RNS Number:1956T
MOS International PLC
12 December 2003
MOS INTERNATIONAL PLC
Audited Results
For the Year Ended 31 March 2003
MOS International PLC ("MOS" or "the Group" or "the Company"), the oilfield
services company, announces its Consolidated Financial Statements for the year
ended 31 March 2003.
Key highlights:
* Loss in line with expectations:
*Underlying trading loss (including interest charges) of #1,069,000.
*Investment write-off of #667,833, resulting in pre-tax loss of #1,736,833
* Remedial action taken; restructuring and cost-cutting programme complete
* Significant increase in enquiry levels
Post period:
* Board restructured, Philip Wood appointed Executive Chairman. Philip Wood
brings complementary industry experience to the Board, especially in Latin
America (including Brazil) and the Middle East
* Seymour Pierce appointed as financial adviser and broker
* Memorandum of Understanding signed with Baker Marine, a subsidiary of PPL
Shipyard Pte Ltd of Singapore
Philip Wood, Executive Chairman, commented:
"I accepted the invitation to be chairman of MOS only recently. However, I have
been impressed by the determination and ability of the management team, who have
addressed the cost base of the Group without detracting from the Group's ability
to handle the now increasing level of enquiries."
"MOS will, in future, focus on its core mechanical handling business,
specifically targeting the oil exploration industry where, after three very
quiet years, there are now distinct signs that the major oil drilling companies
are investing again."
"Over the past few months the business has been rationalised and re-focussed and
we are now in a position to take advantage of the improving market. I am
confident that MOS will be a major beneficiary of the projected upturn."
12th December 2003
ENQUIRIES:
MOS International plc Tel: 01274 531 862
Terry Shuttleworth, Finance Director
Bankside Consultants Tel: 020 7444 4140
Michael Padley/Susan Scott
Company Registration No. 4133026
MOS International plc
CONSOLIDATED FINANCIAL STATEMENTS
for the year ended
31 March 2003
Baker Tilly Chartered Accountants
2 Whitehall Quay, Leeds, LS1 4HG
Offices at: Basingstoke, Birmingham, Brighton, Bristol, Bromley,
Bury St Edmunds, Chelmsford, Chester, Coventry, Crawley, Edinburgh, Grimsby,
Guildford, Hereford, Hull, Ipswich, Leeds, Lerwick, Liverpool, London,
Manchester, Milton Keynes, Newcastle, Newmarket, Norwich, Spalding,
Stoke-on-Trent, Tunbridge Wells, Warrington, Watford, Yeovil.
Registered to carry on audit work and regulated for a range of Investment
Business activities by the Institute of Chartered Accountants in England and
Wales
An independent member of Baker Tilly International
DIRECTORS
P P Wood (Chairman)
K Osborne
T Shuttleworth
N B Fitzpatrick (Non-executive)
SECRETARY
T Shuttleworth
REGISTERED OFFICE
Units D&E Upper Floor
Shipley Wharf
Wharf Street
Shipley
BD17 7DW
BANKERS
Bank of Scotland
116 Wellington Street
Leeds
LS1 4LT
AUDITORS
Baker Tilly
2 Whitehall Quay
Leeds
LS1 4HG
BROKER
Seymour Pierce
Bucklesbury House
3 Queen Victoria Street
London
EC4N 8EL
NOMINATED ADVISOR
Seymour Pierce
Bucklesbury House
3 Queen Victoria Street
London
EC4N 8EL
REGISTRARS
Capita IRG Plc
The Registry
34 Beckenham Road
Beckenham
Kent
BR3 4TU
I accepted the invitation to be chairman of MOS International plc only recently
and I believe that I have joined both at a very critical time in its history and
also at a very exciting time. Whilst the last two years have ravaged the
Group's balance sheet, I have been impressed by the determination and ability of
the management team to stick to their task and maintain their confidence in the
future. The results are disappointing but in line with expectations.
The management team have addressed the cost base of the Group and taken drastic
action to reduce fixed costs without detracting from the Group's ability to
handle the now increasing level of enquiries. During the year, several non-core
subsidiaries have been closed and whilst the balance sheet is presently weak, it
does not reflect the intellectual property and expert knowledge inherent in the
Group, built up over fifteen years of working in the oil drilling business, nor
the potential of MOS - which I believe to be significant.
My first task as Chairman has been to review the Group and its activities and
following this review, MOS will focus on its core mechanical handling business,
specifically targeting the oil exploration industry. In this sector, the Group
enjoys an excellent reputation and, after three very quiet years, there are now
distinct signs that the major oil drilling companies are investing again. This
is excellent news and the level of enquiry for the Group's core products is the
highest for three years. I shall provide shareholders with a trading update at
the EGM on 19th December.
Since the year end, the Group has appointed Seymour Pierce as its nominated
adviser and broker and has restructured the Board of Directors, with Peter
Felter and Graham Burgess resigning and leaving the Company and Brendan Larkin
stepping down. The Board is currently in discussions with our advisers on
refinancing the Group and once this is completed, we will be in a position to
develop the opportunities that are available.
Brendan Larkin, the co-founder of the Group, has stepped down from the Board but
he remains a key member of the senior management team and will focus on
international sales and joint ventures, which are the key to future
profitability. This change has relieved Brendan of day-to-day operational
management, which will be shared by the executive directors and myself, and
returns him to a role that maximises his strengths. I will assist Brendan in
sourcing business and will look to introduce MOS to new markets, in particular
those in South America and the Middle East where I have extensive industry
contacts.
Over the past few months the business has been rationalised and re-focussed and
the Board revamped and although there is a long way to go, and the return to
profit will not be instant, I expect that the tone of next year's statement will
reflect our quiet optimism. We are in a position to take advantage of the
improving market and I am confident that MOS will be a major beneficiary of the
projected upturn.
Last week we signed a Memorandum of Understanding with Baker Marine, Singapore,
which supplies equipment to the offshore market and is a subsidiary of PPL -
one of the world's largest rig builders. Under the agreement MOS will grant a
licence, subject to a joint venture being established, for the manufacture and
servicing of our product range. This is an area which in the past has been our
main weakness and the agreement will give us direct access to one of the
market's leading fabrication and service companies. Baker Marine has an
international client base and they operate independently of PPL.
Finally, I wish to record my thanks to the Board, and especially to Brent
Fitzpatrick whose pragmatic and sensible approach has been so valuable in what
have been very trying circumstances. On behalf of the Board, I must record our
thanks to all the Group's employees who have stuck to their task through thick
and thin. I sincerely hope, and indeed expect, that their commitment will be
well rewarded in the months to come.
P Philip Wood
Chairman
5 December 2003
The purpose of this report by the board is to inform shareholders of its policy
on directors' remuneration and to provide details of the remuneration of
individual directors, as determined by the Remuneration Committee. The
remuneration committee comprises the non-executive directors. Other executive
directors may attend meetings by invitation.
Remuneration policy
The group's remuneration policy is to ensure that it both attracts and retains
high quality staff at all levels. The group aims to offer all its staff a
remuneration package that is competitive in the relevant market and which is set
in relation to individual performance.
Remuneration package
The remuneration arrangements for executive directors consist of basic salary,
benefits, pension contributions and long term share option incentive
arrangements determined by the remuneration committee. The fees paid to the
non-executive directors are determined by the board.
Bonus payments
In addition to their salary, each of the executive directors may be paid a bonus
of such amount and at such times as may be determined by the Remuneration
Committee.
Pension scheme
The group operates a defined contribution pension scheme and also contributes to
a director's personal pension scheme.
Details of directors remuneration is as follows:
Salary Fees Benefits Pension 2003 2002
contributions
in kind Total Total
# # # # # #
B Larkin 50,000 - 1,508 800 52,308 44,905
K Osborne 50,000 - 1,313 2,400 53,713 61,814
R Rooney 35,833 - 1,657 - 37,490 38,115
T Shuttleworth 50,000 - 937 2,400 53,337 58,619
B Fitzpatrick - 12,000 - - 12,000 7,000
R C Lane-Nott - 7,000 - - 7,000 7,000
P Felter - 8,250 - - 8,250 -
G Burgess - 3,750 - - 3,750 -
185,833 31,000 5,415 5,600 227,848 217,453
In addition Mr R Rooney was paid #26,500 in respect of compensation for loss of
office.
Share options
All executive directors are entitled to participate in the Group's share option
schemes. Any options granted thereunder will be approved by the remuneration
committee. It is the policy of the group to grant share options to employees
and executive directors as a means of encouraging ownership and providing
incentives for performance.
Details of share options exercisable at 4p per share are as follows:
Date of grant No. of shares
B Larkin 24 August 2001 2,500,000 Exercisable after three
years and before 10 years
of the date of grant
K Osborne 22 August 2001 2,500,000
T Shuttleworth 22 August 2001 2,500,000
The share price at admission on 23 August 2001 was 4p per share. The share
price at 31 March 2003 was 0.675p. The high and low in the year to 31 March
2003 were 2.250p and 0.5p respectively. The share price as at 1 October 2003
was 0.725p. The shares have been suspended since that date.
Terms of appointment
Executive directors' appointments are terminable by 12 months written notice.
Non-executive appointments are terminable by 3 months written notice. There are
no fixed terms of office. The articles of association require a third of the
directors to retire annually.
The directors submit their report and the consolidated financial statements of
MOS International plc for the year ended 31 March 2003.
PRINCIPAL ACTIVITIES
The principal activity of the company during the period was that of an
investment holding company. The principal activity of the group was that of
civil and mechanical consultants to the oil industry.
REVIEW OF THE BUSINESS
The review of the business and likely future developments are given in the
Chairman's Statement on page 2.
RESULTS AND DIVIDENDS
The trading loss for the year after tax was #1,756,470. The directors do not
recommend payment of a dividend.
DIRECTORS
The following directors held office during the year:
P G Felter (non-executive Chairman) (appointed 26 April 2002), (resigned 5 November 2003)
B Larkin (resigned 16 October 2003)
K Osborne
R Rooney (resigned 1 November 2002)
T Shuttleworth
N B Fitzpatrick (non-executive)
R C Lane-Nott (non-executive) (resigned 25 October 2002)
J G Burgess (appointed 8 November 2002), (resigned 5 November 2003)
Mr P P Wood was appointed a director and Executive Chairman on 17 November 2003.
DIRECTORS' INTERESTS IN SHARES
The beneficial interest in the shares of the company as at 31 March 2003 of the
Directors who held office at the end of the year, including family interests are
as follows:
Ordinary shares of 0.025p each
1 December 2003 31 March 2003 1 April 2002
B Larkin 57,666,666 59,333,333 61,000,000
K Osborne 40,000,000 40,000,000 40,000,000
T Shuttleworth 8,000,000 8,000,000 8,000,000
B Fitzpatrick 280,000 280,000 280,000
P G Felter 3,333,334 1,666,667 -
J G Burgess - - -
SHARE OPTIONS
The directors' share options are disclosed in the remuneration committee report.
Corporate Synergy has an option to subscribe for 7,239,375 ordinary shares
exercisable at 4p each between 23 August 2001 and 23 August 2008.
Hoodless Brennan and Partners have an option to subscribe for 7,239,375 ordinary
shares exercisable at 4p each between 23 August 2001 and 23 August 2004.
SUBSTANTIAL SHAREHOLDINGS
As at 1 December 2003 the following shareholders, excluding directors, held the
following shareholdings in the company:
No. of shares %
Jubilee Investment Trust 100,000,000 28.25
W Larkin 60,800,000 17.17
M Burke 14,000,000 3.95
PAYMENT OF CREDITORS
The company's policy on payment of creditors is to pay to terms. Difficult
trading conditions during the year have prevented this policy from being
implemented. Trade creditor days based on creditors at 31 March 2003 were 104
days (2002 - 193 days).
AUDITORS
A resolution to reappoint Baker Tilly, Chartered Accountants, as auditors will
be put to the members at the annual general meeting.
By order of the board
T Shuttleworth
Director
5 December 2003
Compliance with the Code of Best Practice
The company has established procedures and policies to ensure that the company
complies with the code of best practice set out in Section 1 of the Combined
Code published by the Hampel Committee as appropriate for a public limited
company listed on the Alternative Investment Market of the London Stock
Exchange, except that no board member has received any formal training during
the year. All the new directors appointed during the period have received
detailed briefings from the Chief Executive regarding his responsibilities and
role as a director.
Principles of good governance
The company was listed on the Alternative Investment Market of the London Stock
Exchange on 23 August 2001 and the company has agreed to apply the Principles of
Good Governance set out in Section 1 of the Combined Code by complying with the
Code of Best Practice as described above. Further explanation of how the
principles are to be applied is set out below, and in connection with the
directors' remuneration, in the Remuneration Report.
Directors
During the year the board comprised of a non-executive Chairman, a Chief
Executive, three executive directors and two non-executive directors. On 26
April 2002 Peter Felter was appointed as non-executive chairman and the
Executive Chairman, Mr B Larkin, became the Chief Executive. The non-executive
Chairman held office until 5 November 2003 when he resigned from the board. A
new Chairman, Mr P P Wood, was appointed on 17 November 2003. The chief
Executive, Mr B Larkin held office until 8 September 2003 when he stood down in
favour of Mr J G Burgess, who previously was a non-executive director. Mr
Burgess resigned from the board on 5 November 2003 and the current board
comprises an Executive Chairman, two executive directors and a non-executive
director. Brief biographical details of the current directors appear on page 9.
The board meets regularly throughout the year and there is frequent contact
between meetings to progress the company's business. It is responsible for
overall group strategy and monitors the executive management. A nomination
committee for board appointments has not been established because the full board
is actively involved in all appointments and there is no intention to form a
nomination committee given the current size of the board.
Audit Committee
The audit committee comprises the non-executive directors and finance director.
The audit committee is responsible for ensuring that the financial performance,
position and prospects of the group are properly monitored and reported on and
for meeting with the auditors and discussing their reports on the accounts and
the group's internal controls. The board does not consider the group to be
large enough to benefit from an internal audit function. Non audit work
performed by Baker Tilly (the auditor) is lead by a different partner to the
partner responsible for the audit.
Remuneration Committee
The Remuneration Committee is responsible for making recommendations to the
Board on the Group's framework of Executive remuneration and its cost. The
Committee determines the contract terms, remuneration and other benefits for
each of the Executive Directors, including performance related bonus schemes,
pension rights and compensation payments. The Board itself determines the
remuneration of the Non-Executive Directors. The committee comprises the
Non-Executive Directors. The report on Directors' remuneration is set out on
pages 3 to 4.
Internal Control
The board of directors has overall responsibility for ensuring that the group
maintains a system of internal control to provide them with reasonable assurance
regarding the reliability of financial information used by the business and for
publication. The board of directors are also responsible for safeguarding the
assets. There are inherent limitations in any system of internal control; even
the most effective system can only provide reasonable and not absolute,
assurance with respect to the preparation of financial information and the
safeguarding of assets.
The directors have limited their comments regarding the Group's system of
internal control to internal financial controls, as permitted by the London
Stock Exchange. Procedures necessary to implement the guidance contained in the
publication "Internal Control. Guidance for the Directors on the Combined Code"
have been established. The key procedures that have been established and that
are designed to provide effective financial control are described below:
i. clearly defined and segregated organisation responsibilities
and limits of authority;
ii. well defined financial controls and procedures including a
management information system implemented across the Group;
iii. monthly reporting of financial information to the board and
periodic re-forecasting;
The Combined Code required that the framework of the internal control is
reviewed on, at least, an annual basis. During the year under review, monthly
reporting of financial information has been key in allowing the board to respond
to events in the market place. The board has reviewed the content of project
and financial information received and made recommendations for improvement.
The other key procedures designed to provide effective internal financial
control have not been subject to a formal review. As far as the directors are
aware, there have been no weaknesses in internal financial control that have
resulted in any material losses, contingencies or uncertainties requiring
disclosure in the financial statements.
Philip Wood (54), Executive Chairman, A successful serial entrepreneur and
business developer. Exceptional skills in sales, commercial contracting and
customer relationship management. Extensive business network and specialist
market knowledge of UK, Brazil, Latin America, USA and Middle Eastern markets.
A specialist in the offshore, oil and gas sector encompassing engineering and
the metal industry. Accomplished trader in steel, scrap and commodities.
Research interests working with the UK Atomic Energy Authority and major
industrial and automotive companies. Whilst Executive Chairman of MOS Philip is
specifically tasked with forging new business relationships across Brazil, Latin
America and the Middle East.
Keith Osborne (53), Executive Director: Keith Osborne joined MOS in 1989, and
was Technical Director before becoming an Executive Director in 1998. He has
developed the quality systems and sub-contracting policies within the Group. Mr
Osborne is responsible for the day to day operations of the Group and has a
particular focus on technical aspects and development of material handling
equipment.
Terence Shuttleworth (53), Finance Director: Terry Shuttleworth joined MOS in
1995 when he developed the Group's financial control systems. Mr Shuttleworth
is responsible for the financial affairs of the Group.
Nigel Brent Fitzpatrick (54), Non-Executive Director: Brent Fitzpatrick has
spent the last ten years as a corporate finance consultant and has gained
experience in identifying and advising a number of companies on their
acquisitions and subsequent flotations. Mr Fitzpatrick is currently a
non-executive director of Real Affinity Plc and Bidtimes PLC, both AIM quoted
companies.
Company law requires the directors to prepare financial statements for each
financial year, which give a true and fair view of the state of affairs of the
company and the group of the profit or loss of the company for that period. In
preparing those financial statements, the directors are required to:
a. select suitable accounting policies and then apply them consistently;
b. make judgements and estimates that are reasonable and prudent;
c. state whether applicable accounting standards have been followed,
subject to any material departures disclosed and explained in the
financial statements.
d. prepare the financial statements on the going concern basis unless it
is inappropriate to presume that the company and the group will
continue in business.
The directors are responsible for keeping proper accounting records which
disclose with reasonable accuracy at any time the financial position of the
company and to enable them to ensure that the financial statements comply with
the requirements of the Companies Act 1985. They are also responsible for
safeguarding the assets of the company and the group and hence for taking
reasonable steps for the prevention and detection of fraud and other
irregularities.
The directors are responsible for ensuring that the directors' report and other
information included in the annual report in accordance with company law in the
United Kingdom. They are responsible for ensuring that the annual report
includes information required by the AIM rules.
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF
MOS INTERNATIONAL PLC
We have audited the financial statements on pages 13 to 32.
This report is made solely to the company's members, as a body, in accordance
with section 235 of the Companies Act 1985. 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 auditors
The directors' responsibilities for preparing the Annual Report and the
financial statements in accordance with applicable law and United Kingdom
Accounting Standards are set out in the Statement of Directors'
Responsibilities.
Our responsibility is to audit the financial statements in accordance with
relevant legal and regulatory requirements and United Kingdom Auditing
Standards.
We report to you our opinion as to whether the financial statements give a true
and fair view and are properly prepared in accordance with the Companies Act
1985. We also report to you if, in our opinion, the Directors' Report is not
consistent with the financial statements, if the company has not kept proper
accounting records, if we have not received all the information and explanations
we require for our audit, or if information specified by law regarding
directors' remuneration and transactions with the company is not disclosed.
We read other information contained in the Annual Report, and consider whether
it is consistent with the audited financial statements. This other information
comprises Chairman's Statement, Remuneration Committee Report, Corporate
Governance Statement, Directors Responsibilities Statements, Directors' report
and the Directors' Biographical Details. We consider the implications for our
report if we become aware of any apparent misstatements or material
inconsistencies with the financial statements. Our responsibilities do not
extend to any other information.
Basis of opinion
We conducted our audit in accordance with Auditing Standards issued by the
Auditing Practices Board except that our work was limited as explained below.
An audit includes examination, on a test basis, of evidence relevant to the
amounts and disclosures in the financial statements. It also includes an
assessment of the significant estimates and judgements made by the directors in
the preparation of the financial statements, and of whether the accounting
policies are appropriate to the company's circumstances, consistently applied
and adequately disclosed.
We planned our audit so as to obtain all the information and explanations which
we considered necessary in order to provide us with sufficient evidence to give
reasonable assurance that the financial statements are free from material
misstatement whether caused by fraud or other irregularity or error. However,
the evidence available to us was limited because the group has been unable to
demonstrate how it has applied the group's stock and work in progress accounting
policy in respect of accounting for long term contracts. Consequently we were
unable to confirm that the attributable profit, which is estimated not to exceed
#150,000 and relevant liabilities of approximately #272,000 have been
appropriately recognised.
In forming our opinion we also evaluated the overall adequacy of the
presentation of information in the financial statements.
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF
MOS INTERNATIONAL PLC (continued)
Fundamental uncertainty
In forming our opinion we have considered the adequacy of disclosures made under
the basis of preparation accounting policy note on page 18 of the financial
statements concerning the uncertainty of the group's future cash flows. In view
of the significance of this uncertainty we consider that it should be drawn to
your attention but our opinion is not qualified in this respect.
Qualified opinion arising from limitation in audit scope
Except for any adjustments that might have been found to be necessary had we
been able to obtain sufficient evidence concerning the application of the
group's accounting policy in respect of long term contracts, in our opinion the
financial statements give a true and fair view of the state of the company and
group's affairs as at 31 March 2003 and of its loss for the year then ended and
have been properly prepared in accordance with the Companies Act 1985.
In respect alone of the limitation on our work relating to long term contracts:
* We have not obtained all the information and explanations that we
considered necessary for the purpose of our audit; and
* We were unable to determine whether proper accounting records had been
maintained.
BAKER TILLY
Registered Auditor
Chartered Accountants
2 Whitehall Quay
Leeds
LS1 4HG
5 December 2003
Notes 2003 2002
# #
TURNOVER
Continuing operations 1 3,324,943 3,444,185
3,324,943 3,444,185
Discontinued operations 6,109 41,071
3,331,052 3,485,256
Cost of sales 2 2,123,632 2,132,834
Gross Profit 1,207,420 1,352,422
Other operating expenses 2 2,234,655 2,358,869
Operating Loss
Continuing operations (1,015,798) (930,586)
Discontinued operations 2 (11,437) (75,861)
(1,027,235) (1,006,447)
Amounts written off investments 6 (667,833) (20,625)
Interest receivable and similar income 14,184 3,524
Interest payable and similar charges 7 (55,949) (36,496)
Loss on Ordinary Activities Before Taxation 3 1,736,833 (1,060,044)
Taxation 8 (19,637) 19,637
Loss on Ordinary Activities After Taxation 21 (1,756,470) (1,040,407)
Loss per ordinary share
Basic 9 (0.69)p (0.46)p
Diluted 9 (0.69)p (0.46)p
No separate statement of Total Recognised Gains and Losses has been presented as
all such gains and losses have been dealt with in the profit and loss account.
Notes 2003 2002
# #
FIXED ASSETS
Intangible assets 10 - 90,333
Tangible assets 11 103,010 128,605
Investments 12 172,500 -
275,510 218,938
CURRENT ASSETS
Stocks 13 253,462 255,325
Debtors 14 664,298 1,744,072
Cash at bank and in hand 370,890 143,692
1,288,650 2,143,089
CREDITORS: Amounts falling due within one year 15 2,453,611 2,192,120
NET CURRENT LIABILITIES (1,164,961) (49,031)
TOTAL ASSETS LESS CURRENT LIABILITIES (889,451) 169,907
CREDITORS: Amounts falling due after more than one year 16 - 53,200
(889,451) 116,707
CAPITAL AND RESERVES
Called up equity share capital 18 88,503 63,191
Share premium account 19 1,234,821 509,821
Merger reserve 20 15,101 15,101
Profit and loss account 21 (2,227,876) (471,406)
EQUITY SHAREHOLDERS' (DEFICIT) FUNDS 22 (889,451) 116,707
Approved by the board on 5 December 2003
T Shuttleworth Director
PP Wood Director
Notes 2003 2002
# #
FIXED ASSETS
Intangible assets 10 - 90,333
Investments 12 222,502 50,002
222,502 140,335
CURRENT ASSETS
Debtors 14 55,347 592,976
CREDITORS: Amounts falling due within one year 15 1,068,774 567,746
NET CURRENT (LIABILITIES)/ASSETS (1,013,427) 25,230
TOTAL ASSETS LESS CURRENT LIABILITIES (790,925) 165,565
CREDITORS: Amounts falling due after more than one year 16 - 53,200
(790,925) 112,365
CAPITAL AND RESERVES
Called up equity share capital 18 88,503 63,191
Share premium 19 1,234,821 509,821
Profit and loss account 21 (2,114,249) (460,647)
EQUITY SHAREHOLDERS' (DEFICIT)/FUNDS 22 (790,925) 112,365
Approved by the Board of Directors on 5 December 2003
T Shuttleworth Director
P P Wood Director
Notes 2003 2002
# #
NET CASH FLOW FROM OPERATING ACTIVITIES A 96,866 (586,907)
RETURNS ON INVESTMENTS & SERVICING OF FINANCE
Interest paid (55,949) (36,496)
Interest received and similar income 14,184 3,524
Net cash flow from returns on investments and servicing of finance (41,765) (32,972)
TAXATION
Corporation tax paid (87,200) (210,000)
Net cash flow from taxation (87,200) (210,000)
CAPITAL EXPENDITURE AND FINANCIAL INVESTMENT
Purchase of tangible fixed assets (7,930) (33,446)
Sale of fixed assets 98 50,499
Net cash flow from capital expenditure (7,832) 17,053
ACQUISITIONS AND DISPOSALS
Purchase of subsidiary undertaking - (20,000)
Purchase of intangible fixed assets - (10,000)
NET CASH FLOW FROM ACQUISITIONS AND DISPOSALS - (30,000)
Net Cash Flow Before Financing (39,931) (842,826)
FINANCING
Issue of share capital (net) 312 200,199
Issue of loan note - 312,500
Capital element of hire purchase and finance lease rental payments - (39,319)
Net cash inflow/(outflow) from financing 312 473,380
DECREASE IN CASH (39,619) (369,446)
A Reconciliation of Operating Loss to Net Cash Flow 2003 2002
from Operating Activities # #
Operating loss (1,027,235) (1,006,447)
Depreciation, impairment and amortisation charges 33,427 62,591
Profit on sale of fixed assets - (4,607)
Decrease/(increase) in stocks 1,863 (31,339)
Decrease/(increase) in debtors 1,060,137 (571,508)
Increase in creditors 28,674 964,403
96,866 (586,907)
B Reconciliation of Net Cash Flow to Movement in Net 2003 2002
Debt # #
Decrease in cash in the period (39,619) (369,446)
Net cash flow from decrease in net debt - 39,319
Change in net debt resulting from cash flows (39,619) (330,127)
Net (debt)/funds as 1 April (286,655) 43,472
Net debt as of 31 March (326,274) (286,655)
C Analysis of Net Debt
At 1 April Cash flow At 31 March
2002 2003
# #
Cash at bank and in hand 143,692 227,198 370,890
Bank overdraft (430,347) (266,817) (697,164)
Total (286,655) (39,619) (326,274)
D Non-Cash Transactions
During the year the Company issued 100,000,000 shares at a deemed value of
#750,000 to acquire shares as an investment. (Note 12)
BASIS OF ACCOUNTING
The financial statements have been prepared under the historical cost convention
and in accordance with applicable Accounting Standards
BASIS OF PREPARATION
The nature of the group's business is such that there can be considerable
unpredictable variation in the timing of the placing of firm orders and the cash
flows those orders generate. The directors have prepared cash flow forecasts
for the period to 31 October 2004. The forecasts are based on known orders,
projects that are in negotiation and the historical pattern of spares and other
sales. They also anticipate significant orders being received from a major new
contact in Singapore where close links are being developed and major interest is
being shown in the group's product range. Based on the forecasts the group is
not reliant upon the renewal of its bank overdraft facilities, which fall due
for renewal on 31 January 2004. However, the conclusions reached are very
sensitive to the timing of cash inflows in the short term and the timing of
receipt of orders from the major new contact and inevitably there is an inherent
uncertainty in this respect. The directors believe that the forecasts are
achievable and on this basis consider it appropriate to prepare the accounts on
a going concern basis. The financial statements do not include any adjustments
that would result if the going concern basis were not appropriate.
CONSOLIDATION
The group financial statements consolidate the financial statements of MOS
International plc and the subsidiary undertakings acquired on 22 June 2001 using
the merger basis of consolidation. The whole results, assets, liabilities and
shareholders funds of the merged companies are consolidated, regardless of the
actual merger date.
Subsidiaries acquired since 22 June 2001 are accounted for using the acquisition
basis of consolidation.
PURCHASED GOODWILL
Purchased goodwill is amortised over a period of two years, which in the
directors' opinion is its expected useful economic life.
TANGIBLE FIXED ASSETS
Fixed assets are stated at historical cost. Depreciation is provided on all
tangible fixed assets at rates calculated to write each asset down to its
estimated residual value evenly over its expected useful life, as follows:-
Leasehold improvements 16.67%, 20%, 33%
Plant and machinery 20%, 33%, 50%
Motor vehicles 25%
The freehold property is held for resale and hence is not depreciated. The
carrying value is considered to be less than the net realisable value.
INVESTMENTS
Investments are stated at cost less provision for any permanent diminution in
value.
STOCKS AND WORK IN PROGRESS
Stocks and work in progress are valued at the lower of cost and net realisable
value. Cost of finished goods and work in progress includes overheads
appropriate to the stage of manufacture. Net realisable value is based upon
estimated selling price less further costs expected to be incurred to completion
and disposal. Provision is made for obsolete and slow moving items.
Long term contracts are assessed on a contract by contract basis and reflected
in the profit and loss account by recording turnover and related costs as
contract activity progresses. Turnover is ascertained in a manner appropriate
to the stage of completion of the contract and credit taken for the profit
earned to date when the outcome of the contract can be assessed with reasonable
certainty. The amount by which turnover exceeds payment on account is classified
as "amounts recoverable on contracts" and included in debtors, to the extent
that payments on account exceed relevant turnover, the excess is included as a
creditor. The amount of long term contracts, at costs net of amounts
transferred to cost of sales, less provision for foreseeable losses and payments
on account not matched with turnover, is included within work in progress.
DEFERRED TAXATION
Deferred tax is recognised in respect of all timing differences that have
originated but not reversed at the balance sheet date where transactions or
events that result in an obligation to pay more tax in the future or a right to
pay less tax in the future have occurred at the balance sheet date. Timing
differences are differences between the company's taxable profits and its
results as stated in the financial statements.
Deferred tax is measured at the average tax rates that are expected to apply in
the periods in which timing differences are expected to reverse, based on tax
rates and laws that have been enacted or substantially enacted by the balance
sheet date. Deferred tax is measured on a non-discounted basis.
LEASED ASSETS AND OBLIGATIONS
Where assets are financed by leasing agreements that give rights approximating
to ownership ("finance leases"), the assets are treated as if they had been
purchased outright. The amount capitalised is the present value of the minimum
lease payments payable during the lease term. The corresponding leasing
commitments are shown as obligations to the lessor.
Lease payments are treated as consisting of capital and interest elements, and
the interest is charged to the profit and loss account in proportion to the
remaining balance outstanding.
All other leases are "operating leases" and the annual rentals are charged to
the profit and loss account on a straight line basis over the lease term.
PENSIONS
The group operates a defined contribution pension scheme whose assets are held
separately from those of the group in an independently administered fund. The
pension costs charged in the financial statements represent the contributions
paid by the group during the year.
TURNOVER
Turnover represents the invoiced value, net of Value Added Tax, of goods sold
and services provided to customers and, in the case of long term contracts,
credit is taken appropriate to the stage of completion when the outcome of the
contract can be assessed with reasonable certainty.
FOREIGN EXCHANGE GAINS (LOSSES)
Assets and liabilities denominated in foreign currencies are translated at the
rate of exchange ruling at the balance sheet date. Transactions in foreign
currencies are recorded at the rate ruling at the date of the transaction. All
differences are taken to the profit and loss account.
1 TURNOVER
The Group's turnover and loss before taxation were all derived from its
principal activity, which was undertaken around the world. The Group has not
disclosed its geographical analysis of turnover as in the opinion of the
directors it would be seriously prejudicial to the interests of the Group.
2 COST OF SALES AND OTHER OPERATING EXPENSES
Continuing Discontinued 2003 Total Continuing Discontinued 2002 Total
Cost of sales 2,119,988 3,744 2,123,632 2,104,001 28,833 2,132,834
Administrative 2,220,853 13,802 2,234,655 2,270,770 88,099 2,358,869
costs
Provision
against fixed
asset
investments 557,500 - 557,500 20,625 - 20,625
Impairment
adjustment 90,333 - 90,333 - - -
2,868,686 13,802 2,882,488 2,291,395 88,099 2,379,494
The total figures for continuing operations in 2002 include the following
amounts relating to acquisitions:-
cost of sales #21,592 and administrative expenses #41,093.
The results of MOS Speciality Welds Limited are reported as a discontinued
activity.
3 LOSS ON ORDINARY ACTIVITIES BEFORE TAXATION
Loss on ordinary activities before taxation is stated after charging/(crediting):
2003 2002
# #
Depreciation of owned assets 35,425 43,295
Depreciation of assets subject to hire purchase agreements - 1,229
Impairment adjustment 90,333 -
Amortisation of intangible assets - 18,067
Profit on disposal of fixed assets - (4,670)
Operating lease rentals
- land and buildings 105,973 89,573
- motor vehicles 45,908 9,029
Auditors remuneration
- audit services 20,000 20,500
- other services 16,190 17,335
Exchange losses 38,906 2,508
4 EMPLOYEES 2003 2002
No. No.
The average monthly number of persons (including directors) employed by the
company during the year was:
Directors 5 6
Administration 8 11
Design and production 25 34
38 51
2003 2002
# #
Staff costs for above persons:
Wages and salaries 953,270 1,346,618
Social security costs 95,616 129,394
Other pension costs 19,244 23,859
1,068,130 1,499,871
5 DIRECTORS' REMUNERATION 2003 2002
# #
Aggregate emoluments including benefits in kind 191,248 198,653
Non executive-directors fees 31,000 14,000
Compensation for loss of office 26,500 -
Pension contributions to money purchase pension schemes 5,600 4,800
254,348 217,453
Retirement benefits are accruing to three (2002: three) directors under money
purchase pension schemes. Further information on directors' remuneration is
included in the remuneration report on page 3.
6 AMOUNTS WRITTEN OFF INVESTMENTS 2003 2002
# #
Impairment adjustment to goodwill (note 10) 90,333 -
Provision against fixed asset investments (note 12) 577,500 20,625
667,833 20,625
7 INTEREST PAYABLE 2003 2002
# #
On bank overdraft 55,949 9,107
Lease and hire purchase finance charges - 456
Interest on late payment of tax - 26,500
Other interest - 433
55,949 36,496
8 TAXATION 2003 2002
# #
Corporation tax:
Total current tax - -
Deferred tax:
Current year 19,637 ( 3,033)
Prior year - (16,604)
Total deferred tax 19,637 (19,637)
Tax on loss on ordinary activities 19,637 (19,637)
Factors affecting the tax charge for the year:
The tax charge assessed for the year is higher than the standard rate of corporation tax in the UK. The
differences are explained below:
2003 2002
# #
Loss on ordinary activities before tax 1,736,833 (1,060,044)
Loss on ordinary activities multiplied by the standard rate of corporation
tax in the UK of 30% (2002 - 30%) (521,050) (318,013)
Effects of:
Expenses not deductible for tax purposes 210,567 2,892
Capital allowances in excess of depreciation (587) (2,651)
Tax losses not relieved 311,070 317,772
Current tax charge for the year - -
9 EARNINGS PER SHARE
The calculations of earnings per share are based on the following losses and number of shares:
Basic Basic Diluted Diluted
2003 2002 2003 2002
# # # #
Loss for the financial year 1,756,470 1,040,407 1,756,470 1,040,407
Weighted average number of shares
2003 2002
No.of shares No.of shares
For basic earnings per share 253,995,376 226,341,336
For diluted earnings per shares 253,995,376 226,341,336
Share options have not been taken into account in calculating the number of shares for diluted loss per share,
as this would reduce the reported loss per share.
10 INTANGIBLE FIXED ASSETS Purchased
goodwill
GROUP AND COMPANY #
Cost
At 1 April 2002 and 31 March 2003 108,400
Amortisation
At 1 April 2002 18,067
Impairment adjustment 90,333
At 31 March 2003 108,400
Net book value
At 31 March 2003 -
At 31 March 2002 90,333
Purchased goodwill arose on the purchase of the trade and assets of Goliath
Winch and Hoist Limited. On acquisition the trade and assets were transferred
to a new company, MOS Goliath Winches Limited.
11 TANGIBLE FIXED ASSETS
Improvements to Freehold Computer Plant & Motor Total
leasehold property equipment machinery vehicles
GROUP property
# # # # # #
Cost
At 1 April 2002 47,815 65,000 4,678 286,409 20,916 424,818
Additions - - - 7,930 - 7,930
Disposals - - (1,770) - - (1,770)
At 31 March 2003 47,815 65,000 2,908 294,339 20,916 430,978
Depreciation
At 1 April 2002 28,821 5,000 3,747 253,207 5,438 296,213
Charged in the year
7,723 - 833 19,643 5,228 33,427
On disposal - - (1,672) - - (1,672)
At 31 March 2003 36,544 5,000 2,908 272,850 10,666 327,968
Net book value
At 31 March 2003 11,271 60,000 - 21,489 10,250 103,010
At 31 March 2002 18,994 60,000 931 33,202 15,478 128,605
12 FIXED ASSET INVESTMENTS Listed
shares
#
GROUP
Cost
At 1 April 2002 22,500
Additions 750,000
At 31 March 2003 772,500
Provisions
At 1 April 2002 22,500
Charge in the year 577,500
At 31 March 2003 600,000
Net book value
At 31 March 2003 172,500
At 31 March 2002 -
The listed shares were sold in June 2003. The carrying value has been adjusted
to reflect ultimate realisable value.
Shares
#
COMPANY
Cost
At 1 April 2002 50,002
Additions 750,000
At 31 March 2003 800,002
Provisions
At 1 April 2002 -
Charge in the year 577,500
At 31 March 2003 577,500
Net book value
At 31 March 2003 222,502
At 31 March 2002 50,002
12 FIXED ASSET INVESTMENTS (continued)
The company holds more than 20% of the share capital of the following companies:
Country of registration
or incorporation
Class of % held % held
shares by group by parent
Miko Oilfield Supplies Limited* England and Wales Ordinary 100% 100%
MOS Cold Cutting Systems Limited*
England and Wales Ordinary 100% 100%
MOS Speciality Welds Limited (formerly MOS
Subtech International Limited)*
England and Wales Ordinary 100% 100%
MOS Goliath Winches Limited England and Wales Ordinary 100% 100%
Marine & Offshore Supplies Limited England and Wales Ordinary 96.7% 0%
MOS Environmental Limited England and Wales Ordinary 100% 100%
MOS Decommissioning Limited England and Wales Ordinary 100% 100%
* Consolidated using the merger basis of consolidation (see below).
The principal activities of the above companies were those of civil and
mechanical engineering consultants to the oil industry.
The group was formed on 22 June 2001 by a demerger from the Lyne Baxter Group.
The subsidiaries arising as a result of the demerger are consolidated using the
merger basis of consolidation.
Marine and Offshore Supplies Limited is a dormant subsidiary of Miko Oilfield
Supplies Limited. MOS Environmental Limited and MOS Decommissioning Limited are
both dormant companies. The dormant subsidiaries are excluded from
consolidation on grounds of materiality.
Miko Oilfield Supplies LLC is a limited liability company incorporated in the
State of Texas, USA. The company's members are Keith Osborne and Brendan
Larkin, who act as nominees on behalf of MOS International plc. Miko Oilfield
Supplies LLC has not traded during the year.
Miko Oilfield Supplies LLC owns 50% of MOS Ocean-River LLC, a company
incorporated in the state of Louisiana, USA, and has right to participate in 49%
of any future profits. The company was formed on 14 March 2002 and has no
significant transactions in the year ended 31 March 2003.
13 STOCKS Group Company Group Company
2003 2003 2002 2002
# # # #
Raw materials and finished goods 226,462 - 255,325 -
Work in progress 27,000 - - -
253,462 - 255,325 -
14 DEBTORS Group Company Group Company
2003 2003 2002 2002
# # # #
Trade debtors 572,526 - 609,655 -
Amounts recoverable on contracts - - 403,634 -
Amounts owed by subsidiary - - - 533,403
Other taxation and social security 50,680 50,680 50,323 50,323
Prepayments and accrued income 37,346 4,667 44,292 9,250
Other debtors 3,746 - 616,531 -
Deferred tax asset (note 17) - - 19,637 -
664,298 55,347 1,744,072 592,976
15 CREDITORS: Amounts falling due within one year Group Company Group Company
2003 2003 2002 2002
# # # #
Payments in advance 96,774 - - -
Bank overdrafts 697,164 637,108 430,347 417,627
Trade creditors 573,772 53,815 892,021 66,605
Other tax & social security 431,027 - 228,177 -
Corporation tax - - 87,200 -
Other creditors 118,125 269,449 223,292 35,514
Accruals 536,749 108,402 331,083 48,000
2,453,611 1,068,774 2,192,120 567,746
The bank overdrafts are secured by a fixed and floating charge over the assets
of the group. All group companies are party to a corporate cross guarantee.
16 CREDITORS: Amounts falling due after more than one Group Company Group Company
year 2003 2003 2002 2002
# # # #
Other creditors - - 53,200 53,200
17 DEFERRED TAXATION #
GROUP
Balance at 1 April 2002 (19,637)
Transfer from profit and loss account 19,637
Balance at 31 March 2003 -
2003 2002
# #
Provision for deferred tax has been made as follows:
Excess of depreciation over tax allowances - (13,629)
Unutilised losses - (6,008)
Deferred tax asset - (19,637)
Unprovided provision for deferred taxation is made up as follows:
Unutilised losses (672,700) (336,527)
The unprovided deferred tax asset is based on losses available to carry forward
of #2,242,337.
Due to the cyclical nature of the industry in the major subsidiaries, they are
unable to forecast with certainty the timing and extent of future profitability.
In addition the group is currently undertaking a period of re-organisation. The
various options available make it difficult to determine how and when the
available tax losses will be utilised. Therefore, the element of the potential
deferred tax asset relating to losses has not been recognised in the accounts.
2003
#
COMPANY
Unprovided deferred tax asset:
Unutilised losses 179,719
The unprovided deferred tax asset is based on losses available to
carry forward of #599,063.
18 EQUITY SHARE CAPITAL 2003 2002
# #
Authorised:
1,600,000,000 Ordinary shares 0.025p each (2002: 0.025p each) 400,000 80,000
2003 2002
# #
Allotted, issued and fully paid
354,012,500 ordinary shares of 0.025p each
(2002: 252,762,500 of 0.025p each) 88,503 63,191
Shares were issued throughout the year as set out below:
No of ordinary Value per Nominal Consideration
shares share value received
# #
Acquisition of subsidiaries 1,250,000 0.025p 312 312
New issue to acquire investment 100,000,000 0.75p 25,000 750,000
25,312 750,312
19 SHARE PREMIUM ACCOUNT Group Company
# #
At 1 April 2002 509,821 509,821
On issue of equity shares 725,000 725,000
At 31 March 2003 1,234,821 1,234,821
20 MERGER RESERVE
The merger reserve arises on the issue of 50,000 ordinary shares of #1 each to acquire Miko Oilfield
Supplies Limited, MOS Cold Cutting Limited and MOS Speciality Welds Limited and represents the excess
of shares issued over the share capital and share premium acquired.
21 RESERVES Group Company
# #
Profit and loss account
At 1 April 2002 (471,406) ( 460,647)
Loss for the period (1,756,470) (1,653,602)
At 31 March 2003 (2,227,876) (2,114,249)
The company is relying on the exemption conferred by S230 of the Companies Act 1985 in not
publishing its own profit and loss account.
22 RECONCILIATION OF MOVEMENT IN SHAREHOLDERS' FUNDS 2003 2002
# #
GROUP
Loss for the financial year (1,756,470) (1,040,407)
Issue of equity shares 750,312 523,012
Net reduction in shareholders' funds (1,006,158) (517,395)
Opening shareholders' funds 116,707 634,102
Closing shareholders' (deficit) funds (889,451) 116,707
2003 2002
# #
COMPANY
Loss for the financial year (1,653,602) (460,647)
Issue of equity shares 750,312 573,012
Net reduction in shareholders' funds (903,290) 112,365
Opening shareholders' funds 112,365 -
Closing shareholders' (deficit) funds (790,925) 112,365
23 RELATED PARTY TRANSACTIONS
Brendan Larkin is a director of MOS International plc and also a major shareholder and director of Skylark
Leisure Limited (formerly Lyne Baxter Group Limited).
The MOS Group recharged #31,215 to the Lyne Baxter Group for vehicle contract hire agreements entered into
during the period ended 31 March 2001 and #1,391 on mobile phone costs.
As at the 31 March 2003 the MOS Group had the following balances with the Lyne Baxter Group.
Creditor
#
Miko Oilfield Supplies Limited 19,723
The creditor relates to contract hire payments received in advance.
During the year the group paid rent of #4,950 to Brendan Larkin, Director, for
use of a room as an office.
24 LEASING COMMITMENTS
The following payments are committed to be paid in the year ending
31 March 2004 under non-cancellable operating leases:
Leases
Leases expiring
expiring between
within 2 and 5
1 year years
# #
Land and buildings 28,935 40,150
Motor vehicles 21,697 -
Other - 3,462
50,632 43,612
25 DERIVATIVES AND OTHER FINANCIAL INSTRUMENTS
The Group's principal financial instruments comprise borrowings, cash and
various items such as trade debtors and creditors that arise directly from the
Group's operations. The main purpose of these financial instruments is to
finance the Group's operations. All are considered to be stated at fair value.
It is and has been throughout the period under review, the Group's policy that
no trading in financial instruments shall be undertaken. The main risks arising
from the Group's financial instruments are liquidity and foreign currency risks.
The latter is mitigated by the fact that a proportion of debtors and creditors
pay and are paid in the same currency.
The year end position disclosed in the balance sheets on pages14 and 15
reasonably reflect the general disposition of borrowing, cash and other working
capital assets and liabilities that have existed throughout the year.
Borrowings
The bank overdraft is secured by a fixed and floating charge over the Group's
undertaking and assets. The overdraft is repayable on demand and bears interest
based on the bank's base rate fluctuating from time to time. The facility is
due for renewal on 31 January 2004.
The bank overdraft as disclosed in note 15 is in pounds sterling and is the only
financial liability and is at a floating rate as detailed above.
Foreign currencies
Transactions denominated in foreign currencies are translated at the exchange
rate at the date of the transaction. The resulting exchange gain or loss is
dealt with through the profit and loss account. As at 31 March 2003 the group
had the following significant balances denominated in foreign currency.
US$
Debtors 337,659
Creditors 256,080
Cash at bank 3,680
All were trading items and were interest free.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR TTBMTMMABBFJ
x