The Remuneration
Committee reviews the Directors' remuneration and benefits packages
including the determination of the payment of bonuses, share
options and the terms for appointment of Directors. The
Remuneration Committee considers the recommendations of the Chief
Executive regarding bonuses and performance related
remuneration.
Nomination Committee
The Nomination Committee of the Company comprises David Low and
Andrew Blurton and is chaired by David Low. The Nomination
Committee is responsible for considering Board appointments,
reviewing Board structure, size and composition and identifying the
need for Board appointments by reference to the balance of skills,
knowledge and experience on the Board and the scale of the Company.
No new appointments to the Board were required during the year
ended 30 September 2013.
The Nominations Committee identifies potential candidates by
seeking applications from suitably qualified individuals and where
necessary engaging external consultants to provide details of
potential candidates. In determining a suitable candidate, the
Nomination Committee also considers his or her skills and expertise
in relation to that of other Board members.
Business and professional development of Directors
On appointment, Directors receive information about the Group,
the role of the Board and the matters reserved for its decision,
the terms of reference and membership of the principal Board
Committees, the powers so delegated, the Group's corporate
governance practices and procedures, and up to date financial
information on the Group. The Company advises Directors in writing
on their appointment of their legal and other duties and
obligations as a director of an AIM listed company. These duties
are also formally set out to each Director by the Company's Legal
and Financial Advisers when the Company issues circulars to its
Shareholders. The Directors also receive updates from the Group's
Stockbrokers and Financial Advisers on changes to legal and
governance requirements that affect the Group and themselves as
Directors throughout the year.
Detailed reports and supporting papers are compiled by the
Executive Directors and Senior Executives of the Group, and are
circulated to Directors approximately one week prior to each Board
Meeting and Committee Meeting. The Non-Executive Directors also
receive regular management information which enables them to
scrutinise the Group's and management's performance against agreed
objectives and to provide incisive views on these activities at
meetings of the Board.
Rotation of Directors
The appointment, rotation and retirement of Directors are
subject to the Company's Articles of Association, the Companies Act
2006, and satisfactory performance by the Director concerned. All
Directors are appointed for an initial term which terminates on the
first Annual General Meeting after the date of his or her
appointment. At each Annual General Meeting, a minimum of one third
of the Directors (or, if their number is not a multiple of three,
the number nearest to but not greater than one-third) retire from
office and may offer themselves for re-election. Any Director who
has been on the Board for more than nine years is also required to
stand for re-election at each subsequent Annual General Meeting of
the Company.
The Company Secretary and external professional advice
The Company Secretary is responsible, amongst other duties, for
advising the Board through the Chairman on all governance matters.
All Directors have access to the advice and services of the Company
Secretary. The Company's Articles of Association and the schedule
of matters reserved to be decided only by the Board, provide that
the appointment and removal of the Company Secretary is a matter
for the Board.
Environmental responsibility and health and safety
The Company considers that corporate social responsibility and
effective corporate governance are important components of its
businesses. Manroy Plc is committed to fair and balanced treatment
of all stakeholders in the business, the continuation of
responsible employment policies and, where appropriate, involvement
in the communities in which its businesses operate. The Group
employs a compliance manager who is responsible for monitoring
adherence to the Group's environmental policy and is currently
preparing the Group for ISO 14001 Environmental Management
Systems.
The operational nature of the Group's businesses means that
during their day to day activities, there is the possibility of
injury to employees, customers, contractors or other individuals at
the Group's properties. Safe working practices have been designed
to ensure that employees and the general public are not harmed by
the Group's activities.
Following the year end, the Group's principal operating
subsidiary, Manroy Engineering, achieved the internationally
recognised OHSAS18001:2007 certification, establishing it as one of
the leaders in its field. This independent assessment was conducted
by the leading Certification Body, the British Assessment Bureau,
and demonstrates Manroy Engineering's commitment to occupational
health and safety with first time accreditation.
OHSAS 18001 was first introduced in 1999 and requires
organisations to assess their risk and implement an effective
occupational health and safety management system to promote a safe
and healthy working environment. Certified organisations are
committed to continuous improvement and are assessed annually to
ensure progress is being maintained. The Board anticipates that the
benefits of registration to the OHSAS 18001:2007 standard
include:-
-- Streamlining an organisation's procedures.
-- Bringing consistency to an organisation's service
delivery.
-- Reducing cost and rework.
-- Improving an organisation's management practices.
-- Enhanced status.
-- Competitive advantage.
-- Lower insurance premiums.
Internal control and risk management
The Board is responsible for ensuring that the Group maintains a
system of internal financial controls, including suitable
monitoring procedures. The objective of the system is to safeguard
Group assets, ensure proper accounting records are maintained, and
that financial information used within the business and for
publication is reliable.
Internal financial control monitoring procedures undertaken by
the Board include the approval of all annual budgets and forecasts,
review of monthly financial reports, monitoring of performance,
weekly management reports and the prior approval of all significant
expenditure.
The business is managed by monthly key performance indicators
including those covering revenue, EBITDA and profit margins. These
indicators are also reviewed by the Board at monthly Board
Meetings.
Investor relations
The investor relations activities of the Group are designed to
provide a balanced level of communication between the Company and
its stakeholders. Established procedures are in place within the
Group to ensure timely release to the Stock Market and financial
press of price sensitive information relating to the Group as soon
as the matter concerned has been finalised. The Group also aims to
publish its half-yearly financial report and annual financial
statements within the time periods stipulated by the AIM Rules for
companies and relevant legislative requirements. The Group's public
relations activities ensure that all press releases and related
announcements issued by the Group are provided to existing and
potential Institutional Shareholders, to financial analysts and to
the press, at the same time as they are released to the Stock
Market, thus improving the wider investment markets' awareness of
the objectives and achievements of the Group.
The Board promotes the use of electronic communication and all
Company announcements are made available on a real-time basis on
the Company's website. The website also contains corporate
information which is updated regularly.
The Chief Executive, Glyn Bottomley, and the Finance Director,
Paul Carter, meet with Shareholders, analysts and other
stakeholders to explain the Group in further detail. These meetings
provide explanations and commentary on matters that are of benefit
to Shareholders in assessing the Group's performance, its
operations, the aspirations and strategy being adopted by the
Board, the results of the Group for the half year and full year,
transactions proposed to be undertaken by the Group and the Board's
expectations for the future.
During the year ended 30 September 2013, and to the date of this
report, the Group provided updates to Shareholders dealing with the
expansion of the Group and the outlook for its future in the Annual
Report and Financial Statements for the year ended 30 September
2012, in the Half-Yearly Financial Report covering the results for
the six months ended 31 March 2013 and in Trading Updates issued
during the year. From the date of their publication, copies of
these documents are made available to interested parties by the
Finance Director, and are also available on the Company's website
at www.manroy.com.
All Shareholders on the register at the time that notice is
given of the Company's Annual and General Meetings are invited by
formal notice to attend those meetings. The Chairmen of the Audit
Committee, the Remuneration Committee and the Nomination Committee,
as well as other Directors, will be available to answer questions
from Shareholders at the 2014 Annual General Meeting which is due
to be held on 31 March 2014. The Directors appreciate the
importance of private Shareholders and use the Company's Annual and
General Meetings as further opportunities to communicate with
private investors. It is the Company's policy to involve
Shareholders fully in the affairs of the Group and to give them the
opportunity at Annual and other General Meetings called during the
year to ask questions about its activities and prospects. The Board
also structures these meetings so that Shareholders can vote
separately on each matter, by proposing separate resolutions and
receiving votes for each separate item to be considered.
The proxy votes for and against each resolution are counted
immediately prior to each Annual or other General Meeting of the
Company. Each resolution is voted upon by Shareholders and only
after they have voted are the results of the proxy votes provided
to the meeting. This enables Shareholders present to vote
independently of the results of proxy votes already received.
Shareholders will have the opportunity to vote separately on
each resolution at the Annual General Meeting, either in person or
by proxy, and in this respect Shareholders' attention is drawn to
the notes accompanying the Notice of that meeting that was sent to
shareholders on 7 March 2014.
The Group maintains a corporate website at www.manroy.com which
contains information relating to the Group that is of interest to
existing and potential Investors, and is regularly updated.
Group Remuneration and Employment policies
Management philosophy
Manroy Plc is managed by the Board, utilising the services of
its experienced management team.
The Executive Directors and Senior Management work closely
together to ensure that the Company's strategy is implemented and
monitored on a continuous basis and in accordance with AIM Rule 19.
The Executive Directors and the management teams are responsible
for operating day to day management control, acquisitions,
disposals, equity and debt funding. They also co-ordinate the
performance, assessment and reporting of results, financial
disciplines and controls. The key members of management are the
Directors.
Employment policies
It is Group policy to keep employees informed of the aims,
objectives, activities and financial performance of the Group and
to encourage them to take a wider interest in its affairs. Copies
of all half-yearly and annual financial statements of the Company,
circulars to Shareholders, press releases, and press commentary are
also made available to members of staff.
The health and safety of employees is important to the Group.
Safety awareness is promoted in the Group working environment and
is reviewed in light of good practice and developing legislation.
Further details relating to the Group's health and safety policies
are set out in the Report on Corporate Governance.
Manroy Plc is an equal opportunities employer and is committed
to maintaining a working culture which enables all employees to
make their own distinctive contribution. Employment policies are
designed to be fair and equitable, and to be consistent with the
abilities of employees and the needs of the Group. Applications for
employment by disabled persons are fully considered, bearing in
mind the aptitudes of the applicant concerned. In the event of any
member of staff becoming disabled whilst employed by the Group,
effort is made to enable their employment with the Group to
continue. It is Group policy that training, career development and
promotion of disabled persons should, as far as possible, be
similar to that of other employees.
Share option scheme
At 30 September 2013, options had been granted over a total of
530,060 Ordinary Shares as follows:
Employee At Lapsed At 30 September Exercise Date from Latest expiry
1 October in year 2013 price which exercisable date
2012 (p)
One past employee 90,000 - 90,000 95p 1 April 2007 1 April 2014
Three past 28 April 28 April
employees 75,000 - 75,000 95p 2008 2015
28 April 28 April
A. F. Blurton 74,560 - 74,560 95p 2008 2015
28 October 28 October
G. P. Bottomley 100,000 - 100,000 95p 2014 2021
3 December 3 December
P. J. Carter 100,000 - 100,000 75p 2013 2020
28 October 28 October
P. J. Carter 25,000 - 25,000 95p 2014 2021
28 October 28 October
Other employees 87,250 (21,750) 65,500 95p 2014 2021
551,810 (21,750) 530,060
=========== ========= ================
In December 2010, the Company adopted an Enterprise Management
Incentive Scheme over a maximum of 10% of the Company's issued
share capital, with performance targets set by the Remuneration
Committee of the Board at the date of grant of awards. There have
been no variations to the terms and conditions or performance
criteria for share awards during the year ended 30 September
2013.
No options were granted in the year ended 30 September 2013
Pensions
Key employees are invited to join the Manroy Group Personal
Pension Scheme. The Group contributes a maximum of 5% of the salary
of participating employees to the Scheme, subject to an equal
contribution being made by the employees concerned. The normal
retirement age for the pension scheme is 65.
Report on Remuneration of Directors
Remuneration policy for Executive Directors
The remuneration payable to Executive Directors comprises the
following, further details can also be found in note 29:-
-- An annual salary;
-- An annual car allowance;
-- Participation in the Company share option scheme.
-- Membership of the Manroy Group Personal Pension Scheme. No
contributions are made by the Group on behalf of Directors to any
defined benefit pension schemes.
Service contracts of Executive Directors
The annual salaries and pension contributions of the Executive
Directors borne by the Group during the year ended 30 September
2013 are set out below:-
Annual salary Car allowance
year ended for year ended Pension
30 September 30 September Contribution
2013 2013
Director Responsibility GBP GBP %
G. P. Bottomley Chief Executive 175,000 12,000 5
P. J. Carter Finance Director 100,000 10,000 5
The dates of the service contracts between the Directors and the
Company are as follows:-
G. P. Bottomley Service contract dated 3 December 2010 under which
he is employed as the full-time Chief Executive
of the Company at an annual salary of GBP175,000
reviewable annually. He is entitled to participate
in any share option and bonus scheme incepted by
the Company and to join the Company Pension Scheme
under which the Company is obliged to match any
contributions made up to a maximum of 5 per cent.
of annual salary. He receives an annual car allowance
of GBP12,000 and is provided with a Company mobile
telephone, life assurance and private medical insurance
for himself and his family. His employment can
be terminated by six months' notice given at any
time.
P. J. Carter Service contract dated 3 December 2010 under which
he is employed as the full-time Finance Director
of the Company at an annual salary of GBP100,000
reviewable annually. He is entitled to participate
in any share option and bonus scheme incepted by
the Company and to join the Company Pension Scheme
under which the Company is obliged to match any
contributions made up to a maximum of 5 per cent.
of annual salary. He receives an annual car allowance
of GBP10,000 and is provided with a Company mobile
telephone, life assurance and private medical insurance
for himself and his family. His employment can
be terminated by six months' notice given at any
time.
Terms of engagement of Non-Executive Directors
The Non-Executive Directors do not have service contracts with
the Company. Their services are the subject of detailed Letters of
Engagement and, in the same manner as the Executive Directors; the
Non-Executive Directors are subject to retirement by rotation every
three years under the Articles of Association of the Company. The
dates, period and terms of their appointments are as follows:-
A. F. Blurton Letter of engagement between the Company and Andrew
Blurton Consultancy Limited dated 3 December 2010,
as varied during the year, under which it supplies,
through Mr. Blurton, the specific services set
out in the agreement for an annual fee of GBP30,000.
No pension or other benefits are payable under
the engagement. Additional services outwith the
terms of the letter of engagement can be commissioned
at the discretion of the Board. In the event that
the appointment is terminated by the Company otherwise
than for cause, or Mr. Blurton leaves the Board
otherwise than for cause, a termination fee of
GBP50,000 is payable to Andrew Blurton Consultancy
Limited.
D. J. St. C. Low Letter of engagement between the Company and David
Low & Partners dated 3 December 2010, as varied
during the year, under which it supplies, through
Mr. Low, the specific services set out in the agreement
for an annual fee of GBP30,000. No pension or other
benefits are payable to Mr. Low under the engagement.
Additional services outwith the terms of the letter
of engagement can be commissioned at the discretion
of the Board. In the event that the appointment
is terminated by the Company otherwise than for
cause, or Mr. Low leaves the Board otherwise than
for cause, a termination fee of GBP50,000 is payable
to David. Low & Partners.
G. Clark Letter of engagement dated 18 February 2011 under
which Mr Clark was appointed as a non-executive
Director of the Company for an annual fee of GBP20,000
payable to his employer. No pension or other benefits
are payable to Mr. Clark under the engagement.
B. L. O'Donnell Letter of engagement dated 18 February 2011 under
which Mr. O'Donnell was appointed as a non-executive
Director of the Company for an annual fee of GBP20,000.
No pension or other benefits are payable to Mr.
O'Donnell under the engagement.
The Non-Executive Directors do not participate in any Company
sponsored pension arrangements.
Equity interests of Directors in the Company
Number of Shares Percentage of Issued
Share Capital
A. F. Blurton 445,526 2.3
G. P. Bottomley 2,081,632 10.9
P. J. Carter - -
G. Clark 101,955 0.5
D. J. St. C. Low 225,000 1.2
B. L. O'Donnell 231,900 1.3
----------------- ---------------------
3,086,013 16.2
================= =====================
G. P. Bottomley and P. J. Carter are members of the Concert
Party as referred to in the Report of the Directors. At 30
September 2013, A. F. Blurton, G. P. Bottomley and P. J. Carter had
options over 74,560, 100,000 and 125,000 Ordinary shares
respectively at exercise prices between 75p and 95p per share.
Remuneration of Directors
Year ended 30 September 2013
Fees as
Non- Executive
Salary Directors Additional Allowances Pension
as Executives services and benefits Total contributions
in kind
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------------- ------------- --------------- --------
Executive Directors
G. P. Bottomley 175 - - 14 189 9
P. J. Carter 100 - - 11 111 5
Non-Executive
Directors
A. F. Blurton - 30 10 - 40 -
D. J. St. C. Low - 30 10 - 40 -
G. Clark - 20 - - 20 -
B. L. O'Donnell - 20 - - 20 -
--------------------- ---------------- ----------------- ------------- --------------- -------- ----------------
275 100 20 25 420 14
--------------------- ---------------- ----------------- ------------- --------------- -------- ----------------
Year ended 30 September 2012
Fees as
Non- Executive
Salary Directors Allowances Pension
as Executives Additional and benefits Total contributions
services in kind
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------------- ------------- --------------- --------
Executive Directors
G. P. Bottomley 175 - - 14 189 9
P. J. Carter 100 - - 11 111 5
Non-Executive
Directors
A. F. Blurton - 20 - - 20 -
D. J. St. C. Low - 20 - - 20 -
G. Clark - 20 - - 20 -
B. L. O'Donnell - 20 - - 20 -
---------------------- ---------------- ---------------- ------------- --------------- -------- ----------------
275 80 - 25 380 14
---------------------- ---------------- ---------------- ------------- --------------- -------- ----------------
D. J. St. C. Low
Chairman of the Remuneration Committee
28 March 2014
Statement of Directors' responsibilities in respect of the
annual report and financial statements
The Directors are responsible for preparing the Strategic Report
and the Directors' Report and the financial statements in
accordance with applicable law and regulations.
Company law requires the directors to prepare group and company
financial statements for each financial year. The directors are
required by the AIM Rules of the London Stock Exchange to prepare
group financial statements in accordance with International
Financial Reporting Standards ("IFRS") as adopted by the European
Union ("EU") and have elected under company law to prepare the
company financial statements in accordance with United Kingdom
Generally Accepted Accounting Practice (United Kingdom Accounting
Standards and applicable law).
The group financial statements are required by law and IFRS
adopted by the EU to present fairly the financial position and
performance of the group; the Companies Act 2006 provides in
relation to such financial statements that references in the
relevant part of that Act to financial statements giving a true and
fair view are references to their achieving a fair
presentation.
Under company law the directors must not approve the financial
statements unless they are satisfied that they give a true and fair
view of the state of affairs of the group and the company and of
the profit or loss of the group and the company for that
period.
In preparing each of the group and company financial statements,
the directors are required to:
a. select suitable accounting policies and then apply them consistently;
b. make judgements and accounting estimates that are reasonable and prudent;
c. for the group financial statements, state whether they have
been prepared in accordance with IFRSs adopted by the EU and for
the company financial statements state whether applicable UK
accounting standards have been followed, subject to any material
departures disclosed and explained in the company financial
statements;
d. prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the group and the
company will continue in business.
The Directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the group's and the
company's transactions and disclose with reasonable accuracy at any
time the financial position of the group and the company and enable
them to ensure that the financial statements comply with the
Companies Act 2006. They are also responsible for safeguarding the
assets of the group and the company and hence for taking reasonable
steps for the prevention and detection of fraud and other
irregularities.
The Directors are responsible for the maintenance and integrity
of the corporate and financial information included on the Manroy
Plc website.
Legislation in the United Kingdom governing the preparation and
dissemination of financial statements may differ from legislation
in other jurisdictions.
By order of the Board
G. P. Bottomley P. J. Carter
Chief Executive Finance Director
28 March 2014
Independent Auditor's report to the members of Manroy Plc
We have audited the group and parent company financial
statements ("the financial statements") which comprise the
Consolidated Statement of Comprehensive Income, the Statement of
Changes in Equity, the Consolidated Statement of Financial
Position, the Company Statement of Financial Position, and the Cash
Flow Statement. The financial reporting framework that has been
applied in the preparation of the group financial statements is
applicable law and International Financial Reporting Standards
(IFRSs) as adopted by the European Union. The financial reporting
framework that has been applied in the preparation of the parent
company financial statements is applicable law and United Kingdom
Accounting Standards (United Kingdom Generally Accepted Accounting
Practice).
This report is made solely to the company's members, as a body,
in accordance with Chapter 3 of Part 16 of the Companies Act 2006.
Our audit work has been undertaken so that we might state to the
company's members those matters we are required to state to them in
an auditor's report and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume responsibility to
anyone other than the company and the company's members as a body,
for our audit work, for this report, or for the opinions we have
formed.
Respective responsibilities of directors and auditor
As more fully explained in the Directors' Responsibilities
Statement the directors are responsible for the preparation of the
financial statements and for being satisfied that they give a true
and fair view. Our responsibility is to audit and express an
opinion on the financial statements in accordance with applicable
law and International Standards on Auditing (UK and Ireland). Those
standards require us to comply with the Auditing Practices Board's
(APB's) Ethical Standards for Auditors.
Scope of the audit of the financial statements
A description of the scope of an audit of financial statements
is provided on the Financial Reporting Council's website at
http://www.frc.org.uk/Our-Work/Codes-Standards/Audit-and-assurance/Standards-and-guidance/Standards-and-guidance-for-auditors/Scope-of-audit/UK-Private-Sector-Entity-(issued-1-December-2010).aspx
Opinion on financial statements
In our opinion
-- the financial statements give a true and fair view of the
state of the group's and of the parent company's affairs as at 30
September 2013 and of the group's loss for the year then ended;
-- the group financial statements have been properly prepared in
accordance with IFRSs as adopted by the European Union;
-- the parent company financial statements have been properly
prepared in accordance with United Kingdom Generally Accepted
Accounting Practice; and
-- the financial statements have been prepared in accordance
with the requirements of the Companies Act 2006.
Opinion on other matters prescribed by the Companies Act
2006
In our opinion:
-- the information given in the Strategic Report and the
Directors' Report for the financial year for which the financial
statements are prepared is consistent with the financial
statements.
Matters on which we are required to report by exception
We have nothing to report in respect of the following:
Under the Companies Act 2006 we are required to report to you
if, in our opinion:
-- adequate accounting records have not been kept by the parent
company, or returns adequate for our audit have not been received
from branches not visited by us; or
-- the parent company financial statements are not in agreement
with the accounting records and returns; or
-- certain disclosures of directors' remuneration specified by law are not made; or
-- we have not received all the information and explanations we require for our audit.
Jennifer Hill
Senior Statutory Auditor
Baker Tilly Audit Limited, Statutory Auditor
Chartered Accountants
Davidson House
Forbury Square
Reading
Berkshire
RG1 3EU
28 March 2014
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the year ended 30 September 2013
Year ended Year ended
Notes 30 September 30 September
2013 2012
GBP'000 GBP'000
Revenue
Trade revenues 8,755 6,932
Royalties and other income 111 460
---------------------------------------- -------- -------------- --------------
Total revenue 2 8,866 7,392
Cost of operations (6,180) (4,952)
Gross profit 2,686 2,440
Administrative expenses (2,645) (2,488)
Costs relating to acquisitions 4 (111) -
Negative goodwill arising on corporate
acquisition 11.3 28 -
Amortisation of intangible assets 10.2 (1,059) (1,059)
Loss from operating activities (1,101) (1,107)
Finance income 5.1 77 2
Finance expenses 5.2 (60) (51)
Loss before share of result from
Associated Company (1,084) (1,156)
Share of results of Associated
Company 11.1 (414) (922)
Costs relating to strategic review
of Associated Company 7 (275) -
Impairment of investment in Associated
Company 7 (4,846) -
Loss before tax 6 (6,619) (2,078)
Tax credit 8 308 581
Loss after tax (6,311) (1,497)
Other comprehensive income
Items that may be reclassified
subsequently to profit and loss
Exchange movement on translation
of investment in Associated Company 21.1 206 (49)
---------------------------------------- -------- -------------- --------------
Total comprehensive loss for the
year attributable to owners of
the parent (6,105) (1,546)
======================================== ======== ============== ==============
Loss per share
Basic 9 (33.1p) (8.2p)
Diluted 9 (33.1p) (8.2p)
========= ======== =======
The Group has elected to combine its consolidated income
statement and consolidated statement of comprehensive income into
the above consolidated statement of comprehensive income as
permitted under IAS1.
The notes form part of these financial statements.
CONSOLIDATED STATEMENT OF FINANCIAL 30 September 30 September
POSITION 2013 2012
REGISTERED NUMBER: 2451413 Notes
GBP'000 GBP'000
------------------------------------- ------ ------------- -------------
Non-current assets
Goodwill 10.1 303 303
Other intangible assets 10.2 7,254 7,797
Property, plant and equipment 12 721 374
Investment in Associated Company 11 - 3,580
------------------------------------- ------ ------------- -------------
8,278 12,054
------------------------------------- ------ ------------- -------------
Current assets
Inventories 13 2,975 3,102
Trade and other receivables 14 3,012 4,203
Corporation tax 92 56
Cash and cash equivalents 13 286
------------------------------------- ------ ------------- -------------
6,092 7,647
-------------------------------------
Total assets 14,370 19,701
------------------------------------- ------ ------------- -------------
Current liabilities
Borrowings 16 (2,674) (700)
Obligations under finance leases 18 (2) (23)
Current tax liability - (26)
Trade and other payables 15 (1,864) (2,567)
(4,540) (3,316)
------------------------------------- ------ ------------- -------------
Non-current liabilities
Borrowings 16 - (180)
Obligations under finance leases 18 - (26)
Deferred tax 19 (1,530) (1,777)
------------------------------------- ------ ------------- -------------
(1,530) (1,983)
------------------------------------- ------ ------------- -------------
Total liabilities (6,070) (5,299)
------------------------------------- ------ ------------- -------------
Net assets 8,300 14,402
===================================== ====== ============= =============
Equity
Share capital 20 952 952
Share premium account 704 704
Other reserves 1,773 1,572
Retained earnings 4,871 11,174
Total equity 8,300 14,402
===================================== ====== ============= =============
The notes form part of these financial statements. Authorised
for issue and approved by the Board of Directors on 28 March 2014
and signed on its behalf by:
G. P. Bottomley P. J. Carter
Chief Executive Finance Director
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 30 September 2013
Share Share Merger Special Exchange Retained Total
capital premium reserve reserve movement earnings equity
account account reserve
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
Loss for the year ended
30 September 2012 - - - - - (1,497) (1,497)
---------------------------------- -------- -------- -------- -------- --------- --------- -------
Other comprehensive
income
Items that will be reclassified
to profit and loss
Exchange movement on
translation of foreign
operations (note 21.1) - - - - (49) - (49)
---------------------------------- -------- -------- -------- -------- --------- --------- -------
Total other comprehensive
income - - - - (49) - (49)
---------------------------------- -------- -------- -------- -------- --------- --------- -------
Total comprehensive
income - - - - (49) (1,497) (1,546)
---------------------------------- -------- -------- -------- -------- --------- --------- -------
Transactions with owners
Movement on special
reserve - - - (53) - 53 -
Share option charge
movements in reserves - - - - - 15 15
New shares issued in
the year 42 442 - - - - 484
Share issue costs - (33) - - - - (33)
Dividends paid in the
year - - - - - (135) (135)
---------------------------------- -------- -------- -------- -------- --------- --------- -------
Total transactions with
owners 42 409 - (53) - (67) 331
---------------------------------- -------- -------- -------- -------- --------- --------- -------
At 30 September 2012 952 704 1,457 6 109 11,174 14,402
Loss for the year ended
30 September 2013 - - - - - (6,311) (6,311)
---------------------------------- -------- -------- -------- -------- --------- --------- -------
Other comprehensive
income
Items that will be reclassified
to profit and loss
Exchange movement on
translation of foreign
operations (note 21.1) - - - - 206 - 206
---------------------------------- -------- -------- -------- -------- --------- --------- -------
Total other comprehensive
income - - - - 206 - 206
Total comprehensive
income - - - - 206 (6,311) (6,105)
---------------------------------- -------- -------- -------- -------- --------- --------- -------
Transactions with owners
Movement on special
reserve - - - (5) - 5 -
Share option charge
movements in reserves - - - - - 3 3
---------------------------------- -------- -------- -------- -------- --------- --------- -------
Total transactions with
owners - - - (5) - 8 3
---------------------------------- -------- -------- -------- -------- --------- --------- -------
As at 30 September 2013 952 704 1,457* 1* 315* 4,871 8,300
================================== ======== ======== ======== ======== ========= ========= =======
* = Disclosed as Other reserves totalling GBP1,773,000 (2012:
GBP1,572,000) in the consolidated statement of financial position
at 30 September 2013
CONSOLIDATED STATEMENT OF CASH FLOWS
Year ended 30 September 2013
Year ended Year ended
30 September 30 September
2013 2012
GBP'000 GBP'000
----------------------------------------- -------------- --------------
Loss for the year before tax (6,619) (2,078)
Adjustments:
Finance expense 60 51
Finance income (77) (2)
Negative goodwill (28) -
Amortisation of intangible assets 1,059 1,059
Share of results of Associated
Company 414 922
Impairment of investment in Associated 4,846 -
Company
Exchange movements on consolidation 16 79
Share option charges 3 15
Loss on sale on asset held for
re-sale - 32
Loss on disposal of fixed assets 1 6
Depreciation of property, plant
and equipment 214 184
----------------------------------------- -------------- --------------
Cash flows from operations before
changes in
working capital (111) 268
Decrease / (Increase) in inventories 449 (1,005)
(Increase)/ decrease in trade and
other receivables (299) 930
(Decrease)/ increase in trade and
other payables (678) 26
----------------------------------------- -------------- --------------
Cash (used in)/ generated from
operations (639) 219
Interest received 77 2
Interest paid (60) (51)
Tax paid (1) (128)
----------------------------------------- -------------- --------------
Net cash (used)/ generated in operating
activities (623) 42
----------------------------------------- -------------- --------------
Cashflows from investing activities
Investment in product development (516) (357)
Proceeds from sale of asset held
for re-sale - 112
Proceeds from sale of tangible
assets 32 16
Purchase of trade and assets (753) -
Purchase of property, plant and
equipment (110) (139)
----------------------------------------- -------------- --------------
Net cash used in investing activities (1,347) (368)
----------------------------------------- -------------- --------------
Cashflows from financing activities
Issue of new ordinary shares - 484
Costs incurred on issue of shares - (33)
Repayment of finance leases (97) (33)
Dividends paid - (135)
Repayments of bank loans (1,220) (518)
New loans in year 2,100 -
Net cash generated from/(used in)
financing activities 783 (235)
----------------------------------------- -------------- --------------
Net cash and cash equivalents used
in year (1,187) (561)
Opening cash and cash equivalents 286 847
Closing cash and cash equivalents (901) 286
----------------------------------------- -------------- --------------
Cash at bank and in hand 13 286
Bank overdrafts (914) -
--------------------------------------- ------ ----
Closing net cash and cash equivalents (901) 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 financial statements of the Company for the year
ended 30 September 2013 comprise the Company and the subsidiaries
(together referred to as the "Group"). The consolidated financial
statements for the year ended 30 September 2013 have been prepared
in accordance with International Financial Reporting Standards as
adopted by the EU ("Adopted IFRS"). The Company has elected to
prepare its Parent Company financial statements in accordance with
UK GAAP.
The consolidated 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 2013. The accounting policies
set out below have, unless otherwise stated, been applied
consistently to all periods presented in these consolidated
financial statements and have been applied consistently by Group
entities.
The financial statements have been prepared on a going concern
basis and on a historical cost basis as modified by the valuation
of certain assets and liabilities. These consolidated financial
statements are presented in UK Sterling, which is the Company's
functional currency. All financial information has been rounded to
the nearest thousand pounds.
Going concern review
The provisions of the Combined Code require directors to confirm
whether, after making appropriate enquires, they have reasonable
expectations that the Company and the Group have adequate financial
resources to continue in operational existence for the foreseeable
future.
As part of the regular financial management of the Group, the
Directors review the detailed cash flow projections and cash
requirements of the Group. These cash flow projections include the
net cash flows arising from operations, capital expenditure
proposals and the financial effect of planned business expansion.
The projections take into account bank and other financing
facilities available to the Group and assess the cash flow adequacy
of the Group on a month by month basis for a fifteen month forward
period. The financial statements have been prepared on a going
concern basis, which assumes that the Group will be able to meet
its liabilities as they fall due for the foreseeable future.
After making such enquiries as they consider appropriate, the
Directors consider that there is a reasonable expectation that the
Group has adequate cash and related financial resources to continue
in business for the foreseeable future. The Directors have
therefore adopted the going concern basis in the preparation of the
financial statements for the year ended 30 September 2013.
Accounting estimates and judgements
Estimates and judgments are continually evaluated and are based
on historical experience as adjusted for current market conditions
and other factors. Management makes estimates and assumptions
concerning the future. The resulting accounting estimates will, by
definition, seldom equal the related actual results. The estimates
and assumptions that have a significant risk of causing a material
adjustment to the carrying amounts of assets and liabilities within
the next financial year are outlined below.
Intangible assets
Key estimates and judgements are applied to the fair values of
assets acquired on acquisitions and these have been included the
valuation of intangible assets. The financial statements reflect
the fair value of intangible assets acquired based on estimates and
judgements of the discounted rates of return of the cash generating
units of those assets and the weighted average costs of
capital.
Tangible assets
Key estimates and judgements are applied to the fair values of
assets acquired on acquisitions and these have been included the
valuation of tangible assets. The financial statements reflect the
fair value of tangible assets acquired based on independent
valuations and market values appropriate to such classes of
asset.
Basis of consolidation
The consolidated financial statements incorporate the financial
statements of the Company and its subsidiaries up to 30 September
2013. Subsidiaries are those entities that are controlled by the
Company. Control is achieved where the Company has the power,
directly or indirectly, to govern the financial and operating
policies of an entity so as to obtain benefits from its
activities.
The results of subsidiaries and associated companies acquired or
disposed of during the year are included from the effective date of
acquisition or up to the effective date of disposal, as
appropriate. Inter-company transactions, balances and unrealised
gains on transactions between Group companies are eliminated.
Unrealised losses are also eliminated. Where necessary, adjustments
are made to the financial statements of subsidiaries and associated
companies to bring the accounting policies used into line with
those used by the Group.
Associated companies
Associated companies have been accounted for under the equity
method of accounting whereby the investment is initially recognised
at fair value and adjusted thereafter for the post-acquisition
change in the Group's share of the fair value of the net assets of
associated companies. The profit or loss of the Group includes the
share of profit or loss of associated companies after tax.
Segmental reporting
A business segment is where a group of assets and operations are
engaged in providing services that are subject to risks and returns
that are different from other business segments. The Group has only
one class of business and a summary of revenue by geographical
market is set out in note 2. The results of the Company's
Associated Company, MUSA, are included as share of results of
Associated Company in the Income Statement.
Revenue recognition
Revenue represents income recognised by the Group in respect of
goods and services supplied, royalties from third parties using the
Group's intellectual property and management expertise, exclusive
of trade discounts and Value Added Tax. Revenue is recognised on
dispatch of completed goods, except in the case of bill and hold
sales where revenue is recognised when the risks of ownership have
passed to the customer concerned. Under bill and hold arrangements,
customers request the Group to hold products in Section 5 secured
facilities until collection by their secured carriers has been
undertaken.
Royalty income is accrued during the period then reconciled to
royalty cash receipts on a periodic basis.
Pre-contract costs
Pre-contract costs are carried as an asset where there is
reasonable certainty that the contract will generate future
economic benefits against which the costs will be recovered.
Share options
For equity-settled share-based payment transactions, the Group
measures their value in accordance with IFRS 2, with the
corresponding increase in equity, by reference to the fair value of
equity instruments granted. The fair value of equity instruments is
measured at the date of grant using the Black Scholes method. The
expense is apportioned over the vesting period of the financial
instrument and is based on the numbers which are expected to vest
and the fair value of the financial instruments at the date of
grant. If equity instruments vest immediately, the full expense is
recognised immediately.
Foreign currencies
Monetary assets and liabilities denominated in foreign
currencies are translated into Sterling at rates of exchange ruling
at the date of the statement of financial position. Transactions in
foreign currencies during the year are translated into Sterling at
the rate ruling on the date of the transaction. Exchange gains and
losses arising on transactions are recognised in the consolidated
income statement in the year they arise.
For the purpose of presenting consolidated financial statements,
the assets and liabilities of the Group's foreign operations are
translated at exchange rates prevailing on the date of the
statement of financial position. Income and expense items are
translated at the average exchange rates for the period, unless
exchange rates fluctuate significantly during that period, in which
case the exchange rate at dates of transactions are used. Exchange
differences arising on the translation of assets and liabilities of
the Group's foreign operations at exchange rates prevailing on the
date of the statement of financial position are recognised in other
comprehensive income.
Leasing and hire purchase
Assets obtained under hire purchase contracts and finance leases
are recorded as tangible fixed assets. Assets acquired by finance
lease are depreciated over the shorter of the lease term and their
useful lives. Assets acquired by hire purchase are depreciated over
their useful lives. Finance leases are those where substantially
all of the benefits and risks of ownership are assumed by the
group. Obligations under such agreements are included in current
and non-current liabilities net of finance charge allocated to
future periods. The finance element of the rental payment is
charged to the consolidated statement of total comprehensive income
so as to produce a constant periodic rate of charge on the net
obligation outstanding in each period.
Operating leases
Operating leases and lease payments are recognised as an expense
in the income statement over the lease term on a straight-line
basis, unless another systematic basis is more representative of
the time pattern of the user's benefit
Benefits received and receivable as an incentive to sign an
operating lease are recognised on a straight line basis over the
period until the rent is expected to be adjusted to the prevailing
market rate.
Dividends
Interim dividends paid are recognised in the year in which the
payment is made. Final dividend payments in respect of a financial
year are recognised as a liability in the year in which the
dividend payment is approved by the Company's Shareholders.
Goodwill
Business combinations are accounted for using the acquisition
method. On acquisition, the assets, liabilities and contingent
liabilities of a subsidiary are measured at their fair values at
the date of acquisition. Any excess of the purchase price over the
fair value of the assets and liabilities acquired is recognised as
goodwill. Goodwill is not amortised but is reviewed for impairment
at each date of statement of financial position.Gains, arising when
the price paid for an acquisition is less than the fair value of
its net assets are determined as negative goodwill; these gains are
taken immediately to the Income Statement.
Intangible assets
The Group has valued intangible assets using the income approach
and relief from royalty methodology. Useful economic lives have
been determined for specific assets as follows:-
Trademarks 6 years
Customer relationships 10-15 years
Developed Technology 6 years
Product development 6 years
Development costs
The Group writes off development costs in the period it is
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 then the costs are capitalised and amortised once
commercial production has started or the product comes into
use.
Property, plant and equipment
Leasehold improvements, plant and equipment, computers and motor
vehicles are stated at cost less accumulated depreciation and any
recognised impairment loss. Depreciation is charged so as to write
off the cost of assets over their estimated useful economic lives,
using the following bases:
Leasehold improvements buildings 5 years
Plant and equipment 3-5 years
Computer equipment 3 years
Motor vehicles 25% reducing balance
Impairment
The carrying amounts of the Group's non-financial assets,
inventories and deferred tax assets are reviewed at each period end
to determine whether there is any objective evidence of impairment.
If any indication exists, the asset's recoverable amount is
re-assessed. For goodwill and intangible assets that have an
indefinite useful life, the recoverable amount is estimated at each
period end date.
The recoverable amount of an asset or cash generating unit is
the greater of its value in use and its fair value, less costs to
sell. In assessing value in use, the estimated future cash flows
are discounted to their present value using a discount rate that
reflects current market assessments of the time value of money, and
the risks specific to the asset. For the purpose of impairment
testing, assets are grouped together into the smallest group of
assets that generates cash inflows from continuing use that are
largely independent of the cash inflows of other assets or groups
of assets (the "cash generating unit"). For the purpose of
impairment testing, the goodwill acquired in a business combination
is allocated to cash-generating units that are expected to benefit
from the synergies of the combination.
An impairment loss isrecognisedwhenever the carrying amount of
an asset or its cash-generating unit exceeds its recoverable
amount. Impairment losses are recognised in the income statement
before other comprehensive income. Impairment losses recognised in
respect of cash generating units are allocated first to reduce the
carrying amount of any goodwill allocated to the units and then to
reduce the carrying amount of other assets in the unit on a
pro-rata basis.
Inventories
Inventories are valued at the lower of cost and net realisable
value after making reasonable judgment for obsolete and slow moving
inventories. Cost represents latest purchase price and an
appropriate proportion of directly attributable overheads. The
Group makes specific provisions against obsolete inventory but does
not make general adjustments to the value of inventories held over
time. This assumption is based on the longevity of its main product
and that the components of the main product are not perishable and
do not deteriorate in value. Finished goods acquired in business
acquisitions are valued at sales price, work in progress acquired
in corporate acquisitions is valued at sales price less profit
attributable and further costs to complete.
Carrying value of payables and receivables
Receivables and payables are recorded initially at fair value.
Subsequent measurement is stated at amortised cost. In most cases
trade receivables and payables are stated at the amount expected to
be paid or received, although any trade payables or receivables
held for a significant period may be discounted.
Cash and cash equivalents
Cash and cash equivalents consist of cash balances, deposits
held at banks and other short-term highly liquid investments with
original maturities of three months or less, and bank overdrafts.
Bank overdrafts are shown within bank loans in current liabilities
on the statement of financial position.Bank overdrafts that are
repayable on demand and which form an integral part of the Group's
cash management are included as a component of cash and cash
equivalents in the consolidated statement of cash flows.
Financial liabilities and equity
Financial liabilities and equity instruments are classified
according to the substance of the contractual arrangements entered
into. An equity instrument is any contract that evidences a
residual interest in the assets of the Group after deducting all of
its liabilities.
Bank borrowings
Interest bearing bank loans and overdrafts are initially
recorded at fair value, net of direct issue costs. Subsequent to
initial recognition, loans are recorded at amortised cost with
interest being calculated using the effective interest rate method.
Finance charges, including premiums payable on settlement or
redemption and direct issue costs, are accounted for on an accruals
basis in the income statement using the effective interest rate
method and are added to the carrying amount of the instrument to
the extent that they are not settled in the period in which they
arise.
Financial instruments
Financial instruments are recognised in the statement of
financial position when the Group has become a party to the
contractual provisions of the instruments. Financial instruments
are classified as liabilities or equity in accordance with the
substance of the contractual arrangement, which then determines the
subsequent measurement of the instrument, which is typically
amortised cost or fair value.
Derivative financial instruments
The Group uses derivative financial instruments to hedge its
exposure to interest rate fluctuations. It is not the Group's
policy to trade in derivative financial instruments.
Derivative financial instruments are recognised initially at
cost and are subsequently re-measured and stated at fair value. The
fair value of interest rate swaps is the estimated amount that the
Group would receive or pay to terminate the swap at the date of the
statement of financial position. The gain or loss on re-measurement
to fair value of cash flow hedges in the form of derivative
financial instruments is recognised in the income statement.
Taxation
Current tax is based on taxable profit for the year and is
calculated using tax rates that have been enacted or substantially
enacted. Taxable profit differs from net profit as reported in the
income statement because it is adjusted for items of income or
expense that are taxable or tax deductible in other years
(temporary differences) and items that are never taxable or
deductible (permanent differences). Temporary differences
principally arise from using different values at the date of the
statement of financial position for assets and liabilities than
their respective tax base values. Deferred tax is generally
provided in respect of all these taxable temporary differences at
the date of the statement of financial position.
Deferred tax liabilities are recognised for all taxable
temporary differences. Deferred tax assets are regarded as
recoverable and therefore recognised only when, on the basis of all
available evidence, it is probable that sufficient taxable profits
will be available against which the future reversal of the
underlying temporary differences can be deducted. Such assets and
liabilities are not recognised if the temporary differences arise
from goodwill or from the initial recognition (other than a
business combination) of other assets and liabilities in a
transaction that affects neither the tax profit nor the accounting
profit. The carrying amount of deferred tax assets is reviewed at
each period end and reduced to the extent that it is no longer
probable that sufficient taxable profits will be available to allow
all or part of the asset to be recovered.
The measurement of deferred tax liabilities and assets reflects
the tax consequences that would follow from the manner in which the
Group expects, at the end of the reporting period, to recover or
settle the carrying amount of its assets and liabilities. Deferred
tax assets and liabilities are not netted off against each other
unless they relate to taxes levied by the same authority and arise
in the same taxable entity or in different taxable entities that
intend to recover the tax assets or settle the liabilities
simultaneously on a net basis.
Deferred tax is calculated at the tax rates that are expected to
apply in the period when the liability is settled or the asset is
realised. Deferred tax is charged or credited in the income
statement, except when it relates to items charged or credited
directly to equity, in which case the deferred tax is charged or
credited to equity.
Changes to accounting policies since the previous period end
The following standard and interpretation, issued by the IASB or
the International Financial Reporting Interpretations Committee
("IFRIC"), is effective for the first time in the current financial
year ended 30 September 2013 and has been adopted by the Group with
no significant impact on its results or financial position. This
has been endorsed by the European Union and was applicable from 1
October 2012:
-- IAS 1 (amended) "Presentation of financial statements"
New standards and interpretations not yet adopted in the Group's
accounting policies since the previous period end
The following are other relevant new standards and
interpretations, which have been endorsed by the IASB or the IFRIC
but which were not mandatory during the period under review and
which are not expected to have a material impact on the Group:
-- IFRS 1 (amended) "First time adoption of IFRS"
-- IFRS 7 (amended) "Financial instruments (disclosure)"
-- IFRS 9 "Financial instruments"
-- IFRS 13 "Fair value measurement"
-- IAS 27 (amended) "Separate financial statements"
-- IAS 28 (amended) "Investments in associates"
-- IAS 32 (amended) "Financial instruments (presentation)"
-- IAS 36 (amended) "Impairment of assets"
-- IFRS 10 "Consolidated financial statements"
-- IFRS 11 "Joint arrangements"
-- IFRS 12 "Disclosure of interests in other entities"
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 overseas based asset, being the Group's net
interest in its Associated Company MUSA. The Group's revenue for
the year ended 30 September 2013 is summarised below:
Region Year ended % Year ended %
30 September 30 September
2013 2012
GBP'000 GBP'000
United Kingdom 1,679 19 5,002 72
Europe 1,582 18 1,726 25
North America 287 3 136 2
South America - - 49 1
Asia and Australasia 5,207 60 19 -
---------------------- -------------- ---- -------------- ----
Total trade revenue 8,755 100 6,932 100
Royalty income 111 460
---------------------- -------------- ---- -------------- ----
Total revenue 8,866 7,392
====================== ============== ==== ============== ====
Revenue generated in MUSA is not included within the
consolidated revenue of the Group as it is an Associated Company.
Therefore the above table summarises the revenue generated by all
of the Group's other operations.
3. Employee costs
Year ended Year ended
30 September 30 September
2013 2012
GBP'000 GBP'000
Wages and salaries 1,266 784
Social security costs 126 108
Pension costs 26 24
Charges relating to share options 3 15
Other personnel related costs 106 77
----------------------------------- -------------- --------------
1,527 1,008
=================================== ============== ==============
Number Number
Administrative 23 17
Production 37 33
----------------------------------- -------------- --------------
Average number of employees 60 50
=================================== ============== ==============
Details of share based payments are shown in note 25. The
average number of employees was increased by 10 during the year,
mainly as a result of the acquisition of Base (note 11.3).
Compensation arrangements for key management personnel are
described in the Report on Remuneration of Directors.
4. Costs relating to acquisitions
Year ended Year ended
30 September 30 September
2013 2012
GBP'000 GBP'000
Cost incurred in acquiring the trade 111 -
and assets of Base Enamellers Ltd
and RJL Engineering
111 -
===================================== ============== ==============
5. Finance income and expenses
5.1 Finance income
Year ended Year ended
30 September 30 September
2013 2012
GBP'000 GBP'000
Bank and other interest received 77 2
Total finance income 77 2
================================== ============== ==============
5.2 Finance expenses
Year ended Year ended
30 September 30 September
2013 2012
GBP'000 GBP'000
Interest payable on bank borrowings 55 49
Interest payable on other loans and
finance leases 3 2
Other similar charges 2 -
------------------------------------- -------------- --------------
Total finance expense 60 51
===================================== ============== ==============
6. Loss before tax
Year ended Year ended
30 September 30 September
2013 2012
GBP'000 GBP'000
----------------------------------------------- -------------- --------------
The following items have been charged
against the loss before tax:
Depreciation and amortisation
- property, plant and equipment owned (195) (162)
- property, plant and equipment acquired
under finance leases (19) (22)
- intangible assets (1,059) (1,059)
Operating lease payments (124) (101)
Net foreign exchange gains / (losses) (67) (140)
Auditors' remuneration:
Audit of financial statements of the
Company (38) (32)
Audit of financial statements of subsidiaries (38) (33)
Tax compliance services (19) (15)
Other services (9) (6)
Non - recurring acquisition diligence
fees (41) (25)
Further details relating to the work undertaken by the Company's
auditors are set out in the Audit Committee section of the Report
on Corporate Governance.
7. Provisions and charges relating to Investment in Associated
Company
Year ended Year ended
30 September 30 September
2013 2012
GBP'000 GBP'000
Provision for impairment of investment (3,182) -
in Associated company (note 11)
Provision for impairment of loan to (1,490) -
Associated Company (note 14)
Exchange difference between average (174) -
and year end exchange rates
--------------------------------------- -------------- --------------
(4,846) -
Costs incurred on strategic review (275) -
of investment in Associated Company
(5,121) -
======================================= ============== ==============
Since the year end, negotiations with Herstal as referred to in
note 22 have been undertaken. It was a requirement of Herstal that
before it made the Herstal Offer, which the Board believes
represents good value for Shareholders, the Group should dispose of
its 49% interest in MUSA. In the second half of the calendar year
ended 31 December 2013 and to February 2014, the Board was in
negotiations with a number of interested parties over the sale of
this interest but these negotiations have not succeeded for a
variety of different reasons. By late February 2014, and in order
to secure the Herstal Offer, it became necessary to dispose of the
Group's interest in MUSA at a nominal value. This disposal is
referred to in further detail in notes 22 and has resulted in the
above charge relating to the Group's investment in MUSA in the
results for the year ended 30 September 2013. However, by
completing this disposal, the Board has enabled the announcement
today of the Herstal Offer at a significant premium to the share
price immediately prior to announcement of talks relating to the
potential offer in November 2013 The GBP275,000 of costs incurred
relate to those costs directly attributable to the strategic review
and ultimate disposal of the interest in the Associated
Company.
8. Tax credit
Year ended Year ended
30 September 30 September
2013 2012
Continuing operations GBP'000 GBP'000
Prior year tax adjustment:-
Relating to research and development
expenditure 61 56
Over accrual for prior period - 44
-------------------------------------- -------------- --------------
61 100
Current tax - (26)
Movement in deferred tax 247 507
Tax credit for the year 308 581
====================================== ============== ==============
Taxation has been calculated by applying the standard corporate
tax rates ruling in the operating territories of the Group. The
difference between the total current tax shown above and the amount
calculated by applying the standard rates of corporation tax to the
profit before tax is as follows:
Year ended Year ended
30 September 30 September
2013 2012
GBP'000 GBP'000
---------------------------------------------- -------------- --------------
Loss before tax (6,619) (2,078)
============================================== ============== ==============
Tax credit on loss at an average rate
of 24% (2012: 25%) 1,588 520
Factors affecting charge:-
Negative goodwill not taxable 7 -
Amortisation of intangible assets
not allowable for taxation purposes (254) (265)
Capital allowances in excess of depreciation 10 (5)
Loss by Associated Company not allowable (161) (231)
Loss on disposal of Associated Company (1,163)
not allowable -
Expenditure not allowable for taxation
purposes (45) (20)
Tax recoverable from research and
development 208 120
Group charges to US subsidiary not
allowable (64) (141)
Adjustment for share option charges (1) (4)
Losses not utilised in year and carried (87)
forward -
Losses not utilised in year and not (38) -
provided for as deferred tax asset
Current tax charge for the year - (26)
============================================== ============== ==============
9. Loss per share
The loss per share figures have been calculated as follows
Year ended Year ended
30 September 30 September
2013 2012
Basic loss per share
Loss per Consolidated Income
Statement GBP'000 (6,311) (1,497)
Weighted average number of
shares in issue during the
year '000 19,044 18,222
Loss per share Pence (33.1) (8.2)
============================== ========= ============== ==============
Diluted loss per share
The share options are antidilutive due to the loss for the year,
and therefore diluted loss per share is not appropriate.
Adjusted diluted earnings per Year ended Year ended
share 30 September 30 September
2013 2012
Profit per adjusted Consolidated
Income Statement GBP'000 195 139
Diluted weighted average number
of shares in issue during year '000 19,568 18,762
Earnings per share Pence 1.0 0.7
================================== ========= ============== ==============
10. Intangible assets
10.1 Goodwill
GBP'000
Carrying amount at 1 October 2012 and 30 September
2013 303
==================================================== ========
Goodwill acquired in a business combination is allocated at
acquisition to the cash generating units that are expected to
benefit from that business combination. The carrying amount of
goodwill had been allocated to Manroy Engineering Limited, the
Company's wholly owned subsidiary.
At 30 September 2013 the value in use of goodwill was determined
by discounting future cash flows from continuing use of the cash
generating unit. This is based on projected cash flows to 30
September 2014 and further projections to 30 September 2018 to
produce a 5 year cash flow model. A nil growth assumption has been
applied to cash flows from the end of year 3. A pre-tax discount
rate of 10 per cent. was applied to resultant cash flows to
determine value in use at 30 September 2013. The impairment review
at 30 September 2013 supported the value in use of the goodwill and
accordingly goodwill has been retained at a value of GBP303,000 in
these financial statements.
Deferred consideration is payable on the acquisition of the
business and assets of AEI for two years from the date of
acquisition. This was calculated based on forecast revenues at the
time of acquisition, at the highest rate payable of 7 per cent. of
AEI related revenue and provided in these financial statements. If
actual revenue generated matches forecast revenue then the full
deferred consideration will be covered by the provisions already
made. If revenues fall below the expected revenues then the
deferred consideration would be over provided and any residual
balance would be credited the income statement at the end of the
two year period. 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 charged to the income statement against the higher profit
levels as it arose
10.2 Other intangible assets
Customer Developed Product
Trademarks relationships technology development Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Cost or valuation
At 30 September
2011 548 6,871 1,684 190 9,293
Additions in the
year - - - 357 357
-------------------------- ------------- --------------- ------------ ------------- --------
At 30 September
2012 548 6,871 1,684 547 9,650
Additions in the
year - - - 516 516
-------------------------- ------------- --------------- ------------ ------------- --------
At 30 September
2013 548 6,871 1,684 1,063 10,166
-------------------------- ------------- --------------- ------------ ------------- --------
Accumulated amortisation
At 30 September
2011 68 515 211 - 794
Charge for the
year 91 687 281 - 1,059
-------------------------- ------------- --------------- ------------ ------------- --------
At 30 September
2012 159 1,202 492 - 1,853
Charge for the
year 91 687 281 - 1,059
-------------------------- ------------- --------------- ------------ ------------- --------
At 30 September
2013 250 1,889 773 - 2,912
-------------------------- ------------- --------------- ------------ ------------- --------
Net book value
at 30 September
2013 298 4,982 911 1,064 7,255
========================== ============= =============== ============ ============= ========
Net book value
at 30 September
2012 389 5,669 1,192 547 7,797
========================== ============= =============== ============ ============= ========
The amortisation period of intangible assets is 8 years for
customer relationships and 4 years for trademarks and developed
technology. Product development costs are amortised over 6 years
from the date of shipment of the first completed unit, with GPMG
development costs commencing to be amortised from October 2013.
11. Investment in Associated Company
At 30 September 2011 4,630
Results for the year to 30 September 2012 (922)
Exchange movements on translation at year end (128)
----------------------------------------------- --------
At 30 September 2012 3,580
Share of results for the year to 30 September
2013 (414)
Exchange movements on translation at year end 16
Write off of investment on disposal (note 7) (3,182)
----------------------------------------------- --------
At 30 September 2013 -
=============================================== ========
At 30 September 2013, Manroy had a net investment in MUSA of
GBP3,182,000 as referred to above. Since the year end, negotiations
with Herstal as referred to in note 22 have been undertaken and as
part of those negotiations, Herstal required disposal of the
Group's interest in MUSA before it would make the Herstal Offer. In
the second half of the calendar year ended 31 December 2013 and to
February 2014, the Board was in negotiations with a number of
interested parties over the sale of the Group's 49% interest in
MUSA but these negotiations have not succeeded for a variety of
different reasons. By late February 2014, and in order to secure
the Herstal Offer, it became necessary to dispose of the Group's
interest in MUSA at a nominal value. This disposal is referred to
in further detail in note 22. This disposal was concluded on 28
March 2014 and resulted in an adjusting post balance sheet
impairment charge of GBP3,182,000 in the results for the year ended
30 September 2013 and is referred to further in note 7 to the
financial statements. By completing this disposal, the Board has
enabled the announcement on 28 March 2014 of the Herstal Offer at a
significant premium to the share price immediately prior to the
announcement of talks relating to the potential offer in November
2013.
11.1 MUSA Income statement
Year ended Year ended
30 September 30 September
2013 2012
GBP'000 GBP'000
Revenue 3,908 1,375
Cost of operations (1,941) (1,028)
Gross profit 1,967 347
Administrative expenses (1,782) (881)
Depreciation (360) (327)
Amortisation of intangibles (324) (321)
Non-recurring costs and costs associated
with relocation (39) (572)
Results from operating activities (538) (1,754)
Net finance expense (306) (128)
Loss before taxation (844) (1,882)
Taxation - -
------------------------------------------ -------------- --------------
Loss after taxation for the period (844) (1,882)
========================================== ============== ==============
Loss of Associate Company recognised
in Statement of Comprehensive Income
- 49% Group share (414) (922)
========================================== ============== ==============
11.2 MUSA Balance sheet
30 September 30 September
2013 2012
GBP'000 GBP'000
Non-current assets 7,309 7,932
Current assets 3,047 3,345
------------------------------------- ------------- -------------
Total assets 10,356 11,277
------------------------------------- ------------- -------------
Current liabilities (2,136) (1,045)
Non-current liabilities (1,725) (2,925)
Total liabilities (3,861) (3,970)
------------------------------------- ------------- -------------
Net assets 6,495 7,307
===================================== ============= =============
49% Group share of net assets prior
to disposal of interest 3,182 3,580
===================================== ============= =============
11.3 Negative goodwill arising on acquisition of trade and assets of Base
The Group completed the acquisition of the business and assets
of Base on 28 February 2013. Negative goodwill of GBP28,000 arose
on this acquisition as follows:
Year ended
30 September
2013
GBP'000
Cash paid on acquisition 775
Less deferred consideration (22)
----------------------------------------- ------
Total net consideration 753
Less net fair value of trade and assets
of the business at acquisition (note
11.4) (781)
Negative goodwill (28)
========================================= ======
11.4 Assets acquired at acquisition
At acquisition
on
28 February
2013
GBP'000
Non-current assets
Property, plant and equipment 484
Current assets
Inventories 322
Other debtors 25
-------------------------------------------------- ---------------
Total assets 831
Current liabilities
Trade and other payables (50)
-------------------------------------------------- ---------------
Net assets at acquisition 781
================================================== ===============
11.5 Base (Manroy) Limited Income Statement
From date of acquisition on 28 February 2013 to 30 September
2013.
GBP'000
Revenue 1,115
Cost of sales (623)
Gross profit 492
Administrative expenses (396)
Profit before taxation 96
Taxation -
------------------------- --------
Profit for the period 96
========================= ========
Base was formed in 1972 and is a high precision engineering
company located in Erith, Kent. A number of important specialist
engineering capabilities were brought into the Manroy Group as a
result of this acquisition. Historically Base had worked with
Manroy as a strategic supplier on significant manufacturing
elements of the GPMG production programme and this is
continuing.
12. 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 6 133 40 179
Disposals - (13) (18) (31)
----------------------------------------- ----------------------- -------------------- --------------- --------
At 30 September 2012 129 490 43 662
Additions at cost 14 96 - 110
Acquisition of trade and assets of Base 140 344 - 484
Disposals - - (40) (40)
----------------------------------------- ----------------------- -------------------- --------------- --------
At 30 September 2013 283 930 3 1,216
----------------------------------------- ----------------------- -------------------- --------------- --------
Accumulated depreciation
At 30 September 2011 10 99 4 113
Charge for the year 23 155 6 184
Disposals - (1) (8) (9)
----------------------------------------- ----------------------- -------------------- --------------- --------
At 30 September 2012 33 253 2 288
Charge for the year 33 174 7 214
Disposals - - (7) (7)
----------------------------------------- ----------------------- -------------------- --------------- --------
At 30 September 2013 66 427 2 495
========================================= ======================= ==================== =============== ========
Net book value at 30 September 2013 217 503 1 721
========================================= ======================= ==================== =============== ========
Net book value at 30 September 2012 96 237 41 374
========================================= ======================= ==================== =============== ========
13. Inventories
30 September 30 September
2013 2012
GBP'000 GBP'000
Inventories 2,293 2,155
Work in progress 682 947
------------------ ------------- -------------
2,975 3,102
================== ============= =============
GBP4,389,000 of inventories purchased were expensed in the year
(2012: GBP3,988,000)
14. Trade and other receivables
30 September 30 September
2013 2012
GBP'000 GBP'000
Trade receivables 2,257 2,182
Loan to Associated Company - 1,327
Other receivables 151 200
Prepayments and accrued income 604 494
-------------------------------- ------------- -------------
3,012 4,203
================================ ============= =============
In accordance with negotiations leading to the Herstal Offer
referred to in note 22 to the financial statements, the Company's
interest in MUSA was disposed of on 28 March 2014 and the Company's
loan to MUSA of GBP1,490,000 was written off. This disposal has
assisted in securing the Herstal Offer at the Herstal Offer Price
which the Board believes represents good value to Shareholders.
Further details of the Herstal Offer are set out in note 22 to the
financial statements.
Trade and other receivables are financial assets, the book
values of these are considered by the Board to be equal to their
fair value.
At 30 September 2013 trade receivables of GBP273,000 (2012:
GBP469,000) were past their due date for payment but were not
considered to be impaired. These relate to a number of independent
customers for whom there is no recent history of default. The
ageing of these trade receivables is as follows:
30 September 30 September
2013 2012
GBP'000 GBP'000
Up to 3 months 199 419
3 to 6 months 67 50
Over 6 months 7 -
---------------- ------------- -------------
273 469
================ ============= =============
15. Trade and other payables
30 September 30 September
2013 2012
GBP'000 GBP'000
Trade payables and other payables 1,310 2,110
Other tax and social security 160 53
Accruals and deferred income 394 404
----------------------------------- ------------- -------------
1,864 2,567
=================================== ============= =============
Within accruals is GBP240,000 (2012: GBP240,000) provided for
deferred payments on the 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. No
additional accruals for this were required during the year ended 30
September 2013.
16. Bank loans
30 September 30 September
2013 2012
GBP'000 GBP'000
Current
Overdraft facilities 914 -
Due within one year or on demand (Secured) 1,760 700
Non-current
Repayable within two to five years
(Secured) - 180
2,674 880
============================================ ============= =============
New bank facilities were completed as part of the acquisition of
trade and assets of Base in February 2013. These were revised in
December 2013 and comprise a GBP2.1 million term loan with
quarterly repayments of GBP175,000 over three years, at an interest
rate of 4.1% above LIBOR and an overdraft facility of GBP1 million
at an interest rate of 4.75% above LIBOR. As security for this
loan, the Group's principal operating subsidiary, Manroy
Engineering Limited, granted a debenture supported by fixed and
floating charges over its assets, and Manroy Plc provided an
unsecured guarantee.
17. Financial risk management
Financial Instruments
Financial assets by category
30 September 30 September
2013 2012
GBP'000 GBP'000
Financial assets - non-current
Investment in Associated Company - 3,580
Short term loans to Associated Company - 1,327
--------------------------------------------- ------------- -------------
- 4,907
--------------------------------------------- ------------- -------------
Financial assets - current
Trade and other receivables - maturity
within one year 2,408 2,382
Cash and cash equivalents - maturity within
one year 13 286
--------------------------------------------- ------------- -------------
2,421 2,668
--------------------------------------------- ------------- -------------
Financial liabilities - current
Bank loans and borrowings (2,674) (700)
Trade and other payables - maturity within
one year (1,470) (2,163)
Finance leases (2) (23)
(4,146) (2,886)
--------------------------------------------- ------------- -------------
Financial liabilities - non-current
Bank loans and borrowings - (180)
Finance leases - (26)
- (206)
--------------------------------------------- ------------- -------------
There are no financial assets classed as assets held to
maturity. There is no material difference between the book values
and fair values of the Group's financial assets and financial
liabilities because of the relative short-term nature of the
respective instruments. All material financial assets and
liabilities are in Sterling.
Capital risk management
The Group manages its capital to ensure that the Group will be
able to continue as a going concern, whilemaximisingthe return to
stakeholders through the optimisation of the debt and equity
balance. The capital structure of the Group consists of debt, cash
and cash equivalents and equity attributable to equity holders of
Manroy, comprising issued capital and retained earnings.
Financial risk management objectives
The Group's operations expose it to a variety of financial risks
including the effects of changes in interest rates on borrowings,
foreign currency exchange rates, credit risk and liquidity
risk.
Interest rate risk
Interest bearing assets comprise cash and bank deposits, which
earn interest at market rates.
The bank borrowings of the Group at 30 September 2013 incur
interest at LIBOR plus 4.75% on the overdraft and LIBOR plus 4.1%
on the loan. The only variable element on these rates is LIBOR
which is kept under review by the Board.
Credit risk
The Group's exposure to credit risk is limited to the carrying
amount of trade and other receivables recognised at the date of the
consolidated statement of financial position. At 30 September 2013
the amount subject to credit risk was GBP2.4 million (2012: GBP.2.7
million).
The Board considers that the Group's financial assets are not
impaired for each of the reporting dates under review and are of
good credit quality. None of the Group's financial assets are
secured by collateral or other credit enhancements. In respect of
trade and other receivables, the Group is not exposed to any
significant credit risk exposure to any single counterparty or any
company of counterparty having similar characteristics. The credit
risk for liquid funds and other short-term financial assets is
considered negligible, since the counterparties are reputable
governmentorganisationswith high quality external credit
ratings.
Liquidity risk
Liquidity risk is defined as the risk that the Group will
encounter difficulties in meeting obligations associated with
financial liabilities that are settled by delivering cash or
another financial asset. The liquidity requirements are monitored
by the Board and funding is planned in such a way as to avoid
excessive short-term needs. The long-term liquidity risk is
assessed prior to each major investment decision. In February 2013
the Group improved its bank facilities with a new GBP2.1 million
loan and an increased overdraft facility of GBP1.0 million. At 30
September 2013, GBP0.1 million of the overdraft facility was not
used and GBP0.3 million of the loan facility had been repaid. The
bank facilities were completed as part of the acquisition of trade
and assets of Base in February 2013. These were revised in December
2013 and still comprise a GBP2.1 million term loan with quarterly
repayments of GBP175,000 over three years.
Foreign exchange risk
The Group is exposed in its trading operations to the risk of
changes in foreign currency exchange rates. The main foreign
currencies in which the Group operates are the Euro and the US
dollar.
18. Obligations under finance leases
The Group's financial lease liabilities at the year-end are as
follows:
30 September 30 September
2013 2012
GBP'000 GBP'000
Less than one year 2 23
Two to five years - 26
------------------------------------ ------------- -------------
Present value of lease obligations 2 49
==================================== ============= =============
19. Deferred tax
The movement on deferred tax liability arose as follows:
30 September 30 September
2013 2012
GBP'000 GBP'000
At beginning of the year 1,777 2,283
---------------------------------------------- ------------- -------------
Effect of change in tax rate (159) (228)
Deferred tax on tax losses carried forward (42) -
Tax charged on differences between net 11 -
book value and taxable value of tangible
assets
Tax charged on differences between net 187 -
book value and taxable value of capitalised
development costs
Tax credited on intangible assets acquired
in Manroy Systems (244) (264)
Tax credited on intangible assets acquired
in MUSA - (14)
---------------------------------------------- ------------- -------------
Total credited to tax charge in income
statement in the year (247) (506)
---------------------------------------------- ------------- -------------
1,530 1,777
============================================== ============= =============
Deferred tax was provided at acquisition because amortisation of
intangible assets is non-deductible for corporation tax purposes.
Deferred tax totalling GBP2,494,000 recorded on the acquisition of
Manroy Systems in 2010 and MUSA in 2011 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 intangible assets acquired. GBP157,000 of deferred tax assets
arising from tax losses were not credited to deferred tax at 30
September 2013.
20. Share capital
Number of GBP'000
Ordinary Shares
At 30 September 2012 and 30 September
2013 19,044,202 952
======================================= ================= ========
21. Other reserves
21.1 Exchange reserves
Arising on translation of overseas net assets
30 September 30 September
2013 2012
GBP'000 GBP'000
Balance brought forward 109 158
Exchange movement on translation
of investment in Associated Company 206 (49)
315 109
====================================== ============= =============
This reserve represents the cumulative exchange differences that
have arisen on translation of the net assets of the Company's
overseas Associated Company, which are expected to be transferred
to retained profits as a result of the disposal of the investment
on 28 March 2014.
21.2 Special reserve
30 September 30 September
2013 2012
GBP'000 GBP'000
Balance brought forward 6 59
Credit to retained earnings during
the year on settlement of liabilities (5) (53)
1 6
======================================== ============= =============
21.3 Merger reserve
This reserve was created in accordance with Section 612 of the
Companies Act 2006 on issue of shares to acquire Manroy Systems
Limited in 2010.
22. Adjusting post balance sheet events
22.1 Disposal of investment in Associated Company
Since the year end, negotiations with Herstal have been
undertaken and as part of those negotiations, Herstal required
disposal of the Group's 49% interest in MUSA before it would make
the Herstal Offer. In the second half of the calendar year ended 31
December 2013 and to February 2014, the Board was in negotiations
with a number of interested parties over the sale of this interest
but these negotiations have not succeeded for a variety of
different reasons. By late February 2014, and in order to secure
the Herstal Offer, it became necessary to dispose of the Group's
interest in MUSA at a nominal value.
This has been undertaken by a disposal of the Company's 100%
interest in MUSA Holdings Inc, (which holds the Group's 49%
interest in MUSA) and was completed on 28 March 2014. This has
resulted in adjusting post balance sheet events writing off the
Company's investment in MUSA and loan to MUSA in the results for
the year ended 30 September 2013, as referred to in note 7.
By completing this disposal, the Board has enabled the
announcement today of the Herstal Offer at a significant premium to
the share price before the talks with Herstal were announced on 26
November 2013 and at a premium to the current share price, which
the Board believes represents good value to Shareholders.
22.2 Herstal Offer
On 28 March 2014, Herstal announced the Herstal Offer for the
entire issued share capital of the Company at the Herstal Offer
Price of 85p per share, valuing the Company at GBP16.2 million.
Further details of the Herstal Offer and the Board's recommendation
to Shareholders to accept the Herstal Offer are included in the
announcement issued by Herstal on 28 March 2014 and will be
amplified further in the Herstal Offer Document.
22.3 Bank Facilities
New bank facilities were completed in December 2013 and now
comprise a GBP2.1 million term loan with quarterly repayments of
GBP175,000 over three years, at an interest rate of 4.1% above
LIBOR and an overdraft facility of GBP1 million at an interest rate
of 4.75% above LIBOR.As security for this loan, the Group's
principal operating subsidiary, Manroy Engineering Limited, granted
a debenture supported by fixed and floating charges over its
assets, and Manroy Plc provided an unsecured guarantee.
23. Related party transactions
On 3 December 2010, the Company entered into an agreement for
the acquisition of Manroy Systems Limited, pursuant to which Glyn
Bottomley agreed to sell his entire issued share capital of Manroy
Systems Limited to the Company for 2,068,633 Ordinary Shares at 75
pence per share. No changes have been made to this agreement during
the year ended 30 September 2013. Under the acquisition agreement,
Glyn Bottomley gave warranties to the Company regarding Manroy
Systems Limited and Manroy Engineering Limited relating to
taxation, subject to a maximum liability of GBP1.5 million. Claims
under these warranties must be must be made by 23 December
2017.
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 year ended 30 September 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 3 December 2010, the Company entered into Lock-In and Orderly
Market Agreements with the Concert Party Members. No changes have
been made to this agreement during the year ended 30 September
2013. Under these agreements, any dealings by a Concert Party
Member who is a Director are subject to the Company's code of
dealing, and any disposals by any Concert Party Member 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 report.
Maher Limited, an international materials supplier involved in
the defence sector, provides certain raw materials to the Group on
normal arm's length commercial terms. Maher Limited also provided
upfront working capital to MUSA during the year ended 30 September
2013 to assist in production of products to be purchased by Manroy
for development and sale. Gerry Clark, a Non-Executive Director of
the Company, is a director of Maher Limited.
In January 2014, the Company announced it was expanding
production of military rifles, funded to a maximum of GBP0.75
million by a loan from Caledonian Heritable Limited ("Caledonian"),
a Concert Party Member. This funding and associated interest
totalling GBP0.35m is structured to be repaid by 28 November 2014
from the cashflow receivable by Manroy on sales of the resultant
products. Given Caledonian's shareholding in the Company, entry
into the Loan Agreement by the Company was considered to be a
related party transaction pursuant to Rule 13 of the AIM Rules for
Companies. The Directors, having consulted with the Company's
nominated adviser Allenby Capital Limited, considered that the
terms of the financing were fair and reasonable insofar as the
Company's shareholders were concerned.
During the year ended 30 September 2013, the Group accrued
consultancy fees of GBP118,000 (2012: GBPNil) and paid marketing,
in country customer trials, testing and development fees of GBPNil
(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 year.
During the year ended 30 September 2013, the Group purchased
goods from MUSA for GBP67,000 (2012: GBP3,000) and sold goods to
MUSA for GBP208,000 (2012: GBP52,000). In addition to this, the
Group wrote off its loan to MUSA in accordance with the adjusting
post balance sheet event referred to in note 22.
Apart from these contracts and the service contracts and letters
of engagement between the Directors and the Company, no contract
existed during the year ended 30 September 2013 in relation to the
Group's business in which any Director was interested.
24. Operating lease commitments
At 30 September 2013, the Group had the following total
commitments under non-cancellable operating leases:
Land and buildings
2013 2012
GBP'000 GBP'000
Expiry Date:
Current year 131 84
Between 2 and 5 years 470 115
Between 5 and 10 years 377 59
------------------------ ---------- ---------
978 258
======================== ========== =========
As part of the acquisition of Base, the Group entered into two
new rental lease commitments and renewed a rental lease at one of
the existing factories in East Sussex.
25. Share based payments
In December 2010, the Company adopted an Enterprise Management
Incentive Scheme over a maximum of 10% of the Company's issued
share capital, with performance targets set by the Board at the
date of grant of awards. The options outstanding are as
follows:
Number of shares Weighted
under option average exercise
price
Outstanding at 30 September 2011 339,560 89p
Granted on 28 October 2011 217,250 95p
Lapsed during the year (5,000)
Outstanding at 30 September 2012 551,810 91p
Lapsed during the year (21,750) 91p
Outstanding at 30 September 2013 530,060 91p
================================== ================= ==================
The options outstanding at 30 September 2013 had a weighted
average remaining contractual life of 5 years. The aggregate
estimated fair values of the option granted at 30 September 2013
was GBP23,000 (2012: GBP20,000). The inputs into the Black-Scholes
model for the year to assess charges relating to options were as
follows:
2013 2012
Weighted average share price 91p 91p
Weighted average exercise price 91p 91p
Expected volatility 12.8% 12.8%
Expected life 10 years 5 years
Risk free rate 1.6 % 4.0 %
Expected dividend yield 2 % 2 %
Expected volatility was determined by calculating the historic
volatility of the Group's share price since Admission in December
2010, together with similar companies in the Company's industry
sector. The expected life used in the model has been adjusted,
based on management's best estimate, for the effects of
non-transferability, exercise restrictions and behavioural
considerations.
Of the options outstanding at 30 September 2013, 239,560 were
issued prior to 30 September 2008 and do not have performance
criteria. The balance of 290,500 options were issued under the
Company's Enterprise Management Incentive Schemeand are exercisable
subject to the Group's outperformance measured against market
forecasts of EPS and revenue growth over a three year period.
26. Financial liabilities
At 30 September 2013, the Company had entered into unsecured
guarantees relating to two financing facilities provided to MUSA,
jointly with the 51% owner of MUSA, totalling $1.3 million (GBP0.8
million), which are primarily secured on MUSA's property and
machinery and an unsecured undertaking relating to funds advanced
to MUSA totalling $0.5 million (GBP0.3 million). The Directors have
assessed the fair value of these liabilities as GBPNil based on the
probability of payment and the fact that they are asset backed.
27. Ultimate controlling party
At 30 September 2013 there was no ultimate controlling party of
the Group. The Concert Party Members are deemed by the Panel on
Take-overs and Mergers to control the Group under the terms of the
City Code. The Relationship Agreement managing this relationship
between Concert Party members and the Company will continue in
force for so long as the Ordinary Shares are admitted to AIM.
PARENT COMPANY BALANCE SHEET
REGISTERED NUMBER: 2451413
Notes 30 September 30 September
2013 2012
GBP'000 GBP'000
Fixed assets
Investments 30 3,061 4,916
3,061 4,916
-------------------------------- ------ ------------- -------------
Current assets
Debtors and prepayments 31 6,844 10,673
Cash 1 1
-------------------------------- ------ ------------- -------------
6,845 10,674
Creditors: amounts falling due
within one year 32 (1,685) (774)
-------------------------------- ------ ------------- -------------
Net current assets 5,160 9,900
Net assets 8,221 14,816
================================ ====== ============= =============
Capital and reserves
Called up share capital 33 952 952
Share premium account 704 704
Special reserve 1 6
Merger reserve 1,457 1,457
Profit and Loss account 5,107 11,697
Total equity 8,221 14,816
================================ ====== ============= =============
The notes form part of these financial statements. Approved by
the Board of Directors on 28 March 2014 and signed on its behalf
by:
G. P. Bottomley P. J. Carter
Chief Executive Finance Director
Notes to the Parent Company financial statements
28. Accounting policies for Parent Company financial
statements
The following accounting policies have been applied consistently
in dealing with items which are considered material in relation to
the financial statements of the Company.
Basis of preparation
The financial statements have been prepared in accordance with
applicable accounting standards (United Kingdom Generally Accepted
Accounting Practice) and under the historical cost accounting
rules.
Under section 408 of the Companies Act 2006, the Company is
exempt from the requirement to present its own profit and loss
account. Under Financial Reporting Standard 1, the Company is
exempt from the requirement to prepare a cash flow statement in
respect of its own operations, on the grounds that the consolidated
cash flow statement included in these published consolidated
financial statements includes the cash flow of the Company. The
Company has taken advantage of the exemption in FRS8, "Related
Party Disclosures" from the requirement to disclose related party
transactions on the grounds that it has presented this in its
consolidated financial statements.
Results of the Company
The loss for the Company during the year ended 30 September 2013
was GBP6,595,000 (2012: profit GBP97,000).
Going concern review
The provisions of the Combined Code require directors to confirm
whether, after making appropriate enquires, they have reasonable
expectations that the Company has adequate financial resources to
continue in operational existence for the foreseeable future.
As part of their regular financial management of the Company,
the Directors review the detailed cash flow projections of the
Group. These cash flow projections include the net cash flows
arising from operations, capital expenditure proposals and the
financial effect of planned business expansion and disposals. The
projections take into account all bank and other financing
facilities available to the Group and assess the cash flow adequacy
of the Group on a month by month basis for a fifteen month forward
period. After making such enquiries as they consider appropriate,
the Directors consider that there is a reasonable expectation that
the Group has adequate cash and related financial resources to
continue in business for the foreseeable future. The Directors have
therefore adopted the going concern basis in the preparation of the
financial statements for the year ended 30 September 2013.
Revenue recognition
Revenue represents income recognised by the Company in respect
of management fees and services charged to other Group companies,
exclusive of trade discounts and Value Added Tax.
Foreign currencies
Monetary assets and liabilities denominated in foreign
currencies are translated into Sterling at rates of exchange ruling
at the balance sheet date. Transactions in foreign currencies
during the year are translated into Sterling at the rate ruling on
the date of the transaction. Exchange gains and losses arising on
transactions are recognised in the consolidated income statement in
the year they arise.
For the purpose of presenting consolidated financial statements,
the assets and liabilities of the Company's foreign operations are
translated at exchange rates prevailing on the balance sheet date.
Income and expense items are translated at the average exchange
rates for the period, unless exchange rates fluctuate significantly
during that period, in which case the exchange rate at dates of
transactions are used. Exchange differences arising on the
translation of assets and liabilities of the Company's foreign
operations at exchange rates prevailing on the balance sheet date
are recognised in other comprehensive income.
Operating leases
Rentals under operating leases are charged on a straight line
basis over the lease term. Benefits received and receivable as an
incentive to sign an operating lease arerecognisedon a straight
line basis over the period until the rent is expected to be
adjusted to the prevailing market rate.
Dividends
Interim dividends paid are recognised in the year in which the
payment is made. Final dividend payments in respect of a financial
year are recognised as a liability in the year in which the
dividend payment is approved by the Company's Shareholders.
Carrying value of payables and receivables
Receivables and payables are recorded initially at fair value.
Subsequent measurement is stated at amortised cost. In most cases
trade receivables and payables are stated at the amount expected to
be paid or received, although any trade payables or receivables
held for a significant period may be discounted.
Cash and cash equivalents
Cash and cash equivalents consist of cash balances, deposits
held at banks and other short-term highly liquid investments with
original maturities of three months or less, and bank overdrafts.
Bank overdrafts are shown within bank loans in current liabilities
on the balance sheet. Bank overdrafts that are repayable on demand
and which form an integral part of the Company's cash management
are included as a component of cash and cash equivalents in the
consolidated statement of cash flows.
Financial liabilities and equity
Financial liabilities and equity instruments are classified
according to the substance of the contractual arrangements entered
into. An equity instrument is any contract that evidences a
residual interest in the assets of the Company after deducting all
of its liabilities.
Taxation
Current tax is based on taxable profit for the year and is
calculated using tax rates that have been enacted or substantially
enacted. Taxable profit differs from net profit as reported in the
income statement because it is adjusted for items of income or
expense that are taxable or tax deductible in other years
(temporary differences) and items that are never taxable or
deductible (permanent differences). Temporary differences
principally arise from using different balance sheet values for
assets and liabilities than their respective tax base values.
Share options
For equity-settled share-based payment transactions, the Company
measures their value in accordance with FRS20, with the
corresponding increase in equity, by reference to the fair value of
equity instruments granted. The fair value of equity instruments is
measured at the date of grant using the Black Scholes method. The
expense is apportioned over the vesting period of the financial
instrument and is based on the numbers which are expected to vest
and the fair value of the financial instruments at the date of
grant. If equity instruments vest immediately, the full expense is
recognised immediately.
Investment in subsidiary and associated undertakings
The interest of the Company in shares of subsidiary and
associated undertakings is stated at fair value less provision for
impairment. The carrying values of fixed asset investments are
reviewed for impairment if events or changes in circumstances
indicate the carrying value may not be recoverable. Impairment is
recognised by comparing the carrying amount to the higher of the
recoverable amount and value in use.
29. Directors' emoluments
Year ended Year ended
30 September 30 September
2013 2012
GBP'000 GBP'000
Remuneration as Executives 275 275
Fees of Non-Executive Directors 120 80
Car allowances and benefits in kind 25 25
Pension contributions 14 14
------------------------------------- -------------- --------------
434 394
===================================== ============== ==============
G. P. Bottomley was the highest paid Director of the Company,
and received GBP198,000 (2012: GBP198,000) inclusive of pension
contributions during the year ended 30 September 2013. Further
details of Directors' emoluments are provided in the Report on
remuneration of Directors.
30. Investments
Total Investment
in subsidiary
Manroy USA Manroy Undertakings
Holdings Inc Systems Ltd
GBP'000 GBP'000 GBP'000
At 30 September 2012 1,855 3,061 4,916
Impairment of investment
in Manroy USA Holdings Inc. (1,855) - (1,855)
------------------------------ --------------- -------------- -----------------
At 30 September 2013 - 3,061 3,061
============================== =============== ============== =================
All subsidiaries and associated undertakings of the Company are
wholly owned, are registered in England and Wales and are
incorporated and operate in the United Kingdom. The subsidiaries
and associated undertakings of the Company at 30 September 2013,
after reflecting the adjusting post balance sheet events referred
to in note 22, were as follows:-
Immediate
Classes of holding company
Name of undertaking Country of issued share in the Group
Holding incorporation capital held
by the Group
Manroy Systems 100% direct England and Ordinary Manroy Plc
Limited holding Wales
Manroy Engineering 100% indirect England and Ordinary Manroy Systems
Limited holding Wales Limited
Base (Manroy) 100% indirect England and Ordinary Manroy Engineering
Limited holding Wales Limited
31. Debtors
30 September 30 September
2013 2012
GBP'000 GBP'000
Net amounts due from Group companies 6,804 10,622
Prepayments and other debtors 40 51
-------------------------------------- ------------- -------------
6,844 10,673
====================================== ============= =============
32. Creditors: amounts falling due within one year
30 September 30 September
2013 2012
GBP'000 GBP'000
Amounts due to Group companies 1,531 540
Trade and other creditors 121 133
Accruals and deferred income 33 101
-------------------------------- ------------- -------------
1,685 774
================================ ============= =============
33. Movement on reserves
Share Share Merger Special Retained Total
capital premium reserve reserve earnings equity
account account
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------------------------------------------------- -------- -------- -------- -------- --------- -------
At 30 September 2011 910 295 1,457 59 11,682 14,403
Total comprehensive income
Profit for the year ended 30 September 2012 - - - - 97 97
---------------------------------------------------------- -------- -------- -------- -------- --------- -------
Movement on special reserve - - - (53) 53 -
---------------------------------------------------------- -------- -------- -------- -------- --------- -------
Items that will not be reclassified to profit or loss - - - (53) 53 -
---------------------------------------------------------- -------- -------- -------- -------- --------- -------
New shares issued in the year 42 442 - - - 484
Share issue costs - (33) - - - (33)
---------------------------------------------------------- -------- -------- -------- -------- --------- -------
Items that are or may be subsequently reclassified to
profit or loss 42 409 - - - 451
---------------------------------------------------------- -------- -------- -------- -------- --------- -------
Other comprehensive income 42 409 - (53) 53 451
Total comprehensive income 42 409 - (53) 150 548
---------------------------------------------------------- -------- -------- -------- -------- --------- -------
Transactions with owners
Dividends paid in the year (135) (135)
---------------------------------------------------------- -------- -------- -------- -------- --------- -------
Total transactions with owners - - - - (135) (135)
---------------------------------------------------------- -------- -------- -------- -------- --------- -------
At 30 September 2012 952 704 1,457 6 11,697 14,816
Total comprehensive income
Loss for the year ended 30 September 2013 - - - - (6,595) (6,595)
---------------------------------------------------------- -------- -------- -------- -------- --------- -------
Payment of liabilities in special reserve - - - (5) 5 -
---------------------------------------------------------- -------- -------- -------- -------- --------- -------
Items that will not be reclassified to profit or loss (5) 5 -
---------------------------------------------------------- -------- -------- -------- -------- --------- -------
Items that are or may be subsequently reclassified to - - - - - -
profit or loss
---------------------------------------------------------- -------- -------- -------- -------- --------- -------
Other comprehensive income - - - (5) 5 -
Total comprehensive income - - - (5) (6,590) (6,595)
---------------------------------------------------------- -------- -------- -------- -------- --------- -------
As at 30 September 2013 952 704 1,457 1 5,107 8,221
========================================================== ======== ======== ======== ======== ========= =======
34. Financial liabilities
At 30 September 2013, the Company had entered into unsecured
guarantees for:
(i) a bank facility totalling GBP1.8 million (2012: GBP0.9
million) provided to the Group's wholly owned principal operating
subsidiary, Manroy Engineering Limited which has granted a
debenture supported by fixed and floating charges over its assets
and operations; and
(ii) two financing facilities provided to MUSA, jointly with the
51% owner of MUSA, totalling $1.3 million (GBP0.8 million), which
are primarily secured on MUSA's property and machinery and an
unsecured undertaking relating to funds advanced to MUSA totalling
$0.5 million (GBP0.3 million).
The Directors have assessed the fair value of these liabilities
as GBPNil, based on the probability of payment and the fact that
they are asset backed.
35. Transactions with Directors
On 3 December 2010, the Company entered into an agreement
relating to the acquisition of Manroy Systems Limited, pursuant to
which Glyn Bottomley agreed to sell his entire issued share capital
of Manroy Systems Ltd to the Company for 2,068,633 Ordinary Shares
at 75 pence per share. No changes have been made to this agreement
during the year ended 30 September 2013. Under the acquisition
agreement, Glyn Bottomley gave warranties to the Company regarding
the Manroy Systems Limited and Manroy Engineering Limited relating
to taxation, subject to a maximum liability of GBP1.5 million.
Claims under these warranties must be must be made by 23 December
2017.
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 year ended 30 September 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 3 December 2010, the Company entered into Lock-In and Orderly
Market Agreements with the Concert Party Members. No changes have
been made to this agreement during the year ended 30 September
2013. Under these agreements, any dealings by a Concert Party
Member who is a Director are subject to the Company's code of
dealing, and any disposals by any Concert Party Member 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 report.
Maher Limited, an international materials supplier involved in
the defence sector, provides certain raw materials to the Group on
normal arm's length commercial terms. Maher Limited also provided
upfront working capital to MUSA during the year ended 30 September
2013 to assist in production of products to be purchased by Manroy
for development and sale. Gerry Clark, a Non-Executive Director of
the Company, is a director of Maher Limited.
In January 2014, the Company announced it was expanding
production of military rifles, funded to a maximum of GBP0.75
million by a loan from Caledonian Heritable Limited ("Caledonian"),
a Concert Party Member. This funding and associated interest
totalling GBP0.35m is structured to be repaid by 28 November 2014
from the cashflow receivable by Manroy on sales of the resultant
products. Given Caledonian's shareholding in the Company, entry
into the Loan Agreement by the Company was considered to be a
related party transaction pursuant to Rule 13 of the AIM Rules for
Companies. The Directors, having consulted with the Company's
nominated adviser Allenby Capital Limited, considered that the
terms of the financing were fair and reasonable insofar as the
Company's shareholders were concerned.
During the year ended 30 September 2013, the Group accrued
consultancy fees of GBP118,000 (2012: GBPNil) and paid marketing,
in country customer trials, testing and development fees of GBPNil
(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 year.
Apart from these contracts and the service contracts and letters
of engagement between the Directors and the Company, no contract
existed during the financial year ended 30 September 2013 in
relation to the Group's business in which any Director was
interested.
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.
"AIM" the market of that name operated by the London Stock
Exchange
"Base" Base Enamellers Ltd and RJL Engineering Services,
acquired by the Group in February 2013
"Board" or "Directors" the directors of Manroy, all of whose
names are set out in this document
"City Code" The City Code on Takeovers and Mergers
"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)
"EBITDA" Earnings before interest, tax, depreciation and
amortisation.
"FAA" First Articles Acceptance, a requirement to a produce a
one off product for inspection for US DoD contracts prior to
commencement of delivery under that contract.
"Form of Proxy" the form of proxy which accompanies this
document for use by Shareholders in connection with the Annual
General Meeting
"Group" the Company and its subsidiaries as at the date of this
document
"Herstal" FN Herstal SA, a company registered in Belgium with
company number RPM Liege 0441.928.931 and whose registered office
is at Voie de Liege 33, B-4040 Herstal, Belgium.
"Herstal Offer" The offer announced by Herstal on 28 March 2014
to acquire the entire issued share capital of the Company at the
Herstal Offer Price
"Herstal Offer Price" 85p per Ordinary Share
"LIBOR" London Interbank Offered Rate is the average interest
rate estimated by leading banks in London that they would be
charged if borrowing from other banks
"London Stock Exchange" London Stock Exchange Plc
"M2 HMG" or "HMG" 12.7mm M2 Heavy Machine Gun, Manroy's
principal revenue generating product
"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
"Panel" The Panel on Takeovers and Mergers
"QCA Guidelines" The corporate governance guidelines for
companies published by the Quoted Companies Alliance
"QCB" Quick Change Barrel
"Section 5" Government act for prohibition of certain weapons
and control of arms traffic. The Company requires a license under
this act to trade. It also covers anyone the Company uses to
transport or hold certain weapons.
"Shareholders" persons who are registered holders of Ordinary
Shares from time to time
"US DoD" United States Department of Defense
Transactions during the year were translated at an average
exchange rate of $1.5612= GBP1 (2012: $1.5765 = GBP1. Assets and
liabilities held at 30 September 2013 were translated at $1.6194 =
GBP1 (2012; $1.6149= GBP1).
This information is provided by RNS
The company news service from the London Stock Exchange
END
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Manroy (LSE:MAN)
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